By and  on March 3, 2011

PARIS — Carrefour SA, the world’s second-largest retailer after Wal-Mart Stores Inc., said full-year net profits from recurring operations rose 11.3 percent to 382 million euros, or $507.3 million, reflecting the impact of “significant” one-off charges.

Carrefour had said in January that its operating profits would fall slightly short of its most recent guidance after the company booked one-off charges in Brazil and five other countries resulting from recent audits.

Reported and restated operating profits for the full year came in at 2.97 billion euros, or $3.94 billion, up 9.3 percent versus 2009. This compared with the company’s downwardly revised target of 3 billion euros, or $3.98 billion, for 2010.

Dollar figures are converted from euros at average exchange rates for the 12-month period.

Sales gained 5.5 percent to 90.1 billion euros, or $119.64 billion, driven by Carrefour’s growth markets. Sales in Latin America were up by 31.3 percent year-on-year, while Asia saw revenues rise 18.5 percent.

However, the group noted that performance in France, which accounts for 40 percent of the group’s sales, was disappointing in the last quarter due to weak back-to-school sales and year-end promotions. Revenues in France crept up 1.9 percent in 2010 against the backdrop of a 1.8 percent slide in the rest of Europe.

The retailer last week said that Vicente Trius, executive director Europe and a member of the group’s executive board, would leave Carrefour in the coming weeks to take up the position of president of Canadian retail company Loblaw Cos. Ltd.

Carrefour chief executive officer Lars Olofsson said, despite recent setbacks, the company’s 2009-2012 transformation plan remained on track.

“I will not use the challenging environment around us as an excuse. We did not achieve all our targets and I’m clearly not pleased with that,” he said at a results presentation Thursday. “It could have been better, but I’m sure you noticed our determination to take radical decisions, fix problems and reinforce control where needed.”

In 2011, Carrefour aims to roll out its new Carrefour Planet hypermarket concept at a sustained pace, develop its private-label products and — excluding the hard discount brand Dia — reduce current operating costs by a further 480 million euros, or $665.5 million at current exchange.

Earlier this week, Carrefour submitted a proposal to employees and shareholders to spin off 100 percent of Dia and 25 percent of its real estate division, Carrefour Property, and distribute the shares to Carrefour shareholders in the form of an extraordinary dividend.

Standard & Poor’s Thursday downgraded Carrefour’s long-term corporate credit rating to “BBB+” from “A-” due to the plans.

“The timing of the potential payout will coincide with the uncertainty that still surrounds the success of Carrefour’s capital-intensive hypermarket restructuring in France, and with its continued expansion into developing markets, which in our view will likely not leave any room for lowering capital expenditure,” the credit ratings agency said.

Also during this year, Carrefour intends to step up its rate of expansion with 800 store openings, primarily in growth markets.

Having launched six pilot Carrefour Planet stores in 2010, the company plans to roll out the hypermarket concept to 92 stores in France, Spain, Belgium, Italy and Greece next year, rising to 241 stores by the end of 2013.

“We are ready in 2011 to make a huge step forward,” said Olofsson. “In terms of external environment, we do not expect things really to be very different from 2010, and in that context, we will increase our sales and our current operating income.”

To access this article, click here to subscribe or to log in.

load comments
blog comments powered by Disqus