Total Sales (Q4): EUR25.7 billion, up 2.6% at current currency. Group Like-for-Like Sales (Q4): Up 7.1%. Recurring Operating Income: EUR2.213 billion, up 1.4% excluding currency effects. EBITDA Growth: 1.7% increase. Net Free Cash Flow: EUR1,450 million. France Recurring Operating Income: Increased by 5.5%, surpassing EUR1 billion. Brazil Recurring Operating Income Growth: Close to 25% in local currency. Argentina Recurring Operating Income: EUR115 million, a record level. Cost Savings: EUR1.240 billion achieved in 2024. E-commerce GMV: EUR6 billion, up 18%. Dividend Increase: Ordinary dividend up 6% to EUR0.92 per share, plus a special dividend of EUR0.23 per share. New Store Openings (France): Over 450 new convenience stores. Net Debt Increase: EUR1.220 billion, primarily due to M&A activities.

Warning! GuruFocus has detected 5 Warning Signs with CRERF.

Release Date: February 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Carrefour (CRERF) achieved growth in recurring operating income, EBITDA, and net free cash flow, aligning with multiyear expectations. Carrefour France saw a significant increase in market share and recurring operating income, reaching its highest level in over a decade. Brazil's recurring operating income grew by nearly 25% in local currency, with Atacadao outperforming the market. Carrefour's e-commerce segment experienced substantial growth, with GMV increasing by 18%, reinforcing its leadership in home delivery. The company achieved a 111% score in its Corporate Social Responsibility Index, meeting emissions reduction goals ahead of schedule.

Negative Points

The European market remained challenging, with weak consumption and competitive pressures impacting profitability. Foreign exchange had a strong negative impact, particularly due to the depreciation of the Brazilian real and Argentine peso. Recurring operating income in Europe was down, affected by competitive markets and low volume growth. Net financial charges increased significantly, largely driven by the situation in Argentina. The company faces limited visibility on the timing of volume recovery in Europe, impacting future growth projections.

Q & A Highlights

Q: Can you provide more details on the strategic review of your activities and organizational models? Are you considering disposals, acquisitions, or changes in headcount and markets? A: Alexandre Bompard, Chairman and CEO, explained that the strategic review is comprehensive, with no limits on topics or entities. It includes all activities, formats, operating models, and the real estate portfolio. The goal is to ensure the right market positioning and operating model in a changed competitive landscape.

Story Continues

Q: How much CapEx are you planning to invest in France, and what areas will it focus on? A: Matthieu Malige, CFO, stated that the CapEx budget for France will increase by 20% compared to 2024, focusing on improving customer experience through store revamps, logistics enhancements, and ensuring product availability, which is crucial for customer satisfaction and market share dynamics.

Q: What was the impact of M&A on the French EBIT, and how does it affect the underlying margin? A: Matthieu Malige noted that the impact of M&A on French EBIT was fairly neutral in 2024, with the consolidation of profits from Cora & Match and the costs associated with synergy implementation balancing each other out.

Q: Why are you opting for a special dividend instead of share buybacks, and how does this align with your capital allocation strategy? A: Matthieu Malige explained that due to a new 8% tax on share buybacks in France, Carrefour chose to issue a special dividend instead. The capital allocation strategy balances shareholder returns, M&A opportunities, and maintaining a strong balance sheet.

Q: What factors contributed to the decline in European margins, and do you expect this trend to continue? A: Alexandre Bompard highlighted that the decline was due to competitive markets and low volume growth. The focus remains on strategic initiatives like price investments and private labels to drive future performance, but visibility on volume recovery remains limited.

Q: How do you view the competitive environment in France, and is there potential for further consolidation? A: Alexandre Bompard noted that the competitive landscape has changed significantly, leading to market polarization. Carrefour has benefited from consolidation through strategic acquisitions like Cora & Match, and will continue to be selective in M&A to ensure accretive deals that do not compromise profitability.

Q: Can you clarify the guidance for slight EBIT growth and how it varies by region? A: Matthieu Malige stated that the guidance for slight growth considers the lack of visibility on volume recovery and ongoing price investments. The growth is expected to be driven by France and Brazil, with Spain showing positive trends, while Europe remains challenging.

Q: What is your outlook on free cash flow and the role of disposals and working capital gains in achieving your 2026 target? A: Matthieu Malige indicated that while working capital gains may not be as strong in 2025, disposals, particularly sale and leasebacks, will continue to contribute. The company remains confident in reaching the EUR1.7 billion free cash flow target by 2026.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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