Couche-Tard shares hit new high on strong Q2 earnings
Quebec convenience store company Alimentation Couche-Tard saw its shares climb to a new high of $77 Cdn on Tuesday after issuing a strong second-quarter earnings report.
Couche-Tard, which keeps its books in U.S. dollars, said its net income surged 26.7 per cent to $229.8 million US or $1.21 per share in the third quarter, from $181.3 million or 97 cents a share a year earlier. It also announced its dividend will increase to 10 cents per share from 8.75 cents, payable on Dec. 19.
Couche-Tard shares were up three per cent at $76.98 at day’s end, after trading as low as $45 earlier this year.
The company operates the Couche-Tard, Mac's and Circle K convenience stories in North America and the Statoil Fuel & Retail stores across Scandinavia, Poland, the Baltics and Russia.
It said same-store merchandise revenues were up 3.1 per cent in Canada, 4.5 per cent in the U.S. and 1.9 per cent in Europe. New acquisitions in the U.S. helped push revenues higher.
Volumes were up in each market but the Statoil Fuel & Retail stores operated fewer days, bringing costs down, according to CEO Alain Bouchard.
“In North America, the pricing strategies we put in place in the first quarter to support in-store traffic growth proved their effectiveness in both the U.S. and Canada where same-store merchandise revenues increased significantly without affecting the margin as much as it did in the first quarter " Bouchard said.
Revenues decreased three per cent to $9 billion, mainly because of lower fuel prices and currency translations (the euro has risen against the U.S. dollar and the Canadian dollar remains high).
"The results for the second quarter were very strong and confirmed the trend from the first quarter, especially in Europe where our fuel brand 'miles' and our fresh food initiatives continued to deliver strong results," Bouchard said.
Couche-Tard sold its Liquid Petroleum Gas business last year and bought Norway’s Statoil Fuel & Retail. It has been seeking synergies on operating the European chain ever since and said there would be further work in the coming year.
Couche-Tard has also continued its expansion into the U.S., buying nine stores in Illinois, 13 in Georgia and Florida and 23 in New Mexico.
Chief financial officer Raymond Pare said the company's goal is to continue improving its financial flexibility to take advantage of acquisition opportunities.