Europe’s largest retailer Carrefour has posted a 14.3% drop in full-year profits to EUR371m (US$490.3m) and said it will cut back on capital spending in anticipation of a tough year ahead.
The French retailer said this morning (8 March) it will put the roll-out of further flagship Planet hypermarkets on hold beyond 2012, saying converted stores so far had not performed as well as expected.
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Unveiling its last results under outgoing CEO Lars Olofsson’s tutelage, the retailer cited “very significant” largely non-cash one-off elements, notably an impairment charge for Italy, for the decline.
Operating profit also dropped, by 19.2% to EUR2.70bn, negatively impacted by underperforming French hypermarkets and a tough economic environment in Greece.
The retailer, however, managed slight growth in sales of 0.9% to EUR81.3bn, supported by growth in emerging markets.
Chairman and CEO Lars Olofsson said 2011 was a year of “mixed results” for Carrefour.
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By GlobalData“Sales grew slightly, driven by a strong performance in emerging markets, and the group is ahead of its cumulative cost-cutting target since the launch of the Transformation Plan,” he said. “
“The tough environment we faced throughout the year, notably in Southern Europe, and the underperformance of French hypermarkets led to a drop in current operating income.”
Carrefour said it will cut capital expenditure this year to between EUR1.6bn and EUR1.7bn from EUR2.3bn in 2011. Spending levels will remain unchanged in emerging markets, where the grocer maintains its “strong commitment” to expanding in China, Brazil and Indonesia, it said.
The retailer also proposed a new dividend payout policy of around 45% of net earnings, adjusted for one-time items.
Nonetheless, Olofsson said the group will capitalise on its strengths in 2012 while exercising “strict cost and cash discipline to adjust to the environment”.
“Carrefour will continue implementing its ‘reset plan’ in France as well as local action plans in Southern Europe, aiming at consistent lower prices, more targeted promotions, and a considerably enhanced Carrefour branded product offer.”
Carrefour’s share price dropped 0.96% to EUR17.45 at 09:52 GMT today.
