By  on July 15, 2010

PARIS — Carrefour SA, the world’s second-largest retailer behind Wal-Mart Stores Inc., said Thursday that it recorded overall growth in the second quarter as strong sales in emerging economies such as China and Brazil offset weakness in Western Europe.

In the three months ending June 30, sales rose 6.3 percent to 24.92 billion euros, or $31.8 billion. During the first half, sales were up 5.9 percent to 48.88 billion euros, or $65 billion. Dollar figures have been converted at average exchange rates for the periods to which they refer.

“In a contrasted environment, we posted solid sales in the first half, with continued market-share gains in France, strong growth in Latin America and faster growth in Asia,” chief executive officer Lars Olofsson said.

The group, which will publish half-year results on Aug. 31, said it expected its first-half operating profit to be close to 1.1 billion euros, or $1.4 billion. That figure included a positive impact of about 45 million euros, or $60 million, of the business tax on added value and a negative impact of 36 million euros, or $48 million, from disruptions caused by labor movements in Belgium after Carrefour’s announcement of a restructuring of its operations there.

Operating profit was expected to total 3.1 billion euros, or $3.9 billion at current exchange rates, in 2010 as a whole, the company said.

Revenue in France, which accounts for 40 percent of the group’s sales, rose 2.7 percent in the second quarter, compared with a 2.1 percent increase in the first quarter. Carrefour’s Promo Libre discount program, in place since February, has had a positive impact on its price image and average basket, chief financial officer Pierre Bouchut told analysts in a conference call.

Sales in Europe, excluding France, fell 5 percent during the period as Spain continued to suffer from deflationary pressures on food and weak household spending.

“Our business has definitely been affected in southern Europe — Greece, Spain, Italy, Romania — by the recent austerity measures, which result in reduced consumption,” Bouchut said.

Business in Belgium was disrupted by repeated strikes in the run-up to a deal between management and unions on July 2 that plans for the closure of 16 unprofitable stores, among other measures.

However, sales in Latin America jumped 34.1 percent during the quarter, while China saw a 24.1 percent increase. Carrefour said it planned to address recent weakness in its Brazilian hypermarket business, but reported its discount chain Atacadao was performing well.

The group announced it had signed an agreement to acquire 51 percent of Chinese hypermarket operator Baolongcang as part of its strategy to reinforce its presence in countries where Carrefour has a leadership position. Baolongcang operates 11 hypermarkets in the region of Hebei close to Beijing, clocking net sales of around 113 million euros, or $157 million, in 2009. Bouchut said Carrefour would be looking for other similar opportunities in China.

Overall, the group was on target with the 2010–2012 objectives contained in the transformation plan implemented by Olofsson to cut costs and improve its price image, he said

“We expect the environment to remain challenging,” Bouchut said. “Growth in China and Latin America should remain solid, but we remain prudent about the outlook in the G4 countries and other southern European countries like Greece or Romania.”

The group has declined to comment on reports that it is looking for buyers for its units in Malaysia, Thailand and Singapore, in line with its stated policy of pulling out of countries where it has no realistic prospect of becoming market leader. Since Olofsson took the helm last year, the company has exited Russia and southern Italy and is studying selling its Portuguese operations, in addition to closing or disposing of part of its Belgian operations.

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