PARIS —Shares in Carrefour SA took a tumble on Thursday after reporting a drop in profits last year as it continued its efforts to turn around its ailing Chinese business and invested heavily in its store network in France.
Net income from continuing operations fell 17.3 percent to 977 million euros, or $1.08 billion, the company reported. Carrefour booked a net expense of 257 million euros, or $285 million, linked to restructuring charges.
Recurring operating profits for the retailer, the world’s second largest behind Wal-Mart Stores Inc., rose 2.4 percent year-on-year to 2.45 billion euros, or $2.71 billion, in line with previous guidance. The company proposed a dividend of 0.70 euros, or $0.85, per share, below market expectations.
Carrefour shares closed down 6.5 percent to 23.68 euros, or $28.78, on the Paris Stock Exchange.
Despite a year-end slowdown, Carrefour in 2015 logged its fourth consecutive year of rising sales, as a recovery plan initiated by chief executive officer Georges Plassat in 2012 continued to deliver results. Carrefour reported in January that revenues at current exchange rates including petrol were up 2.7 percent in 2015.
“I would say 2015 was a decent year that was in line, I think, with market expectations. There were no fundamental surprises,” Plassat said at a news conference in Paris.
He declined to provide any guidance for the year ahead.
“I am not an astrologist and I have no idea of the geopolitical, monetary and economic evolution of each country. Clearly, there is turbulence almost everywhere, so if we were scared, we would pull out everywhere, but obviously we won’t do that,” he added. “The company remains very solid and forward-looking.”
The group said it would continue to expand across formats in 2016 and deepen its focus on multi-channel distribution following the acquisition of online retailer Rue du Commerce. However, Plassat indicated that he was more interested in developing convenience stores than growing online grocery sales.
“I think we will remain a human activity,” he said.
The retailer expects investments to total between 2.5 billion euros and 2.6 billion euros, or $2.7 billion to $2.8 billion at current exchange, in 2016.
In France, it converted 158 of the Dia discount stores it purchased in 2014 to existing Carrefour banners last year. There are plans to convert an additional 500 stores in 2016.
“It is not unlikely that we will indeed lose a bit more money with Dia in 2016. Could it be less than in 2015? Very sincerely, I hope so,” said Plassat. However, chief financial officer Pierre-Jean Sivignon predicted that losses stemming from the Dia integration should be roughly stable.
Likewise, Carrefour does not see a turnaround in China until the end of 2016 or beginning of 2017. “I am extremely confident for the future. It’s going to take a little time,” Plassat said.
As part of its turnaround plan in China, Carrefour closed 19 stores last year, according to Sivignon. The retailer also opened 11 hypermarkets and seven convenience stores in China last year, a spokeswoman for Carrefour added.
The group has been hit by an economic slowdown and the rapid development of Internet, which has changed the shopping habits of Chinese households.
Plassat said Carrefour was in no hurry to float its real estate unit Carmila or its Brazilian subsidiary. “All of that is future potential,” he said.
In France, the firm’s recurring operating income (ROI) fell 6.4 percent to 1.19 billion euros, or $1.32 billion. The operating margin was hit by the Dia integration, an increase in the tax on sales space and the transfer of rental income from shopping malls to Carmila, created in 2014.
ROI in the rest of Europe grew 33.4 percent to 567 million euros, or $629 million, largely driven by the continuing recovery in Spain and improvement in Italy.
In Asia, recurring operating income fell 87 percent to 13 million euros, or $14 million, while in Latin America, it grew 6.9 percent to 705 million euros, or $783 million, reflecting “excellent” like-for-like sales growth in Brazil and Argentina.