Bouchard: 'A Year of Execution & Achievement in Europe'
Couche-Tard net earnings up for fiscal 2014, despite declines in U.S. gross fuel margins
LAVAL, Quebec -- For its fiscal 2014, Alimentation Couche-Tard Inc. has reported net earnings of $812.2 million, up 41.8% over fiscal year 2013's net earnings of $572.8 million. For its fourth quarter of fiscal 2014, Couche-Tard announces net earnings of $145.1 million, down 0.9% from $146.4 million from the same period last year.
Same-store merchandise revenues were up 4.4% in the United States, 2.5% in Europe and 1.6% in Canada. Merchandise and service gross margin stood at 33.1% in the United States, at 42.9% in Europe and at 32.5% in Canada. Same-store road transportation fuel volume up 2.8% in the United States, 3.2% in Europe and 1.7% in Canada, "solid considering the market trends," said the company. Road transportation fuel gross margin stood at 14.85 cents per gallon in the United States, 10.54 cents (U.S.) per liter in Europe and 5.86 cents (Canadian) per liter in Canada.
Road transportation gross fuel margin in the United States fell more than 23%, offsetting the impact of higher same-store sales.
"We are pleased to close fiscal 2014 with net earnings showing a significant growth for a sixth consecutive year. The results for the quarter … show another solid performance despite the lower fuel margin in the United States. The success of our strategies is clearly reflected in both North America and Europe by our same-store performance," said Alain Bouchard, president and CEO.
"In July 2013, I said that fiscal 2014 would be a year of execution and achievement in Europe. Today, I am proud to say that we delivered. Indeed, we are very satisfied with the efforts deployed to boost sales and to realize synergies. Many steps have been completed but our job is far from over and we are working on several exciting projects that should help us achieve the goals we have set for ourselves and deliver value for our shareholders and other stakeholders. I would like to thank all of our employees for another extraordinary year," said Bouchard.
"I am very pleased with the results of our fiscal year and especially with the improvement of our balance sheet," said Raymond Paré, vice president and CFO. "With our strong cash flows, we were able to reduce our debt significantly and increase our dividend for the third time this year. This was made possible by our ability to continue to integrate successfully our European operations while continuously looking to improve our North American performance."
He added, "We are excited by the prospects for continued organic growth from our current network of sites. The growth of the food, the improvement of the top line with 'miles' and our new loyalty program in Europe, the realization of synergies identified as well as the acceleration of building new sites are some of the pillars for the years to come. Also, we continue to believe that great opportunities exist to expand our network organically and by disciplined acquisitions."
Revenues were $9 billion in the fourth quarter of fiscal 2014, up $176.3 million, an increase of 2.0%, mainly attributable to the contribution from acquisitions as well as growth in same-store merchandise revenues and road transportation fuel volume in both North America and Europe. These items contributing to the growth in revenues were partly offset by lower road transportation fuel average retail prices in the United States, by the negative net impact from the translation of revenues from Canadian and European operations into U.S. dollars as well as by the divesture and closure of stores.
The growth of merchandise and service revenues for the fourth quarter of fiscal 2014 was $26.3 million or 1.5%. Same-store merchandise revenues increased by 4.4% in the United States and by 1.6% in Canada.
"Our performance in the United States is noteworthy when compared to the performance of the convenience store industry and is attributable to our dynamic merchandising strategies as well as to the investments we made to enhance service and the offering of products in our stores," the company said. "Our performance in the United States is even more impressive considering we were able to increase store traffic without investing as much in our margins as in previous quarters. In Europe, the exchange of best practices, the implementation of new and sustainable merchandising strategies as well as the investments made through extensive marketing campaigns to promote in-store offering allowed us to turn around the negative sales trend that existed when we acquired Statoil Fuel & Retail. Consequently, for a sixth consecutive quarter, same-store merchandise revenues in Europe posted a growth which was of 2.5% for the fourth quarter, driven by strong fresh food services and coffee sales."
Road transportation fuel revenues increased by $145.9 million or 2.3% in the fourth quarter of fiscal 2014. Excluding the negative net impact from the translation of revenues from the company's Canadian and European operations into U.S. dollars, which amounted to approximately $59 million, road transportation fuel revenues increased by $204.9 million or 3.2%. This increase was mainly attributable to the contribution from acquisitions of approximately $156 million and to organic growth. In the United States and in Canada, same-store road transportation fuel volume increased by 2.8% and 1.7%, respectively.
This was also the sixth consecutive quarter during which same-store road transportation fuel volume showed positive development in Europe where same-store road transportation fuel volume increased by 3.2% which represents a strong improvement over the trend that the company's European network was posting before it acquired Statoil Fuel & Retail.
"Our new fuel brand, 'miles,' which we launched in some of our European markets, is delivering encouraging results and was again a nice contributor to this quarter performance.
Organic growth and the contribution from acquisitions were partly offset by lower average road transportation fuel retail price in the United States.
As of April 27, 2014, Laval, Quebec-based Couche-Tard's network included 6,241 convenience stores throughout North America, including 4,756 stores with motor fuel dispensing. Its North American network consists of 13 business units, including nine in the United States covering 39 states and the District of Columbia (under the Circle K brand) and four in Canada (under the Mac's and Couche-Tard brands) covering all 10 provinces. In Europe, Couche-Tard operates a broad retail network across Scandinavia (Norway, Sweden and Denmark), Poland, the Baltics (Estonia, Latvia and Lithuania) and Russia, which comprised 2,258 stores. Also, under licensing agreements, about 4,600 stores are operated under the Circle K banner in 12 other countries (China, Guam, Honduras, Hong Kong, Indonesia, Japan, Macau, Malaysia, Mexico, Philippines, Vietnam and United Arab Emirates), which brings to more than 13,100 the number of sites in Couche-Tard's network.