By Michael Susin
Carrefour backed its targets for the year after significant growth in Brazil in the first half, despite the effects of hyperinflation in Argentina dealing a significant blow to the grocer's net profit.
The French company said Wednesday that net profit for the first six months of the year slumped to 25 million euros ($27.1 million) from EUR867 million in the same period last year.
The group said the drop was mainly fueled by financial expenses rising to EUR430 million from EUR276 million a year earlier, largely due to volatility caused by hyperinflation in Argentina. It follows a robust gains following the company's sale of its operations in Taiwan.
On an adjusted basis--which strips out exceptional and other one-off items such as the financial impact of Argentina in the group's figures--net profit rose to EUR313 million from EUR306 million.
Sales slipped to EUR44.86 billion from EUR45.45 billion, but rose 12% on a like-for-like basis, Carrefour said.
Latin America's comparable sales for the period rose more than 46%, with Brazil seeing a strong acceleration in May and June driven by growing volumes and food inflation.
LFL sales in France declined by 2.0%, reflecting the significant slowdown in inflation, exacerbated by Carrefour's aggressive pricing investment policy with volumes remaining slightly negative.
Recurring operating income rose 6.2% to EUR743 million. The figure was mainly boosted by a 45.7% increase in Brazil to EUR366 million, reflecting the performance of the legacy store network and of the financial services activity. Recurring operating income in France rose 6.2% to EUR286 million, supported by the robust cost-savings momentum.
For 2024 as a whole, Carrefour said it continues to expect growth in earnings before interest, taxes, depreciation and amortization and recurring operating income.
"In a mixed economic context, Carrefour delivered a very good performance in its two key countries," Chair and Chief Executive Alexandre Bompard said.
"The group is accelerating the implementation of the Carrefour 2026 plan, with the growth of e-commerce, retail media, and its private label."
The group added that its retail media business is expanding rapidly, without disclosing financial details, with the joint venture with Publicis servicing around 30 partners in 13 different countries, including food and non-food retailers. The group aims to generate an additional EUR200 million of return on equity in 2026 with retail media services.
Despite considering the private label products as part of its strategic plan in order to protect consumers against inflation, Carrefour previously said it doesn't aim to keep producing its own products in the future.
Write to Michael Susin at michael.susin@wsj.com
(END) Dow Jones Newswires
July 24, 2024 12:59 ET (16:59 GMT)
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