Carrefour has lowered its profit forecast for 2010 for the second time in two months on the back of a series of one-off charges in Brazil.
The world’s second-largest retailer has cut its target for “activity contribution” – or operating profit to EUR3bn (US$3.93bn), which it said, was “around EUR130m lower, on a pro-forma basis, than the previously communicated objective”.
Carrefour is auditing its business in Brazil and said it would record EUR550m in one-off charges in Brazil this year, against a previous forecast of EUR180m.
“In order not to alter the predictive value of operating income and given the non-recurring and exceptional amount of these charges, they will be fully recognised as non-operating income,” Carrefour said yesterday (30 November).
The charges comprise depreciation and inventory adjustments, provisions for labour and tax litigation, non-recoverable supplier rebates and depreciation of tangible assets.
Carrefour said other drivers behind the reduction in its forecast include a EUR50m charge due to its Thai stores becoming discontinued operations following the sale of the business to Casino. It also cited the “under-performance” of its hypermarkets in Brazil and “the challenging trading environment” in Europe.
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Shares in Carrefour were down 8% at EUR32.07 at 11:42 CET.