Applegreen to retain non-core UK hotels business

Applegreen to retain non-core UK hotels business
File image

Motorway services and forecourt operator Applegreen has decided to keep its non-core UK hotels business, saying a sale is "not the right thing".

The company said, earlier this year, that it would review the division and assess a number of options regarding its future ownership. Applegreen inherited 31 hotels as part of its 2018 €362m takeover of UK motorway services operator Welcome Break.

The company now plans to retain the hotels and invest in their improvement. It will also either expand or seek alternative usage - such as forecourt drive-thru or truck parking facilities - for 23 of the properties which are co-located with existing motorway services operations.

Applegreen shares surged by nearly 10% on the back of a strong set of financial results for the first half of the year; largely driven by Welcome Break's contribution. Group revenue rose, year-on-year, by 73% to €1.5bn, with gross profit surging to €268m.

Pre-tax profit increased from €9.13m at the halfway point of last year to just over €10.2m.

The company said that its underlying core business also showed strong growth during the first half, with food and fuel margins and volumes performing well. Applegreen's non-fuel gross profit rose 6%, while its fuel gross profits were up 14%.

First half revenue in its three geographies - Ireland, the UK and the US - rose by 14%, 127% and 117% respectively. A total of 46 new sites were acquired in the US during the six months, with 11 added to the portfolio across the UK and Ireland. Applegreen also recently acquired a minority stake in the Connecticut Service Plazas business in the US.

Management said it sees enough future opportunities within its existing geographies to not have to look at new territories at this time and will continue to seek purchases, albeit a small number of larger sites.

"We have a good pipeline of further developments - of both service area sites and petrol filling stations - across our markets," the company said.

Applegreen generates 70% of its profits from just 20% of its sites and in the first half of the year 75% of its gross profit came from non-fuel revenues.

The company said costs of a temporary closure of one of its Dublin forecourts due to a vermin scare is not material and that public safety is the priority. Applegreen also said that it is well prepared for Brexit.

"The underlying Applegreen business continues to grow at a satisfactory rate and, whilst there is currently no certainty around the timing and impact of Brexit, the resilient nature of our business and our 'self help' initiatives should help protect us from potential downsides. We, therefore, remain confident in the prospects for the business for 2019 and beyond," management said.

More in this Section

Traders mull extent of huge sterling rally, if Brexit deal were agreed   Traders mull extent of huge sterling rally, if Brexit deal were agreed

Bord na Móna seeking opportunities to redeploy 200 staffBord na Móna seeking opportunities to redeploy 200 staff

Spelling out all the ABCs of financial jargon in plain languageSpelling out all the ABCs of financial jargon in plain language

Amazon deal with Deliveroo investigated by UK competition watchdogAmazon deal with Deliveroo investigated by UK competition watchdog


Lifestyle

Munster offers so many hidden gems with bargains, ideas and must-have products for the interiors enthusiast who is always on the lookout for something new, writes Carol O’Callaghan.Made in Munster: So many treasure troves for the interiors enthusiast

Aileen Lee in conversation with ceramist Hedi O'Neill.Made in Munster: 'My advice? Be free in your style’ - Ceramist Hedi O'Neill

Red lips are hot for autumn but can you make them part of your everyday makeup? Rachel Marie Walsh thinks so.Code red: Making a statement with red lipstick for the everyday look

Welcome to the Autumn/Winter edition of ieStyle.Don't miss the Irish Examiner's free glossy 'ieStyle' magazine

More From The Irish Examiner