The petrol station group, EG Group, predominantly owned by the billionaire Issa brothers and private equity firm TDR Capital, has reported an 18% decline in profits, attributing the drop to decreased fuel volumes and a competitive market environment.
For the three months ending in September, EG Group posted earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $345 million. The company highlighted lower fuel volumes as a primary factor influencing profits, and it acknowledged the impact of a challenging competitive landscape. The decline in profits comes as fuel prices have decreased following regulatory measures that compelled UK retailers to provide real-time pricing data.
This intervention was prompted by findings that retailers had inflated diesel and petrol prices to unnecessarily high levels. Asda, a part of the EG Group, was specifically identified for tripling its margins on fuel since before the COVID-19 pandemic. EG Group's total revenue for the period dipped from $8 billion to $7.5 billion compared to the previous year.
Notably, Mohsin and Zuber Issa, along with TDR Capital, had earlier sold EG Group's UK and Ireland petrol station forecourts business to Asda for £2.3 billion in the same year. This move was aimed at strengthening EG Group's balance sheet, but it left Asda with additional costs of £770 million in new loans, contributing to Asda's net debts of approximately £4.6 billion.
EG Group emphasised that the sale of its UK operations to Asda resulted in total debt repayments of $4 billion in 2023, significantly reducing the group's net leverage. However, as of the end of 2022, EG Group still carried a net debt of $9.6 billion, equivalent to nearly seven times its EBITDA.