April 25, 2024 06:41 GMT
Carrefour (CAFP; Baa1, BBB; S) {CA FP Equity} 1Q results
CONSUMER STAPLES
Weak results in France & broader Europe. Ongoing volume decreases despite aggressive pricing not great & negative for read-through to Elo/Auchan (NR, BB+ Stable), Carrefour adding; "the objective is to gain market share, obviously, without starting a price war".
Co has stuck to a broad FY guidance that will leave equity payouts netting most of this years FCF. We don't expect any rating action here - BS squared away on strong cash position - hence contingent on acquisition activity.- 1Q sales at €22.2b (c€22.5b) at same store sales growth of +13.5% (c+6.5%) & at gross was +0.4% (FX -12% impact).
- Headline hides weakness in France (-0.4% vs. c+1.4%) & broader Europe (-0.2% vs. c+1.7%) & was helped up by hyperinflation in Argentina (+265% vs. c+89%).
- On France; co says volumes still falling but expects stabilisation. MoM inflation flat now but co is aggressively reducing prices to compete for market share - expects to continue that through to year end.
- FY guidance is left broad; growth in EBITDA & recurring EBIT (vs. '23) & net FCF in line with '26 plan (>€1.7b by '26, FY23 was €1.6b). It has boosted cost savings objective to €1.2b (vs. €1b) - unclear if this is to net out pricing impacts (its dismissing pricing impact on margins).
- Buyback this year is €700m, dividends are currently running at €600m. Objective is for 5%+ growth in dividends & regular yearly buybacks. Total €1.3b in pay-outs already to growth against FCF that's flat against a '26 target - Moody's thresholds are gross <3.25x and net <2.25x.
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