NEW PATHS FOR DEVELOPMENT AHEAD FOR
CARREFOUR, THE REFERENCE IN FOOD RETAIL
Regulatory News:
Carrefour (Paris:CA):
2016 key highlights
- Increase in net sales: +2.7% at constant exchange rates
to €76.6bnGood performance in food in all countries; Excellent
sales growth in Brazil and continued positive momentum in
Europe
- EBITDA1 of €3,886m, ROI of €2,351m, in
line with expectations; operating margin holds up well at
3.1%Strong increase in other European countries and continued
excellent momentum in Brazil
- Adjusted net income, Group share of €1,031m
- Financial targets achievedFree Cash Flow, excluding
exceptional items, above €1bn, up 9.2% and slight reduction in net
debt to €4.5bn
- Multiformat and omnichannel expansion871 store openings
under banners in 2016; Deployment of new e-commerce websites and
apps for food or non-food in all countries
- Proposed dividend: €0.70, in cash or shares
(1) Recurring operating income before
amortization and depreciation(including logistics amortization)
2017 priorities &
objectives
- Comfort Carrefour’s position as the reference in food
retail
- Continue to deploy the multiformat and omnichannel model to
benefit our clients
- Grow sales by 3% to 5% at constant exchange rates
- Maintain financial discipline: Capex of €2.4bn excluding Cargo
Property and increase in free cash flow
- Planned listing of Carrefour’s activities in Brazil and of
Carmila, market conditions permitting
Georges Plassat, Chairman and Chief
Executive Officer of Carrefour, declared:
“Carrefour emerges from 2016 a stronger
company. The increase in sales, for the fifth consecutive year,
attests to the relevance of our multiformat and omnichannel model,
which is now a reality in all our countries. In 2017, Carrefour
will continue to expand in all its formats, stores and digital, to
enhance its proximity to its clients. Carrefour is resolutely the
reference in food retail, anticipating trends, thus opening new
paths for development and growth. Innovation, the pursuit of
operational excellence and strict financial discipline will support
value creation.”
2016 achievements in line with strategy
Carrefour, the reference in food retail, posted a strong
performance in 2016.
Gross sales amounted to €85.7bn, up 3.3% excluding petrol at
constant exchange rates. Sales grew both in Europe and in our
international activities, reflecting the relevance of the
predominantly food-based multiformat model.
In 2016, Carrefour continued its multi-format dynamic, which
shifted the Group's center of gravity towards convenience formats,
accelerating store openings, notably in Brazil, Spain, Poland and
China. The group also continued its strategy of tactical
acquisitions, in Romania with Billa stores and in Spain with
selected Eroski stores. Lastly, in France, the transformation of
the stores acquired from Dia was virtually completed, with a total
of 622 stores converted to date to Carrefour banners. In addition,
Carmila, of which Carrefour is the largest shareholder, continues
to enhance the commercial sites adjacent to the Group's stores in
France, Spain and Italy.
2016 was also marked by new advances in Carrefour’s evolution
towards an omnichannel approach. Indeed, thanks to the
complementarity between its multiformat physical network and its
e-commerce format, which is gaining strength, Carrefour multiplies
opportunities to develop contacts with customers and sales, as part
of its resolutely omnichannel approach. For example, in France,
clients who use several Carrefour formats already account for half
of the total number of clients and two-thirds of sales.
The rise of the omnichannel approach is supported by
acceleration of digital:
- Gross Merchandise Volume in food and
non-food amounts to €1.2bn in 2016. It should triple by 2020 to
reach €4bn.
- Carrefour now has an online offer in
all of its integrated countries, with in particular the launch in
2016 of a non-food offer in Brazil, a food offer in China and a
marketplace in Spain;
- The Group made targeted acquisitions to
accelerate the deployment of e-commerce activities, including Rue
du Commerce and Greenweez, a site specializing in organic foods, in
France.
Carrefour is also returning to a culture of innovation, be it in
formats, concepts or products. Thus, sales of organic products
throughout the world reached more than €1bn in 2016, up 32%.
Finally, in 2016, the Group continued its efforts to improve its
operational efficiency, including the completion of the plan to
integrate and optimize logistics in China and the continuation of
the Caravelle project in France.
Key figures (€m) 2015
2016 Variationat constant exchange rates Fx
impact
Variationat current exchange rates
Net sales ex petrol
70,244 70,204 +3.3% -3.4% -0.1%
Net sales 76,945 76,645 +2.7% -3.1% -0.4%
Organic growth
+3.0% Ebitda(1) 3,955 3,886
-0.5% -1.3% -1.8% Recurring Operating
Income (ROI) 2,445 2,351
-3.2% -0.6% -3.8% Adjusted net
income, Group share 1,113 1,031
-7.4%
Free cash flow from continuing
operations excluding exceptional items 951
1,039 +9.2% Net
debt at closing 4,546 4,531
-€15m Net debt/ Ebitda
1.1x 1.2x
(1) Recurring operating income before amortization and
depreciation (including logistics amortization)
Total sales under banners including petrol reached €103.7bn in
full-year 2016, up 2.1% at constant exchange rates.
Income statement
Carrefour posted full-year 2016 total net sales excluding petrol
of €70,204m, up +3.3% at constant exchange rates and up +3.0% on an
organic basis.
Operating margin held up well and stood at 3.1% in 2016
(vs 3.2% in 2015). Recurring Operating Income (ROI) stood at
€2,351m, down -3.2% at constant exchange rates vs 2015.
Other European countries (ex France) posted a solid
performance in 2016. ROI reached €712m, a sharp increase of + 25.7%
at constant exchange rates. Operating margin increased by 70 bp to
3.5% of sales. This very good performance was largely driven by
Spain's continued recovery, as well as improved profitability in
Italy and Poland, where the Group has been constantly innovating
for several years.
In France, in a difficult competitive environment, the
Group continued to roll out its multi-format and omnichannel
strategy with the completion of the transformation of DIA stores to
Carrefour banners and the integration of Rue du Commerce. ROI
totaled €1,031m and operating margin declined by 40 basis points to
2.9%.
In Latin America, ROI Increased by +3.7% at constant
exchange rates in 2016 to €711m. Brazil posted a very good
performance, with a marked improvement in profitability,
illustrating the strength of Carrefour's multi-format model there.
The macroeconomic situation in Argentina, notably very high
inflation, continues to weigh on the country’s profitability.
In Asia, ROI was -€58m. The strong growth of ROI in
Taiwan was, as expected, more than offset by expenses related to
the plan to transform our model in China, which continued during
the year and whose first positive effects were reflected in our
sales in the second half of 2016.
In 2016, non-recurring income was an expense of €372m,
which notably includes reorganization costs in various countries,
as well as a loss of €106m, the result of a change in tax
legislation introduced at the end of 2016 relating to the tax on
selling space in France (TaSCom). As a reminder, non-recurring
income in 2015 was -€257m.
Net income from continuing operations, Group share, was
€786m, including stable financial expenses at €515m and a
globally stable effective tax rate.
Net income, Group share, stood at €746m. Adjusted net income,
Group share, restated for exceptional items was €1,031m in
2016.
Cash flow and debt
In 2016, cash generation remained strong and principally
resulted from the following elements:
- A sharp improvement in gross cash
flow which reached €2,964m vs €2,733m in 2015;
- Working capital requirements
represented an inflow of €351m vs €81m the previous year;
- Variation of fixed-asset supplier
payables constituted an outflow of €78m and business-related
asset disposals generated an inflow €118m;
- Continued capex of €2.5bn,
excluding Cargo Property, to bring up to standards, modernize and
develop our store network;
- Investments linked to Cargo Property
for €249m (offset by capital increases subscribed to by the
company’s shareholders).
Adjusted for exceptional items and investments linked to Cargo
Property, free cash flow from continuing operations reached
€1,039m, sharply up vs 2015.
The Group's financial structure at December 31, 2016 remained
very solid. Net financial debt decreased slightly to €4,531m
(compared with €4,546m at December 31, 2015.) It includes in
particular the increased cash flow generation, as well as
acquisitions made in 2016 for €190m (Billa in Romania, acquisitions
in the digital field in France).
2017 priorities
Carrefour comforts its position as the reference in food
retail, relying on its expertise built over 50 years, its
unique know-how in fresh and organic produce and mastery of the
entire production chain.
The most multi-format distributor in the world, with a
portfolio of countries chosen for their market dynamics, Carrefour
continues to invest in expansion to enhance proximity to its
clients. In 2017, the Group will open stores in all its formats,
notably in convenience, at a steady pace.
Carrefour will continue in all countries the development of
e-commerce, conceived as a new format in its own right,
which will both increase its sales and dynamize its offer in
non-food and services.
The omnichannel approach, based on better knowledge of
the customer through the use of data, will allow Carrefour to
increase average basket and traffic.
Carrefour disseminates a culture of innovation within
headquarters and stores by constantly innovating in terms of
concepts, products, services and formats.
Thanks to better operational efficiency and strict financial
discipline, Carrefour is developing its model, which is
resolutely focused on value-creation.
2017 targets:
- Growth in total sales of 3% to 5% at
constant exchange rates
- Investments slightly down to €2.4bn
excluding Cargo Property
- Continued increase in free cash flow
excluding Cargo Property
- Planned listing of activities in Brazil
and of Carmila, market conditions permitting
Agenda
- First quarter 2017 sales: April 13,
2017
- Annual Shareholders’ Meeting: June 15,
2017
APPENDIX
2016 net sales and Recurring Operating Income by
region
Net sales Recurring Operating
Income
(in €m)
2015
2016
Organic
growth1
Variationat constant exchange rates
Variationat current exchange rates
2015
2016
Variationat constant exchange rates
Variationat currentexchange rates
France
36,272 35,877 -0.9% -1.1%
-1.1%
1,191 1,031 -13.4% -13.4%
Other European countries
19,724 20,085 +2.2%
+2.3% +1.8%
567 712 +25.7% +25.5%
Europe
55,996 55,962 +0.3% +0.1% -0.1%
1,758 1,743 -0.8%
-0.9% Latin America
14,290 14,507 +16.2% +16.0% +1.5%
705
711 +3.7% +0.9% Asia
6,659 6,176 -3.8%
-3.6% -7.3%
13 (58) n/a n/a
Emerging Markets
20,949 20,683 +9.6% +9.8% -1.3%
718 653 -7.0%
-9.0% Global functions
(31) (45)
TOTAL 76,945 76,645
+3.0% +2.7% -0.4%
2,445
2,351 -3.2% -3.8%
1 Ex petrol and ex calendar
Consolidated income statement
(in €m) 2015
2016 Net
sales 76,945 76,645 Net sales
net of loyalty program costs 76,393
76,054 Other revenue 2,464 2,720
Total
revenue 78,857 78,774 Cost of goods
sold (60,838) (60,789) Gross margin from recurring operations
18,019 17,985 SG&A (14,105) (14,147)
Recurring operating income before
D&A (EBITDA)1
3,955 3,886 Depreciation and
amortization (1,470) (1,487)
Recurring operating
income (ROI) 2,445 2,351 Net income
from companies accounted for by the equity method 44
(36) Non-recurring income and expenses (257) (372)
EBIT 2,232 1,943 Financial expense (515) (515) Income
before taxes 1,717 1,428 Income tax expense (597)
(494)
Net income from continuing operations
1,120 934 Net income from discontinued
operations 4 (40)
Net income
1,123 894 Of which Net Income –
Non-controlling interests (NCI) 143
148 Net income, Group share, adjusted for exceptional
items 1,113 1,031
1 Recurring operating income before amortization and
depreciation (including logistics amortization)
Consolidated balance sheet
(in €m)
December 31, 2015
December 31, 2016 ASSETS Intangible assets 9,510
9,906 Tangible assets 12,071 13,406 Financial investments 2,725
2,871 Deferred tax assets 744 829 Investment properties 383 314
Consumer credit from financial-services companies – long-term
2,351 2,371
Non-current assets
27,784 29,697 Inventories 6,362 7,039 Trade
receivables 2, 269 2,682 Consumer credit from financial-services
companies – short-term 3,658 3,902 Tax receivables 1,168 1,044
Other receivables 705 907 Current financial assets 358 239 Cash and
cash equivalents 2,724 3,305
Current assets
17,245 19,117 Assets held for
sale 66 31 TOTAL
45,095 48,845 LIABILITIES Shareholders’
equity, Group share 9,633 10,426 Minority interests in consolidated
companies 1,039 1,582
Shareholders’ equity
10,672 12,008 Deferred tax liabilities
508 543 Provisions for contigencies 3,014 3,064 Borrowing –
Long-term 6,662 6,200 Bank loans refinancing – long-term
1,921 1,935
Non-current liabilities
12,106 11,742 Borrowings – short-term 966 1
875 Trade payables 13,648 15,396 Bank loan refinancing – short-term
3 328 3 395 Tax payables & others 1 097 1 260 Other debts
3 244 3 153
Current liabilities
22,282 25,079 Liabilties related to assets
held for sale 34 16 TOTAL
45,095 48,845
Consolidated Cash Flow Statement
(in €m) 2015
2016 NET
DEBT OPENING (4,954) (4,546) Gross
cash flow 2,733 2,964 Change in working capital 81 351 Impact of
discontinued activities 3 (11)
Cash flow from
operations 2,818 3,305 Capital
expenditure (excluding Cargo) (2,378) (2,492) Net capital
expenditure (Cargo) - (249) Change in net payables ro fixed asset
suppliers (inc. receivables) 136 (78) Asset disposals
(business-related) 104 118 Impact of discontinued activities
7 0
Free Cash Flow 687
603 Free Cash Flow excluding Cargo 687
852 Financial investments (85) (190) Disposals 109 45
Others (28) (25) Discontinued activities 0 16
Cash
Flow after investments 682 449
Dividends/Capital increase (474) 48 Acquisition and disposal of
investments without change in control 208 (40) Treasury shares 384
30 Cost of net financial debt (347) (377) Others (44) (95)
Discontinued activities 0 0
NET DEBT CLOSING
(4,546) (4,531)
Change in Shareholders’ Equity
(in €m)
Totalshareholders’
equity
Shareholders’ equity,Group
share
Minority interests At December 31, 2015
10,672 9,633 1,039 Total
comprehensive income for 2016 894 746 148 2015
dividend (247) (121) (126) Impact of scope
changes and others 689 168 521
At December
31, 2016 12,008 10,426
1,582
Net income, Group share, adjusted for exceptional
items
(in €m) 2015
2016 Net
income from continuing operations, Group share
977 786 Restatement for non-recurring income
and expenses (before tax) 257 372 Restatement for exceptional items
in net financial expenses 65 30
Tax impact 1
(159) (179) Restatement on share of income from minorities and
companies consolidated by the equity method (27) 22
Adjusted net income, Group share 1,113
1,031
1 Tax impact of restated items (from non-recurring income and
expenses and financial expenses) and non-recurring tax items
Dividend payment procedure
The ex-dividend payment date has been set at June 21, 2017. The
period during which shareholders may opt for the dividend payment
in cash or shares will begin on June 21, 2017 and end on July 4,
2017 included. Payment of the cash dividend and settlement of the
stock dividend will occur on July 13, 2017.
Definitions
Organic sales growth
Like for like sales growth plus net openings over the past
twelve months, including temporary store closures, at constant
exchange rates.
Gross margin
Gross margin is the difference between the sum of net sales,
other income, reduced by loyalty program costs and the cost of
goods sold. Cost of sales comprises purchase costs, changes in
inventory, the cost of products sold by the financial-services
companies, discounting revenue and exchange-rate gains and losses
on goods purchased.
Recurring Operating Income (ROI)
Recurring Operating Income is defined as the difference between
gross margin and sales, general and administrative expenses,
depreciation and amortization.
Recurring Operating Income Before Depreciation and
Amortization (EBITDA)
Recurring Operating Income Before Depreciation and Amortization
(EBITDA) excludes depreciation from supply chain activities which
is booked in cost of goods sold and excludes non-recurring items as
defined below.
Operating Income (EBIT)
Operating Income (EBIT) is defined as the difference between
gross margin and sales, general and administrative expenses,
depreciation, amortization and non-recurring items
Non-recurring income and expenses are certain material items
that are unusual in terms of their nature and frequency, such as
impairment, restructuring costs and expenses related to the
revaluation of preexisting risks on the basis of information that
the Group became aware of during the accounting period.
Free cash flow
Free cash flow is defined as the difference between funds
generated by operations (before net interest costs), the variation
of working capital requirements and capital expenditures.
Disclaimer
This press release contains both historical and forward-looking
statements. These forward-looking statements are based on Carrefour
management's current views and assumptions. Such statements are not
guarantees of future performance of the Group. Actual results or
performances may differ materially from those in such
forward-looking statements as a result of a number of risks and
uncertainties, including but not limited to the risks described in
the documents filed with the Autorité des Marchés Financiers as
part of the regulated information disclosure requirements and
available on Carrefour's website (www.carrefour.com), and in
particular the Annual Report (Document de Référence). These
documents are also available in English on the company's website.
Investors may obtain a copy of these documents from Carrefour free
of charge. Carrefour does not assume any obligation to update or
revise any of these forward-looking statements in the future.
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Investor RelationsMathilde Rodié, Anne-Sophie Lanaute and
Louis Igonet, +33 (0)1 41 04 28 83orShareholder Relations0
805 902 902 (toll-free in France)orGroup Communication+33
(0)1 41 04 26 17
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