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LAVAL, Quebec -- In what resulted in its biggest stock decline in more than three years, Alimentation Couche-Tard Inc., operator of the Circle K and Mac's convenience store chains, posted fourth-quarter profits.
However, the company beat analysts expectations, with net income dropping by half to $15.5 million, or 8 cents a share, while analysts estimated it would amount to five cents.
In a released statement, Couche-Tard, which receives half its revenue from fuel sales, noted it earned less from each gallon of gasoline sold in the U.S., while credit-card fees cost more than 4 cents a gallon. In an effort to increase inside sales, the company said its strategy included lowering fuel costs.
Due to recent acquisitions and higher gasoline prices, revenues climbed to $3.71 billion, which matched the average sales projection in a recent Bloomberg survey based on seven analysts' estimates.
The company, which owns and operates more than 5,100 c-stores, reported earning roughly 10 cents a gallon from U.S. gasoline sales, which is down from 13.1 cents from last year. U.S. merchandise sales increased by 0.1 percent, compared with a 3.4 percent gain a year earlier.
"The convenience-store industry is experiencing severe headwinds originating mainly from higher crude prices, higher credit-card fees and food and general price inflation," Anthony Zicha, an analyst with the Toronto-based Scotia Capital, told Bloomberg News.
In other news, United Refining Co.'s fourth quarter report underscored a significant increase in sales as a direct result of rising fuel prices for the company, which operates a 70,000 barrel-per-day refinery and 369 Kwik Fill Red Apple and Country Fair retail gasoline and convenience stores in western New York and western Pennsylvania.
The report noted net sales for the quarter, which ended May 31, were at a record $788.9 million, compared to $587.3 million for the prior year quarter, marking an approximate 35 percent spike.
Increases in retail merchandise, as well as wholesale and retail petroleum sales, drove up net sales approximate 29 percent higher, or $2,146.2 million, over the same nine month period from 2007.
Net income for the same nine month period, however, decreased by $20.6 million. Net income for the quarter was $4.4 million while in 2007 the same quarter results were $32.4 million.
According to the report, earnings before interest, taxes, depreciation and amortization (EBITDA) for the three months ended May 31, 2008, and 2007 were $21.9 million and $66.2 million, respectively, marking a decrease of $44.3 million from the prior year quarter.