Parkland Fuel Corp. (TSX: PKI) saw its net earnings fall sharply in 2014, which reflected the end of a fuel supply contract that had given Parkland a share of the refiner’s margin.
The Red Deer-based company, which is Canada’s largest independent marketer of fuel and petroleum products, reported on Wednesday that it earned $48.9 million during the 12 months ended Dec. 31, 2014. That was down 47 per cent from $92 million the previous year.
Parkland’s 2014 earnings equated to 66 cents per basic share, down from $1.31. The company declared dividends of $1.05 per share during the year, up from $1.04 in 2013.
Sales and operating revenues for the year were up by a third, to $7,527.6 million from $5,663.4 million.
In its report to shareholders, Parkland noted that its finance costs in 2014 increased by $5.2 million to $25.1 million, its business acquisition costs were up by $8.8 million to $15.7 million, and its depreciation and amortization expenses jumped $19.1 million to $75.1 million. Income tax expenses dropped by more than $10 million.
Parkland acquired SPF Energy Inc. of Minot, N.D., as well as 12 Chevron-branded service stations in Northern British Columbia, in 2014. It also entered into an agreement to acquire Pioneer Energy in Ontario.
Its total assets grew to $1,531.8 million in 2014, up from $1,255.2 million.
Bob Espey, Parkland’s president and CEO, said in a release that the company has taken steps to counter the December 2013 expiry of a fuel supply contract that ended its refiner’s margin revenues.
“In 2011 we rolled out the Parkland Penny Plan, which was a plan to offset the financial contribution from the expiring refiner’s margin contract by executing on a strategy to grow the business, expand our supply advantage, and operate effectively.”
He said that plan resulted in EBITDA (earnings before interest, taxes, depreciation and amortization) growth in all divisions last year, as well as acquisitions that are allowing Parkland to increase its annual dividend by two cents per common share.
In its final quarter of 2014, Parkland had net earnings of $10.2 million, less than half of the $22 million generated during the same period in 2013. Its sales and operating revenues for the quarter were $1,739 million, an improvement from $1,598.9 for the same period the previous year.
Net earnings per share were 13 cents, as compared with 31 cents a year earlier, with 26 cents in dividends paid out, unchanged from the fourth quarter of 2013.
Parkland delivers gasoline, diesel, propane, lubricants, heating oil and other petroleum products in Canada and the United States.