The Issa brothers’ EG Group saw gross margins in its fuel division shrink slightly after Russia invaded Ukraine.
In the company’s fuel arm, gross profit reached $481 million in the three months to March 31, a 16% increase from the first quarter of 2021.
However, its gross profit margins were down slightly from the prior quarter, ending December 21, 2021.
This was “partly due to increased market volatility due to the impact of geopolitical events on wholesale oil prices and demand,” EG Group said Tuesday.
The Issa brothers’ oil empire posted group EBITDA up 2% to $270 million in the first quarter.
The petrol forecourt operator said buoyant profits were mainly due to continued growth in its restaurant arm, with EG also owning Leon and other food operators.
The company recently bungled after bidding to take over beleaguered newsagent McColl’s, with grocer Morrisons winning the takeover battle.
In a business update, the company said its restaurant business saw gross margin growth of 54% year-on-year to $175 million. This is a 20% increase on a like-for-like basis.
Some 26 food outlets were opened during the quarter, meaning the Blackburn-based company now has a portfolio of over 1,800 outlets in total.
Of the 26 new sites, some 21 have been launched in the UK and Ireland, including Subway, Greggs and Cinnabon outlets.
EG’s grocery and merchandise division was in line with the prior year, with gross profit of $293 million. This division increased by 0.8% on a reported basis.
Margins in its grocery and merchandise division were in line with its comparable period, although wholesale and distribution costs soared.
“In an uncertain and rapidly changing environment, the business continued to make good progress against its strategic objectives across all group operations,” said Zuber Issa, co-founder and co-CEO of EG Group.
The restoration was dubbed “the biggest opportunity for EG Group in the world” by Issa.
However, Issa warned that the outlook for the year remained “uncertain” as households were already facing “significant inflationary pressure”.
He added: “However, we remain confident that the geographic diversity of our business and our highly complementary grocery and merchandise, restaurant and fuel businesses will continue to support our resilience and allow us to outperform the broader market. “
The Issa brothers, who also own supermarket Asda alongside private equity firm TDR Capital, are said to be in talks to offload their oil forecourt business.
According to an article in the Sunday Telegraph, the duo had discussions with a Canadian shopping giant, Couche-Tard, in recent weeks.