Carrefour reports growth in recurring operating income and in net income for the first half 2013
Carrefour reports growth in recurring operating income and in net income for the first half 2013
Key H1 2013 figures
- Sales ex. VAT of €36.5bn, up 1.4% at constant exchange rates. Taking into account the impact of exchange rates, the variation was -0.8%.
- Recurring operating income of €766m, up 7.7% at constant exchange rates. Taking into account the impact of exchange rates, recurring operating income is up 4.9%. Growth in recurring operating income in France and in Latin America at constant exchange rates. Southern Europe was impacted by the economic environment.
- Net income, Group share, rose to €902m.
- Stronger financial structure and improved liquidity position, with net debt of €5.9 billion, a €3.7 billion improvement compared to 30 June 2012.
H1 2013 1
|Recurring Operating Income before D&A (EBITDA)||1,479||1,482||+2.4%||+0.2%|
|Recurring Operating Income (ROI)||730||766||+7.7%||+4.9%|
|Recurring operating margin||2.0%||2.1%|
|Non-recurring income and expenses||-21||489|
|Net income from continuing operations, Group share||231||519||x2.2|
|Net income, Group share||3||902||+€0.9bn|
|Net debt at close||9,629||5,894||-€3.7bn|
1 The H1 2013 social and consolidated accounts were approved by the Carrefour Board of Directors, which met on August 28, 2013. The accounts were audited by the Group’s auditors.
Figures for 2013 and the comparative 2012 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 (Greece, Singapore, Colombia, Malaysia, Indonesia and Turkey) as well as the retrospective application of the amended standard IAS 19 – Employee benefits.
H1 2013 highlights
Continued reorganization and strengthening of international
- In Turkey, the Group reorganized its partnership with Sabanci Holding, transforming the governance of their CarrefourSA joint venture. The transaction was approved by the relevant authorities in July. Carrefour now holds 46.2% of CarrefourSA.
- In May, Carrefour and Majid Al Futtaim Holding reorganized and strengthened their partnership: Carrefour sold its 25% stake in Majid Al Futtaim Hypermarkets for €530 million to its regional partner. The franchise partnership has been reinforced, extended in time and expanded in scope to the Middle East, North Africa and Central Asia.
- Also in May, Carrefour and CFAO announced the signing of a memorandum of understanding to form a joint venture that will be 55% owned by CFAO and 45% by Carrefour. This venture will have exclusive distribution rights to develop various store formats in Western and Central Africa.
Significant improvement in the Group’s liquidity position:
- New bond issue of €1 billion in May (1.75% coupon, maturity 2019).
- Bond buyback for €1.3 billion in June on 2014, 2015 and 2016 maturities.
- Renewal of syndicated loans for an amount of €4.15 billion.
H1 2013 performance by zone
|Net sales||Recurring operating income|
In France, sales were up 1.0% ex calendar in the first half and broadly stable at -0.3% on a reported basis. Commercial margin was up as a result of action plans. SG&A costs were stable. Recurring operating income rose 75.4% to €482 million with good profitability in all formats.
Other European countries
In Europe, sales were down -4.5% at current exchange rates, reflecting the persistently difficult economic environment in Southern Europe. However, commercial margin was resilient, thanks to our constant focus on price positioning. SG&A costs were stable. Recurring operating income amounted to €36 million, impacted by Italy.
At constant exchange rates, sales growth in Latin America continued (+13.3%). The currency effect was strongly unfavorable in the first half. The commercial margin held up well. Profitability in Brazil continued to grow. In Argentina, the business was resilient as a regulatory price freeze and wage increases impacted profitability.
Sales in Asia increased by 2.7%. During the second quarter, sales in China and Taiwan returned to positive trends. The commercial margin held up well. Recurring operating income was impacted by wage inflation and continued expansion in China.
Analysis of H1 2013 results
- Net sales increased by 1.4% at constant exchange rates vs. H1 2012. At current exchange rates, they were down 0.8%.
Recurring operating income rose by 7.7% at constant exchange
rates and by 4.9% at current exchange rates to reach €766m, with:
- Commercial margin rising to 21.9% of net sales vs. 21.5% in H1 2012.
- SG&A costs under control.
- The Group’s operating income increased by 77%, at €1,254m, vs. H1 2012, after taking into account net non-recurring income of €489m.
Net income, Group share, stood at €902m compared to the €3m
recorded in H1 2012.
Net income from recurring operations, Group share rose
significantly to €519m, reflecting the following:
- Financial expenses of €402m (up by €75m), including an exceptional charge of €119m linked to the bond buyback program. Interest expenses related to debt decreased by €40m.
- An effective tax rate of 34.9%.
- Discontinued operations, Group share, stood at €383m, essentially due to the net positive effect of the Group’s refocusing.
- Net income from recurring operations, Group share rose significantly to €519m, reflecting the following:
Cash flow and debt
Free cash flow improved by €243m compared to H1 2012:
- Excluding the €119m exceptional expense related to the bond buy-back, cash flow from operations was broadly stable.
- The change in working capital requirement was stable.
- Capital expenditure continued, amounting to €620m, up 11% vs. H1 2012.
- The cash-out related to discontinued activities decreased by €256m.
- The Group’s refocusing, mainly the disposals of our stakes in MAF Hypermarkets and in Indonesia, generated a cash inflow of €980m.
- The net cash outflow related to dividend payments amounted to €108m, as 72% of our dividend was paid in shares.
- The Group’s financial structure strengthened with net financial debt amounting to €5.9bn, an improvement of €3.7bn compared to June 30th, 2012.
Continuation of our 2013 priorities
Amid toughening consumption trends worldwide and exchange rate volatility, Carrefour is staying the course. The priorities announced at the annual results presentation in March are reaffirmed.
Development of the multi-local, multi-format model
- France: Continued action plans in all formats, with priority given to improvement of the offer and of price perception, store refurbishments, Drive roll-out and multi-channel development
- Europe: Adaptation of the offer and costs in the face of a tough economic environment
- Emerging markets: Continued expansion in Latin America and Asia
- New momentum in the development of real estate assets
Decentralization and empowerment
- Simplify structures and decision-making process
- Re-empower stores
- Place the client at the core of the business
Continued strict financial discipline
- Stable dividend payout policy
- Controlled increase of capital expenditure (expected at between €2.2bn and €2.3bn in 2013)
- Control of working capital
Consolidated Income Statement
|Sales, net of taxes||36,777||36,464||-0.8%|
|Sales, net of taxes and loyalty||36,406||36,177||-0.6%|
|Cost of sales||-29,654||-29,374||-0.9%|
|Recurring operating incomes before D&A (EBITDA)||1,479||1,482||+0.2%|
|Depreciation & amortization||-749||-717||-4.3%|
|Recurring operating income (ROI)||730||766||+4.9%|
|Non-current income and expenses||-21||489|
|Profit before tax||382||853||+123.3%|
|Companies accounted for by the equity method||23||25||+7.5%|
|Net income from continuing operations||288||580||+101.3%|
|Net income from discontinued operations||-276||376|
|Of which Net income – Group share||3||902|
|Of which net income from continuing operations, Group share||231||519|
|Of which net income from discontinued operations, Group share||-229||383|
|Of which Net income – Non-Controlling Interests (NCI)||10||53|
|Of which net income from continuing operations, NCI||57||61|
|Of which net income from discontinued operations, NCI||-47||-8|
|Recurring operating income / Net sales||2.0%||2.1%|
|Operating income / Net sales||1.9%||3.4%|
Consolidated Balance Sheet
|(€m)||December 31, 2012||June 30, 2013|
|Deferred tax assets||854||854|
|Consumer credit from financial-services companies – long term||2,360||2,372|
|Consumer credit from financial-services companies – short term||3,286||2,968|
|Current financial assets||352||409|
|Cash and cash equivalents||6,573||3,834|
Assets held for sale1
|Shareholders equity, Group share||7,302||7,838|
|Minority interests in consolidated companies||868||767|
|Deferred tax liabilities||580||532|
|Provisions for contingencies||4,287||3,608|
|Borrowing – long term||8,983||8,496|
|Bank loans refinancing – long term||1,966||1,781|
|Non current liabilities||15,816||14,416|
|Borrowings – short term||2,263||1,640|
|Bank loans refinancing – short term||3,032||2,895|
|Tax payables & others||1,040||1,090|
|Liabilities related to assets held for sale2||273||482|
1 Assets held for sale and related liabilities correspond:
- as of December 31, 2012 to assets and liabilities related to Indonesia and Singapore, and certain assets in Italy
- as of June 30, 2013 to assets and liabilities related to Turkey, and certain assets in France
Consolidated Cash Flow Statement
|NET DEBT OPENING||-6,911||-4,320|
|Gross cash flow (ex. discontinued activities)||828||676|
|Change in working capital||-2,415||-2,441|
|Impact of discontinued activities||-189||-15|
|Cash flow from operations (ex. financial services)||-1,776||-1,780|
|Asset disposals (business related)||-342||-92|
|Change in net payables to fixed asset suppliers||78||54|
|Impact of discontinued activities||-104||-22|
|Free Cash Flow||-2,703||-2,460|
|Proceeds from disposals of subsidiaries and from other tangible & intangible assets||155||539|
|Impact of discontinued activities||-5||441|
|Cash Flow after investments||-2,764||-1,423|
|Dividends/ capital increase||-49||-164|
|Acquisition and disposal of investments without change of control||47||-11|
|Impact of discontinued activities||56||35|
|Consumer credit impact||-19||-2|
|NET DEBT CLOSING||-9,629||-5,894|
Changes in Shareholder Equity
|At December 31, 2012||8,170||7,302||868|
|Net income for the first half||955||902||53|
|Capital increase / premium||3||0||3|
|Change in translation adjustment||-195||-183||-12|
|Impact of scope changes and others||-162||-76||-86|
|At June 30, 2013||8,605||7,838||767|
Consolidated Income Statement pro forma 2012
|Sales, net of taxes||75,701|
|Sales, net of taxes and loyalty||75,048|
|Cost of sales||-60,685|
|Recurring operating incomes before D&A (EBITDA)||3,639|
|Depreciation & amortization||-1,520|
|Recurring operating income (ROI)||2,119|
|Non-current income and expenses||-660|
|Profit before tax||581|
|Companies accounted for by the equity method||72|
|Net income from continuing operations||268|
|Net income from discontinued operations||1,087|
|Of which Net income – Group share||1,267|
|Of which net income from continuing operations, Group share||145|
|Of which net income from discontinued operations, Group share||1,122|
|Of which Net income – Non-Controlling Interests (NCI)||83|
|Of which net income from continuing operations, NCI||123|
|Of which net income from discontinued operations, NCI||-40|
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 gains and losses on goods purchases.
Recurring Operating Income Before Depreciation and Amortization (EBITDA)
Recurring Operating Income Before Depreciation and Amortization (EBITDA) is defined as the difference between the commercial income and sales, general and administrative expenses. It excludes non-recurring items as defined below.
Recurring Operating Income (ROI)
Recurring Operating Income is defined as the difference between the 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, the variation of working capital requirements and capital expenditures.
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.
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