WWD.com/globe-news/financial/carrefour-profits-rise-53-in-2013-7557660/
government-trade
government-trade

Carrefour Profits Rise 5.3% in 2013

The world’s second-largest retailer noted a strong improvement of profitability in France and growth in Latin America.

A Carrefour hypermarket.

PARIS — Carrefour continued to reap the benefits of its turnaround plan in 2013.

The world’s second-largest retailer behind Wal-Mart Stores Inc. said group share of net profits increased 0.3 percent to 1.26 billion euros, or $1.72 billion at average exchange, in the 12 months ended Dec. 31.

Calculated based on continuing operations, the company’s net income increased 532 percent to 949 million euros, or $1.3 billion. This was thanks to factors including capital gains from disposals, decreases in nonrecurring expenses and an income tax reduction.

Results were positively impacted by improvement in profitability at the company’s core French business — which represented 47 percent of sales in 2013 — as well as growth in Latin America.

Shares in Carrefour closed up 4.4 percent at 27.83 euros, or $38.24, on the Paris Bourse on Wednesday.

“Carrefour is following its path as a multiformat retailer on all three continents where it is present,” chief executive officer Georges Plassat, who joined the company in May 2012 to initiate its turnaround, told a press conference here. “Carrefour remains vigilant, yet serene.”

Plassat highlighted that retailers must not neglect the importance of the domestic markets that are their foundation.

“The global grocery distribution market remains between 65 and 67 percent in mature markets,” he said. “[While] this share should fall to approximately 64 percent in coming years, mature markets will remain dominant.…The domestic market is fundamental.”

Carrefour said it would invest between 2.4 billion euros and 2.5 billion euros, or $3.3 billion and $3.43 billion at current exchange, to renovate stores and expand this year.

This includes an investment of around 1 billion euros, or $1.37 billion, in its French network, which is undergoing renovation, rolling out drive-in stores and simplifying administrative functions and logistics.

The company has seen better sales in stores that it has already revamped, said Plassat, as well as improved consumer price perception, two key targets for the retailer.

A new domestic e-commerce venture will be unveiled next month, he revealed.

Plassat fielded questions regarding the company’s Brazilian strategy, saying the firm would consider opening up the capital of its subsidiary there starting in 2015, via either an initial public offering or a partnership with a local player. “Anything is possible, as long as we maintain control of the operation,” said Plassat.

The move would allow the firm to better anchor its operations in Brazil, he said — a strategy mirrored through its activities in other markets, where Plassat has focused on renewing local management.

Plassat said he was confident that the company’s European operations should become profitable again within 18 months, roughly when the revitalization program ends.

For the full year 2013, Carrefour net sales excluding VAT fell 1 percent to 74.89 billion euros, or $102.61 billion. This included a 0.3 percent uptick at its French business.

In the rest of Europe, revenues fell 2.9 percent, while in emerging markets, they were down 1.5 percent, including a significant currency impact, notably in Latin America.

The company posted a 5.3 percent increase in recurring operating income last year, to 2.24 billion euros, or $2.97 billion at average exchange. At constant exchange rates, they rose 9.8 percent.

The French operations saw recurring operating income increase 29.9 percent to 1.20 billion euros, or $1.64 billion, in 2013, while in the rest of Europe, it fell 22.8 percent to 388 million euros, or $531.6 million.

In Latin America, recurring operating income grew 3.2 percent to 627 million euros, or $859.1 million, thanks to steady growth in Brazil and stability in Argentina in an inflationary context, while in Asia, operating income fell 27 percent to 131 million euros, or $179.50 million, on the back of higher wages and continued investment in China.

 

RELATED CONTENT: WWD Earnings Tracker >>