Carrefour's profit is under pressure

French retail group Carrefour recently revealed disappointing financial results for the first half of 2017, and the new board indicated the second half of the year will also remain difficult.

Lower margins

The turnover for the first two quarters had already been divulged: the retailer had a 38.5 billion euro turnover for the first half of 2017, which is up 6.2 % overall and + 2.1 % on a like-for-like basis.

However, profit did not fare as well: its operating income was 621 million euro, down 12.1 %, and its operational margin dropped down to 1.6 %. That was partially down to strong promotional pressure in France and increasing losses in Argentina, where the economy still struggles. The operational margins in other European countries also dropped slightly, in part because of the integration of two acquired brands, the Eroski stores in Spain and Billa stores in Romania.

No improvement in sight

Carrefour did not reveal profits per country: the only thing we know about Belgium is its 0.1 % turnover increase to 2.1 billion euro. That was because of a weak first and good second quarter.

The company does not forecast any significant improvement: turnover will grow 2 to 4 % for 2017, less than the previously forecast of 3 to 5 %. Circumstances remain challenging in some countries and the annual results will probably be similar to its results in the first half of the year. Carrefour says it will improve its financial discipline and will slightly lower its investments. “The new board is fully focused to improving the group performance and tapping into the rapid and far-reaching evolutions within the industry”, the company said.