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Fesco maintains momentum despite fall in fuel prices

Published:Wednesday | May 31, 2023 | 12:22 AM

Petrol trader Future Energy Source Company Limited maintained its growth momentum for the fourth quarter ending March, despite a fall-off in oil and wholesale gas prices.

The company, which trades as Fesco, reported 51 per cent improvement in profits to $132 million on sales, which rose 37 per cent to $6.4 billion.

The growth stems from its expanding operation, and improved volume sales.

For the full year, Fesco more than doubled its earnings, which spiked 123 per cent its preliminary results show.

The company led by CEO Jeremy Barnes estimates that gasolene has declined by about $11 per litre during the year, while for the March quarter the decline was about $12.60.

The cheaper gas has translated to increase demand at the pump.

Accordingly, the company says its growth in revenue for the March quarter, relative to the similar period of 2022, reflects significant growth in litres of fuel sold.

“Fesco has no control over the supply price of fuel and, instead, focuses more on quantity of fuel sold and gross profit,” the company said in the preamble to the quarterly results, a point it has continuously made since oil prices surged to over $110 per barrel in March 2022 emanating from the Ukraine/Russia war.

The price of crude fell below US$70 at midday Tuesday partly due to cloudy news about supplies ahead of a June 4 meeting of OPEC+, which includes Russia.

Fesco operates a national network of 18 service stations, up from 16 a year ago. Another two stations are planned for this year, with May Pen, Clarendon, being one of the parishes earmarked for a service station.

Concurrently, Fesco says its in the process of testing and increasing its capacity, building-out offices, commissioning assets and equipment from the newly acquired business Wilson Beck LPG in April.

The fuel marketer has begun to softly serve small sections of the LPG market through new brand FesGas.

However, Fesco has cautioned that as the company begins to operationalise its LPG assets, depreciation charges and interest expense may temporarily outpace LPG earnings in the short term.

For the full year ending March 2023, Fesco reported revenue of $26 billion, up from $12 billion in 2022, and earnings of $566 million, up from $258 million. The numbers are preliminary.