The FINANCIAL — In 2015, Carrefour recorded a significant increase in sales. Net sales were up by +4.1% at constant exchange rates and by +3.0% on an organic basis. All regions reported sales growth at current exchange rates, with Europe up by +2.7% and Emerging Markets up by +3.8%.
Recurring Operating Income (ROI) grew once again to €2,445m, up +7.0% at constant exchange rates (+2.4% at current exchange rates), increasing both in Europe (+9.9% proforma) and in Emerging Markets (+9.2% at constant exchange rates).
In France, ROI stood at €1,191m. Operating margin in France was up compared to 2014, after adjusting for the integration of DIA, the increase in the tax on sales space and the transfer to Carmila upon its creation in 2014 of rental income from shopping malls. The transformation plan of DIA stores accelerated as planned during the second half, according to Carrefour.
In Other European countries, ROI rose sharply, to €567m vs €425m in 2014, up +33.4%. In 2015, commercial margin improved, reflecting the positive impact of our various action plans. Operating margin was up by 70 bp to 2.9% of sales. This performance was largely driven by the continuing recovery in Spain and improvement in Italy. Operating margin improved in all countries.
Latin America continued to grow strongly, with an increase in ROI of +23.5% at constant exchange rates, to €705m. This improvement reflected excellent LFL sales growth in Brazil and Argentina, combined with an improvement in commercial margin. SG&A included the increase in energy costs in Brazil. Operating margin stood at 4.9%, up 20 bp.
In Asia, ROI stood at €13m. In China, amid an economic slowdown and rapidly-changing consumer needs, we are continuing the repositioning of our model. In Taiwan, sales returned to growth for the first time in over two years, driven by the roll-out of our multiformat model and the modernization of some hypermarkets, and ROI was up.
In 2015, non-recurring income was a net expense of €257m, principally linked to reorganization costs in various countries. This compares to a gain of €149m in 2014, essentially linked to the capital gain from the contribution of assets to Carmila. Net income from continuing operations, Group share, stood at €977m, including the following elements:
A drop in financial expenses, largely attributable to lower interest costs for €52m. This drop resulted from the combination of continued low interest rates in Europe, partly offset by higher interest rates elsewhere;
A broadly stable effective tax rate.
Net income, Group share, stood at €980m. When adjusted mainly for non-recurring income, net income, Group share, stood at €1,113m, up by +7.1%.
Cash flow and debt
In 2015, free cash flow improved sharply and stood at €687m vs €306m in 2014. This variation principally stemmed from:
A sharp improvement in gross cash flow which stood at €2,733m vs €2,504m in 2014;
Working capital requirements represented an inflow of €81m in the year, vs €19m last year;
An improved variation of fixed-asset supplier payables, which constituted an inflow of €136m, while business-related asset disposals generated an inflow of €104m;
Continued capex of €2.4bn to bring up to standards, modernize and develop our store network.
Adjusted for exceptional items, free cash flow from continuing operations reached €951m, sharply up vs 2014.
Net financial debt at December 31, 2015 stood at €4.5bn, a reduction of €408m compared to December 31, 2014. It benefited from:
The improvement in free cash flow described above;
The sale of part of our treasury shares in March 2015, which generated a cash-in of €394m;
The sale of an additional stake in Carrefour Brazil to Península Participações in April 2015.
Peninsula’s stake now stands at 12%.
2016 priorities
Carrefour is continuing its transformation, with strong ambitions for its multiformat model, which allows it to offer its clients a shopping experience adapted to their evolving aspirations and to changing consumption habits.
The world’s most multi-format retailer, Carrefour continues to invest in expansion. In 2016, the Group will continue opening stores in its different formats, notably in convenience, at a sustained pace. In France, the conversion of the DIA store network is proceeding according to plan, with another 500 stores to be transformed in 2016.
Carrefour is also investing for sustainable growth. The Group continues to modernize its stores in all countries and to enhance the attractiveness of its sites by capitalizing on Carmila. Carrefour is making further headway in its structural projects, including the revamp of its supply-chain and IT rationalization in several countries. The repositioning of its model in China is one of Carrefour’s priorities.
Carrefour is accelerating its digital transformation as it pursues its omnichannel ambition. This ambition capitalizes on Carrefour’s physical store network and on the development of e-commerce services in all Group countries. In France, the acquisition of Rue du Commerce will allow us to enrich our offer via a marketplace.
In 2016, Carrefour will maintain its financial discipline:
Total investments of between €2.5bn and €2.6bn o Constant focus on free cash flow generation
Maintain BBB+ rating
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