Paris, France--(Marketwire - August 30, 2007) -
Press release Levallois, 30th August 2007
H1 2007: On track to meet our Full Year objectives
2008-2010: Accelerating growth and maximizing shareholder returns
- Our H1 2007 results demonstrate the resilience of our business and
reflect the execution of our strategy focused on customers and growth
- H1 2007 sales : + 5.5% (+ 6.1% on constant exchange rates)
- Activity Contribution : + 0.3%
- Net income from recurring operations, Group share : + 0.1%
- Improving operating free cash flow
The Supervisory Board of Carrefour, which met on the 29th of August 2007, has examined the consolidated accounts for the half year 2007 drawn up by the Management Board on 21 August.
Consolidated profit and loss account*
EURm H1 2007 H1 2006 Growth
Net sales 38,845 36,823 +5.5%
Activity Contribution bef.
Dep. and Amortisation (ACDA)** 2,187 2,128 +2.8%
Activity Contribution 1,364 1,360 +0.3%
% Activity Contribution margin 3.5% 3,7%
Net income from recurring
operations Group Share 741 740 +0.1%
Net income Group Share 729 706 +3.3%
* As per IFRS 5, H1 2006 and 2007 accounts have been adjusted
for the deconsolidation of Portuguese hypermarkets and
Switzerland operations
** Before non recurring items
- In 2008-2010, we will grow faster and maximize shareholder
returns by :
- Making the brand work harder and generating cash
- Optimising capital allocation
- Managing the balance sheet actively and leveraging
property assets
- This will result in :
- Faster growth in profitability,
- Free cash flow generation of EUR1.5bn p.a. from 2008,
- An improvement in ROCE from close to 20% to at least
22% by 2010
- Further return to shareholders notably via share buy-backs
from cash generated by divestments and the planned IPO
of Carrefour Property
(1) H1 2007 results show that our strategy, focused on customers
and growth, is on track to deliver
- Group sales increased 5.5% in the first half, or 6.1% at
constant exchange rates:
All regions contributed to an increase in sales, and this was
achieved within strongly competitive environments, especially
in Western Europe.
- In France, our sales were supported by strong volume
gains in hypermarkets and supermarkets. Excluding petrol,
sales increased 2.5%. The Group consolidated strong market
share gains of 0.7% achieved in H1 2006.
Regional breakdown of Net Sales
EURm H1 2007 H1 2006 Growth Growth at
constant exch.
rates
France 18,126 17,941 +1.0% + 1.0%
Europe
(ex France) 14,478 13,644 +6.1% + 6.3%
Latin America 3,480 2,821 +23.4% + 26.0%
Asia 2,760 2,417 +14.2% +20.0%
Total Group 38,845 36,823 +5.5% +6.1%
- Activity Contribution grew 0.3% to EUR1,364m, at a slower
rate than sales, as expected:
- Commercial margin, at 22.5%, was resilient as we
strengthened our local price and promotion leadership. In
France, our commercial margin was down 10bp, reflecting a
strong decline in dry grocery margin partly offset
by an improved margin mix in non-food and a reduction
in supply chain costs
- SG&A (excluding rents) were stable as a percentage of
sales, despite an increase in cost inflation and greater
resources allocated to stores undergoing conversion
- Asset costs (rents & depreciation) were up 9% in H1,
continuing to reflect the impact of faster expansion
Activity Contribution
EURm H1 2007 H1 2006 Growth
Net sales 38,845 36,823 +5.5%
Commercial income 8,750 8,325 +5.1%
Commercial margin 22.5% 22.6%
SG&A (6,563) (6,197) +5.9%
Activity Contribution,
before depreciation
and amortization 2,187 2,128 +2.8%
Depreciation and
amortization (823) (768) + 7.1%
Activity Contribution 1,364 1,360 +0.3%
- International activities reported an 8.5% increase in Activity
Contribution:
- Excluding Italy, our international activities recorded a 21%
increase in Activity Contribution.
- Our new engines for growth continued to deliver: Activity
Contribution in countries outside G4 (France, Spain, Italy
and Belgium) was up 46% in the period.
Breakdown of Activity Contribution by region
EURm H1 2007 H1 2006 Growth
France 734 779 - 5.8%
International 630 581 + 8.5%
Europe (ex France) 436 456 - 4.4%
Latin America 84 40 + 108.2%
Asia 110 84 + 30.4%
Total Group 1,364 1,360 + 0.3%
- Net income Group share, before discontinued activities,
was up 0.1%:
- Financial costs were up EUR10m, as expected, as a result
of rising interest rates and a dynamic acquisition
pipeline.
- Tax rate was broadly stable at 29%, while our share in
associates declined to EUR2m, reflecting lower exceptional
capital gains at our associates this year.
Profit and loss account
EURm H1 2007 H1 2006 Growth
Activity Contribution 1,364 1,360 + 0.3%
Non recurring elements 23 (9) Na
EBIT 1,387 1,351 + 2.7%
Financial costs (248) (238) + 4.0%
Income tax (329) (328) + 0.3%
Tax rate 28.9% 29.5%
Minority interest (71) (60) + 17.7%
Associates 2 16 Na
Net income from rec.
Ops Group Share 741 740 + 0.1%
Discontinued activities (12) (34)
Net income group share 729 706 + 3.3%
- Net debt at the end of H1 improved by more than EUR600m, resulting
in solid financial ratios:
- Free Cash Flow improved by over EUR1bn, driven by solid cash flow
(+3%) and an improvement in working capital. Capital expenditure
was broadly stable at EUR1.1bn.
- This solid Free Cash Flow helped us finance EUR1bn of
acquisitions in H1 07, the largest being Atacadao in Brazil
for EUR825m.
- Cash Flow/ Net debt was 16%, vs. 15% in H1 2006. Financial
ratios remained solid.
Free Cash Flow and net debt ratios
EURm H1 2007 H1 2006 Change
Free Cash Flow (1,945) (2,967) EUR1,022m
Net debt closing 10,212 10,831 (EUR620m)
ACDA/ Financial costs 8.8x 8.9x
Cash Flow/ Net debt 16% 15%
(2) We are confident we will reach our full year goals
- Our H1 results make us confident that our 2007 targets
will be met:
- 2007 sales growth on constant exchange rates > 2006
(reported 6.4%)
- Growth in Activity contribution, at a slower pace than sales
- In France, we are assuming no change in the pricing environment
in the H2:
- We remain committed to our non-negotiable priority of
local price leadership, whatever the competitive
environment
- Our engines for growth will continue to deliver:
- Growth markets in Europe, Latin America and Asia continue
to record strong trends
- Our recent acquisitions, Atacadao and Ahold Polska, will
contribute to growth
- We continue to optimise our portfolio:
- Disposal of Portuguese hypermarkets for an EV of EUR662m
(July 2007)
- Disposal of Switzerland for an EV of around EUR330m
(August 2007)
(3) 2008 - 2010: turning the virtuous circle faster
- We will use all our levers for value creation at our disposal,
including:
- Making the brand work harder and generating cash, via
reinforcing our commercial model (food, non-food, using
our multi-format single brand strategy), managing the
commercial margin, reducing costs and controlling capital
expenditure to a maximum of EUR3bn
- A more rigorous allocation of capital: we target EUR1.5bn
of disposals between 2007 and 2008 as part of our
portfolio optimisation
- A more active management of our balance sheet, including
the leverage of the value of our property assets
- As a result, we will be able to accelerate growth and
maximize shareholder returns:
- From 2008, Activity Contribution will grow at least in
line with sales
- From 2008, Free Cash Flow will increase to EUR1.5bn p.a. The
cash will be mainly used to accelerate growth in the core
business through tactical acquisitions
- ROCE will increase from close to 20% to at least 22% by
2010
- We expect to list our dedicated real estate vehicle,
Carrefour Property, in 2008 (subject to market
conditions):
- The pan-European vehicle Carrefour Property will
consist of around 60% of our estimated total property
value (between 20 and EUR24bn), representing 3.7
million m(2) (around 280 hypermarkets and 540
supermarkets),
- We plan to open a portion of the capital of this
vehicle to outside investors worth around EUR3bn.
- Cash from divestments and the IPO of Carrefour Property
will be returned mainly via share buy-backs to maximize
shareholder returns. These buy backs could be worth up
to EUR4.5bn* on the period.
Next appointment:
Publication of Q3 2007 sales
16 October 2007
* Subject to the approval at the 2008 AGM
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