Couche-Tard strategic plan aims to double net profit in five years

Quebec convenience store giant Alimentation Couche-Tard aims to double its net earnings in the next five years.

The company, which primarily operates under the Circle K banner, says it will achieve the target through a combination of organic growth and further acquisitions.

Chief executive Brian Hannasch describes the goal as "ambitious'' but one that can be achieved by remaining true to its core business while maximizing its strengths.

Couche-Tard's net profit grew 10% last year to US$1.8 billion while adjusted earnings per share were up 27.7% to $3.32 as revenues increased 15%t to US$59.1 billion.

The retailer has become one of the world's largest convenience store chains through a series of acquisitions and adoption of coffee, food and cold beverage programs that grew by double digits last year.

Analyst Keith Howlett of Desjardins Capital Markets says doubling its profitability will depend on sustained sales momentum and expanded gross margins that will likely come from a shift in product mix to high margin food service.

Last week, Couche-Tard missed expectations as its net income attributable to shareholders decreased 25% to US$293.1 million in the fourth quarter of its fiscal year on a dip in revenues.

The company says it earned 52 cents per share for the period ended April 28, down from 69 cents per share or $391 million a year earlier. The company received a net tax benefit of $69.7 million in the fourth-quarter of fiscal 2018 from U.S. tax cuts.

Adjusted profits of 52 cents per share compared with 59 cents per share in the fourth quarter of 2018.

Revenues fell 3.7 per cent to $13.1 billion from $13.6 billion.

The retailer was expected to earn 54 cents per diluted share in adjusted profits on $13.3 billion of revenues, according to analysts polled by Thomson Reuters Eikon.

For the full year, Couche-Tard's net profit increased 10% to $1.8 billion or $3.25 per share, up from $1.67 billion or $2.95 per share in 2018. Adjusted earnings were up 27.7 per cent to $3.32 per share. Revenues were $59.1 billion, up 15% from $51.4 billion.