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    Core-Mark 2Q Profit Drops

    Leading wholesale distributor's loss is significantly impacted by the Federal Excise Tax (FET).

    SAN FRANCISCO – Core-Mark Holding Co. Inc. saw a profit loss of nearly 26 percent for the second quarter of 2009, the c-store distributor reported late last week in a conference call. Net income for the second quarter of 2009 was $4.2 million, or $0.39 per diluted share compared to $5.7 million, or $0.51 per diluted share for the same period in 2008.

    Core-Mark said the Federal Excise Tax (FET) contributed significantly to the decline in net income.

    Excluding the FET and other impacting items, diluted earnings per share on a non-GAAP basis would have been $1.01 for the second quarter this year compared to $0.57 in the second quarter of 2008.

    "Our margins and earnings are healthy," said Michael Walsh, president and CEO of Core-Mark. “We need to be more effective in helping our customers restore more normal growth rates in a manner profitable for them. The timing of our fresh and VCI offerings couldn't be better. It's a matter of arming our customers with the goods and services to win the competition for the consumer dollar."

    Core-Mark’s net sales were $1.71 billion for the second quarter of 2009 compared to $1.53 billion for the same period in 2008, an 11.5-percent increase. On a constant currency basis, net sales increased 14 percent. In addition to incremental sales from its New England division, net sales benefitted from approximately $171 million of cigarette price inflation the company believes was related to the passage of the State Children's Health Insurance Program (SCHIP).

    Gross profit for the second quarter of 2009 was $87.5 million compared to $91.1 million for the same period last year. Gross profit was adversely impacted by the $11.5 million FET, net of manufacturers' reimbursements and a reduction in cigarette holding profits from $1.3 million in the second quarter of last year to $0.4 million this quarter. Gross profit, excluding cigarette holding profits, FET and LIFO expense, grew to $100.7 million this quarter from $92.8 million in the second quarter of 2008, an 8.5-percent increase.

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    -- Tobacco Roundtable

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