Fesco profits rise amid global oil rise

Future Energy Source Company Limited (Fesco) delivered strong full-year results, reflecting higher fuel volumes, an expanded retail network, and improved margins amid volatility in global oil markets.

"The company produced these results despite reduced fuel prices for the first three quarters, a softening of the economy since the passage of Hurricane Melissa in October 2025, and a sudden, significant and sustained fuel supply price increase and downstream margin compression since February 2026," the directors' report stated.

The price of oil internationally increased from US$60 a barrel at the start of the year to over $100 following the February US-Israel strikes on Iran.

For the March 2026 fourth quarter, revenue rose 16 per cent to $8.16 billion, underpinned mainly by increased litres sold across the company's fuel network. Fesco's bottom line reflected the combined effect of higher volumes and better margins.

Fourth-quarter net profit climbed to $176.2 million, up 48.9 per cent year-on-year, while full-year earnings surged 65.5 per cent to $764.1 million, the best in the company's history.

Volume-driven growth

The company reported a 12 per cent increase in fuel volumes for the year, with throughput — rather than pricing — carrying performance.

This growth was supported by expansion of its retail footprint, including the company-operated FESCO Oval station on Spanish Town Road, and improved output across dealer-operated stations.

Fesco's strategy of building out both its retail fuel network and LPG distribution business continued to deepen volumes, with the company targeting additional service station openings and further enhancement of its propane infrastructure.

Margins lifted, but global shocks linger

While revenue growth was volume-led, profitability gains reflected improved margins. Gross profit for the fourth quarter jumped to $556.4 million, up 46.6 per cent year-on-year, outpacing revenue expansion.

For the full year, gross profit climbed 29 per cent to $2.15 billion, underscoring increased efficiency and better capture of value per litre sold.

However, the petroleum marketer continues to operate in a volatile pricing environment. Rising crude oil prices linked to geopolitical tensions have pushed up input costs across the industry. These cost pressures were reflected in the 7.2 per cent increase in cost of sales to $30.42 billion for the year.

That dynamic suggests that while margins improved, they remain sensitive to global oil price swings. The company's ability to expand margins in this environment points to tighter cost control and scale benefits from higher throughput, but sustained geopolitical shocks could constrain future gains.

Cash flows reflect expansion cycle

Cash flows show a business still in investment mode. The increase in property, plant and equipment — up approximately 12 per cent to $4.48 billion — reflects ongoing capital deployment into network expansion and storage assets.

This investment phase, while weighing on free cash flow in the near term, is aligned with the company's strategy of scaling operations and securing future growth.

Expanding footprint and operations

Operationally, Fesco continues to expand its cooking gas, retail and commercial fuel operations. The buildout of new company-operated stations — which typically incorporate convenience retail and other services — is expected to enhance margins relative to dealer-operated sites. Recent projects also include expansion of LPG storage and distribution infrastructure, positioning the company to capture growth in the cooking gas market and industrial fuel demand.

Near-term outlook

Looking ahead, Fesco plans to continue its expansion strategy, including new station openings, further build-out of LPG capacity, and strengthening of its balance sheet ahead of debt maturities, including a $300-million bond principal payment due March 2027.

While global oil price volatility remains a key risk to margins, Fesco's ability to drive earnings through volume growth and operational expansion suggests a business still firmly in growth mode. 

business@gleanerjm.com