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Gas station owners, traditionally a tough business to flush out a profit, are pumping out thicker margins.
Net profit margins on average rose nearly 3% in 2013 over 2012, compared with a 1.6% increase in 2012 over 2011, according to Raleigh, N.C.-based financial data firm Sageworks. Industry-wide sales rose only about 1%, adds Sageworks, in a new report.
In real dollars, or coins, that means private gas station owners took home about a dime per every gallon sold in 2013. That's up from a nickel in 2012, assuming the same price at the pump. More inverse reaction: In 2008, reports Sageworks, when prices hit a record average of $4.11 per gallon, profit margins were even smaller, at 0.9%.
The key to the recent profit increase, no matter how meager, reports Sageworks, is there was less pressure on margins from costs of goods sold. Those costs include distribution, marketing, transportation of the fuel to the station, advertising and payment card swipe fees. There's also the cost of buying the gas itself.
“If you consider the fact that gas stations' margins are so thin to begin with, any fluctuation in (costs of goods sold) even if it's not significant, can have a pretty dramatic impact on stations' ultimate margins,” Sageworks analyst Regan Camp says in a release. “If they had big margins, a small fluctuation in costs may not impact them so much.”
The increase is certainly nice. But private gas station owners still have lower net profit margins, on average, than most other retail-based companies, Sageworks reports. And the average net profit margin for all privately held companies, according to the firm, was more than 8% in 2013.
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