Carrefour: 2012 Half-Year Results

Thu Aug 30, 2012 1:45am EDT

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Carrefour: 2012 Half-Year Results

Growth in sales supported by emerging countries

Recurring Operating Income: €769m

Net income from continuing operations, Group share of €199m

Net debt reduced to €9.6bn, a decrease of €1bn vs. June 30, 2011

Regulatory News:

Carrefour (Paris:CA):

(€m)  

H1 2011 pro-forma1

  H1 2012   Var.
 
Sales ex. VAT 38,475 38,821 +0.9%
EBITDA   1,667   1,590   -4.6%
Recurring Operating Income   838   769   -8.2%
Recurring Operating Margin 2.2% 2.0%
Non-recurring income and expenses   -870   -63    
Net income from continuing operations, Group share   -879   199    
Net income from discontinued operations, Group share 630 -230
Net income, Group share -249 -31
             
Net debt at close   10,654   9,629   -9.6%

Key H1 2012 figures

  • Growth in sales of +0.9% to €38.8bn, driven by emerging markets
  • Recurring Operating Income of €769m, supported by Latin America but impacted by the economic environment in Southern Europe, vs €838m in H1 2011
  • Net income from continuing operations, Group share, of €199m, vs. a loss of €879m in H1 2011
  • Net income from discontinued operations, Group share, of -€230m, largely resulting from the disposal of Greece as announced in the press release dated June 15th
  • Net income, Group share, of -€31m, vs. a loss of €249m in H1 2011

Key H1 2012 highlights

  • Full consolidation of Guyenne & Gascogne as from June 1, 2012, after the success of the cash tender offer with a secondary option in shares, followed by a compulsory buyout offer
  • Reorganization of the partnership in Greece: Carrefour sold its stake in its joint venture to its partner Marinopoulos, which becomes the exclusive franchisee of Carrefour in Greece, Cyprus and the Balkans
  • Exit from Singapore: planned closure of the 2 stores by year-end. Operations in the country are also reclassified under discontinued operations in H1 2012 and 2011 accounts have been restated pro-forma
  • Acquisition of 129 Eki stores in Argentina, effective June 2012, consolidating Carrefour’s leadership in the country
  • Completion of the partnership with Itaú Unibanco in Brazil in financial services

1 Following the reorganization of the partnership in Greece announced on June 15, 2012, activities in the country have been reclassified as discontinued operations as from January 1, 2012. Activities in Singapore have also been reclassified as discontinued operations following management’s decision to cease operations in the country. 2011 P&L has been restated pro-forma as a result of these two operations in accordance with IFRS 5. Variations are pro-forma excluding Greece and Singapore.

Performance by zone

Net sales   Recurring operating income
€ millions   H1 2011 pro-forma   H1 2012   Var.   Variation at constant exch. rates, including petrol   H1 2011 pro-forma   H1 2012   Var.
             
France 17,073 16,995 -0.5% -0.5% 299 279 -6.7%
Europe 10,423 10,114 -3.0% -1.8% 220 150 -32.0%
Latin America 7,298 7,682 +5.3% +8.3% 222 245 +10.1%
Asia 3,681 4,031 +9.5% +0.7% 121 116 -4.1%
Global functions                   -24   -20   +15.8%
Total   38,475   38,821   +0.9%   +0.9%   838   769   -8.2%

France

In France, sales were down 0.5%, supported by growth in food sales but impacted by the decline in non-food sales, notably in seasonal goods. Continued investment in prices had a slightly negative effect on commercial margin. SG&A were stable as a percentage of sales. Recurring operating income was down 6.7% to €279m.

Europe

In Europe, sales decreased by 1.8% at constant exchange rates (-3.0% at current exchange rates), reflecting the difficult economic environment, especially in Southern Europe. Belgium recorded an increase in sales. Overall, recurring operating income amounted to €150m, down 32% compared to H1 2011. A large part of the decrease in recurring operating income is attributable to Spain, where the decrease in sales and investments in the offer are only partially offset by the significant reduction in distribution costs.

Latin America

Sales growth in Latin America remained strong (+8.3% at constant exchange rates and +5.3% at current exchange rates), driven by strong like-for-like performance, notably at Atacadao in Brazil. Commercial margin was up. Recurring operating income rose 10.1% to €245m, driven by Brazil.

Asia

Sales in Asia increased by 0.7% at constant exchange rates (+9.5% at current exchange rates), marked by stable sales in China and a sustained increase in Indonesia. Commercial margin improved. Distribution costs rose, mainly due to wage inflation in China. Recurring operating income was down 4.1% to €116m.

Analysis of H1 2012 results

Income statement

  • Sales increased by 0.9% vs. H1 2011 restated for operations in Greece and Singapore. The variation is similar at constant exchange rates.
  • Gross margin from current operations was resilient at 21.5% of sales, unchanged from H1 2011. Commercial margin improved in emerging countries.
  • SG&A costs, including asset costs were up 1.6%, or 10 basis points as a percentage of sales. Distribution costs fell slightly in France and Europe, but increased in Latin America and Asia as a result of wage inflation.
  • Recurring operating income was down 8.2% to €769m.
  • Net non-recurring expense amounted to €63m. Proceeds from disposals of €152m (of which €111m from Altis) partially offset reorganization costs of €47m, depreciation of assets for €51m and other items for €117m, of which settlement of a tax dispute in Brazil for €105m.
  • As a result, the Group’s operating income reached €706m vs. a loss of €31m in H1 2011
  • Financial expenses increased by 4.3% to €344m.
  • The tax charge was €126m, down 73.9% vs. H1 2011. The effective tax rate was 34.8%, significantly lower than in H1 2011, which was marked by exceptional charges.
  • Minority interests were stable, at €60m vs. €59m in H1 2011.
  • Net income from recurring operations, Group share stood at €199m, vs. -€879m in H1 2011.
  • The impact of discontinued operations, Group share was -€230m. This is largely attributable to the disposal of our operations in Greece and the end of our operations in Singapore. This compares to net income from discontinued operations, Group share of €630m in H1 2011, which included the gain on the sale of our operations in Thailand.
  • As a result, net income, Group share, improved to -€31m vs. a loss of €249m in H1 2011.

Cash flow statement & debt

  • Cash flow from operations (excluding discontinued operations) amounted to €907m, down 25%, primarily reflecting the drop in EBITDA and settlement of Brazilian tax litigation.
  • The variation of working capital requirements was -€2,587m (vs. -€3,472m in H1 2011), mainly reflecting the improvement in our inventory levels.
  • Capital expenditure was €603m, down 17% compared to the H1 2011 figure of €725m (excluding Greece and Singapore), which included investments linked to the roll-out of Planet in France and Europe.
  • As a result, free cash-flow improved by €444m, to -€2,783m vs. -€3,227m in H1 2011.
  • Cash-in from disposals stood at €236m, of which €153m linked to the sale of the Group’s stake in Altis. The Guyenne & Gascogne transaction led to a cash outflow of €239m.
  • Net financial debt improved by €1bn, at €9,629m at June 30, 2012 compared to June 30, 2011.

AGENDA

Q3 2012 sales: October 11, 2012

APPENDIX

 

CONSOLIDATED INCOME STATEMENT

     
(In millions of euros)

H1 2011
pro-forma

H1 2012 % Prog
Sales, net of taxes 38,475 38,821 0.9
Loyalty program -450 -377 -16.2
Other revenues 1,093 1,203 10.0
Total revenues 39,118 39,647 1.4
Cost of sales -30,829 -31,304 1.5
Gross margin of current operations 8,289 8,343 0.6
SG&A -6,623 -6,753 2.0
Current operating income before D&A and provisions (EBITDA) 1,667 1,590 -4.6
Depreciation & provisions -828 -820 -1.0
Recurring operating income 838 769 -8.2
Non current income and expenses -870 -63
Operating income -32 706
Financial result -330 -344
Result before tax -362 362
Income tax -482 -126
Equity accounted companies 24 23
Minority interests -59 -60
Net income from recurring operations
Group Share
-879 199
Discontinued operations Group Share 630 -230
Discontinued operations Minority Interest -50 -50
Total net income -241 -21
Net income - Group Share -249 -31
 

MAIN RATIOS

   

H1 2011
pro forma

H1 2012
Gross margin from current operations / Sales 21.5% 21.5%
SG&A / Sales 17.2% 17.4%
Recurring operating income / Sales 2.2% 2.0%
Operating income / Sales -0.1% 1.8%
         

CONSOLIDATED BALANCE SHEET

   
(In millions of euros)   H1 2011   H1 2012
ASSETS
Intangible assets 11,366 9,634
Tangible assets 13,377 12,953
Financial investments 1,732 1,739
Deferred tax assets 835 795
Investment properties 536 560
Consumer credit from financial-services companies-long term 2,079 2,062
Non current assets 29,925 27,744
Inventories 6,494 6,159
Trade receivables 2,629 2,483
Consumer credit from financial-services companies-short term 3,356 3,389
Tax receivables 657 622
Other receivables 1,060 1,038
Current financial assets 304 181
Cash and cash equivalents 1,713 2,523
Current assets 16,214 16,396
Assets held for sale 3,651 880
TOTAL 49,791 45,019
 
LIABILITIES
Shareholders equity, Group Share 6,028 6,399
Minority interests in consolidated companies 935 849
Shareholders equity 6,963 7,248
Deferred tax liabilities 707 604
Provisions for contingencies 3,559 3,564
Borrowings- long term 9,726 8,860
Bank loans refinancing- long term 441 587
Non current liabilities 14,434 13,615
Borrowings – short term 2,946 3,473
Trade payables 12,335 11,929
Bank loans refinancing –short term 4,344 4,155
Tax payables & others 1,079 1,093
Other debts 5,278 2,649
Current liabilities 25,982 23,299
Liabilities related to assets held for sale 2,411 858
TOTAL 49,791 45,019
         

CONSOLIDATED CASH FLOW STATEMENT

   
(In millions of euros) H1 2011 H1 2012
 
NET DEBT OPENING -7,998 -6,911
Gross cash flow (ex. discontinued activities) 1,214 907
Change in working capital -3,472 -2,587
Discontinued activities 77 -96
Cash flow from operations (ex. financial services) -2,181 -1,776
Capital expenditures -725 -603
Change in payables to fixed asset suppliers -142 -384
Discontinued activities -180 -20
Free Cash Flow -3,227 -2,783
Financial investments -51 -153
Disposals 68 236
Others 12 -56
Discontinued activities 564 -7
Cash Flow after investments -2,633 -2,763
Dividends and capital increase -93 -49
Acquisition and disposal of investments without change of control - 47
Treasury shares -99 -
Others 214 10
Discontinued activities 58 56
Consumer credit impact -104 -19
NET DEBT CLOSING -10,654 -9,629
             

CHANGES IN SHAREHOLDER EQUITY

     
In millions of euros  

Total shareholders’ equity

 

Shareholders’ equity,
Group share

 

Minority interests

 
At December 31, 2011 7,627 6,618 1,008
 
H1 2012 net income -21 -31 10
2011 dividends -441 -348 -93
Capital increase and premiums 189 188 1
Foreign currency translation adjustments 64 46 18
Impact of changes in perimeter -163 -68 -96
Other -7 -6 -1
At June 30, 2012 7,248 6,400 848
             

IMPACT OF RESTATEMENTS ON H1 2011 P&L (REPORTED/PRO FORMA)

     
(In millions of euros)

H1 2011
reported

Impact of Greece & Singapore

H1 2011
pro-forma

Sales, net of taxes 39,607 -1,132 38,475
Loyalty program -451 1 -450
Other revenues 1,100 -7 1,093
Total revenues 40,256 -1,138 39,118
Cost of sales -31,763 934 -30,829
Gross margin of current operations 8,494 -204 8,289
SG&A -6,869 246 -6,623
Current operating income before D&A and provisions (EBITDA) 1,625 41 1,667
Depreciation & provisions -853 24 -828
Recurring operating income 772 66 838
Non current income and expenses -884 14 -870
Operating income -112 80 -31
Financial result -342 11 -330
Result before tax -453 92 -362
Income tax -490 7 -482
Equity accounted companies 25 -1 24
Minority interests -9 -50 -59

Net income from recurring operations
Group Share

-927 48 -879
Discontinued operations Group Share 679 -48 630
Discontinued operations Minority Interest -1 -50 -50
Total net income -241 0 -241
Net income - Group Share -249 0 -249
             

IMPACT OF RESTATEMENTS ON FULL YEAR 2011 P&L (REPORTED/PRO FORMA)

     
In millions of euros

2011
reported

Impact of Greece & Singapore

2011
pro-forma

Sales, net of taxes 81,271 -2,238 79,033
Loyalty program -816 4 -812
Other revenues 2,309 -18 2,291
Total revenues 82,764 -2,252 80,512
Cost of sales -64,912 1,836 -63,076
Gross margin of current operations 17,852 -416 17,436
SG&A -13,969 492 -13,477
Current operating income before D&A and provisions (EBITDA) 3,883 76 3,959
Depreciation & provisions -1,701 48 -1,653
Recurring operating income 2,182 124 2,306
Non current income and expenses -2,662 269 -2,393
Operating income -481 394 -87
Financial result -757 27 -731
Result before tax -1,238 420 -818
Income tax -1,002 42 -960
Equity accounted companies 64 0 64
Minority interests -25 -138 -163

Net income from recurring operations
Group Share

-2,202 324 -1,878
Discontinued operations Group Share 2,573 -324 2,249
Discontinued operations Minority Interest 7 -138 -131
Total net income 404 0 404
Net income - Group Share 371 0 371

DEFINITIONS

  • Gross margin from current operations

Gross margin from current operations is the difference between the sum of net sales, other income and the cost of goods sold.

  • Recurring Operating Income Before Depreciation and Amortization (EBITDA)

Recurring Operating Income Before Depreciation and Amortization (EBITDA) is defined as the difference between the gross margin from current operations and sales, general and administrative expenses.

  • Recurring Operating Income

Recurring Operating Income is defined as the difference between the gross margin from current operations and sales, general and administrative expenses, depreciation and amortization.

  • Operating Income (EBIT)

Operating Income (EBIT) is defined as the difference between gross margin from current operations and sales, general and administrative expenses, depreciation, amortization and non-recurring items

  • Free cash flow

Free cash flow is defined as the difference between funds generated by operations and capital expenditures.

Investor relations:
Alessandra Girolami, Matthew Mellin, Reginald Gillet, +33 (0)1 41 04 26 00
or
Shareholder relations:
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or
Group Communications
+33 (0)1 41 04 27 53