BUSINESS

Couche-Tard has best quarterly performance in U.S. since 2008 financial crisis

07/14/2015 09:43 EDT | Updated 07/14/2016 05:59 EDT
MONTREAL - Convenience store operator Alimentation Couche-Tard capped the 2015 fiscal year with the strongest performance by its large U.S. operations since the 2008 financial crisis.

The owner of Mac's and Couche-Tard convenience stores in Canada and Circle K stores throughout the United States says its quarterly dividend will rise by 22 per cent to 5.5 cents Canadian starting with the Aug. 6 payment to shareholders.

It also reported Tuesday that its core profit for the fourth quarter ended April 26, excluding one-time items and currency fluctuations, increased 15 per cent over the comparable period last year.

The Quebec-based multinational — which reports its results in U.S. currency — said its adjusted profit was $142 million or 25 cents per share for the 12-week period. That was one cent shy of analyst forecasts but up from $123 million or 22 cents per share in last year's fourth quarter.

"Our performance in the fourth quarter was a great way to end what we believe was an exceptional fiscal year," CEO Brian Hannasch said in a conference call.

For the full year, Couche-Tard's net profit increased 15 per cent to $933.5 million or $1.64 per diluted share. Adjusted profits were up 33.4 per cent to $1.02 billion or $1.80 per share. Revenues decreased nine per cent to $34.5 billion.

Couche-Tard (TSX:ATD.B) says lower gas prices drove an increase in fuel sales across its network while an enhanced food offering and growth in its own brand of products drove customers into stores, especially in the U.S.

The company delivers fresh food such as pastries, salads, sandwiches and fruit cups to 700 sites across North America and plans to expand the service to another 300 stores over the next year. A growing number of stores also sell food cooked on the premises, including hot dogs, pizza and burritos in the U.S. south.

Over the past year, it has added more than 100 higher profit private label brands, including fountain soft drink Polar Pop in North America and Simply Great coffee in Europe. Hannasch said the company is looking at more products and also introducing unspecified financial services and payment products.

Net earnings for the quarter decreased nearly 11 per cent from last year, dropping to $129.5 million or 23 cents per share, as a result of $8.6 million in currency fluctuations and US$22.2 million of non-recurring costs related to its deal buy The Pantry Inc., a convenience store operator based in North Carolina.

Revenues fell 18.6 per cent to $7.28 billion, mostly because of a decline in the average selling price for gasoline, currency fluctuations and the sale of an aviation fuel business in Europe.

Derek Dley of Canaccord Genuity said the convenience store chain is financially well-positioned to pursue further acquisitions.

"We continue to believe Couche-Tard has a robust pipeline for acquisitive growth as the integrated oil and gas producers in Europe begin to shed their downstream (retail) assets, in a similar fashion to what we have witnessed in the U.S. over the last 10 years," he wrote in a report.

Follow @RossMarowits on Twitter.

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