BRIEF-U.S. CPSC says Target recalls magnetic tic tac toe games due to choking, magnet ingestion hazards
March 29 U.S. Consumer Product Safety Commission :
* Operating profit 2.238 bln euros vs average forecast of 2.224 bln
* Eyes 2014 capex of 2.4-2.5 bln euros vs 2.2 bln in 2013
* Carrefour may sell Carrefour Brazil shares or do IPO in 2015 - CEO
* Share price up 4 pct
By Dominique Vidalon
PARIS, March 5 Carrefour, the world's second-largest retailer, reported a rise in profits on Wednesday as work on turning round its core French business started to pay off and said it might list shares in its core Brazilian business next year.
Europe's largest retailer also said it would spend more cash this year to revive its European hypermarkets and expand further in both China and Brazil.
Carrefour said it would decide by the end of the year whether it would make a trade sale of a stake in its business in Brazil, its largest market after France, or proceed with an initial public offer of shares in 2015.
"We want to prepare Carrefour to play a major role in Brazil in the future ... We want to be ready to act in Brazil in 2015," Chief Executive Georges Plassat told investors.
"Everything is possible as long as we retain control", he added, saying that Carrefour had no specific funding needs in Brazil but that the presence of local investors would help it expand in South America's largest economy.
The Brazilian business is estimated to be worth 7-9 billion euros, analysts have said.
CONFIDENCE ON REVIVAL PLAN
Europe's largest retailer said operating profits last year rose a slightly better than expected 5.3 percent to 2.238 billion euros ($3.1 billion) thanks to a sharp improvement in profitability at home as well as robust growth in Latin America, although Spain, Italy and Asia remained weak.
Plassat, who took over as chief executive 20 months ago, told investors that with the core French market on the mend and Spain showing signs of improvement in the second half, he was confident he would deliver on his three-year plan to revive the group's ailing European business.
"I feel good about the remaining year and a half (of the plan). The company will not disappoint the market," he said.
"Within a year and half, at the end of the plan, Europe will have regained the profitability levels it had lost," he said.
Struggling Italy may, however, not break even before 2015, he added.
Shares in Europe's biggest retailer were 4.22 percent higher at 27.78 euros by 1410 GMT, when the French CAC 40 index was down 0.12 percent.
Carrefour, second only to Wal-Mart among the world's biggest retailers, is battling to reverse years of underperformance in Europe, where it makes 73 percent of its sales. Its problems are partly due to a reliance on the hypermarket format it pioneered, as time-pressed customers shop more locally and online, and buy non-food goods from specialists.
Plassat has had some success in the group's home market of France by cutting costs, revamping stores, improving price competitiveness, simplifying product offerings and giving more autonomy to store managers.
Carrefour said its operating margin in France, which accounts for 47 percent of revenue, rose to 3.4 percent of sales, helping to lift the group margin to 3 percent from 2.6 percent in 2012, although that still lagged the 4.9 percent achieved by smaller French peer Casino.
A stronger France helped counter a decline in the profitability for the rest of Europe, dragged down by Italy and Spain, while Asia also remained weak.
Many retailers across Europe have been struggling as shoppers' disposable income is squeezed by subdued wage growth and austerity measures, and most have responded with price cuts.
Carrefour said it would invest between 2.4 billion and 2.5 billion euros to renovate and expand stores this year, up from the 2.2 billion in 2013, a rate of spending which analysts had expected would be unchanged in 2014.
In France alone Carrefour planned to spend 1 billion euros this year, a level unchanged from 2013.
Carrefour will continue to renovate stores in France, Brazil, Italy and Spain in 2014, while expanding its store network in China and Brazil.
Carrrefour's decision to accelerate capital spending in 2014 contrasts with the situation at British rival Tesco, which last month said would lower its overall capital expenditure as it was cutting back on expanding its net new store space..
However, Carrefour's capex to sales ratio of 2.9 percent for 2013 still lags the 3.2 percent achieved by Casino last year, while estimates for Tesco's ratio in 2013 stand at 4.6 percent, according to Thomson Reuters I/B/E/S Estimates.
Analysts also point out that Carrefour started its restructuring effort earlier than Tesco.
"Tesco are two years into the turnaround and are now giving themselves a further three year horizon to see positive results," Bernstein analysts said in a recent note.
"This is much like Carrefour from 2005, plenty of false dawns with declining market shares and with two margin resets already under their belt. There were many more to come before the first signs of stabilisation in 2013."
Carrefour shares rose 49 percent last year, welcome news for top stakeholder Blue Capital, controlled by LVMH CEO Bernard Arnault, and U.S. investment fund Colony Capital. although the stock has dropped back by 7.5 percent so far this year amid concerns the recovery in France might be losing steam while there are new headwinds in emerging markets.
March 29 U.S. Consumer Product Safety Commission :
* Appointment of Aicha S. Evans as chief strategy officer, effective immediately