PARIS — Carrefour SA posted fourth-quarter sales in line with market expectations, but said 2010 operating profits fell slightly short of its most recent guidance after the company booked one-off charges in Brazil and five other countries resulting from recent audits.
This story first appeared in the January 14, 2011 issue of WWD. Subscribe Today.
Carrefour, the world’s second-largest retailer behind Wal-Mart Stores Inc., said it had implemented new operating rules with strengthened internal controls as a result of the irregularities, which prompted it to issue a profit warning late last year that rattled investors and weighed on its share price.
Carrefour chief executive officer Lars Olofsson stated that “2010 was a year of contrasts for Carrefour: Heavy one-off charges weighed on our results, but we also saw several very satisfying achievements.”
The company confirmed it would record one-off charges in Brazil of 550 million euros, or $716.1 million. Of this, it booked 30 million euros, or $39.8 million, at operating profit level in 2010 in addition to 52 million euros, or $72.5 million, in 2009, though earlier it expected the charges to be tallied as nonoperating income given their nonrecurring and exceptional amount.
Dollar figures have been converted at average exchange rates for the periods to which they refer.
As a result, reported and restated operating profit for the full year came in at 2.96 billion euros, or $3.93 billion, up 9.4 percent, versus a restated 2.71 billion, or $3.78 billion, in 2009. This compared with the company’s downwardly revised target of 3 billion euros, or $3.98 billion, for 2010. Underlying operating profit for the period stood at 3.02 billion euros, or $4.01 billion, Carrefour said.
The audits in other countries resulted in an additional one-off charge of 54 million euros, or $71.7 million, in 2010. Carrefour chief financial officer Pierre Bouchut said the company will propose the appointment of a third external auditor, Mazars, at its next annual general meeting.
Carrefour, which will disclose its full 2010 results on March 3, did not provide a net profit figure.
In the three months to Dec. 31, sales rose 5.1 percent to 27.12 billion euros, or $36.90 billion, after increasing 6.7 percent to 25.61 billion euros, or $33.05 billion, in the third quarter. Full-year 2010 sales were up 5.8 percent to 101.02 billion euros, or $134.14 billion, the group said.