H Results. July 26th 2018

Transcription

1 H Results July 26th 2018

2 FIRST SIGNIFICANT ADVANCES IN THE CARREFOUR 2022 TRANSFORMATION PLAN

3 H1 2018: Strong momentum for Carrefour 2022 OMNICHANNEL RAPIDLY RAMPING-UP Rapid implementation of food e-commerce proposition in all countries: Renewed and simplified front websites (1 single site per country) Order preparation optimized and industrialized Extension of delivery services Acceleration of e-commerce sales growth in H1 REVAMPED COMMERCIAL PROPOSITION Adaptation of the sales area/store formats Simplification of assortment Investments in price competitiveness Rapid expansion of growth formats: 15 Cash & Carry and 180 convenience store openings A LEANER AND MORE EFFICIENT ORGANIZATION All restructuring processes signed and being implemented 520m in cost-reduction achieved in H1 Capex and inventories optimized PARTNERSHIPS WITH STRATEGIC PLAYERS Strategic partnerships signed with recognized leaders: Purchasing with Tesco/Système U/Fnac Darty Digital with Google/Tencent/Sapient IMPROVED FINANCIALS Net sales up +0.7% LFL Recurring Operating Income up +5.8% at constant FX (1) Free Cash Flow ex exceptionals up + 418m Net debt improved by + 1.5bn (1) Vs. reported H H RESULTS 3

4 Rapid implementation of leading e-commerce services in all countries Key initiatives to enhance Carrefour s e-commerce proposition ORDER Single Carrefour entry point already available in 7 countries carrefour.fr live in Q as planned Non-food marketplace already available in 5 countries PREPARE Dedicated online order preparation warehouse/dark stores opened or under construction in most countries Aulnay PPC 1 in Paris region opened in April Hybrid solutions rolled out in Spain and Italy DELIVER Home delivery now available in 9 countries, service extended to new cities in H1 Express 1-hour delivery now available in 6 countries, service extended to new cities in H1 Click & Collect offered in 8 countries More than 130 new Drive openings in H1, of which 13 pedestrian Fresh/food lockers tested O2O growing rapidly in China, offering ready-to-eat solutions on leading local mobile applications Acceleration of food e-commerce sales growth in H1 2018: +30% 1) PPC: Plateforme de Préparation de Commandes (Dedicated online order preparation platform) H RESULTS 4

5 In-depth reshaping of commercial proposition on track in H1 PRICE COMPETITIVENESS First investments in price competitiveness implemented in H1 OPTIMISATION OF STORE NETWORKS Commercial proposition reshaping Hypermarkets: Sales area reduction underway Transfers of hypermarkets to supermarkets or C&C (eg. Belgium, Italy, LatAm) Transfer to lease management REVAMPING OF ASSORTMENTS Optimization of assortment by reducing number of SKUs (down 4% in France at end of June) Fostering innovation by nourishing privileged relationships with selected suppliers Acceleration of expansion in Cash & Carry and convenience Closure of loss-making stores Promoting a responsible product offering: Commitments in favor of local producers and elimination of controversial components, roll out of blockchain technology, increased organic offer CUSTOMER-ORIENTED SERVICES Easier and faster payments with Carrefour Pay Omnichannel and delivery services Easier access to consumer credit eg. Atacadao card Focus on customer satisfaction (NPS) H RESULTS 5

6 Key strategic partnerships signed Strategic partnerships were signed in H1 First benefits expected in H2 2018, with ramp-up in 2019 PURCHASING DIGITAL ADD-ON INVESTMENTS H RESULTS 6

7 All components of the efficiency plan are on track EFFICIENCY PLAN Organization transformation Cost savings Capex Inventory STATUS H1 ACHIEVEMENTS All plans signed Implementation in progress 520m -39% - 175m H RESULTS 7

8 H key figures: Growth in ROI and strong growth of free cash flow NET SALES +0.7% LFL RECURRING OPERATING INCOME + 36m (1) +5.8% (1) FREE CASH FLOW EX. EXCEPTIONAL ITEMS growing by + 418m NET DEBT (2) improving by 1,465m 1) At constant FX vs. reported H l 2) As of 30 June 2018 vs. 30 June 2017 H RESULTS 8

9 FINANCIAL ANALYSIS

10 Ex-Dia stores acccounted for as discontinued activities as from January 1 st Rapid progress in the disposal and closure process of 273 ex-dia stores All stores sold or closed at end July 2018 Ex-Dia stores accounted for as discontinued activities as from January 1 st (IFRS 5 standard) Rapid implementation of plan January 23 rd April July Announcement of the plan to exit 273 ex-dia stores from Group scope Agreement with the unions Start of the search for buyers Completion of the process: All stores sold or closed (info) Deconsolidation of the stores ow. 244 closures and 29 disposals H RESULTS 10

11 H sales marked by improved trends in Q2 H Gross sales evolution (in m and %) +1.1% +0.7% +0.4% +0.1% +0.3% +0.7% +2.2% -3.0% 42.7 bn +0.4% +0.9% -5.2% 41.4 bn Q1 Q2 H H Store H LFL openings/ organic ex petrol closures ex petrol ex calendar ex calendar Calendar Acquisitions/ Petrol H Disposals at constant fx rates Forex H at current fx rates H RESULTS 11

12 Negative FX impact, mainly due to BRL evolution Currency H evolution 1 Brazilian Real -16.9% Argentine Peso -34.3% -5.2% negative FX impact in H sales Polish Zloty +1.2% Romanian Leu -2.5% Chinese Yuan -3.5% Taiwanese Dollar -7.1% - 60m negative FX impact in H ROI (1) FX evolution vs. H H RESULTS 12

13 H1 ROI growing + 36m (at constant exchange rates) Gross margin decrease due to mix effect, market competitiveness and commercial investments Distribution costs down -70bps Improvement in all geographies Cost reduction plan delivering strong performance in H1 H reported H Evolution at constant FX ( m / %) Net sales (in bn) % LFL Gross margin from recurring operations as a % of net sales 22.9% 22.2% -70bps Total distribution costs (1) (7,419) (6,884) 138m As a % of net sales -19.3% -18.6% -70bps Recurring operating income (ROI) ( mn) m / +5.8% As a % of net sales 1.6% 1.6% stable (1) Total distribution costs are composed of sales, general and administrative expenses H RESULTS 13

14 Ahead of schedule on cost reductions: 520m achieved in H1 COGS Distribution costs Objective STATUS 2bn H1 ACHIEVEMENTS > First gains recorded in H1 > Purchasing alliances signed with Tesco internationally, Système U in France, PAM/VéGé in Italy > Strong contribution to total cost reduction in H1 thanks to: Demand control/challenge Process redesign Productivity gains Systematic renegotiations 520m NEXT STEPS > Acceleration of savings to come in 2019 thanks to purchasing alliances > Streamlining actions to continue > Savings from reorganizations from H2 onwards H FY 2020 Objective confirmed: 2bn cost savings by 2020 H RESULTS 14

15 France: Commercial activity still under pressure (in m) H % reported H change Net sales 17,307 17, % LFL ex petrol, ex calendar -0.1% ROI % ROI margin 1.2% 0.6% -60bp > Broadly stable sales year-on-year in a persistently competitive market > ROI drop: Pressure on gross margin (negative mix effect, competitive markets and investments in price competitiveness) Positive momentum in cost reduction and transformation of organization, with effects ramping up in H2 and 2019 H RESULTS 15

16 Other European countries: Slight growth in recurring operating income (in m) H H % change at current FX % change at constant FX Net sales 10,010 10, % +1.0% LFL ex petrol, ex calendar -1.5% ROI % +2.2% ROI margin 1.5% 1.5% 0bp > Overall sales growth, contrasted trends between growth in Northern Europe and slight drop in Southern Europe > Slight improvement in ROI thanks to positive cost reduction momentum H RESULTS 16

17 Latin America: Strong commercial momentum and improved profitability (in m) H H % change at current FX % change at constant FX Net sales 8,075 6, % +8.6% LFL ex petrol, ex calendar +6.4% ROI % +28.0% ROI margin 3.6% 4.6% +90bp +60bp > Brazil: Atacadao: LFL sales acceleration, margin growth and expansion on track Retail: Solid performance despite a combination of deflation and mix effects Banking activities: Strong profitability growth on higher billings and lower risk charges > Argentina: Higher sales volumes, turnaround plan underway > Solid growth in ROI and 60bp improvement in margin at constant FX H RESULTS 17

18 Latin America: Interruption in food deflation in June FOOD INFLATION (IPCA) FOOD AT HOME INDEX EVOLUTION (JAN 2017 JUNE 2018) 6.5% 4.6% 4.3% 1.0% 3.0% 2.5% 1.1% 0.1% -4.0% -2.8% -0.6% -4.5% -4.5% -3.9% -3.8% -4.3% -4.7% -3.8% -3.1% -5.2% -5.3% -5.1% -5.3% -4.9% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source : IBGE H RESULTS 18

19 Asia: Recurring operating income improvement despite difficult commercial trends in China (in m) H H % change at current FX % change at constant FX Net sales 3,135 2, % -4.3% LFL ex petrol, ex calendar -3.9% ROI mn + 22mn ROI margin 0.4% 1.1% +70bp > China sales impacted by continued e-commerce rise, good momentum in Taiwan > Significant profitability improvement thanks to cost reduction and loss-making store closures H RESULTS 19

20 Adjusted net income, Group share, from continuing operations of 131mn (in m) H reported H Recurring operating income Net income from associates and JVs 13 (6) Non-recurring income and expenses, net (150) (785) EBIT 484 (194) Net financial expenses (247) (149) Income before taxes 236 (342) Income tax expense (89) (179) Normative tax rate 34.4% 34.7% Net income from discontinued operations (1) (229) Consolidated Net income 147 (750) Mainly related to Carrefour 2022 transformation initiatives launched in H1 98mn improvement in net financial expenses due to improved refinancing terms and deleveraging Normative tax rate reflecting footprint and country weighting Including principally the 273 ex-dia stores exiting the Group s scope Net income, Group share 78 (861) Net income from continuing operations, Group share 79 (633) Minority interests Adjusted net income, Group share from continuing operations H RESULTS 20

21 All restructuring processes are well underway Key Initiatives Status Next steps Savings recognition phasing HQ France Voluntary departure plan Signed Implementation underway Full completion expected by year end > Starting in H > Full-year effect in 2019 DIA 273 ex-dia stores to be removed from Group scope Signed Disposals/closures completed by end of July 2018 > Ex-Dia scope discontinued from January 1 st Belgium Voluntary departure plan c.950 FTE Conversion of 5 hypermarkets to supermarkets Flexibility measures in hypers Signed Hypermarkets to be converted in Q4 Voluntary departure plan to be fully completed in Q > Mostly in 2019 Argentina Crisis prevention plan 11 store closures Voluntary departure plan: c.750 FTE Signed 6 stores to close in H Implementation of voluntary departure plan to be finalized in Q4 > Starting in H > Full-year effect in 2019 H RESULTS 21

22 Most retructuring costs accounted for in H1 related cash-out mostly in H2 (in m) H reported H Restructuring costs (102) (693) Impairment and asset write-offs (31) (44) Other non-current items (17) (48) Related to the transformation initiatives announced in H1, notably in France, Belgium and Argentina Non-recurring expense related to the ex-dia network and included in the Net income from discontinued activities amounts to (183)m Non-recurring income and expenses, net (150) (785) Restructuring expenses linked to H1 announcements were recorded in H Cash-out is expected mainly in H and the balance in 2019 H RESULTS 22

23 A tax expense reflecting a normative half-year tax rate of 34.7% (in m) H Reported H Half-year normative tax rate (1) 34.2% 34.7% Normative tax expense (132) (154) Non income-based taxes (incl. CVAE (2) ) (28) (28) Others (3) 71 3 Total tax expense (89) (179) Effective tax rate 37.5% (52.2)% The +0.5 pts increase mainly reflects a greater weight of Brazil in Group pretax income in H vs H Mainly reflects the recognition of tax assets in H High level of non-current expenses in pre-tax income implies a negative and non-meaningful effective tax rate (1) Half-year Normative tax rate: Reflects Carrefour s geographic footprint and the relative weighting of each country Calculation based on local corporate income tax rate applied to pre-tax income excluding non-current items Full-year normative tax rate was 31.9% in 2017 (2) CVAE: Local business tax in France assessed on the basis of the value-added generated by the business, recorded as corporate income tax H RESULTS 23

24 Focus on Free Cash Flow generation: + 418m (excl. exceptional items) (in m) H reported H Variation at current FX EBITDA 1,431 1,373 (58) Financial result (58) (37) 21 Cash impact of non-recurring items (126) (193) (67) Other (including tax paid) (268) (195) 73 Gross cash flow (excl. discontinued) (31) Change in working capital (2,518) (2,365) 153 Discontinued activities (3) (6) (4) Operating cash flow (1,541) (1,423) 118 Capital expenditure (ex. Cargo) (904) (555) 349 Net capital expenditure (Cargo) (85) (38) 47 Change in net payables to fixed asset suppliers (262) (274) (12) Asset disposals (business-related) Discontinued activities 0 (3) (3) Free cash flow (2,736) (2,219) 517 Incl. Impact of Cargo (85) (38) 47 Incl. Impact of exceptional items and discontinued (64) (12) 52 Free cash flow from continuing operations, exl. exceptionnal items (2,587) (2,169) Working capital improvement mainly coming from reduction of inventories 2. Capex ex-cargo down to 555m thanks to continuous productivity improvements and more selectivity on investments H RESULTS 24

25 1 Better inventory management in most geographies INVENTORY - (in m) - 175m Key levers Assortment rationalization and better management of inventories Inclusion of FCF objectives in managers incentive schemes Supply chain: Optimization of flows H reported H constant FX Forex H current FX H RESULTS 25

26 2 Capex reduced by 39% thanks to greater productivity and selectivity of investments INCREASED SELECTIVITY & PRODUCTIVITY H capex ex. Cargo down 349m or 39% at current FX 904m Full remodelings and hypermarket extensions Cost per unit Standardization Return on capital employed Capex reduction through better productivity and selectivity Standardization efforts underway 555m ALLOCATION ALIGNED WITH STRATEGIC PRIORITIES IT & Omnichannel to support digital ambition 2nd PPC launched in April to supply the Paris region H reported H Expansion in Cash & Carry and convenience stores Commercial proposition to optimize the store network Opening of more than 130 Drives at Group level Investments in growth formats: 15 C&C and 180 openings of convenience stores Objective confirmed: 2bn of capex in 2018 H RESULTS 26

27 427mn net debt improvement in last 12 months excluding FX impact and Brazil IPO proceeds 427m improvement Incl. a 345m cash out related to exceptional items (mainly restructuring) 7,720m 7,293m (239) (246) (107) (283) ,255m June Net Debt H RESULTS 27 FCF Dividends Cost of net financial debt (1) June Net Debt before FX impact and Brazil IPO proceeds Others June (1) Net Debt FX impact Brazil IPO June Net Debt

28 Successful refinancing operations conducted in H1 5.25% DEBT REDEMPTION SCHEDULE (in m and %) 4.00% 3.88% 1.75% 1.75% 1.25% 0.49% 0.51% On March 27, 2018, issuance of $500 million non-dilutive cash-settled convertible Bond, swapped in euros with a maturity of 6 years and a zero coupon 1,179 On June 5, 2018, oversubscribed issuance of 500 million bonds with a maturity of 5 years 1,000 1,000 1,000 1, * 750 At end June 2018, debt maturity stood at 3.7 years * 750 Credit Rating as of June 30, 2018: BBB + negative outlook (S&P) Baa1 stable outlook (Moody s) issuance Average annual coupon The Group has 3.9bn credit facilities available, of which 2.5bn maturing in 2022 and 1.4bn in 2023 * The $500m Convertible Bonds of 2023 and 2024 are here converted using the /$ exchange rate of June 30, 2018 H RESULTS 28

29 57% take-up of scrip dividend PAYMENT AND SETTLEMENT ON JULY 13, 2018 (H2) DIVIDEND PAID IN CASH DIVIDEND PAID IN SHARES 152m CASH-OUT IN H2 57% TAKE-UP RATIO equivalent to 200m Total dividend: 352m H RESULTS 29

30 Transformation plan targets confirmed > 5bn of food e-commerce sales in 2022 > 5bn in sales of organic products in 2022 > A cost reduction plan of 2bn by 2020 on full-year basis > Disposal of non-strategic assets for 500m by 2020 > Annual capex of 2bn Carrefour 2022 transformation plan progressing rapidly, targets confirmed H RESULTS 30

31 APPENDIX

32 ADJUSTED NET INCOME, GROUP SHARE (in m) H reported H (in m) H reported H EBITDA (1) 1,431 1,373 Recurring operating income Net income from associates and JVs 13-6 Non-recurring income EBIT Net financial expenses Net interest expense Net income from continuing operations Minority share of net income from continuing operations Net income from continuing operations, Group share Net income from discontinued operations, Group share Other net financial expenses Income before taxes Income tax expense Net income, Group share Adjusted net income, Group share (1) Recurring operating income before depreciation and amortization (including supply chain depreciation) H RESULTS 32

33 H INCOME STATEMENT (in m) H reported H Net sales 38,526 37,071 Net sales, net of loyalty program costs 38,228 36,728 Other revenue 1,354 1,309 Total revenue 39,582 38,037 Cost of good sold -30,762-29,816 Gross margin from recurring operations 8,821 8,221 SG&A -7,419-6,884 Recurring operating income before D&A (EBITDA) (1) 1,431 1,373 Depreciation and amortization Recurring operating income (ROI) Recurring operating income (ROI) including income from associates and joint ventures Non recurring income and expenses EBIT Financial expense Income tax expense Minority interests Net income from continuing operations, Group share Net income from discontinued operations, Group share Net income, Group share Adjusted net income, Group share (1) Tax impact of restated items (from non-recurring income and expenses and financial expenses) and non-recurring tax items H RESULTS 33

34 Net sales and recurring operating income per region NET SALES RECURRING OPERATING INCOME (in m) H reported H Variation at constant exch. rates Variation at current exch. rates H reported H Variation at constant exch. rates Variation at current exch. rates France 17,307 17, % -0.9% % -44.8% Other European countries 10,010 10, % +0.8% % +1.9% Latin America 8,075 6, % -13.6% % +8.8% Asia 3,135 2, % -9.0% % % International 21,219 19, % -6.1% % +10.6% Global functions % -52.4% TOTAL 38,526 37, % -3.8% % -3.8% H RESULTS 34

35 ADJUSTED NET INCOME, GROUP SHARE (in m) H reported H Net income from continuing operations, Group share 78 (861) Restatement for non-recurring income and expenses (before tax) Restatement for exceptional items in net financial expenses 17 6 Tax impact (1) (84) (19) Restatement on share of income from minorities and companies consolidated by the equity method (7) (8) Restatement for discontinued operations Adjusted net income, Group share (1) Tax impact of restated items (from non-recurring income and expenses and financial expenses) and non-recurring tax items H RESULTS 35

36 EARNINGS PER SHARE ( per share) H reported H Net income from continuing operations 0.11 (0.83) Net income from discontinued operations (0.00) (0.30) Net income, Group share 0.10 (1.13) Adjusted net income, Group share Weighted average number of shares pre-dilution (in millions) (1) (1) Non significant dilutive impact H RESULTS 36

37 STORES UNDER BANNERS 1 AT END H (#) Hypermarkets Supermarkets Convenience Cash & Carry Total France 248 1,059 3, ,390 Spain ,010 Italy ,077 Belgium Poland Romania Others Other European countries 455 1,749 2, ,656 Argentina Brazil Latin America ,021 China Taiwan Others Asia Others (2) Total 1,377 3,255 6, ,947 H RESULTS 37

38 H GROSS SALES Gross sales (in m) Change at current exch. rates inc. petrol Change at constant exch. rates inc. petrol LFL ex. petrol ex. calendar Organic growth ex. petrol ex. calendar France 19, % +0.9% -0.1% -1.1% Hypermarkets 9, % -0.1% -1.6% -2.2% Supermarkets 6, % +0.9% +0.8% -1.0% Others, inc. convenience 2, % +4.6% +2.6% +2.3% International 22, % +3.2% +1.2% +2.6% Other European countries 11, % +0.7% -1.5% -0.7% Spain 4, % +2.2% -1.8% -1.0% Italy 2, % -3.0% -3.6% -3.5% Belgium 2, % -2.2% -2.0% -2.2% Poland 1, % +2.8% +0.8% +2.9% Romania % +8.7% +5.3% +8.1% Latin America 7, % +9.3% +6.4% +9.5% Brazil 6, % +5.8% +1.9% +5.7% Argentina 1, % +24.6% +24.7% +24.7% Asia 3, % -4.6% -3.9% -4.5% China 2, % -8.0% -6.4% -7.8% Taiwan % +3.7% +2.2% +3.7% Group total 41, % +2.2% +0.7% +1.1% H RESULTS 38

39 Q GROSS SALES Gross sales (in m) Change at current exch. rates inc. petrol Change at constant exch. rates inc. petrol LFL ex. petrol ex. calendar Organic growth ex. petrol ex. calendar France 9, % +0.9% -0.1% -0.9% Hypermarkets 5, % +0.2% -1.0% -1.4% Supermarkets 3, % +0.4% +0.1% -1.5% Others, inc. convenience 1, % +4.5% +2.2% +2.0% International 10, % +2.5% +1.7% +3.1% Other European countries 5, % -1.3% -2.2% -1.5% Spain 2, % +0.2% -2.9% -2.2% Italy 1, % -5.0% -3.9% -3.8% Belgium 1, % -3.9% -2.3% -3.2% Poland % +0.1% +2.3% +4.5% Romania % +7.0% +3.1% +6.0% Latin America 3, % +9.6% +8.4% +11.5% Brazil 3, % +5.5% +3.4% +7.3% Argentina % +26.8% +28.0% +27.9% Asia 1, % -4.7% -4.2% -4.7% China % -8.0% -6.5% -8.0% Taiwan % +2.8% +1.0% +2.7% Group total 20, % +1.8% +0.9% +1.4% H RESULTS 39

40 DISCLAIMER This presentation contains both historical and forward-looking statements. These forward-looking statements are based on Carrefour management's current views and assumptions. Such statements are not guarantees of future performance of the Group. Actual results or performances may differ materially from those in such forward-looking statements as a result of a number of risks and uncertainties, including but not limited to the risks described in the documents filed with the Autorité des Marchés Financiers as part of the regulated information disclosure requirements and available on Carrefour's website ( and in particular the Annual Report (Document de Référence). These documents are also available in the English language on the company's website. Investors may obtain a copy of these documents from Carrefour free of charge. Carrefour does not assume any obligation to update or revise any of these forward-looking statements in the future.