Carrefour posted a stronger-than-expected 5.8% rise in first-half operating profits, as robust international operations offset weakness in its core French market amid cut-throat competition among supermarket retailers.
The performance highlights some of the progress but also the challenges facing chief executive Alexandre Bompard, as he marks his first year at the job at the helm of Carrefour and aims to revive the fortunes of Europe's largest retailer.
Above-Average Figures
First-half recurring operating profit reached €597 million euros, above the average €523 million forecast in a poll of analysts conducted by Inquiry Financial for Reuters.
Carrefour highlighted its 'strong' cash flow generation, exhibiting a growth of €418 million in free cash flow, excluding exception items. It credited this to rigid control of investments and inventory.
It also improved its overall debt by €1.5 billion at end of June 2018, compared to the same period last year.
Some milestones were met, as outlined in the Carrefour 2022 Transformation plan, notable the signing of multiple strategic partnerships with Système U, Tencent, Google and Tesco. The company said it also achieved cost cuts of €520 million in the first half of the year, contributing to its goal of reducing costs by €2 billion by 2020.
Another initiative include the dynamic roll-out of the omnichannel food offer in its global operations. The group saw a large increase of its online food sales, up 30% in H1. Home delivery is now available in 9 out of 10 group countries. Food click & collect has been implemented in eight countries, strongly developing in the first half of 2018, the company said.
Flagging At Home
In France however, where Bompard has made reviving flagging sales at hypermarket stores a priority, operating profit sank 44.8% to €110 million in the first-half.
Carrefour shares have slumped 36% since Bompard became CEO on July 18, 2017, as evidence of an improvement in the company's performance - notably in France - remains elusive, according to analysts.
News by Reuters, edited by ESM. Additional reporting by Karen Henderson. Click subscribe to sign up to ESM: European Supermarket Magazine.
