Couche-Tard Focuses on Increasing Value


LAVAL, Quebec -- Alimentation Couche-Tard saw positive numbers in the third quarter of fiscal year 2011, with net earnings rising $71 million, a $16.2-million increase over the last fiscal comparable period. According to company executives, the 29.6-percent jump can be contributed to the growth of merchandise and service sales, the increased number of sites selling fuel, the growth in same-store motor fuel volume in Canada and the United States and the strengthening of the Canadian dollar.

"The third quarter results were pretty much in line with other quarters," Alain Bouchard, president and CEO, said in the company's earnings call yesterday afternoon.

According to Bouchard, the company acquired nine company-operated stores through seven different transactions in the third quarter. In addition, Couche-Tarde built 10 stores during the period, bringing the number of new ground-up stores in the fiscal year to 26. "We continue to investigate several acquisition opportunities that may prove to be interesting," he added.

However, the company is more focused on creating value than building its portfolio. "We definitely don't want to force store count north to the detriment of profitability," Bouchard explained.

Also in the third quarter the company subdivided its Eastern Canada business into two new units: the Quebec West unit and Quebec East and Atlantic unit. This strategic move is in line with the company's philosophy to have a maximum of 500 to 600 company-operated stores per unit. "This change will allow these two units to produce growth," Bouchard added.

Revenues reached $5.6 billion in the third quarter of fiscal year 2011, explained Raymond Pare. The 13.7 percent increase can be mainly attributed to increased motor fuel sales because of higher average retail prices at the pump and the rise in fuel sold in Canada and the United States. Both executives did point out, however, that the increase in motor fuel gross margin was offset by the increase in electronic payment modes resulting from the higher average retail prices.

"The last few quarters were fine considering the economy in most of the markets we are in," Bouchard said. "We were able to create value in even in the absence of major acquisitions. Our number one goal is to create value and the store count is only one of those tools."


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