Carrefour posts profit drop as investors await new plan

Carrefour, the world's second-largest retailer, reported a dip in first-half profits on Thursday, hit by poor performances from businesses in austerity-hit countries such as Spain and Italy which the company is expected to address later in the day with the presentation of a new turnaround plan.

"Emerging markets continue to grow but southern Europe remains difficult, notably Spain," Chief Financial Officer Pierre-Jean Sivignon said in announcing the half-year results.

Sivignon also suggested results for the full year would be pretty much as expected, saying he was comfortable with the median market forecast of earnings before interest and taxes (EBIT) of 2.05 billion euros. Last year the company made an operating profit of 2.18 billion euros.

 

But Chief Executive Georges Plassat is expected to map out his strategy to put Europe's largest retailer back on track later on Thursday.

The arrival of Plassat, a retail veteran who took over in May, has fuelled hopes Carrefour can finally get to grips with years of underperformance in its main European markets, where hypermarkets have been hit by competition from specialist stores and trends toward local and online shopping.

Shares in the company were up 4 percent at 16.39 euros by 0813 GMT, having gained over 20 percent since mid-July, when Carrefour published second-quarter sales.

Few clues on the turnaround plan have emerged so far, though Carrefour told unions on Wednesday that it planned to cut up to 600 jobs in France to slash costs.

Plassat has said he needs three years to turn around Carrefour, whose challenges include halting a fall in market share in France, where it makes 43 percent of sales, cutting debt and weathering a difficult economic climate in Italy and Spain, where it makes just under 20 percent.

First-half underlying profit fell 8.2 percent to 769 million euros, compared with the average forecast of 10 analysts in a Reuters poll of 709 million, hit by weakness in French hypermarkets and in Asia.

The fall in first-half profits also reflected a sluggish performance at its French hypermarkets and weakness in Asia, notably China, where Carrefour was hit by rising distribution and labour costs, Sivignon said.

Net debt declined by 1 billion euros to 9.6 billion euros.

Comparable figures for the first half of 2011 were given on a pro-forma basis to take into account Carrefour's exit from businesses in Greece and Singapore.