Carrefour, the world’s second-largest retailer, on Thursday pledged to grow sales and free cash flow this year after posting a steeper than expected fall in 2016 earnings, as profits dropped at its core French market.
Europe’s biggest retailer also said it was ready to float its Carmila property unit and its Brazilian business this year, market conditions permitting.
The French company, which has started looking for a successor to the chairman and chief executive Georges Plassat whose mandate expires in May 2018, also announced it would hold its annual shareholders meeting on June 15.
Carrefour kept its 2016 dividend unchanged at €0.70 per share after recurring operating profit fell 3.8 per cent to €2.35 billion (Dh10.49bn) in 2016, below an average of €2.37bn euros in a Reuters poll.
Accounting for currency exchange rate variations, net sales in Asia fell 7.3 per cent to €6.17bn year on year while in emerging markets they slid 1.3 per cent to €20.68bn. Total sales slipped 0.4 per cent to €76.64bn.
Since taking over as the chief executive in 2012, Mr Plassat has presided over signs of a recovery at Carrefour, which has numerous stores in the UAE but makes 73 per cent of its sales in Europe and around a quarter of sales in France.
He has focused on price cuts along with an expansion into smaller convenience stores, while also renovating its chain of hypermarkets, starting in France.
Yet while Carrefour has made good progress in most European countries and in Brazil, its second-largest market, it has lagged behind on its French hypermarkets.
In France, operating profits fell 13.4 per cent to €1.03bn, with margins down by 40 basis points to 2.9 per cent.
This reflected costs tied to the integration of the loss-making Dia discount stores and increased promotional activity at French hypermarkets amid cut-throat competition in the sector.
“2017 will be the year when Dia results start improving,” said the finance head Pierre-Jean Sivignon.
Elsewhere in Europe, however, operating profits rose 25.7 per cent, driven by a continued recovery in Spain and improved profitability in Italy.
In Latin America, Brazil put in a strong performance in spite of difficult market conditions but China, which makes 5 per cent of sales, was still a loss-making area.
“The second-half was a low-point for China,” Mr Sivignon said.
Carrefour vowed to grow group sales by 3 to 5 per cent this year and increase free cash flow, as it pares back on investments to renovate its stores although it would continue to expand its store network and invest in E-commerce, added Mr Sivignon.
* Reuters
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