PARIS — Carrefour Group reported a 3.3 percent leap in first-half net profits and said sales growth and profitability would accelerate in the coming years.
The world's second largest retailer after Wal-Mart Stores Inc. also said it would start leveraging its vast real estate assets, with a plan to list a portion of its property arm as early as 2008.
Carrefour has come under pressure to maximize returns from shareholders — who include luxury goods titan Bernard Arnault, who last March took a joint 9.1 percent stake in the supermarket operator with investment fund Colony Capital.
The plan is to list 60 percent of Carrefour's property holdings, valued at between 20 billion to 24 billion euros, or $20.36 billion to $32.83 billion at current exchange.
Meanwhile, the retail giant, which has been hampered by deflationary pressures in its home market, was upbeat about its prospects and vowed to speed up cash flow.
"We can look ahead to faster growth from 2008 to 2010," Jose Luis Duran, chairman of Carrefour's management board, told analysts during a conference call Thursday. "I have confidence in the potential of the group."
While describing price competition in France as the toughest in a decade, Duran said Carrefour is targeting constant-currency sales growth of 6 to 8 percent over the coming years, with profitability at least as high, and annual cash flow in excess of 1.5 billion euros, or $2.05 billion, per year.
Net income for the six months ended June 30 increased to 729 million euros, or $969.2 million, versus 706 million euros, or $868.1 million, a year ago on a sales rise of 5.5 percent to 38.85 billion euros, or $51.64 billion. Profits from recurring operations inched up 0.1 percent to 741 million euros, or $985.1 million, meeting company targets. Currency conversions were made at average exchange rates for the respective periods.
Duran told analysts Carrefour would continue to shed underperforming operations while making "tactical" acquisitions. The company envisions 1.5 billion euros, or $2.05 billion, worth of disposals between 2007 and 2008. Proceeds from divestments and the property listing should total up to 4.5 billion euros, or $6.16 billion, which will be returned to shareholders mainly via share buybacks.Carrefour recently sold businesses in Switzerland, Portugal, Japan, South Korea and Mexico, while bulking up operations in Spain and Brazil. Duran said Asia and Latin American continue to record strong sales trends, with China a "star performer."
Shares in Carrefour rose 1 euro cent Thursday to close at 52.15 euros, or $71.34, on the Paris Bourse.
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