Applegreen reports ‘resilient performance’ in H1 and recovery in volumes after initial lockdown

Applegreen, the roadside convenience retailer, has reported a “resilient performance” for the six months to 30 June in an unprecedented environment where COVID-19 impacted all of its markets.

Encouragingly, the retailer said there was a strong recovery in volumes after the initial lockdown in April and this positive momentum has carried into Q3. Applegreen said its balance sheet has recovered strongly from the initial impact of COVID-19 giving it ample liquidity and asset strength to allow the business to continue to deliver on its strategic ambitions.

Financial highlights

  • Group Revenue of €1.1bn, reflecting a sales reduction of 26.6% from the impact of COVID-19 lockdown restrictions (H1 2019: €1.5bn)
  • Group adjusted EBITDA (pre-IFRS 16) of €25.3m (H1 2019: €58.9m)
  • Adjusted EBITDA excluding Welcome Break (pre-IFRS 16) of €29.4m which represents +11% growth YOY (H1 2019: €26.5m)
  • Targeted investment in the estate with capital expenditure of €24.9m
  • Group net debt of €550.7m (pre-IFRS 16) (31 Dec 2019: €525.5m) represents leverage of 5.2x. Core Applegreen stand-alone leverage is 2.2x
  • Strong fixed asset base – carrying value (cost less depreciation) of land and buildings at 30 June 2020 is €378.4m
  • In order to preserve liquidity in the current environment, the Board is not recommending the payment of an interim dividend

Operational highlights

  • Estate expansion continued with 559 sites at the end of June 2020
  • Sites remained open throughout the crisis, albeit some with significantly reduced food franchise offerings
  • Swift and decisive action taken across the Group to manage the cost base

Current trading and outlook

Appplegreen said the positive momentum exiting the period continued with the business trading ahead of management’s expectations in Q3 to date.

The Group, and Welcome Break in particular, have seen a sharp recovery and positive momentum in Q2 and into Q3, aided by government stimulus, increased traffic volumes and staycations, the retailer said.

Sales volumes fell to 57% of the prior year period in April 2020 during the peak of the lockdown, improving significantly to 29% of the prior year in June 2020.

After the period end, this recovery continued as remaining food offers were reopened, Applegreen added.

While management remains cautious around the on-going uncertainty caused by the COVID- 19 pandemic, the Board is confident that Applegreen is well positioned to benefit from future opportunities, the retailer said.

Bob Etchingham, chief executive officer, commented: “The first half of 2020 has been an unprecedented period due to the COVID-19 pandemic and I am immensely proud of the tremendous efforts of our people in supporting our customers and local communities throughout this challenging period.

“Applegreen carried good momentum from last year and traded strongly for the first ten weeks of the year, however, we saw a sudden and significant impact on the business from mid-March, particularly in our motorway service areas. This was most pronounced in April and May, but volumes recovered well by the end of the second quarter. To help mitigate some of this impact, the Group took swift and decisive action in managing our cost base and tailoring our retail offer for changing consumer needs.

“Encouragingly, this recovery has continued over the summer months with the further lifting of restrictions, government stimulus packages and the staycation trend, all of which has improved traffic volumes. This performance further demonstrates the resilience of our business model and of our sector. We have learnt a lot during this crisis and are confident that we will emerge as a stronger organisation that is well positioned to benefit from future opportunities across all of our markets.”