Carrefour Posts FY17 Loss

Carrefour Posts FY17 Loss

The FINANCIAL -- Alexandre Bompard, Chairman and Chief Executive Officer of Carrefour, declared:

“The 2017 results that we are presenting today demonstrate the necessity of implementing without delay Carrefour’s transformation plan. The Group is fully focused on the Carrefour 2022 plan, with ambitious action plans currently being implemented in all of the group’s geographies. With this plan, whose ambition is to make Carrefour the leader of the food transition and build an omnichannel universe of reference, Carrefour is back on the offensive and is investing to resume growth.”

Income statement

Carrefour posted 2017 total net sales of €78,897m, up +2.6% at constant exchange rates and up +1.6% on a like-for-like basis. Gross margin stood at €18,214m, or 23.1% of sales, down 38 bp, principally linked to activity in France and Europe. Distribution costs increased by €575m in 2017, notably due to particularly marked cost inflation in Latin America.

Group Recurring Operating Income (ROI) stood at €2,006m, down -14.7% at current exchange rates. Operating margin, at 2.5% for the full-year, was down by 52 bp.

-In France, ROI stood at €692m, representing an operating margin of 1.9%, down 94 bp. Carrefour France suffered from strong competitive pressure. Moreover, operating losses of ex-DIA stores continued to weigh strongly on the country’s profitability (c. -€150m).

-In other European countries (excluding France), ROI stood at €677m, with margin down slightly, by 34 bp to 3.2%, reflecting contrasting performance: Northern Europe’s operating margin held up well, while Southern Europe’s was down, also impacted by a tough competitive environment, as well as inflation in distribution costs in Spain.

-In Latin America, 2017 ROI stood at €715m, up by €4m. Operating margin was 4.5%, down 44 bp, principally due to operating losses in Argentina as a result of the macro-economic environment. Brazil delivered a solid operating performance, despite strong food deflation, driven by the confirmed success of the Atacadao model which improved its profitability.

-In Asia, the second half confirmed the improvement in profitability that began at the start of the year. ROI in 2017 stood at €4m, compared with an operating loss of €58m in 2016. The Group reaped the fruits of the action plans implemented in China, in particular in terms of cost reduction, in a context that remains highly competitive, marked by rapidly-changing consumption habits. In Taiwan, sales growth remained strong and operating margin continued to improve, 

Depreciation, including logistics, increased by nearly €95m, reflecting the high level of investments in past years.

Group Ebitda stood at €3,636m, down 6.4% at current exchange rates, with Ebitda margin slipping to 4.6%.

In 2017, non-recurring income stood at €(1,310)m. It includes a charge corresponding to depreciation of part of the goodwill in Italy and depreciation of assets linked to the former DIA store network.

Net income from continuing operations, Group share, stood at €(531)m, including the following items:

A €42m improvement in net income from companies accounted for by the equity method;

Net financial expenses down by €70m, notably reflecting the reduction in the Group’s debt and lower interest rates;

An effective tax rate that was impacted by exceptional items in 2017. Excluding exceptional items, the normalized rate stands at 39%, slightly above the 2016 rate. Tax expense was higher in 2017 due to net deferred tax depreciations, notably in Argentina and in the ex-DIA scope.

Adjusted net income, Group share, stood at €773m, according to Carrefour.

Cash flow and debt

In 2017, the Group’s cash generation remained solid and resulted from the following elements:

Gross cash flow of €2,653m, compared with €2,964m in 2016;

Working Capital Requirements represented an inflow of €189m, driven notably by stricter management of inventory levels;

Capex to maintain assets and develop the network stood at €2.1bn excluding Cargo Property, compared with €2.5bn in 2016. This drop reflects the evolution in the Group’s investment strategy and measures implemented in the second half to control capex;

Investments linked to Cargo Property for €232m (offset by capital increases subscribed to by the company’s shareholders).

Free cash flow for 2017 stood at €503m vs €603m in 2016. Restated for exceptional items and investments linked to Cargo Property, free cash flow from continuing operations stood at €950m, vs €1,039m in 2016.

The Group’s financial structure at December 31, 2017 remains sound. Net financial debt decreased to €3,743m at close (vs

€4,531m at December 31, 2016). Carrefour’s rating at December 31, 2017 is unchanged, at BBB+.

The proposed dividend for 2017 is €0.46 per share vs €0.70 per share for 2016, down 34%. This amount represents a payout ratio of 45% of adjusted net income, Group share, in line with the Group’s payout policy. This dividend will be proposed in cash or shares, at the option of the shareholder, and will be subject to shareholder approval at the General Assembly of June 15, 2018.


The Group is fully mobilized to execute the « Carrefour 2022 » plan presented on January 23. With this plan, the Group has launched a profound transformation, with 2022 targets that will be reached through actions in all geographies.

In order to invest in growth and rapidly improve its price competitiveness, short-term measures have been launched, notably to reach the target of €2bn in cost cuts by 2020 on a full-year basis.

2018 Outlook

Regarding 2018, the Group’s results will remain closely linked to the evolution of foreign exchange rates, in particular that of the Brazilian Real. The spot rate on February 27, 2018 stood at 3.98, whereas the average rate for 2017 was 3.61.

In addition, given the investment levels of the past years, the Group should continue to see in 2018 an increase in depreciation despite greater discipline on investments and a Capex budget of €2bn starting in 2018.

2018 constitutes the first year of the plan and is a pivotal year in the Group’s transformation. More specifically, the plan’s implementation will be materialized by advances in 2018 in each of the plan’s pillars, notably through:

-Deploy a simplified and open organization o Faster decision-making process

o Implementation of the previously-announced departure plans at headquarters

-Achieve productivity and competitiveness gains

o Target of shedding 273 ex-DIA stores from our scope

o A first wave of cost savings within the framework of the plan to achieve savings of €2bn by 2020 on a full-year basis and investments in commercial competitiveness

oCapex of €2bn

-Create an omnichannel universe of reference

oAcceleration of the development of the Cash and Carry format, notably with:

-The opening of 20 new Atacadão stores in Brazil

-The conversion of 16 hypermarkets to the Maxi format in Argentina o Launch of the single e-commerce platform,

o Extended food e-commerce offer in France with 15 new cities offering home delivery (D+1) and 10 new cities offering one-hour delivery

o Opening of 170 new Drives in France

o Implement partnerships aiming in particular at accelerating the group’s digitalization, along the lines of the partnership with Showroomprivé




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