Carrefour reports sharp drop in profits, shares crash
France's largest grocer saw profits crash over the first six months of 2017 despite rising sales, amid a large drop in recurring operating income and a growing debt pile, with management telling shareholders the second half of the year would be just as difficult.
CAC 40
8,016.65
17:00 25/04/24
Carrefour
€15.69
16:29 25/04/24
DJ EURO STOXX 50
4,989.88
00:00 25/04/24
Net sales at Carrefour jumped by 6.2% in comparison to the year ago period to reach €38.53bn and by 2.8% on a like-for-like basis, but operating margins worsened from 4.0% to 3.7% and recurring operating income (ROI) was 12.1% lower to €621m.
The news sent shares in the grocer 14.62% lower to €16.65.
Positive exchange rate effects accounted for 2.8 percentage points of the sales increase.
Despite that, adjusted net income shrank 34% to €154m.
Among the factors negatively impacting its results was a 70 basis point operating margin drop in France, in part due to higher losses at ex-Dia stores.
Higher losses in Argentina and charges from integrating acquisitions were also factors, the company said in a statement.
Management also alluded to the need to adapt to "rapid and far-reaching" evolutions within the industry.
Excluding cargo and exceptional items, free cash flow worsened from -€2.11bn to -€2.59bn., which the outfit attributed to short-term variations in its working capital requirements.
The company's net debt load increased by €353m to €7.72bn.
At constant exchange rates, full-year sales were seen growing by between 2% and 4% while at current exchange rates ROI was seen "roughly in-line" with the evolution seen in the first half of 2017.