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Couche-Tard shows no signs of slowing down

Convenience store chain's annual profit tops US$1B for first time

The Quebec-based company that runs Couche-Tard, Mac's and Circle K convenience stores is raising its dividend nearly 15 per cent after earning more than US$1 billion in annual profits for the first time in its history.

Alimentation Couche-Tard said its annual profit surged 28.4 per cent to nearly US$1.2 billion.

The profit included US$206.2 million or 36 cents per share earned in the fourth quarter that ended April 24, up 80 per cent from US$126 million or 22 cents per share in the comparable period last year.

"Our performance in the fourth quarter was a fitting finale to another outstanding fiscal year—the eighth year in a row with record-setting earnings,'' stated CEO Brian Hannasch.

The increased profit comes as Couche-Tard continued to build its network of convenience stores and gas bars in Canada, the United States and northern Europe.

Hannasch said the company will continue to grow.

"We do not intend to slow down any time soon,'' he added. "We don't just look for strategic opportunities, but we also look at potential acquisitions to see if there is anything we can learn from them.''

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Analyst Irene Nattel of RBC Capital Markets said the comments could be a reference to acquisition opportunities at CST Brands and Loblaw gas bars that are currently underway.

In addition to integrating recent procurements in Ireland and Denmark, Couche-Tard will complete next fall its purchase of Esso-branded Imperial Oil locations in Ontario and Quebec.

Excluding one-time items, Couche-Tard earned $221 million or 39 cents per diluted share in the fourth quarter, one penny ahead of expectations and up from $138 million or 24 cents per share a year earlier.

Same-store merchandise sales grew for the year in the U.S. and Europe but was down in Canada. During the quarter, non-fuel sales growth was lower than the prior year in all three geographies.

Fuel volumes at existing stores was up 3.6 per cent in the U.S. and 1.1 per cent in Europe, but fell 0.8 per cent in Canada due to the weakening economy in Western Canada and competitive pressures.

READ: Sobeys Quebec president heads to Couche-Tard

Gross fuel profits increased 26 per cent to $531 million in the quarter as it earned 16.78 cents per gallon in the U.S., 7.74 cents US per litre in Europe and 6.09 cents Cdn per litre in Canada.

Lower selling prices cut about $1 billion in revenues, which was partly offset with $637 million coming from acquisitions.

The company said its annual revenue slipped 1.1 per cent to US$34.1 billion from $34.5 billion due to factors including lower fuel prices, the impact of currency fluctuations and the sale of its aviation fuel and lubricants business. Fourth-quarter revenue rose 1.5 per cent to nearly $7.4 billion from just under $7.3 billion.

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