LAVAL, Quebec -- Alimentation Couche-Tard Inc. said second-quarter profit rose 35% on more profitable gasoline sales, reported Bloomberg.
Net income climbed to $74.7 million, or 36 cents a share, from $55.5 million, or 27 cents, a year earlier, the Laval, Quebec-based company said in a statement. Sales for the three months ended October 15 rose 15% to $2.76 billion from $2.39 billion.
Average profit per gallon rose 22% as prices at fuel pumps fell in the quarter. Gasoline retailers such as Couche-Tard usually benefit as pump prices [image-nocss] fall because the decline is slower than wholesale prices.
As we expected, gasoline margins were very strong,'' Jessy Hayem, an analyst with Desjardins Securities Inc. in Montreal, told Bloomberg. Even if you strip out better gasoline margins, the company still managed to raise earnings by 20%.''
The company boosted its quarterly dividend 20% to three cents a share. The company introduced its first dividend a year earlier.
Couche-Tard earned about 20.7 cents a gallon in the quarter on gasoline sales in U.S. compared with 13.5 cents in the previous quarter and 17.1 cents a year earlier, the company said. U.S. gasoline volume rose 24% from lower prices and acquisitions during the year, it said.
U.S. gasoline prices fell to an average of $2.33 a gallon for the three months ending in September compared with an average of $2.52 for the previous year, the company said.
The company, which gets more than 60% of sales from gasoline, last month agreed to acquire 236 stations and stores in the United States from Shell Oil Co., giving it about 5,205 outlets in the United States and Canada.
Couche-Tard will continue to acquire chains of 20 to 200 stores, and two announcements may be made early next year, CEO Alain Bouchard said on a conference call with analysts. No large acquisitions are on the horizon, he said, according to Bloomberg.
Couche-Tard said it is reducing the number of planned store conversions to 400 in the current year through next April from 500 originally planned because it is paying more attention to acquisitions.
We expect this year to more active in terms of acquisitions than we saw last year,'' Hayem said. I'm not too concerned. There are probably lots of opportunities to consolidate the market.''
The acquisition from Shell was the company's biggest since 2003 and doubled the number of stores it has acquired this year.
CFO Richard Fortin said in September he expects earnings per share will increase at least 15% a year as the company buys small rivals and opens new outlets. Per share earnings rose 25% last year.
Click here to download the full earnings release.
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