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Couche-Tard posts higher profit, strikes deal to sell aviation fuel business

File photo of a Couche-Tard outlet seen in Montreal.

Christinne Muschi/The Globe and Mail

Convenience store giant Alimentation Couche-Tard Inc. posted a 5.7-per-cent rise in quarterly profit on higher fuel margins and reduction of its debt.

The Laval, Que.-based company also said on Wednesday that it is selling the aviation fuel business it inherited in its acquisition of Norwegian oil giant Statoil ASA's retail operations.

For the first quarter, Couche-Tard reported net profit of $269.5-million (U.S.) or 47 cents per share, compared with $255-million or 45 cents in the year-earlier period.

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Excluding one-time items, net profit was $276-million or 48 cents per share, compared with $220-million or 39 cents.

The results beat analysts' estimate of 42 cents per share.

Revenue in the first quarter was $9.2-billion, up 3.2 per cent from $8.9-billion.

Couche-Tard also announced it is increasing its quarterly dividend by 12.5 per cent to 4.5 cents (Canadian) per share.

The company said strong organic growth from merchandise and fuel sales, as well as contributions from acquisitions and a decrease in financial expenses due to debt reduction, helped boost earnings.

This was offset somewhat by the impact of the stronger U.S. dollar.

President and chief executive officer Alain Bouchard said higher fuel margins in the quarter were driven by improved supply contract terms and favourable market conditions.

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The company remains on the lookout for new acquisitions "regardless of size," he said in a news release Wednesday.

And the pace of construction and renovation of stores is set to pick up, he added.

Couche-Tard has completed the repayment of its $3.2-billion financing used in the 2012 acquisition of Norway's Statoil Fuel & Retail, chief financial officer Raymond Paré said.

In a separate statement, Couche-Tard said it has struck a deal to sell its aviation fuel unit for an undisclosed sum to Air BP, one of the world's largest aviation fuel providers.

The agreement is through Couche-Tard's wholly owned subsidiary Statoil Fuel & Retail AS.

Air BP will acquire 100 per cent of all issued and outstanding shares of Statoil Fuel & Retail Aviation AS.

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SFR Aviation supplies aviation fuel products to airlines, general aviation, military and bulk customers in nine countries across Northern Europe.

It says on its website that it has a presence at 75 airports in Norway, Sweden, Denmark and Finland.

Couche-Tard's acquisition of Statoil Fuel & Retail included a major fuel business in addition to the network of convenience-store and gas-up locations in Scandinavia, the Baltic states, Poland and Russia.

Besides aviation fuel, Statoil Fuel & Retail includes a lubricants and chemicals business, a heating-oil supply division and marine fuel supplier.

It also operates fuel terminals and fuel depots in 8 countries.

At the time of the acquisition, there was speculation that Mr. Bouchard might be tempted to expand further into the oil business, such as refining.

Mr. Bouchard said then the fuel operations that came with the acquisition were "synergistic" to the core convenience-store and fuel retailing businesses.

Currently, the Couche-Tard network includes 6,243 convenience stores throughout North America, of which 4,478 are units with fuel outlets.

In Europe, the retail network is made up of 2,250 stores, a majority of which have fuel and convenience products; the remaining stores are unmanned automated fueling stations.

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About the Author
Quebec Business Correspondent

Bertrand has been covering Quebec business and finance since 2000. Before joining The Globe and Mail in 2000, he was the Toronto-based national business correspondent for Southam News. He has a B.A. from McGill University and a Bachelor of Applied Arts from Ryerson. More

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