FESCO Gases Up Earnings in Q3

  • FESCO’s earnings jumped 176.4% during the quarter ending December 2025 to $242.70Mn, fueled by strong revenue growth and lower finance costs.
  • Quarterly revenues revved up 20.1% to $8.80Bn, buoyed by a 21.7% jump in total litres pumped across all products, including LPG. While pump prices for gasoline (E10 87 and E10 90) and diesel (ADO and ULSD) are set by the market and largely outside the company’s control, management keeps its foot on the gas when it comes to driving higher volumes.
  • In line with higher volumes and higher fuel prices, the cost of sales rose 18.8% to $8.20Bn. However, this was outpaced by revenue growth, which allowed gross profit margin to rise by 102bps to 6.8%
  • Operating expenses totaled $315.63Mn for the quarter, representing a 17.1% year-over-year increase compared to the same period last year. Higher staff costs, security expenses, motor vehicle expenses, and depreciation primarily drove the increase. Staff costs amounted to J$126.90Mn, up J$19.90Mn or 18.6% year-over-year, reflecting the expansion of the company’s workforce. This increase also incorporates adjustments to wage rates and salaries, Christmas bonuses, and costs associated with expanded operations, including additional company-operated locations and an expanded range of activities.
  • Security expenses totaled J$22.40Mn for the quarter, an increase of J$9.2Mn or 69.5% year-over-year, reflecting additional operating locations and higher security rates. Motor vehicle expenses amounted to J$12.90Mn, a decrease of J$2.30Mn or 14.9% year-over-year. These costs, which include toll charges, reflect growth in the fleet to primarily support the haulage and distribution of LPG.
  • Depreciation expense for the quarter was J$61.0Mn, reflecting the expansion of Plant, Property and Equipment (PPE), including investments in LPG infrastructure and service station assets.
  • With strong performances in both the 2nd and 3rd quarters, Fesco has reported its best nine-month performance, with net profit of J$587.89Mn up 44.63%, exceeding its best full-year net profit. Topline expansion (5.97%) and lower finance cost (-13.30%) were the primary drivers of the nine-month performance.
  • Its operations suffered minimal damage following Hurricane Melissa, even so the company-owned service stations and filling plants are fully covered by insurance. Looking ahead, FESCO plans to open four to five new dealer-operated service stations during the 2026 calendar year. This aligns with the company’s strategy of expanding its network, which now exceeds 20 stations islandwide, while delivering earnings growth at a compound annual growth rate (CAGR) of 47.3% over the past four years. This strategy has proven effective, and we believe further expansion will continue to create value for shareholders.
  • FESCO’s stock has declined 9.1% year-to-date, closing at J$2.81 on Thursday. At its current price, FESCO trades at a price-to-earnings (P/E) ratio of 10.9x, which is below the Junior Market Distribution sector average of 14.1x. Despite stronger year-to-date performance, the stock price has remained largely unresponsive, suggesting that persistent negative market sentiment continues to overshadow solid underlying fundamentals.

(Sources: JSE & NCBCM Research)