Alimentation Couche-Tard passed the bill on to consumers for rising fuel prices while its margins remained “relatively stable” despite an inflationary shock at the pump.
“It’s not good news for consumers when you’re talking about a price shock,” Chairman and CEO Brian Hannasch said Wednesday during a conference call to discuss the latest quarterly results. . The increase was so significant that the industry had no choice but to follow it. »
Soaring pump prices are a global phenomenon and all markets (Canada, United States, Europe) of convenience store and service station operators have been affected.
Without mentioning critics who accuse the industry of anti-competitive practices, Hannasch said the gas station industry remains “very” competitive. “We are the only ones who display our prices for all to see. »
Last week, the leader of the Parti Québécois, Paul St-Pierre Plamondon, accused the oil companies of agreeing on prices, which he compared to “robbery”. A few days earlier, the federal government had announced that it had seized the Competition Bureau to monitor the fuel market, asking it to ensure that there was no collusion in the determination of the price of gasoline. , while the war in Ukraine drives up the price of oil. The PQ leader, however, accused the Competition Bureau of not doing enough.
It’s still too early to tell whether consumers will reduce their trips to adjust to higher prices, Hannasch said. He notes that oil and gas prices have moderated since last week’s peak. “If it remains a short-lived shock, I don’t think it will bring about a change in behavior,” continued the manager, who believes that the answer to the question will be clearer in the next quarterly results.
Reinforcement fuel margins
Couche-Tard unveiled, the day before the markets closed, results that exceeded analysts’ expectations, thanks to higher-than-expected margins for service stations in the United States.
In the third quarter (ended January 31), the company posted a 22.9% increase in net income while its revenues jumped 41.2%.
Overall, the results demonstrate the strength of Couche-Tard’s model, despite the effect of rising COVID-19 cases on demand for fuel and for products in convenience stores.
Irene Nattel, RBC Capital Markets
Chris Li, of Desjardins Capital Markets, points out that several projects aimed at supporting the company’s growth are “on the right track”. He cites the example of the deployment of fresh food in 3,200 convenience stores around the world, a segment that is showing strong growth, the installation of nearly 1,000 electric charging stations in Europe and the use of local data in merchandising strategies. .
The chain of convenience stores and gas stations saw its profit reach 746.4 million US, or 70 US cents per share, for the quarter ended January 30, when it had been 607.5 million US, or 55 US cents per share, in the same period a year earlier.
The Laval company’s revenues totaled 18.58 billion US in the most recent quarter, while its turnover had been 13.16 billion US a year earlier.
Adjusted earnings, which exclude one-time items, were 70 cents per share, compared to 56 cents per share for the same period last year.
Analysts on average had expected adjusted earnings of 63 cents per share, along with revenue of $17.89 billion, according to forecasts compiled by financial data firm Refinitiv.
Pending a potential acquisition, Couche-Tard has plenty of leeway to return cash to shareholders in the form of a stock buyback, said the company’s chief financial officer, Claude Tessier. The company’s net debt to earnings before interest, taxes, and amortization (EBITDA) ratio is “very low” and below a “comfortable” level of 2.25 times.
On Wednesday, the stock gained $2.91, or 6.1%, to $50.82 on the Toronto Stock Exchange.