The world's second largest retailer Carrefour has posted a 3.3% rise in profits in fiscal 2006, excluding exceptional items, as a strong performance in Latin America and Asia offset weaker sales and depressed margins in France. The company also revealed that it is planning entry into the Russian and Indian retail sectors to fuel future growth.

Net income totalled EUR2.27bn (US$3bn), up from EUR1.44bn last year, the Paris-based retailer said in a statement. Carrefour reported a one-time gain of EUR412m this year, which the company said was related to the sale of Carrefour Korea in 2006. Excluding gains from the sale of Carrefour's Korean business, profit rose to EUR1.86bn.

Carrefour posted its largest sales rise in Latin America, where sales were up 17%. Revenue increased 14% in Asia and 6.2% in the rest of Europe, excluding France. In its home market Carrefour has slashed prices and revisited its format in order to regain market share. French sales showed the weakest growth for the year, rising by 4.6%. While the company said that the French retail environment "remains difficult" so far in 2007, according to the hypermarket operator it has succeeded in winning food market share in France.

"The food retail industry in mature European markets is characterised by low growth and deflation," the company said in its statement, adding that it will "overhaul our commercial model" and offer a wider range of products.

Total revenue was up 6.6% in 2006, with sales forecast to grow by 10% in 2008. The company indicated that it was on the acquisition trail, stating that future sales growth was dependant on attaining the "expected level of tactical acquisitions".

Throughout the year Carrefour has focused its expansion efforts on Eastern Europe and Asia. The company revealed that it has a management team in place in Russia and anticipates opening stores in the country in the first half of 2008. Meanwhile, in India Carrefour said that it plans to enter the market through a joint venture. "We have a short list of potential partners, and will find an accord in the coming months," CEO Jose Luis Duran said in a conference call.

Chairman Luc Vandevelde was replaced yesterday (7 March) by Robert Halley, whose family is Carrefour's largest shareholder. Shareholder dissatisfaction has grown considerably of late, with share value plummeting in recent years. Carrefour CFO Eric Reiss yesterday valued the company's retail assets at EUR15-20bn, prompting speculation that their value could be unlocked to boost shareholder returns in the short term.

Yesterday, France's richest man Bernard Arnault and US private equity group Colony Capital announced that they had purchased a 9% stake in the French retailer.

Commenting  on the investment during a conference call, Duran said: "I have rather got the impression that this is a long-term and strategic investment", adding that he does not believe it puts management's strategy in question.

Carrefour shares dropped in morning trade today, falling 1.4% to EUR52.06 at time of press.