Alimentation Couche-Tard $ATD (+1.09%) is confident despite a challenging second quarter

Service station operator ATD remains confident in its global network and long-term strategic growth plan, even though parts of its convenience and service station business faced challenges in the second quarter.

Total sales of goods and services increased by 6.6% year-on-year to 4.4 billion US dollars (4.2 billion euros) in the period, while comparable store sales fell by 1.6% in the US, 1.5% in Europe and other regions and 2.3% in Canada.

Alimentation Couche-Tard attributed this decline to the curtailment of spending on non-essential consumer goods as low-income consumers faced difficult economic conditions and the continued decline of the cigarette industry.

Net profit attributable to shareholders fell by 13.5% year-on-year to 708.8 million US dollars (674.6 million euros) in the second quarter. In the same period of the previous year, it amounted to 819.2 million US dollars (779.6 million euros).

Quarterly highlights

Sales in the second quarter increased by 6.0% year-on-year to 17.4 billion US dollars (16.6 billion euros), mainly due to the contribution from acquisitions and higher sales in fuel trading.

However, this effect was partially offset by a lower average selling price for road transportation fuels as well as weaker fuel demand and traffic volumes as low-income consumers were affected by the difficult economic conditions.

Gross profit for the quarter amounted to $3.2 billion (€3.05 billion), an increase of 7.3% year-on-year, while adjusted EBITDA increased by $36.1 million (€34.4 million), or 2.4% year-on-year, to $1.5 billion (€1.4 billion).

Filipe Da Silva, Chief Financial Officer of Alimentation Couche-Tard, said: "Throughout the second quarter, we saw sequential monthly improvements, particularly in same-store merchandise sales in the United States, and we are encouraged by this positive momentum as we enter the third quarter."

"Our strategic focus on operational excellence and cost management resulted in a modest 2.3% increase in normalized costs. This enabled us to outperform an environment of easing inflation. As we continue to pursue growth opportunities, our strong balance sheet and disciplined capital deployment will support our proven long-term goal of creating value for our shareholders."

Source: esmmagazine.com