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(Bloomberg) — Gas station and convenience store operator Alimentation Couche-Tard Inc. saw big gains in fuel margins after the war in the Middle East caused prices to spike. The company easily beat analysts’ estimates for sales and earnings.
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The Canadian retailer, the owner of the Circle K brand, reported revenue of $19.5 billion in the fiscal fourth quarter ended April 26, a 20% jump from the same period last year and $750 million more than analysts had expected.
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That’s despite the fact that consumers drove less. Couche-Tard said road transportation fuel volumes decreased 2.1% in the US and 4.4% in Europe and other regions, on a same-store basis, as people responded to higher pump prices. In contrast, volumes rose 2% in Canada.
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Gasoline and diesel prices rose sharply after the US and Israel attacked Iran beginning in late February, and Iran responded by largely closing the Strait of Hormuz to shipping traffic.
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In the US, Couche-Tard’s most important market, fuel gross margin was 52.44 cents a gallon, an increase of more than 9 cents from a year earlier. “This quarter highlighted the earnings power of the model in a volatile fuel environment, with outsized fuel margin capture more than offsetting softer fuel volumes,” Raymond James analyst Bobby Griffin said in a note.
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The average selling price of fuel at Couche-Tard’s company-operated US stores was $3.60 a gallon during the quarter.
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Overall, Couche-Tard earned 73 cents a share on an adjusted basis, crushing estimates of 54 cents in a Bloomberg survey.
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The company’s stock price has risen about 10% this year, giving it a market capitalization of more than C$75 billion ($53 billion). Shares of rival Casey’s General Stores Inc. soared more than 20% on June 10 after it also reported earnings that topped estimates.
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