Mar 5, 2014
Carrefour boosts 2014 capex after 2013 profit rises
Mar 5, 2014
PARIS, France - Carrefour, the world's second-largest retailer, said it would spend more cash to renovate and expand its stores this year to revive its struggling European hypermarkets and expand in the key emerging markets of China and Brazil.
Europe's biggest retailer also hiked its 2013 dividend by 7 percent to 0.62 euros per share on Wednesday after operating profit rose 5.3 percent, slightly ahead of analysts expectations.
The performance reflected a sharp improvement in the profitability of the core French business as a turnaround plan started to pay off, as well as robust growth in Latin America, though Spain, Italy and Asia were weak.
Carrefour said it would invest between 2.4 billion and 2.5 billion euros to renovate and expand stores this year, against 2.2 billion last year and above analysts' average estimate of 2.2 billion.
Chief Financial Officer Pierre-Jean Sivignon told a conference call with journalists that Carrefour would continue to renovate stores in France, Brazil, Italy and Spain in 2014, while expanding its store network in China and Brazil.
The world's No. 2 retailer behind Wal-Mart said 2013 operating profit rose to 2.238 billion euros ($3.08 billion), above the average estimate of 2.224 billion in a Thomson Reuters I/B/E/S analyst poll.
Carrefour is battling to reverse years of underperformance in Europe, where it makes 73 percent of its sales. Its problems are partly due to a reliance on the hypermarket format it pioneered, as time-pressed customers shop more locally and online, and buy non-food goods from specialists.
Chief Executive Georges Plassat has had some success in the group's home market of France by cutting costs, revamping stores, improving price competitiveness, simplifying product offerings and giving more autonomy to store managers.
Carrefour said its operating margin in France, where it makes 47 percent of revenue, rose to 3.4 percent of sales, helping to lift the group margin to 3 percent from 2.6 percent in 2012, although that still lagged the 4.9 percent achieved by smaller French peer Casino.
A stronger France helped counter a decline in the profitability of the rest of Europe, which was dragged down by Italy and Spain.
$1 = 0.7277 Euros
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