Carrefour

PARIS — Carrefour revealed new targets for additional annual cost savings by 2023 after the French grocery giant reached its 2020 target of 3 billion euros in cost cuts.

Carrefour posted recurring operating income of 2.17 billion euros, representing a 16.4 percent rise versus the same prior-year period on a constant-currency basis.

Group sales reached 78.61 billion euros, up 7.8 percent in like-for-like terms. Carrefour said it registered its best sales performance in the past two decades, spurred in part by strong momentum in key markets such as France, Brazil and Spain.

Alexandre Bompard, chairman and chief executive officer of Carrefour, said during a virtual conference with financial analysts on Thursday morning that “2020 marked a successful turning point.”

“We implemented a model that ensures lasting growth and profitability for our group,” Bompard said.

On the back of the strong 2020 results, Carrefour has set some new financial targets. It now aims for 2.4 billion euros in additional cost savings per year by 2023, on top of the 3 billion euros it has already achieved since the start of its plan in 2018, and a net free cash flow level of more than 1 billion euros annually starting this year.

Carrefour is in the midst of a restructuring plan running through 2022 that includes annual cost reductions, real estate asset disposals, and an increase of organic food sales and business online.

During the meeting, Bompard addressed the subject of Canada’s Alimentation Couche-Tard’s unsolicited offer in early January to acquire Carrefour.

“This episode is a positive sign that Carrefour has become attractive once again,” Bompard said. “My responsibility was to look at this offer seriously. Discussions were still at a very preliminary stage when they were cut short by the government.

“Global M&A operations are not a necessity,” he continued. “We have a clear trajectory on our own, and we are on the offensive on our markets. Bolt-on M&A is part of our strategy. It leverages our strong balance sheet and operational expertise in order to reinforce our market positions, and it adds profitable growth to our group.”

Bompard highlighted that the company generated 1.1 billion euros of net free cash flow in 2020.

“To realize the full extent of this result, let me remind you that for the past decade, we were averaging a total of zero,” he said. “So this is a momentous turnaround.”

Bompard said Carrefour looks to the future with confidence.

“With this level of confidence in our financial models, we are putting an end to 10 years of scrip dividends at Carrefour, and we will distribute dividends fully in cash,” he said, referring to the group’s dividend of 0.48 euro per share announced for 2020.

“Three years ago, Carrefour was lagging behind,” Bompard said. “At the close of 2020, I note that despite challenges we are continuing to grow, despite emergencies we are reaching our goals.”

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