Profits down at Topaz despite 19% rise in turnover

PROFITS AT Ireland’s biggest petrol retailer Topaz declined last year, in spite of a rise in turnover of 19 per cent to €2.8 billion.

Topaz Energy Group Ltd reported earnings before interest, tax, depreciation and amortisation of €35.9 million in the year to the end of March 2011, down 7 per cent on the previous 12 months.

This was against a backdrop of a fall of 9 per cent in fuel volumes in the sector during the period due to the impact of the recession.

The turnover increase was due to the rise in global oil prices.

Topaz’s cost of sales also rose sharply to €2.67 billion from €2.2 billion a year earlier.

Topaz's latest accounts, which have been provided to The Irish Times, show that it made an after-tax profit of €4.6 million last year compared with €5.9 million in the previous reporting period.

Commenting on the current financial year, which closes at the end of March, Topaz chief executive John Williamson said he expects fuel volumes to decline by another 7 per cent as the effects of austerity measures in the economy continue to bite.

He said this decline would be reflected in Topaz’s Ebitda number for the year.

“We are trading in line with the targets we set ourselves at the beginning of the year,” he said. “We happy with that outcome.”

Topaz paid down €14 million on its senior term debt last year and Mr Williamson said it would be reduced by another €19 million in the current financial year.

At the end of March 2011, this debt stood at €130 million. It is due to mature in 2015.

The fuel group’s interest charge last year decreased to €12.8 million from €13.7 million in the previous 12 months.

No dividend was paid to shareholders last year.

Topaz, whose shareholders include entrepreneur Denis O’Brien and Galway businessman Gerry Barrett, received an extension of its working capital facilities last November from lenders.

These facilities have been extended out until December 2012.

Topaz has sought to accelerate the repayment of its debt with its lenders loosening its covenants to facilitate this.

Mr Williamson said the company was “looking to deleverage as quickly as we can”.

Topaz’s main lender is Irish Bank Resolution Corporation (formerly Anglo Irish Bank).

Mr Williamson said Topaz would look for opportunities this year to increase the number of forecourts in its network.

The company added 12 filling stations to its network last year and currently has 113 company-owned sites and 197 dealers.

“We do see opportunities to expand the Topaz network in Ireland,” he said.

Mr Williamson said its focus would be on new locations close to the national motorway network.

Topaz chairman Neil O’Leary said the company still has “ambitions” to launch the brand into other countries.

“If we hadn’t had the credit crunch we would be trying to internationalise the Topaz brand now,” he said. “We’re not done with that [plan] yet.”

Mr O’Leary noted an interesting change in consumer trends in its forecourt convenience stores in the current climate of austerity. “The sale of Lotto tickets is up while sales of Mars bars are down.”

Topaz was formed in recent years from the merger of the former Shell and Statoil forecourt networks here.

The businesses were acquired by Ion Equity, in which Mr O’Leary is a co-founder.