French hypermarket group Carrefour performed better than expected last year: operational profit dropped by only 2.6 percent to 21.4 billion euro, while net profits were three times higher than the year before. As CEO Georges Plassat promised in August of last year, it seems Carrefour is back on the rise.
Higher net profits due to downsizing
Last year overall sales of the world's second largest distribution group rose by 0.9% to 76.8 billion euro, mainly thanks to emerging markets. Net profits also rose significantly: Carrefour made a yearly net profit of 1.24 billion euro, compared to only 371 million euro in 2011. Operational profit did drop by 2.6 percent, but that was still better than the 2.07 billion euro expected by analysts.
Carrefour’s rise in profits came mainly because of the sale of company parts that didn’t fit in the new strategy of focussing on a few core markets. In that respect the distribution giant sold its activities in Colombia, Malaysia and Indonesia.
Recovery in France, Belgium mainstay in Europe
Carrefour also showed some signs of recovery on the home front: sales in France rose by 0.5 percent, while operational profit jumped by 3.5 percent to 929 million euro. According to the retailer, the lower prices in France only had a small impact on profit margins, due to an improved mix of daily prices, promotions and customer fidelity.
In Belgium the company also showed some positive figures: profitability as well as sales continue to rise at France's northern neighbours. Belgium is an exception in Europe however, as sales in the Europe minus France region went down by 2.7 percent, marked by a declining consumption in Southern Europe.
Analysts are carefully optimistic about the road Carrefour has taken and are starting to believe that a turnaround for the retail giant could be possible. Since the first public appearance of Plassat last June, the share price of Carrefour has risen by about 50%.