Future Energy Source Company Limited, which trades as Fesco, has pumped the greater part of $894 million into cutting a pathway into the cooking gas market and, to a lesser extent, the buildout of its Beechwood Avenue service station, earnings from which it largely expects to recuperate upon the launch of the cooking gas division in financial year 2024.
Company CEO Jeremy Barnes, while not disclosing the current status of development works by the petroleum marketing company for its entry into the LPG or cooking gas business, said the company has been pumping most of its excess cash into the capital-intensive venture.
Its asset balance for the year ended March 2022 was $1.1 billion compared to $256 million for the financial year ended March 2021.
“That business is not just about fuel acquisition, you have to get trucks to go to the refinery. You also have to have storage, filling facilities, as well as storage at each customer’s home, meaning the cylinder,” Barnes told shareholders during the company’s 2022 annual general meeting on Friday.
“We haven’t sold one litre of LPG yet, and so we’ve been going through this investment period without generating revenues. But, the coming months or quarters when we do launch the business, we expect to see that cash flowing back into the business,” he said.
FESCO’s entry into the LPG market is just one way the company is looking at diversifying its revenue streams which hit $6.5 billion for the three months up to June 2022. Earnings rose 280 per cent to $151 million year on year.
The company also earns from its convenience store, the FYC Refill Water Store and Express Mart, motor oils, along with restaurant lease arrangements.
Its diversification into the supply of cooking gas into the commercial and residential markets, and the buildout of its gas station network, are expected to be primary drivers for the company’s growth.
The petroleum marketing company recently celebrated the opening of another service station under the dealer owned and operated business model in Whitehall, St Elizabeth, bringing its network of service stations nationwide to 17. Another, in Ocho Rios, St Ann, is planned for opening between next month and November, followed by a May Pen, Clarendon service station in FY 2023.
“In addition to that, we have several stations in the pipeline at various stages of development, from drawings to ones that are approved. Our intention is to open three to five stations within the next 12-24 months,” Barnes said.
“We also intend to launch additional grades of fuels and increase the availability of E10 88 and other blended fuels across the island,” he said.