Forecourt operator Applegreen remains a 'high quality business with an attractive growth strategy', despite the impact of COVID-19 on its operations, a leading industry analyst has said.
Clive Black of Shore Capital was commenting following a trading update by the group, in which it said that the majority of its business is trading ahead of expectations, driven by strong store sales.
Growth Strategy
'Applegreen is high quality business in our view, with an attractive medium to long term growth strategy centred upon maintaining its leading market position in the Republic of
Ireland, driving synergies and growth from the acquired Welcome Break business, and further developing its capital light model within the USA,' Black commented in a briefing note.
In its trading update, Applegreen said that it was 'pleased' with the performance of its business following 'extensive' cost saving measures, noting that traffic volumes have started to recover with the lifting of travel restrictions.
Cash balances in the forecourt arm of the business, as of 26 June, were in excess of €60 million with undrawn facilities of approximately €64 million, it said.
Welcome Break
The group also announced that its Welcome Break subsidiary has completed a process to access additional credit facilities, which will 'significantly enhance' its liquidity during the crisis.
The group said that it has repurposed £25 million of a dedicated capital expenditure facility in its existing banking facilities into a revolving credit facility, which is available to draw down for any purpose.
Applegreen said that Welcome Break has now reopened a 'significant number' of its food and beverage businesses, with traffic flows currently operating at 65% of 2019 volumes.
Looking ahead to the remainder of the year, Applegreen said that its 'absolute focus' at present is to navigate the various challenges posed by COVID-19, while also ensuring the safety of its personnel and customers.
'The ultimate course of the pandemic remains unclear at this stage, but we are following the relevant guidance from the authorities and taking definitive steps to ensure the group remains well positioned as market conditions recover,' the group said.
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