First profit drop in 5 years for Carrefour

First profit drop in 5 years for Carrefour
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French supermarket chain Carrefour managed a 3 % organic turnover growth in 2016 thanks to the strength of its international activities. These managed to easily offset the drop the company experienced in the French market. Net profit suffered a blow, however.

Net profit dropped nearly 25 %

Carrefour’s turnover was already revealed mid-January: group turnover reached 85.7 billion euro, slightly below the previous year’s result (down 0.7 %). Excluding exchange rate fluctuations and gasoline sales, the company’s turnover grew 2.7 % to 76.6 billion euro.

 

Profit wise, Carrefour was not able to divulge any positives: the group’s net profit slumped 23.87 % to 746 million euro. If one-time operations are excluded, things are not as dramatic, as it would have been able to post a 1.03 billion euro net profit. Regardless, that still would have been a 7.4 % drop compared to the year before.

 

Operational profit also slumped, down 3.8 % to 2.35 billion euro. The company particularly struggled in Asia (China specifically) and in France, where it suffered a 13.4 % profit drop in a stagnant and ever more price competitive market. Luckily, it achieved decent profit growth elsewhere, up 25.5 % in the rest of Europe and up 3.7 % in Latin American (excluding exchange rate fluctuations).

 

“Fifth consecutive year of turnover growth”

CEO George Plassat will vacate his position next year, but was very happy about 2016’s positives: “Carrefour emerges from 2016 a stronger company. The increase in sales, for the fifth consecutive year, attests to the relevance of our multiformat and omnichannel model, which is now a reality in all our countries. In 2017, Carrefour will continue to expand in all its formats, stores and digital, to enhance its proximity to its clients.”

 

“We have also achieved all of the financial targets we set ourselves, including a free cashflow increase, lower debts and a control over our investments”, CFO Pierre-Jean Sivignon added in a conference call.