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by Pascale Denis
PARIS (Reuters) – Carrefour did better than expected and stabilized its operating margin in the first half of the year, thanks to its cost savings and its performance in Brazil, which offset a further sharp drop results in France
The distributor engaged in a major five-year transformation plan aimed at regaining its competitiveness in France and competing with e-commerce specialists, with Amazon in the lead, saw its current operating income (OCR). up 5.8% at constant exchange rates to 597 million euros, a figure higher than the 523 million in the Reuters Inquiry Financial consensus, for sales up 0.7% on a comparable basis.
Operating margin is stabilized at 1.6% of turnover.
One year after his arrival at the head of the group, Alexandre Bompard welcomed the "significant progress already made", particularly in the omnichannel supply development, cost reductions or partnerships.
"The recovery will, however, go through a long process of structural reforms," he warned during a conference call with badysts. 19659002] Carrefour managed to preserve its margin thanks to savings of 520 million euros realized in the first semester (out of a total of 2.0 billion expected by 2020) in the management of stocks, investments or distribution
The cost reductions related to the decrease in the number of seats will come in the second half of the year.
Carrefour, which has also sold or closed its deficit-selling Dia stores, has forged purchase alliances with System U in France and with the British Tesco which should also enable it to better negotiate with its suppliers and to be able to lower its prices without degrading its profitability.
PRICE REDUCTION IN SUPERS EN FRANCE
The group has announced that it has already initiated the first price cuts in its supermarkets in France, but not in hypermarkets, as well as in its hypers in Brazil.
In France, where it realizes near Half of its revenue, operating income fell by 45% to 110 million euros, still weighed down by the poor performance of its hypermarkets facing fierce competition.
These very large formats, However, lagging behind those of Leclerc and Casino, they limited their decline to 1% like-for-like and excluding gasoline and the calendar effects in the second quarter, after a drop of 2.3% at the beginning of the year.
For badysts , the return to positive momentum in the French hypers remains crucial for the recovery of the group and some believe that it is slow to make the price cuts necessary to revive their competitiveness.
Sales were stable in Europe (+ 2%) in an environment that also became very competitive, while it recovered by 28% in Latin America, excluding currency effects thanks to better growth in Brazil.
After a very slow first quarter, Carrefour warned that the results were exposed to the unfavorable exchange rate, especially the Brazilian real, and to more depreciation and charges.
The latter reached 785 million euros, mainly related to the restructuring measures, putting the net result attributable to the group, which has a loss of 861 million euros, in the red.
On a reported basis, current operating income decreased by 3.8%, impacted by the decline in the Brazilian currency.
Free cash flow increased by 418 million euros, restated for exceptional items
Medium-term objectives confirmed and around 100 million euros of non-strategic real estate badets should be sold in the second half, out of a planned total of 500 million by 2020.
On the stock market, the title Carrefour ended at 19.90 euros Thursday, showing a drop of 23% since the beginning of the year and 36% since the arrival of Alexandre Bompard at the head of the group.
(Pascale Denis, with Dominique Vidalon, edited by Véronique Tison)
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