Canada: Couche-Tard reports earnings rise
Couche-Tard operates about 5,800 convenience stores across North America, the majority of which sell fuel. Its banners include Couche-Tard, Mac's and Circle K.
Fuel volume sold jumped 25.5 percent in the United States and 14.0 percent in Canada in the company's fiscal fourth quarter, ended April 29, largely due to the impact of acquisitions. At existing locations, volume was roughly flat.
Gross profit margin on fuel rose in both Canada and the United States. Canaccord Genuity analyst Derek Dley said strong US fuel margins played the biggest role in lifting earnings above his expectations, but other factors were also relevant.
"Same-store sales were really strong again in the US and Canada, and I think this was driven by continued out performance in food," he said. "And the company's cost cutting continued at an impressive clip."
Couche-Tard has been expanding its fresh food offerings, which can offer better margins than convenience store standbys like cigarettes, Dley said.
There were 13 weeks in the quarter, which also helped results.
After the end of the quarter, in June, Couche-Tard entered Europe, acquiring Norway's Statoil Fuel & Retail in a $2.6 billion deal. Statoil has about 2,300 outlets, mainly in Scandinavia, as well as in Poland, the Baltics and Russia.
The company said the acquisition would contribute to earnings immediately, although it had also increased debt.
"It is clear that the transaction has contributed to increase our indebtedness level," Chief Financial Officer Raymond Paré said in a release, adding that Couche-Tard is still in a strong position given its diversification and cash flow.
"During fiscal 2013 and subsequent years, we will favor a rapid reduction of our indebtedness level."
Source: in.reuters.com
