Couche-Tard to accelerate pace of convenience store construction, remodelling
MONTREAL - Alimentation Couche-Tard plans to accelerate the pace of construction of new stores and remodel older locations this year as it seeks to improve its network.
The Quebec-based convenience store and gas station company said Wednesday it will continue to pursue acquisitions, but expects to construct or rebuild 80 to 100 stores, a significant increase over last year.
"For the remainder of fiscal 2015, we expect to pursue our investments with caution in order to, amongst other things, improve our network and build additional stores," the company said after reporting record results in its first quarter and increasing its quarterly dividend by half a cent to 4.5 cents per share.
The higher dividend came as Couche-Tard, which keeps its books in U.S. dollars, said it earned $269.5 million or 47 cents per diluted share in the quarter ended July 20 compared with a profit of $255 million, or 45 cents per diluted share, in the first quarter of its 2014 financial year.
Revenue was up just more than three per cent to $9.19 billion compared with $8.90 billion a year earlier.
The company said currency translations of revenues and expenses from its Canadian and European operations into U.S. dollars shaved about $3 million from its net earnings in the quarter.
Excluding items such as the foreign exchange loss, a goodwill charge and acquisition costs, Couche-Tard said its adjusted net earnings grew 25 per cent to $276 million from $220 million in the prior year. That equalled 48 cents per diluted share, up from 39 cents per diluted share a year ago.
Couche-Tard was expected to report 44 cents per diluted share in adjusted earnings and $9.32 billion of revenues, according to analysts polled by Thomson Reuters.
The company said its higher profits were driven largely due to organic merchandise and fuel growth as well as recent acquisitions and a debt repayment.
"This performance reflects the strength of our business model which relies not only on growth through acquisitions but also on the constant improvement of our existing network, namely through in-store innovation and cost control at all levels, allowing us to create value for our shareholders, even in the absence of significant acquisitions," said CEO Alain Bouchard.
Analyst Irene Nattel of RBC Capital Markets said Couche-Tard was off to a good start in the quarter by beating analyst earnings forecasts.
"Merchandise metrics a bit ahead of forecast, but beat primarily driven by stronger than expected gas margins," she wrote in a report.
Also Wednesday, Couche-Tard said it has signed a deal to sell its European-based aviation fuel business to Air BP, one of the world's largest suppliers of aviation fuel products and services. Financial terms of the deal to sell Statoil Fuel & Retail Aviation weren't released, but the sale will be done through a share purchase agreement expected to be completed by the end of 2014.
Statoil Fuel & Retail Aviation supplies fuel to airlines, general aviation, military and bulk customers in nine countries across Northern Europe.
BP Air says the deal will add about 73 new airports in Northern Europe to its 600-strong global fuels network. About 59 Statoil Fuel & Aviation employees, based in Norway, Sweden and Denmark, are expected to join Air BP, the aviation division of BP.
Couche-Tard sold Statoil's liquid petroleum gas operations in December 2012.
The company said it has fully repaid a $3.2-billion loan used to finance the acquisition of Statoil Fuel & Retail in June 2012. Its long-term debt stood at $2.26 billion, down from $2.59 billion a year ago.
Couche-Tard said it realized about $12 million in cost savings from its European operations in the quarter and $97 million to date. It continues to expect to realize $150 million to $200 million in annual savings before the end of 2015.
Couche-Tard has more than 6,200 convenience stores across North America as well as a network spanning Norway, Sweden, Denmark, Poland, Estonia, Latvia, Lithuania and Russia, comprised of some 2,250 stores.
On the Toronto Stock Exchange, its shares gained 95 cents, or 2.86 per cent, at C$34.18 in morning trading.
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