Carrefour, the French retail giant which is second only to Wal-Mart in the global market, this week said it had met its three 2002 targets of boosting sales, reducing costs and improving cash management.
While sales in actual terms were down 1.1 per cent to €68.7 billion, at constant exchange rates, the company showed a strong rise from nearly all its domestic and foreign businesses, with its operations in 10 countries showing double digit increases. Only Malaysia (-1.7 per cent) and Mexico (-0.6 per cent) registered lower sales at constant exchange rates.
Sales in France were ahead 2.2 per cent at €35.1 billion, while in the rest of Europe they increased by 6.6 per cent (6.7 per cent at constant rates) to €23.6 billion. A 36.2 per cent decline in sales to €5.4 billion from the Americas was related to currency devaluations in key markets such as Argentina. At constant rates, sales were up 7.8 per cent. In Asia, sales reached €4.6 billion, up 1.6 per cent or 5.9 per cent at constant rates.
EBIT (earnings before interest and tax) increased by 7.1 per cent for the year to €3.03 billion, with €2.06 billion of that coming from France (up 8.4 per cent on the previous year). EBIT from the rest of Europe rose 8.4 per cent at constant rates to €796 million, while Asia posted a 9 per cent increase (5.4 per cent in actual terms) to €141 million. But the Americas once again was the troublesome area for Carrefour, with EBIT down 56 per cent there to €23 million, due to currency devaluations.
Operating profit was, however, some 3.3 per cent higher than in the previous year at €4.7 billion, while pre-tax profit increased 14.6 per cent to €2.5 billion. Net profits were also higher than in 2001 at €1.9 billion, up 8.6 per cent.
As far as the other two targets for 2002 are concerned, Carrefour managed to cut its costs to 16.1 per cent of sales, compared to 16.9 per cent in the previous year, while financial charges were reduced by 18.5 per cent and operating working capital improved by €259 million
"In two years, between 2000 and 2002, the group has sharply increased its return on capital employed from 12.5 per cent to 14.8 per cent," the company said in a statement. "In order to continue this improvement, the group's strategy will focus in the coming years on organic growth and the development of all its formats, notably with the reinforcement of its European base. The objective is to come back over the medium term and on constant exchange rates to a sales growth of 7 per cent."
This development would be achieved by controlling the range of products, discount policy, innovations capital investment and store ownership programme in each market where Carrefour operates, the company added.
By the end of this year, the group will have added a further 830 new stores to its 2002 total of 9,632. Of these new stores, 60 will be hypermarkets, 120 supermarkets, 450 hard discount stores and 200 convenience stores. With the continuing turbulent market conditions set to prevail throughout the year, the company has also set itself modest targets for 2003 - an increase in sales of more than 5 per cent at constant exchange rates, and a double-digit increase in earnings per share.
Carrefour has also hinted that it could be interested in snapping up some of the assets of troubled Dutch counterpart Ahold, although it has stressed that a bid for the company as a whole was not on the cards. Carrefour's aim is to consolidate its position in markets where it already operates and not to move into new countries, which means that a piecemeal acquisition of certain Ahold assets would be the best way to proceed.