New acquisitions coming soon for Alimentation Couche-Tard?

“At this point, I believe there are very few opportunities that we do not think we can manage with our current infrastructure,” said President and CEO of Alimentation Couche-Tard (TSX: ATD). B), Brian Hannasch, last Wednesday. He was referring to the fact that the Laval-based company was “ahead of schedule” in the integration of CST Brands and Holiday, its latest two acquisitions in the North American market, whose total value is about US$ 6bn.

These statements were made in a conference call with analysts, following the release of the company’s quarterly results on Tuesday, March 19. These were encouraging as the convenience and gas station operator posted a record profit of US$ 609mn, up 27% year-on-year, and managed to lower its adjusted debt level to 2.78% adjusted operating income. Revenues increased 4.6% to US$ 16.5bn and the company took the opportunity to increase dividends to 12.5 cents per share. However, despite these exceptional results, analysts have remained on their hunger, while forecasts estimated an adjusted profit of US$ 641.7mn.

These results follow an announcement last week by Bruce Linton, the President and CEO of Canopy Growth, an Ontario based cannabis company, of a partnership between the two companies for the exploitation of private cannabis shop in London, Ontario. This news suggests that the Canadian multinational will try to enter the market for the sale of cannabis. Mr. Linton had also mentioned a greater collaboration between the two companies during an interview with The Canadian Press, meaning that the opening of other shops is to be presaged. Alimentation Couche-Tard will be able to count on a competitive advantage to penetrate this new market: it currently operates a network of approximately 16,000 sale points.

Sources

Le Devois. (2019). Couche-Tard prête à prendre une nouvelle bouchée. Retrieved from : https://www.ledevoir.com/economie/550311/couche-tard-prete-a-prendre-une-nouvelle-bouchee

BNN Bloomberg. (2019). Couche-Tard boosts dividend, misses expectations despite record Q3 profits. Retrieved from :  https://www.bnnbloomberg.ca/alimentation-couche-tard-misses-expectations-despite-record-q3-profits-1.1231485

Yahoo Finance. (2019). Alimentation Couche-Tard profit misses on higher costs. Retrieved from : https://ca.finance.yahoo.com/news/alimentation-couche-tard-profit-misses-higher-costs-220119215–finance.html

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