(Adds CEO comment on exposure to and investment in Argentina,
share price move and trader quote)
PARIS, July 31 Carrefour, the world's
second-largest retailer which reported higher first-half profits
on Thursday, said it will slow down investment in Argentina in
response to the country's second debt default in 13 years.
Chief Executive Georges Plassat said the impact of the debt
default would be manageable for the retailer as it relies on the
country for only 3 percent of group sales and 2 percent of
Argentina defaulted on its debts earlier on Thursday after
hopes for a midnight deal with creditors were dashed.
Shares in Carrefour slid 3.5 percent to 26.17 euros by 1059
"Argentina weighs on the stock although the group's exposure
to the country is limited," said a Paris-based trader.
Carrefour reported higher first-half profits in its core
French business and in Brazil and Argentina. First-half
recurring operating profit rose 13.8 percent to 833 million
euros ($1.12 billion), while first half adjusted net income rose
16.7 percent at current foreign exchange rates to 274 million
The retailer 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 customers turn to local and
Plassat has lowered costs, revamped stores, cut prices,
simplified product offerings and given more autonomy to store
managers, starting in France.
The first-half increase in recurring operating profit was
driven by growth of 7.8 percent in Carrefour's core French
market and 19.2 percent in emerging markets, with particularly
strong performance in Brazil and Argentina.
Carrefour is the second-largest operator in the Brazilian
food retail market, behind leader Grupo Pao de Acucar (GPA),
controlled by Carrefour's arch-rival Casino, and just
ahead of world number one retailer U.S. group Wal-Mart.
Carrefour, which has said it would spend more cash this year
to revive its European hypermarkets and expand further in both
emerging markets of China and Brazil, said its gross cash flow
rose 1.9 percent excluding exceptionals to 1.3 billion euros.
Chief Financial Officer Pierre-Jean Sivignon said earlier
in July that the analysts' consensus forecast for an operating
profit of about 2.38 billion euros this year was "reasonable".
That would be a 6.3 percent rise on 2013.
(1 US dollar = 0.7465 euro)
(Reporting by Andrew Callus and Emma Thomasson, Editing by