Second-quarter sales slid at forecourt and retail business EG Group as the billionaire Issa brothers worked to slash the company’s debt.
Revenues for the three months to the end of June fell 18% to $7.3 billion, while pre-tax earnings fell 4% to $335 million, which the firm put down to “the impact of oil inventory revaluations, driven by oil price volatility.”
EG Group said it was able to cut debt by 41% through a combination of sale and leaseback deals in the US, as well as the sale of the bulk of its UK business to Asda, which the pair also own. It has also extended the maturity date on a number of loans totalling $6.1 billion.
Co-founder Zuber Issa said: “The Group continued to make good progress with its deleveraging strategy...to put in place a sustainable long-term capital structure.”
He added that the firm was committed to achieving a net leverage multiple of mid-four times and addressing near-term maturities no later than 12 to 15 months before maturity. Interest rates on the group’s billion-dollar loans have soared since last year, as the majority are tied to central bank rates, which have shot up by 5% in the UK.
In May, the brothers marked a major milestone on their quest to slash their business empire’s heavy debt burden as they finalised plans to merge the UK operations of petrol forecourt business EG Group with Asda in a £2.3 billion deal.
EG said the deal with Asda was expected to reduce total net debt from $9,801m in March 2023 to $5.4 billion post-merger.
Chair Stuart Rose told reporters that the primary purpose of the deal was to expand Asda’s operations but “if as a consequence you’ve also got the opportunity to deleverage then what’s the problem with that?”
In August, EG said it had disposed of 63 sites in Kentucky and Tennessee in a deal with US-listed Casey’s General Stores. The terms of the sale were not disclosed.
The pair were earlier this year rumoured to be making a bid to acquire sandwich business Subway.