Q2 2024 Earnings Summary
- Carrefour's price investments in France are driving a positive shift in market dynamics, leading to improved customer perception with an increase in Net Promoter Scores, and stabilization of market share in volume terms starting from periods P5, P6, and P7. These investments have been achieved without compromising profitability, thanks to dynamic cost-saving initiatives. [[3]]
- Strong performance and profitability growth in Brazil, with e-commerce gross merchandise value increasing by 45-46%, and the e-commerce business being profitable, particularly with Atacad\u00e3o central to this growth. Carrefour plans to accelerate this profitable growth in the coming months. All retail formats in Brazil are performing well, benefiting from positive macroeconomic trends and strategic initiatives. [[3], [7]]
- Cost-saving programs are effectively offsetting price investments across Europe, and Carrefour is confident in delivering better performance in the second half of the year. The company has demonstrated good control of these programs, accelerating dynamics throughout the group, which supports their confidence in improving margins and profitability in H2. [[10], [14]]
- Carrefour's aggressive price investments in France and other European markets are pressuring margins. Despite efforts to offset these investments with cost-saving initiatives, the CEO acknowledged that "our market share value is penalized by the depth of our price investment." This indicates that profitability may be impacted as the company continues to invest in prices throughout the year.
- Performance in European countries has been negatively affected by adverse weather, leading to decreased sales in key categories and reduced hypermarket traffic. The CEO stated that the weather "has had a huge impact" on the business, particularly impacting beverages, seasonal products, and nonfood items. While they hope the impact won't continue in the second half, uncertainties remain, and volumes are still "under pressure."
- Carrefour's retail media venture, Unlimitail, is still in its investment phase and contributes minimally to profits. The CEO admitted that it's "really an investment phase" and "still a small market" in Europe compared to the U.S. This suggests that expected benefits from this venture may take time to materialize, potentially weighing on short-term financial performance.
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Margin Outlook and Full-Year Guidance
Q: Will you meet the full-year consensus ROI of EUR 2.5 billion?
A: Management confirms that their expectations are consistent with the full-year consensus ROI of EUR 2.5 billion. They expect positive growth in EBITDA, ROIC, and net free cash flow, in line with the Carrefour 2026 plan trajectory. -
Europe Performance and H2 Outlook
Q: Can you elaborate on Europe's H1 profit trend and H2 expectations?
A: Europe faced specific challenges in H1, including adverse weather impacting seasonal products and price investments. Management is more positive for H2, expecting improvements as one-offs like Cora integration costs reduce, and cost savings offset price investments. -
Price Investments in France and Market Share
Q: Are price investments sufficient to improve market share in France?
A: Significant price investments in France have reduced prices by 10% on over 2,000 products since the beginning of the year. This improved price perception, stabilizing market share volumes in periods P5, P6, and P7, with continued investments planned. -
Brazil Performance and Outlook
Q: What supports confidence in Brazil's consumer trends improving?
A: Positive macroeconomic indicators like normalized food inflation and volumes, along with strong performance in formats like Atacadão and Carrefour Retail, give confidence in continued growth in Brazil. -
Weather Impact on Sales and H2 Expectations
Q: How significant was Q2's weather impact, and expectations for H2?
A: Adverse weather had a major impact on European Q2 sales, affecting key categories like beverages and seasonal products, especially in hypermarkets. Management does not expect this negative impact to repeat in the second half. -
Real Estate Disposals and Free Cash Flow Outlook
Q: What is the outlook for real estate disposals and free cash flow?
A: Real estate disposals depend on market opportunities. While last year saw disposals of around EUR 470 million, disposals may be lower this year but remain substantial. -
Retail Media Business (Unlimitail)
Q: Is Unlimitail in development or generating significant returns?
A: Unlimitail is in an investment phase, expanding into 28 countries, with partners reaching 2.2 billion page views per month and 160 million customers. While contributions are currently limited, management is enthusiastic about future growth. -
Cost Savings Initiatives
Q: Are price investments in Europe funded by cost savings?
A: Yes, price investments are offset by cost-saving plans, similar to France's approach, allowing investments without impacting financials. -
Spanish Financial Services Impact
Q: What is the impact of the Spanish financial services business?
A: The Spanish financial services had some impact on H1 profitability, but management maintains good cost of risk control and is constructive about future performance. -
French Margin Improvement Drivers
Q: What drove the French margin improvement?
A: Factors include dynamic cost savings, improved e-commerce profitability, transfer to franchise and lease management (now 30% of hypermarkets), private labels, and initial contributions from retail media. -
Brazilian E-commerce Profitability
Q: Is the Brazilian e-commerce business profitable?
A: Yes, Brazil's e-commerce, with 46% GMV growth and 10% revenue penetration, is profitable, driven by strong performance from Atacadão. -
Inflation Expectations in H2
Q: Is inflation expected to rise in the second half?
A: Management sees food inflation remaining low single-digit, with some commodities increasing but overall expecting normalization. -
Cost Savings Flexibility in Europe
Q: Is there flexibility for cost savings in Europe versus France?
A: Yes, cost-saving initiatives are widespread across Europe, with ongoing operational plans contributing to improved dynamics. -
Market Share Impact from Cora Acquisition
Q: Did Cora/Match acquisition affect market share reports?
A: Including Cora and Match for one week out of four led to a 60 basis points contribution to market share gains; excluding them, market share was stable in volume.