Release Date: July 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Carrefour (CRERF, Financial) achieved a strong performance in Brazil, with a 46% increase in operating income, reaching EUR366 million.
- The company completed the acquisition of hypermarket chains, enhancing commercial dynamism and creating strong synergies.
- E-commerce contributed significantly to commercial results, with gross merchandise value rising by 45%.
- Carrefour (CRERF) generated substantial synergies amounting to BRL2.3 billion, surpassing initial goals and ahead of schedule.
- Recurring operating income increased by 6.2%, reflecting solid achievements in Brazil and France.
Negative Points
- Consumer spending in Europe remains low, with people shopping more frequently but buying fewer items each time.
- Adverse weather conditions across most European countries significantly impacted traffic in hypermarkets and sales of non-food items.
- Recurring operating income decreased in all European markets except Belgium, with specific challenges in Spain, Italy, and Poland.
- Net financial charges increased significantly in H1, mainly due to the impact of IAS 29 hyperinflation accounting in Argentina.
- Free cash flow performance was roughly stable compared to H1 last year, with net free cash flow at minus EUR1.7 billion.
Q & A Highlights
Highlights of Carrefour (CRERF) Earnings Call Transcript
Q: Is it reasonable to assume a similar growth in percentage terms, 6% or so in ROI for the second half also? And from a share point of view, would that still be driven by France?
A: We confirm the objective for full year 2024, which means positive growth in absolute terms for EBITDA, recurring operating income, and net free cash flow in line with the Carrefour 2026 plan. The profitability should be slightly growing.
Q: Can you talk about why the first half profit trends in Europe should not be assumed for the second half?
A: There were specific country-by-country factors in H1, including adverse weather conditions and price investments. We are more constructive for H2, considering the normalization of conditions and positive food inflation in Brazil.
Q: What should we expect from real estate disposals for the full year?
A: Real estate disposals depend on market opportunities. Last year was particularly strong, and it could be a little lower this year. However, it will remain in the same order of magnitude.
Q: Could you break out the drivers in Europe in a bit more detail?
A: The first half was impacted by adverse weather conditions, price investments, and specific elements like financial services in Spain. We finance price investments via cost-saving plans, and we are confident about delivering a better performance in H2.
Q: Do you think you've done all the price investments necessary to improve market share in France?
A: We have invested significantly and are now back to our price positioning before the inflationary peak. We believe we are investing the right amounts, and these investments have translated into improved price perception and stabilization of market share in volume.
Q: Can you give more details on the Brazilian consumer and what gives you confidence in an inflection?
A: Positive macroeconomic data points to continued improvement, including normalized food inflation and volumes. Our strategic initiatives are also yielding positive results across all formats, including Atacadão and Sam's Club.
Q: Are you seeing any evidence that inflation might start to tick upwards in the second half?
A: We see very low single-digit inflation, with some products accelerating more. Overall, we expect a normalization of food inflation for the second half.
Q: Could you comment on the profitability of the Brazilian e-commerce business?
A: The Brazilian e-commerce business is profitable, and we have seen impressive growth with a 46% increase in GMV. Atacadão plays a central role in this growth.
Q: What is the impact of the Spanish financial service business on overall operations?
A: The financial services business in Spain had some pressure on the financial margin but is not a huge impact. We are more constructive on this path and have good management of the cost of risk.
Q: What kind of flexibility do you still have at this stage on cost savings in Europe versus France?
A: We have many operational cost-saving plans in place across Europe. We have accelerated the dynamic since the beginning of the year, and there is still good potential for cost savings across all countries.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
