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FESCO promises new store roll-outs in new year

Future Energy Source Company (FESCO) Limited is promising investors that in its new financial year, April 2021 to March 2022, they will benefit from new store openings and the zero rating of corporate income taxes for the next five years, resulting from its Jamaica Stock Exchange Junior Market listing in April 2021.

The company is planning to commission more service stations in the medium term. Despite previous delays, FESCO should have a better year.

FESCO opened its first branded service station in Mandeville (Heaven’s FESCO) and since then has grown to fourteen branded service stations islandwide. (Photo: Jamaica Observer)

“We see signs of recovery in the local economy and as global travel accelerates, business confidence improves and new dealerships added at Ferry and Beechwood Ave in the next quarter, we expect that to positively impact profitability and cash flow,” management outlined in remarks attached to unaudited Q4 results 

They noted that during the last quarter (Q4 20210 and current quarter (Q1 2022), increases in the frequency of complete and/or partial weekend lockdowns, and extended curfew hours, severely restricted the operating hours of dealer stations and delayed expansion via new stations.

“Our construction projects and new store openings have been negatively impacted by the restrictions in movement which affects both construction labour and supply chains for material and equipment procurement,” the report read.

Year in review

For the twelve months ended March 2021, FESCO recorded profit before taxes of JM$140.77 million, a 2.9 per cent increase or J$3.9 million improvement on profit before taxes of JM$136.80 million recorded in 2020. 

Given that the transportation fuel industry declined in litres of fuel sold by 13.5 per cent, FESCO’s management said that the performance is particularly commendable.

“We see signs of recovery in the local economy and as global travel accelerates, business confidence improves and new dealerships added at Ferry and Beechwood Ave in the next quarter, we expect that to positively impact profitability and cash flow”

For the period April 2020 to January 2021, FESCO, however, grew sales by 10.6 per cent.

The company incurred income tax charges for the year ended March 2021 of JM$31.7 million (2020: $JM32.03 million), which resulted in a net profit of JM$109 million — a 4.1 per cent or JM$4.29 million improvement on J$104.8 million recorded as at March 2020.

There will be no income tax charges for the next five years following the company’s Junior Market listing.

The company has net current assets of JM$91.2 million, with cash buoyed by the raise of JM$240 million from the initial public offering.  

Equity or the book value of the firm increased and now stands at JM$319.3 million, up from JM$205.46 million as at March 2020.