Wed | Nov 29, 2023

Fesco opens St Elizabeth service station, plans another by year-end

Published:Wednesday | August 24, 2022 | 12:06 AM

Future Energy Source Company Limited, operator of the Fesco brand, will be adding at least one more service station to its network before the year comes to a close.

The petroleum marketing company recently celebrated the opening of another service station under the dealer owned and operated business model in Whitehall, St Elizabeth, bringing its network of service stations nationwide to 17. Fesco, however, intends to push that number to 20 before the close of its March 2023 financial year.

The locations for the new service stations were not disclosed.

Th petroleum marketing company has added three stations to its network since its listing on the stock market in 2021 when the chain comprised 14 dealer-owned service stations. Among the three additions, Fesco has rolled out a single company-owned-and-operated service station at Beechwood Avenue in Kingston.

For the first quarter ending June 2022, the petroleum marketing company nearly quadrupled earnings for the similar period last year, moving from profit of $40 million to $152 million. Revenues also swelled by 238 per cent, from $1.9 billion to $6.5 billion. Comparatively, the company’s turnover was $12.7 billion for all of its financial year ending March 2022.

Fesco’s revenue growth over the last three quarters has been exponential – averaging $4.9 billion per quarter – some of which CEO Jeremy Barnes says is attributable to rising fuel prices. But the petroleum marketing company’s decision to revise its business model to include company-owned service station – with Beechwood as the first to be rolled out in this category – also provided an additional source of sales revenue, he added.

“The price of fuel went up but we are also selling more litres of gasolene. The expectation with the opening of Beechwood was that we would get better margins. We aren’t just getting wholesale margins from that operation, we are also getting a retail margin. So yes, we earn more per litre sold at Beechwood,” Barnes told the Financial Gleaner.

“But if you want me break out what we sell at Beechwood versus what we sell in the network, I can’t do so for competitive reasons,” he added.

Fesco also earns from its convenience store, the FYC Refill Water Store and Express Mart, along with lease arrangement Mr. Breakfast Lunch and Dinner to Go restaurant, which helps to create a ‘destination experience’ at select Fesco locations. But Barnes said that those earnings are not yet significant.

The petroleum marketing company still plans to enter the cooking gas market and anticipates future growth from that as well as the ongoing expansion of its service station network.

Earlier this year the company raised $1 billion through a bond issue, money it says it will use to finance the projects, both of which are estimated to cost around $850 million.