Carrefour: France Gains Point To Turnaround?
France based retailer Carrefour's H1 results point to further gains made by the firm in its bid to turn around turbulent losses which saw its share price plummet in 2011. With CEO Georges Plassat's leadership continuing to e ffect meaningful progress, significant improvements across the retailer's domestic operations reflect our long-term view that France must remain at the core of the retailer's strategy in the pursuit of long-term, stable growth.
Despite French net sales slip ping by 0.3% year-on-year, a key takeaway from H1 results is a 75.4% leap in operating profit in France, rising to EUR482mn. Net income also rose to EUR902mn (compared with the EUR3mn recorded in H112) with the company's bottom line boosted by lower losses fr om disposed assets abroad; both impressive indicators pointing to the retailer's continued recovery. Wider Europe an operations, however , continue to look problematic as sales slid 4.5%, with poor regional consumer sentiment particularly evident in Italy and Spain. Although improvements in France are certainly encouraging, we don't expect the challenges presented Europewide to lift in the near term, potentially threatening the retailer's progress in H1.
Conversely, international operations continue to look strong for the world's second largest retailer. With the dumping of assets in markets such as Colombia, Indonesia and most recently, in the Middle East (with joint venture partner Majid Al Futtaim (MAF) ) , growth here presents a stark contrast with developed market operations. Up 13.3% compared to H112, Latin America looks particularly strong and is likely to continue to prove a lucrative addition to the retailer's profile moving forward. And although Carrefour has been actively committed to cut ting presence in markets it was unsuccessful in , international operations continue to be an important facet of future growth for the retailer.
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