Organic sales growth of 4.3%
Increase in Recurring Operating Income of
+13.8%
Strong increase in adjusted net income,
Group share of +16.7%
Regulatory News:
Carrefour (Paris:CA):
Strong profit growth at constant exchange rates in first half
2014
- Net sales of €35.9bn, up +4.3%1,
highest organic growth rate in five years
- Growth in Recurring Operating Income:
up +13.8%2 to €833m
- Rise in net income, Group share,
adjusted for exceptional items: up +16.7%3 to €274m
- Increase in gross cash flow of +41.6%
to €1.3bn (+1.9% excluding exceptionals)
Europe: Growth of +7.8% in Recurring Operating Income
France: New half of improved profitability
- Further organic sales growth:
+1.9%
- Traffic up in all formats
- Growth in Recurring Operating Income
for the 4th consecutive half: +6.9%
Other European Countries: Further improvement in
profitability
- Overall stability in sales with growth
in Spain, Belgium and Romania
- Recurring Operating Income up
+19.3%
Emerging markets: Growth of +19.2% in Recurring Operating
Income
- Excellent sales performance and
increased profitability in Brazil and Argentina
- Stable sales in Asia
Investments up, two tactical acquisitions
- Continued investments at €818m, in line
with our catch-up, remodeling and network expansion policy
- Signing of agreements to acquire the
activities of DIA France and 53 supermarkets in northern Italy,
reinforcing our multiformat strategy
_________________________________1 Ex petrol ex calendar.2 At
constant exchange rates.3 Adjusted net income: See in appendix.
First half 2014 key figures1
(€M)
H1 2013restated
H1 2014
Variation atconstantexch. rates
Variation atcurrentexch. rates
Net sales 36,446 35,870
+3.4% -1.6% Net sales ex petrol
32,480 32,119 +4.3% -1.1% Recurring
Operating Income before D&A (EBITDA) 1,488
1,515 +6.6% +1.8% EBITDA Margin 4.1%
4.2%
Recurring Operating
Income 772 833
+13.8% +7.9% Recurring Operating Margin
2.1% 2.3%
Adjusted net
income, Group share 235 274
+16.7%
Net debt at close
5,894 7,324
+€1.4bn
Breakdown by zone of first half 2014 net sales and recurring
operating income
Net sales Recurring Operating
Income
(€M)
H1 2013restated
H1 2014
Organicgrowth2
Variation at currentexch. rates
H1 2013restated
H1 2014
Variation at
constantexch. rates
Variation at currentexch. rates
France 16,947
17,005 +1.9% +0.3% 482
515 +6.9% +6.9% Other Europe
9,176
9,173 -0.1% 0.0% 36
43 +19.3% +19.1%
Europe 26,123 26,178 +1.1% +0.2%
518 558 +7.8% +7.7% Latin America 6,953
6,454 +16.8% -7.2% 217
247 +33.2% +13.4% Asia
3,370
3,237 +0.2% -3.9% 98
83 -11.9% -15.2%
Emerging markets 10,323
9,691 +11.2% -6.1%
315 330 +19.2%
+4.8% Global functions
-61
-55
+9.6% +10.2% Total
36,446 35,870 +4.3% -1.6%
772
833 +13.8% +7.9%
_________________________________1 The H1 2014 social and
consolidated accounts were approved by the Carrefour Board of
Directors, which met on July 30th, 2014. The accounts were
submitted to a limited review by the Group’s auditors.
Figures for the first half 2014 and the comparative first half
2013 information presented in this document take into account the
classification of certain activities in accordance with IFRS 5 –
Assets held for sale and discontinued operations.
2 Excluding petrol and calendar.
Further growth in Recurring Operating Income (+13.8% at
constant exchange rates) and in adjusted net income, Group share
(+16.7%)
Income statement
In H1 2014, Carrefour recorded solid net sales growth. Net
sales were up 4.3% on an organic basis. At current exchange
rates, sales were down 1.6%. Europe and Emerging Markets both
recorded sales growth: +1.1% and +11.2% respectively.
Recurring Operating Income grew once again and reached
€833m, up +13.8% at constant exchange rates (+7.9% at current
exchange rates), driven by both Europe (+7.8%) and Emerging Markets
(+19.2%).
In France, recurring operating income was €515m, up
+6.9%, an increase of +20 basis points (bp) in gross margin, which
reached 3.0% of sales. This performance is mainly explained by an
improved gross margin as a result of decreased shrinkage and cost
savings from logistics. Profitability was good in all formats.
In Other European countries, recurring operating income
stood at €43m, up +19.3% at constant currencies. Operating margin
was slightly up at 0.5% of sales. While maintaining constant
attention to price positioning, the gross margin improved. In Spain
and in Belgium, profitability increased. Italy continued rolling
out its action plans and intensified its commercial investments
linked to the football world cup in the half.
Strong growth in Latin America continued with recurring
operating income of €247m, up +33.2% at constant exchange rates.
Operating margin stood at 3.8%, up +70bp. This increase reflected
excellent like-for-like sales in Brazil and Argentina and a better
gross margin.
In Asia, recurring operating income was €83m. Gross
margin held up well. Amid a more frugal consumption environment and
a decrease in shopping card activity, China continued its expansion
to build up its long-term position. Taiwan improved its
performance.
Net non-recurring income stood at €264m and mainly
reflected the capital gain linked to the contribution of assets to
property company Carmila. Net income from continuing operations,
Group share, was €474m and reflected:
- A decrease of €131m in financial
expenses, reflecting the better cost of funding and the €119m
non-recurring expense linked to the bond buyback in the first half
2013
- A stable effective tax rate
Net income, Group share, was €441m.
Adjusted net income, Group share, stood at €274m, an increase
of +16.7%.
Cash flow and debt
Cash flow from operations rose by +41.6%. Adjusted for
exceptional items and discontinued operations, it increased by
+1.9%, in line with the increase in EBITDA, to €1,252m (vs €1,229m
in the first half of 2013).
Carrefour continued to invest in remodeling and expansion with
capital expenditure of €818m. The change in payables to
fixed asset suppliers led to a use of €382m. Change in working
capital excluding exceptional items, stable versus the prior
year, was a cash-out of €2,488m.
Free cash flow was -€2,412m, reflecting the seasonality
of the business.
Acquisitions and disposals led to a net total cash-out of
€186m, partly explained by the creation of Carmila. The cash
dividend paid by Carrefour was a limited €149m, as 65% of
shareholders opted for a dividend payment in shares. Financial
expenses decreased by €27m to €192m.
Net financial debt as at June 30th, 2014 was €7.3bn.
H1 2014 highlights
- In April, creation of Carmila, a
company dedicated to enhancing the value of the shopping centers
adjacent to Carrefour hypermarkets in France, Spain and Italy and
in which Carrefour holds a 42% stake.
- Acquisition in June of DIA
France, comprising more than 800 stores totaling nearly 550,000
m² and 2.3 billion euros of sales under banners in 2013. This
transaction, which remains subject to the approval of the relevant
antitrust authorities, should contribute to the growth of
Carrefour’s multiformat store network in France.
- Acquisition of 53 supermarkets
located in northern Italy in June, with a combined sales area
of 58,000 m² and net sales of around 300 million euros in 2013.
This acquisition will strengthen Carrefour’s multiformat strategy
in Italy. The completion of the transaction is subject to the
approval of the relevant antitrust authorities.
Staying the course on 2014 priorities
Carrefour is staying the course. The priorities announced at the
annual results presentation in March are reaffirmed:
- Continue action plans in all
countries aiming at continuous improvement of our offer and
price image to enhance the shopping experience, notably in our
three largest markets, France, Brazil and Spain but also in
Italy
- Accelerate multi-channel
roll-out
- Revamp and convergence of our websites
in France, gradual broadening of our offer
- Continued development of click &
collect
- Continue structural projects
including:
- Revamp of the supply chain in
France
- IT rationalization
- Enhance the attractiveness of our
sites in France, Spain and Italy by capitalizing on the
creation of Carmila
- Accelerate store remodelings and
relaunch multi-format expansion
- Investments of between €2.4bn and
€2.5bn in 2014
- Intensification of the remodeling
plan
- Continued long-term growth in emerging
markets, particularly in China and Brazil
- Maintain strict financial
disciplineContacts
APPENDIX
Consolidated Income Statement
(€M)
H1 2013restated
H1 2014 Variation
Sales, net of taxes
36,446 35,870
-1.6% Sales, net of taxes and loyalty
36,159 35,564 -1.6% Other
revenues 1,184 1,192 +0.7%
Total
Revenues 37,342 36,757
-1.6% Cost of sales -29,357
-28,686 -2.3% Commercial income 7,986 8,071 +1.1% SG&A
-6,498 -6,556 +0.9%
Recurring
operating incomes before D&A (EBITDA)
1,488 1,515 +1.8% Depreciation
& amortization -716 -682 -4.7%
Recurring operating income 772
833 +7.9% Non-current income and expenses
489 264 -45.9%
Operating income
1,261 1,097 -13.0%
Financial expenses -401 -269 -32.8% Profit before tax 860 828 -3.8%
Income tax -298 -300 +0.6% Companies accounted for by the equity
method 25 9 -62.7%
Net income from
continuing operations 588
537 -8.5% Net income from discontinued
operations 368 -33
Net
income 955 504
-47.2% Of which Net income – Group share 902
441 Of which net income from continuing operations, Group
share 526 474 Of which net income from discontinued operations,
Group share 376 -33
Of which Net income –
Non-Controlling Interests (NCI) 53 63 Of which
net income from continuing operations, NCI 61 63 Of which net
income from discontinued operations, NCI
-8
0
Calculation of adjusted net income, Group share
(€M)
H1 2013restated
H1 2014 Variation
Net income from
continuing operations, Group share 526
474 -9.8% Restatement for non recurring
income and expenses (before tax) -489 -264
Restatement for exceptional items in net financial expenses
139 11
Tax impact1
70 40 Restatement on share of income from minorities and companies
consolidated by the equity method -11 13
Adjusted net income, Group share
235 274 +16.7%
_________________________________1 Tax impact of restated items
(non recurring income and expenses and financial expenses) and non
recurring tax items.
Main ratios
H1 2013restated
H1 2014 Commercial margin 21.9%
22.5% Recurring operating income / Net sales 2.1%
2.3% Operating income / Net sales 3.5%
3.1%
Consolidated Balance Sheet
(€M) June 30th, 2013
June
30th, 2014 ASSETS
Intangible assets 9,131 9,108 Tangible assets 10,966 11,227
Financial investments 1,418 2,541 Deferred tax assets 854 944
Investment properties 422 319 Consumer credit from
financial-services companies – long term 2,372
2,413
Non-current assets 25,164
26,553 Inventories 5,595 5,902 Trade
receivables 2,390 2,281 Consumer credit from financial-services
companies – short term 2,968 3,373 Tax receivables 936 735 Other
receivables 946 1,041 Current financial assets 409 361 Cash and
cash equivalents 3,834 2,030
Current
assets 17,079 15,723
Assets held for sale 739
12 TOTAL 42,981
42,288 LIABILITIES Shareholders equity, Group
share 7,838 8,158 Minority interests in consolidated companies
767 783
Shareholders’ equity
8,605 8,941 Deferred tax
liabilities 532 537 Provisions for contingencies 3,608 3,734
Borrowing – long term 8,496 6,626 Bank loans refinancing – long
term 1,781 1,954
Non current
liabilities 14,416
12,851 Borrowings – short term 1,640 3,089 Trade payables
11,219 10,868 Bank loans refinancing – short term 2,895 3,079 Tax
payables & others 1,090 1,156 Other debts 2,634
2,298
Current liabilities
19,478 20,490 Liabilities related to
assets held for sale 482
7 TOTAL 42,981
42,288
Consolidated Cash Flow Statement
(€M)
H1 2013restated
H1 2014 NET DEBT OPENING -
4,320 - 4,117 Gross cash flow (ex. discontinued
activities) 907 1,284 Change in working
capital - 2,440 - 2,571 Impact of discontinued activities
- 28 0
Cash flow from operations (ex. financial
services) - 1,561 - 1,287
Capital expenditures - 620 - 818 Change in net payables to fixed
asset suppliers (inc. receivables) - 91 - 378 Asset disposals
(business related) 54 75 Impact of discontinued activities
- 23 - 5
Free Cash Flow -
2,240 - 2,412 Financial investments - 35 - 268
Proceeds from disposals of subsidiaries and from other tangible
& intangible assets 539 82 Others 91 -68 Impact of discontinued
activities 441 0
Cash Flow after
investments - 1,204 -2,667
Dividends/ capital increase - 164 - 198 Acquisition and disposal of
investments without change of control - 11 - 122 Cost of net
financial debt - 219 -192 Others - 8 37 Impact of discontinued
activities 35 -16 Consumer credit impact
-2
-50
NET DEBT CLOSING - 5,894
- 7,324
Changes in Shareholder Equity
(€M)
Total
shareholders’equity
Shareholders’ equity,Group
share
Minority interests At December 31, 2013
8,597 7,844 754 Total
comprehensive income for H1 2014 560 483
77 2013 dividend -199 -149 -50
Impact of scope changes and others -18 -20
2
At June 30, 2014 8,940
8,158 783
Definitions
Organic sales growth
Like for like sales growth plus net openings over the past
twelve months, including temporary store closures.
Commercial income
Commercial income 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 Before Depreciation and
Amortization (EBITDA)
Recurring Operating Income Before Depreciation and Amortization
(EBITDA) is defined as the difference between commercial income and
sales, general and administrative expenses. It excludes
non-recurring items as defined below.
Recurring Operating Income
Recurring Operating Income is defined as the difference between
commercial income and sales, general and administrative expenses,
depreciation and amortization.
Operating Income (EBIT)
Operating Income (EBIT) is defined as the difference between
commercial income 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 language 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.
Investor RelationsRéginald Gillet, Alessandra Girolami,
Matthew MellinTel : +33 (0)1 41 04 26 00orShareholder
RelationsTel : 0 805 902 902 (toll-free n° in France)orGroup
CommunicationsTel : +33 (0)1 41 04 26 17
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