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RED DEER, Alberta -- With last year's $214 million acquisition of Nova Scotia-based Bluewave Energy, Parkland Income Fund became the largest independent fuel distributor in Canada. Now, the company, which also operates the Fas Gas convenience store chain, and its CEO, Mike Chorlton, is looking for ways to grow the business, the Calgary Herald reported.
With the Bluewave acquisition, Parkland added an annual fuel volume of 645 million liters to its own 2.7 billion liters.
Chorlton said the deal adds to Parkland's geographic and product mix without much overlap, and synergies are expected to create $2 million in savings this year and $5 million in 2011, according to the report. Bluewave is primarily involved in bulk fuel and heating fuel deliveries, and is the largest Shell-branded distributor in Canada -- adding to Parkland's Esso-branded operations.
"There are very few places where we're selling to the same people and not many places where we're selling the same products," said Chorlton,
In the future, the fuel retailer plans to drops its trust status and become more active in growing its business through acquisitions.
"As a company, our focus is on building our business, not on building new buildings," he said in an interview with the newspaper. "Now that we have a base in the Maritimes, we have an opportunity to build the retail business in the East."
Chorlton said Parkland regularly closes underperforming stations, and replaces the revenue by buying existing stations to add to the bottom line. In addition, Parkland continuously upgrades its stores to keep customers happy, he said.
As for fuel pricing, "We buy from all of the refineries, so we tend to get a very competitive price," Chorlton said in the report. "As long as there's not a shortage, you don't get hurt."
Contrary to some Canadian government officials, Chorlton said there is no conspiracy to set retail gasoline prices, adding that although fuels carry lower profit margins per volume than muffins, they still pay the way.
"The majority of our profits come from fuels, but you need both. The coffee and other convenience store items draw customers in," he said.
Parkland supplies 622 gas stations and convenience stores from British Columbia to Ontario, roughly 150 of which are owned by the company. Brands include Fas Gas Plus, Fas Gas, Race Trac Fuels and Short Stop Food Stores.
In addition, Parkland supplies independent Esso dealers at more than 200 locations in Western Canada and Ontario, along with Sunoco brand dealers in the Toronto area through a $8.5 million purchase of NOCO Energy Canada in 2008, the report stated.