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Q2 2010 sales were above expectations (+6.3% to €24.9 billion against +5.4% to €24.7 billion). Two pleasant surprises emerged from this publication: 1/ better than expected performance of hypermarkets in France; 2/ confidence of the management reflected in the EBIT objectives announced for H1 (+9% to €1.1 billion) and for the year as a whole (+11.7% to €3.1 billion) which exceed current forecasts! Our positive view of the share is strengthened by these factors. The restructuring plan is under way and the management is holding firm, despite sluggish prospects for the European economy. PLUS code confirmed.
Thanks to the dynamic performance of its supermarkets and emerging zones, Carrefour is on the road to recovery. Its profile as a mass food retailer is reassuring against the risk to consumer spending created by budgetary austerity in Europe. The new management’s 3-year strategic plan looks promising: revitalization of sales in France, restructuring in Belgium and Italy, €3.1 billion cost savings by 2012 and low valuation placed on future prospects.
2009 ended on a positive note for Carrefour whose sales published in Q4 rose +1.2% to €26 billion. Signs are encouraging for French hypermarkets (-2.7% against -3.5% consensus) and supermarkets confirm their renewed dynamic (+3.6%). The announcement of a 2009 EBIT at €2.77billion in this publication comes as a nice surprise. It is above the guidance at the bottom of the €2.7-2.8 billion range. This publication will bring an upward revision of forecasts for 2009-2010 before the next meeting on 19 February when the 2010 objectives will be disclosed. PLUS code confirmed.
At an investor seminar, CEO Lars Olofsson presented his strategic vision for the group. He highlighted the dynamism of the emerging countries, in which strong growth was being reported and the business success achieved by the conversion of the Champion supermarket label into Carrefour Market. The main challenge in 2010 will be the renewal of the hypermarket format (Q1 2010). This will revitalize performance following the example of the recent launch of the Carrefour Discount own brand. The management confirmed its confidence in the €3.1 billion cost-cutting target for 2012 including €1 billion generated by purchasing synergies. PLUS code confirmed.
Carrefour is expected to end the year 2009 in a more robust position: the dynamic performance of supermarkets and emerging zones will be confirmed in Q4, while hypermarkets are set to recover. The new management’s 3-year strategic plan is promising (sales revitalisation in France, restructuring in Italy and Belgium, €3.1 billion cost savings by 2012), in parallel with economic recovery in Europe.
In a difficult environment, Q3 2009 sales are down by 2.9% at €24.02 billion; this figure is slightly less than expected but hardly surprising. The confirmed weakness of hypermarkets in France (-5.1%) is offset by the dynamic performance of supermarkets (+6%) and emerging zones (+5.2%). We are reassured by Carrefour’s confirmation of its EBIT target for 2009 close to €2.7 billion and by the focus on its 3 year strategic plan: revitalization of its business in France, restructuring in Italy/Belgium, savings of €3.1 billion by 2012. PLUS code confirmed.
The figures published for the 1st half 2009 results brought no surprises. Positive points: 1/ The reduction of operating costs (-€212 million in H1) is ahead of the original plan and allows the management to feel very confident over its annual minimum €500 million cost-cutting objective; 2/Confirmation of the 2009 EBIT objective of between €2.7 and 2.8 billion suggests that operating performance will be better in H2. Strategic initiatives announced on 30 June are now under way. PLUS code confirmed.
In a difficult context, published sales for Q2 2009 are solid (-1.2% to €23.4billion, +0.2% at constant exchange rates) and without surprises (trends announced at the strategy meeting of 30 June). In France, supermarket sales are greatly improved (+5.4% excluding petrol) and hypermarket sales are steadying (-1.4%). Carrefour has confirmed its target of an operating profit of €2.7/2.8billion in 2009 and is focusing on its new three-year strategic plan: commercial revival in France, restructuring in Italy/Belgium, savings of €4.5billion between now and 2012. PLUS code reiterated.
The new CEO is sending a strong message to the market. He is revising downwards the results consensus for 2009 but for good reasons (commercial recovery in France, restructuring costs Italy/Belgium). Above all, he has announced a €4.5billion savings plan between now and 2012 which goes beyond expectations, including €2.1billion for operating costs, €1billion for purchases and €1.4billion for stocks. The arrival of Lars Olofsson is the sign of a new strategic approach backed by B. Arnault and Colony who want to bolster the value of an investment made at €49 per share. Plus code reiterated.
In this new year, the improvement in hypermarkets in France and on the non-food side is explained by promotional efforts. The appointment of Lars Olofsson as CEO sends a strong signal to the market: he will be the man behind the optimisation and acceleration of Carrefour’s strategic projects. A new plan is to be presented in June, reflecting a fresh impetus advocated by the reference shareholder (B. Arnault and Colony).
Q1 2009 sales are down 2.8% at €22.7 billion. Positive factor: organic growth (+1.3%) is better than expected (+0.7%). Improvement in French hypermarket activity (25% of sales) and on the non-food side generated by promotional efforts which are particularly welcome after the failures in 2008, especially in the prevailing economic environment. Lars Olofsson, the new CEO, will be presenting a new strategic plan in June: this reflects a fresh impetus given by the reference shareholders (B. Arnault et Colony) who wish to enhance the value of an investment made at €49/share. PLUS code confirmed.
2008 results proved strong in a challenging environment. Nice surprise: the €1.9 billion free cash flow generation is well above expectations. Carrefour has announced investments worth €600 million in 2009 to strengthen the commercial dynamic in France and is planning on making savings of €500 million (3 times more than in 2008). The new CEO has promised significant cash generation and a profitable and sustainable organic growth target. The arrival of Lars Olofsson at the head of the group points to the start of a dynamic new strategy, backed by Arnault and Colony who wish to revalorise their investment made at € 49 per share. PLUS code confirmed.
In a difficult environment, Q4 2008 proved robust and unsurprising. They confirm a downturn in Europe and Asia, while Latin America remains dynamic and France (42% of sales) stood firm. Guidance for 2008 is confirmed (slight EBIT growth, €1.5 billion free cash flow), but the underlying market trends are set to continue in 2009. A new CEO, hypermarket restructuring, the new law on mass retailing in France, a healthy balance sheet and attractive valuation PLUS code for this share.
Colony/Arnault want to enhance the value of the company’s assets and boost its operating performance. The appointment of Lars Olofsson as CEO sends a strong signal to the market: he will be the man behind the optimisation and acceleration of Carrefour’s strategic projects. Against economic headwinds, the preponderant share (75% of sales) of the non-cyclical food segment is a real bonus for 2009.
Figures published for Q3 are reassuring. Sales are better than expected, especially in the French hypermarkets (25% of group sales) where Carrefour is reaping the benefits of the vigorous promotional action plan put in place following a subdued Q2. In a difficult environment for consumer spending, the 2008 guidelines have been confirmed: organic growth +7%, similar EBIT rise, cash flow generation reaching €1.5 billion. These factors associated with an attractive valuation and a healthy balance sheet structure justify our PLUS code.
Although first-half year results show that Carrefour is facing an economic slowdown in Europe, the group has met its targets, though some had doubts. We find it reassuring that the 2008 guidance is reiterated: organic growth of 7%, rise in EBIT in line with that of sales and €1.5 billion cash flow. The CEO has indicated that July/August sales were far better than those of Q2. The stronger presence of Colony and Arnault in the capital and actions announced for the second half-year are steps in the right direction. PLUS code reiterated.
Sales figures published for Q2 (+6.7% at €23.7 billion) show that Carrefour is facing a cyclical downturn and changing patterns of consumer behaviour (with the high price of petrol). Its supermarkets, hard discount stores and international business are performing well, but its hypermarkets in France are suffering. The actions announced for the 2nd half of 2008, and the stronger presence of Colony and Arnault in the equity capital, should be followed by a change of strategy in coming months. PLUS code confirmed.
The market’s reaction to the cautious statement by Carrefour about its 2008 guidance is exaggerated. This message is motivated by low consumer spending in Europe in the non-food sector, but the defensive character of food distribution (75% of group sales) should come into its own with a positive pricing effect and buoyant international business. There is now a speculative aspect (Colony and Arnault), Carrefour Property is to be listed shortly and the valuation is very attractive measured against its competitors and historical low prices. Plus code confirmed for this share.
Quite apart from the determination of Arnault and Colony to upgrade Carrefour’s assets (disposal of unprofitable activities, outsourcing of buildings), the business dynamic is positive. The preponderant share (75% of the capital) of non-cyclical food sales, price rises, the single brand strategy, international growth relays and liberalisation of commerce in France are all major advantages for the future.
Sales for Q1 2008 (+10.2% at €23.4 billion) are above expectations (+9% at €23.1 billion). The deterioration of the non-food segment in France was expected, while the food business (74% of total sales) is advancing strongly. The group is making reassuring comments on its objectives for 2008 and has announced that its margins will be maintained in Q1. Quite apart from this good visibility, the share will benefit from a succession of announcements in months to come (restructuring, probable asset disposals, conversion of Champion supermarkets to the Carrefour label, re-composition of the shareholding structure). PLUS code confirmed.
The publication of the 2007 results brought no surprises: sales (+7% to 92.3 billion €) and operating result (+3.3% to 3.4 billion €) were in line with expectations. The 2008 guidance has been confirmed: +6/8% organic growth and improved margin. However, Carrefour has made two important announcements: 1/ outsourcing of its real estate by private placement (1.5 billion €) will take place in Q4; 2/ termination of the shareholder pact of the Halley family is likely to bring renewed speculation over the share. PLUS code confirmed for this equity.
2007 sales growth (+7% to €92.3 billion) turned out to be higher than expected (+6.2%), and gathered pace strongly during Q4 (+10% to €25.6 billion). This performance during Q4 is explained by a return to inflation in the food sector (France +1.6%, Spain +2.2%) and good volumes (+4.6% hypermarkets, +7.2% supermarkets). The management has once more convincingly confirmed its objectives for 200/08 and, as a positive new development, indicated that EBIT growth in 2008 will be faster than that of sales (+6-8% organic). PLUS code confirmed on this share.
Publication of the results for the first half of 2007 has brought excellent news. Margin erosion is expected to end in 2008 and the group is also taking more sustained initiatives to create shareholder value: 1/ floating of its real estate arm Carrefour Property (€3 billion); 2/ optimisation of the asset portfolio (disposals totalling €1.5billion); 3/ the cash released in this way will be returned to shareholders via a share buyback programme. These factors will all support the share price in coming months. PLUS code confirmed.
The results for 2006 were very close to expectations. The 2006 objectives (growth and margin) were achieved and there is no reason to doubt the strategy embraced by Carrefour as well as its capacity to become a growth share again by around 2008 (objective +10% sales and EBIT). In addition, the arrival of the Arnault group and Colony in the capital is a tangible sign, in our opinion, of the industrial undervaluation of Carrefour. Its real estate assets are likely to be sold to an outside owner in due course. PLUS code confirmed.
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