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

MONTREAL – The Quebec-based company that runs Couche-Tard, Mac’s and Circle K convenience stores said Tuesday it earned more than US$1 billion in annual profits for the first time in its history.

Alimentation Couche-Tard (TSX:ATD.B) said its profit for the 2016 fiscal year surged by 28.4 per cent to nearly US$1.2 billion, despite lower selling prices for fuel. That included US$206.2 million earned in the fourth quarter that ended April 24, up more than 60 per cent from US$126 million in the comparable period last year.

Annual revenue slipped 1.1 per cent to US$34.1 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 by 1.5 per cent to nearly US$7.4 billion, and the dividend will increase by one cent per share to 7.75 cents Cdn., payable Aug. 4.

The higher profit comes as Couche-Tard (TSX:ATD.B) continued to build its network of convenience stores and gas bars in Canada, the United States and northern Europe. The company has also started to erase the century-old Statoil retail name from Europe.

Beginning in May, one store a day in Norway, Sweden and Denmark has taken on the new Circle K name. The rebranding of Couche-Tard’s entire network of 2,700 European locations is expected to be complete by mid-2018.

CEO Brian Hannasch said giving up one of Scandinavia’s best known and respected retail brands is risky but accompanying changes including the sale of hot dogs and coffee is producing “promising” results.

“I’m optimistic we will be able to retain the strength of the old brand and go on to make the Circle K brand stronger than Statoil in the years to come,” he told analysts during a conference call.

The rebranding is part of a global change that includes the U.S. and Canadian provinces aside from Quebec. More than 400 American sites have taken the Circle K name.

The chain said it is also expanding the number of locations through international licences. The number of Circle K locations in Mexico will increase to more than 1,100 by August 2017, eventually reaching at least 2,400 by 2030, the company said.

Couche-Tard is also eyeing opportunities in Asia.

“We think it will be a key growth market for our industry for the next 20-plus years … as we see incomes growing, disposable income growing, middle class emerging in many countries,” Hannasch said.

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Note to readers: This is a corrected story. A previous version said Couche-Tard’s earnings were up 80 per cent in the fourth quarter.