PARIS--(Marketwire - August 29, 2008) - Carrefour (
-- Sustained sales growth: +8.5% at constant exchange rates (+8.0% at
current exchange rates)
-- Strongest First Half growth since 2005: Activity Contribution up 5.5%
to EUR1,404m
-- Net income from recurring operations, Group share, up 1.2% to EUR750m
-- A sound financial structure to support growth: cash flow to net debt
ratio of 16.7% versus 16% in H1 2007
Our First Half performance underscores:
-- The group's resilience, as demonstrated in the challenging economic
and consumer environment in France and Western Europe
-- The relevance of our multi format and single brand strategy
-- The excellent performance in Carrefour's growth markets*
We confirm our 2008 objectives:
-- Sales growth at constant exchange rates of 7%
-- Growth in Activity Contribution broadly in line with sales
-- Operating free cash flow of EUR1.5bn
On 26 August 2008, the Carrefour Board of Directors reviewed and drew up
the consolidated financial statements for the First Half of 2008.
S1
Consolidated income statement (mEUR ) S1 2008 2007** Var.
-------- -------- -------
Sales exc. VAT 41,948 38,845 +8.0%
ACDA ** 2,303 2,154 +6.9%
-------- -------- -------
Activity contribution 1,404 1,331 +5.5%
-------- -------- -------
Non-recurring income (expenses) 85 56
EBIT (Activity Contribution after non-recurring
items) 1,489 1,387 +7.4%
-------- -------- -------
Net income from recurring operations - Group
share 750 741 +1.2%
-------- -------- -------
* Growth markets: markets other than France, Spain, Italy and Belgium
** ACDA = Activity Contribution before Depreciation and Amortization
Commenting on these results, José Luis Durán, Carrefour's Chief Executive
Officer, said:
"These are Carrefour's best first half results since 2005. This strong
performance attests to the relevance of our multi format single brand
strategy on an international scale. The Group has robust fundamentals, with
a business model focused primarily on food, a balanced portfolio of
formats, leading positions in the countries where it operates, and a sound
balance sheet. These strengths, along with our competitive advantages such
as the power of our brand and our real estate potential, give us the means
to forge ahead and create greater value.
In an uncertain and challenging environment, the implementation of the
operational action plan we announced in July makes me confident that we
will achieve our 2008 objectives."
(1) Our results in H1 2008 demonstrate that our international multi-format,
single-brand strategy is paying off
-- Sales rose 8.0% in H1 (8.5% at constant exchange rates)
to EUR41,948m:
-- All regions contributed to sales growth, with growth markets
recording a strong performance.
-- In France, our multi-format approach, with good like-for-like
performance at supermarkets (+5.9%), hard discount (+2.5%) and
convenience stores (+2.7%), enabled us to offset lower
hypermarket sales (-0.9%).
-- Sales in the rest of Europe grew faster than in H1 2007, thanks
to strong dynamics in Spain (8.3% of total growth), stable
performance in Italy (+1.4%) and a significant contribution
from European growth markets (+21.7% at constant exchange
rates).
-- Sales in Latin America grew strongly once again (+41.8%),
supported by the integration of Atacadao.
-- In Asia, sales at constant exchange rates showed the same
vigorous growth as in H1 2007, despite the impact in China of
the April and May events.
-- Overall, sales in our growth markets increased by 25.5%.
Change at
constant
H1 H1 exch.
Regional breakdown of net sales (EUR m) 2008 2007 Change rates
------ ------ ------- ---------
France 18,351 18,126 +1.2% +1.2%
Europe 15,677 14,478 +8.3% +8.1%
Latin America 4,936 3,48 +41.8% +42.2%
Asia 2,985 2,76 +8.1% +16.3%
------ ------ ------- ---------
Total 41,948 38,845 +8.0% +8.5%
------ ------ ------- ---------
-- Activity Contribution was up 5.5% to EUR1,404m.
-- Commercial margin, as a percentage of sales, was broadly stable
at 22.4%. It was up slightly in France, practically unchanged
elsewhere in Europe, and down slightly in our growth markets,
due mainly to the integration of Atacadao.
-- General and administrative expenses (excluding rents) decreased
significantly as a percentage of sales (-20bp), reflecting both
the impact of Atacadao and our efforts to reduce costs.
-- Asset costs, as a percentage of sales, were slightly up.
Activity Contribution (EUR m) H1 2008 H1 2007 Change
--------- --------- ---------
Sales excl. VAT 41,948 38,845 +8.0%
Commercial income 9,38 8,75 +7.2%
SG&A (7077) (6596) +7.3%
--------- --------- ---------
ACDA 2,303 2,154 +6.9%
--------- --------- ---------
Depreciation (899) (823) +9.2%
--------- --------- ---------
Activity Contribution
after IFRS 2 adjustment 1,404 1,331 +5.5%
--------- --------- ---------
-- Growth in Activity Contribution was characterized by:
-- Little change in France (-0.8% to EUR695m), despite a EUR41m
charge resulting from a change in method for calculating
employee profit-sharing.
-- Good resilience in the rest of Europe, with Activity
Contribution rising 1.5% to EUR443m. Spain's contribution
decreased slightly, reflecting a major promotional campaign in
the First Half, Italy showed moderate progress and other
markets in Europe turned in significantly higher results.
-- Our growth markets (including the European growth markets
described above) booked a strong performance. Activity
Contribution was up 30% to EUR330m, with Brazil (+78%),
China (+17%), and Greece (+33%) performing particularly well.
Regional breakdown of Activity Contribution
(EUR m) H1 2008 H1 2007 Change
-------- -------- -------
France 695 701 -0.8%
Europe 443 436 +1.5%
Latin America 147 84 +75.3%
Asia 119 110 +8.0%
-------- -------- -------
Total 1,404 1,331 +5.5%
-------- -------- -------
-- Net income from recurring operations, Group share, rose 1.2%
to EUR750m:
-- Financial expense increased by EUR31m. This mainly reflects a
rise in the Group's average debt (from EUR9.4bn to EUR10.2bn)
resulting from acquisitions carried out in 2007, share
buy-backs and the increase in interest rates over the period.
-- The lower Group tax rate (26.4% in H1 2008 versus 28.9% in
H1 2007) is mainly attributable to low taxation of the capital
gain booked by Carrefour on disposal of the Merter property in
Turkey. This transaction also had a strong impact on minority
interests, up 121.9% in H1 2008.
-- The higher contribution from associates is mainly due to the
first-time Half Year consolidation of MAF Hypermarkets, our
partner in the Middle East.
Consolidated Income statement (EUR m) H1 2008 H1 2007 Change
--------- --------- ---------
Activity Contribution 1,404 1,331 +5.5%
Non recurring income (expenses) 85 56
EBIT 1,489 1,389 +7.4%
Financial costs (279) (248) +12.7%
Income tax (319) (329)
Tax rate 26.4% 28.9%
Associates 16 2
Minorities (157) (71) +121.9%
--------- --------- ---------
Net income from recurring operations -
Group share 750 741 +1.2%
--------- --------- ---------
-- Robust financial structure:
-- Our financial ratios are sound:
-- Cash flow / net debt is 16.7%, versus 16% in H1 2007.
-- Activity Contribution before depreciation and amortisation
compared to financial expenses was 8.2x versus 8.7x in
H1 2007.
-- Cash flow is up 12.2% to EUR1.8bn.
-- Free cash flow showed a decrease of EUR373m, due mainly to
merchandise treasury :
-- Cash flow from merchandise treasury was boosted in H1 2007
by a highly favourable calendar effect (about EUR350m in
France).
-- Payment terms to suppliers were further affected by the
implementation of the law in Spain designed to shorten
payment terms (around EUR100m).
-- Capital gains from disposals totalled EUR604m, up from EUR232m
in H1 2007. To a large extent, this figure reflects real estate
disposals in Turkey and Bulgaria, as well as the cash in from
our business units in Switzerland and Slovakia.
-- Net debt at the end of the period was EUR11bn.
Simplified Cash Flow statement (EUR m) H1 2008 H1 2007
--------- ---------
Cash flow 1,838 1,637
Free cash flow (2,156) (1,783)
Acquisitions (207) (1021)
Disposals 604 232
--------- ---------
Net debt closing (11,008) (10,212)
--------- ---------
Key financial ratios H1 2008 H1 2007
--------- ---------
Net debt at year-end (EUR m) 11,008 10,212
ACDA / Financial costs 8.2x 8.7x
Gearing 96.9% 96.5%
Cash flow / Net debt 16.7% 16.0%
--------- ---------
(2) Objectives for 2008 and roll-out of our operational action plan
-- Confirmation of 2008 objectives announced in July:
-- Sales growth of 7% at constant exchange rates
-- Growth in Activity Contribution broadly in line with sales growth
-- Generation of EUR1.5 billion in free cash flow from operations
in 2008
-- Implementation of our five-point operational action plan :
1. Stepped-up commercial activity at hypermarkets in France
Our sales plan is based on campaigns in support of consumer purchasing
power. Here are a few examples:
-- A large-scale programme to cut prices on 300 products, mainly
national brands, by as much as 20%, with prices frozen until the end
of the year.
-- Weekly campaigns to boost sales of fresh produce.
-- Strong promotional campaigns around seasonal events (e.g. a
10% back-to-school discount).
-- Joint programmes with our financial services arm, with for example
the option for loyalty cardholders to pay in three instalments at no
extra charge.
2. Accelerated deployment of Carrefour Market
150 Champion stores will be switching over to the new Carrefour Market
banner by the end of 2008, instead of the 100 initially planned. Carrefour-
label products will be available to customers at all of the 1,050
supermarkets even before full conversion, and should account for 80% of all
own-brand goods sold in supermarkets by year-end.
3. Tighter screening of capital allocation and cost reduction plan
More capital (EUR200m) will be redirected towards investments that generate
higher value, such as opening stores in growth markets and brand
convergence.
We have taken steps to save about EUR100m on Group-level operating costs by
the end of the year in order to more than offset the additional costs
generated by the Taxe d'Aide au Commerce et à l'Artisanat (TACA - Small
Businesses Support Tax) in France, as well as the communication and
marketing expenses for our plan to boost hypermarket business in France.
4. Accelerated store openings in our growth markets
In 2008, nearly 70% of new sales area is scheduled to be opened in our
growth markets. They will account for a rising share of our total
portfolio, thereby further shifting the Group's centre of gravity.
5. Use of Carrefour Property as an operational lever
Carrefour Property became operational in the First Half of 2008. The team's
mission is (i) to identify opportunities for new sites for all the group's
formats in which Carrefour Property operates; (ii) to develop more actively
the management of shopping malls to improve their attractiveness and
positioning; and (iii) to make optimal use of our existing sales area, by
reducing or increasing the size of stores, on a case by case basis.
Publication of Q3 2008 sales: 23 October 2008
Contact Information: Investor Relations: Alessandra Girolami Tel: (33) 1 55 63 39 00 Shareholder Relations: Céline Blandineau Toll-free number: 0805 902 902 Press Relations: EURO RSCG Tel: (33) 1 58 47 98 88