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A 'Prudent' New Year for Couche-Tard

Retailer adopts cautious M&A tone for fiscal 2013

LAVAL, Quebec -- Following on the closing of the $2.64-billion purchase of Statoil Fuel & Retail in Europe, Alimentation Couche-Tard Inc. has adopted a cautious tone for its fiscal year 2013 as it integrates the new acquisition and focuses on the basics.

"I would be lying if I told you that Statoil Oil Fuel & Retail won't take a large part of our attention in the next couple of years at the corporate level," president and CEO Alain Bouchard said on a fourth-quarter 2012 earnings call yesterday.

(See Related Content below for a detailed summary of the quarter.)

As part of its fiscal yearend financial report, Couche-Tard stated it "expects to pursue its investments with caution" in 2013 "in order to, amongst other things, improve its network."

The multinational company also intends to keep an ongoing focus on its sales, supply terms and operating expenses.

As always, however, Bouchard left the door open for additional growth opportunities as they arise.

"Our decentralized operating model, our vast experience in integrating new networks, as well as our dedication to retaining talent in businesses we acquire will greatly help us to do what we do best, and that is to grow and optimize our existing new operations," he said.

He also alluded to growth opportunities in both the United States and the freshly reached Europe.

"Our new platform in Europe will allow us to take a good shot at growth opportunities there, but we remain conscious that there are still several remaining growth opportunities in North America," he said. "We have the teams and resources in place, ready to seize them. But as usual, and as we did for Statoil Fuel & Retail, we will remain disciplined and patient, as we don't want to favor store count at the detriment of profitability and returns."

Asked to expand on where Couche-Tard might grow next, Bouchard demurred.  "Any property we're looking at is always under a confidentiality agreement," he said. "There is some activity."

Specific to the United States, Bouchard said, "We have many files we're working on, but nothing big. [Most potential deals are] less than 100 stores. There are a couple files that could be bigger than that, but we're not actively pursuing anything big there."

What will drive acquisitions for the company's fiscal 2013?

"It's always related to the quality of the assets, the multiple and the opportunity," Bouchard said. "If the opportunity is good, then maybe [we'll make a deal], although we want to [maintain] our investment grade, and we will certainly be prudent with larger acquisitions."

Other goals for fiscal 2013 include:

  • Couche-Tard will pay special attention to the integration of Statoil Fuel & Retail (click here for previous CSP Daily News coverage).To do this, it has formed a multidisciplinary team that will ensure an effective integration and will identify opportunities for improvement, including available synergies.
  • Couche-Tard will also put in place strategies that will enable it to reduce its debt levels in order to regain its financial flexibility and maintain the quality of its credit profile.
  • Couche-Tard intends to continue to focus its resources on the sale of fresh products and on innovation, including the introduction of new products and services, in order to satisfy the needs of its large clientele.

As of April 29, 2012, Laval, Quebec-based Couche-Tard had a network of 5,803 convenience stores, 4,216 of which include motor fuel dispensing, as well as agreements for the supply of motor fuel to 350 independent operator sites. Couche-Tard's network consists of 13 business units, including nine in the United States covering 42 states and the District of Columbia (primarily under the Circle K flag), and four in Canada covering all 10 provinces (primarily under the Mac's and Couche-Tard flags).

Following its acquisition of Statoil, Couche-Tard also operates a retail network across Scandinavia, Poland, the Baltics and Russia with approximately 2,300 stores.

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