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Carrefour (CAFP; NR/BBB) 1H (to June) Results

CONSUMER STAPLES

Carrefour is showing the benefits of geographical diversification as LATAM carries its bottom line (again). For read-through to Auchan; it doesn't look great on prices still falling and volumes down (though not huge falls). It's done well to still drag its margin up in France. Europe ex. France margin trends are concerning. Slight misses across the board (sales +12% vs. c+10%, EBIT margin 1.8% vs. c2.1%) - expect equity px action accordingly. We will wait for Auchan tomorrow to comment on RV but even here we see WOWAU28s as marginally better value (even after a impressive run in). CAFP does have diversification that only ADNA has in the comp space - latter is perennially tight curve.

  • 1H sales at €45b (+12% LFL) with similar +11% growth in Q2. Over 1H; France (45% of group sales) fell -2%, Europe ex. France (28%) -1.5% and LATAM (28%) +46% driven by high inflation in Argentina (+233%).
  • EBITDA was €1.9b (+3.4%) at a 4.3% margin (+20bps) while Adj. EBIT was €743 (+6.2%) at a 1.8% margin (+12bps).
  • Bulk of EBIT increase has come from LATAM's +37% jump and is contributing 56% to group bottom line on its superior 3.7% margin. France is running a 1.6% EBIT margin (+13bps) while Europe ex. France halved to a 0.7% margin.
  • On Europe's abysmal margin reasons are varied from weather to intense competitive pressure and integration costs on acquired Cora stores.
  • In France impressive it has offset the -2% headline fall with a margin increase (even if slight). It said headline fall was due to slowdown in inflation paired with slightly negative volumes. It says its market share is stabilising but that was after "aggressive pricing". Read-through to Auchan we are searching for here, hard to see much positive given margins its tying to its own programs.
  • Net financial debt (i.e. ex. the €4.8 in lease liabilities) was €5.4b up €0.4b over the year mainly on hefty equity pay-outs (€636m in dividends, €915m in buybacks over rolling year). FCF this half was -€1.7b and unch yoy (1H seasonality).
  • 3Q results come on the 23rd of October, guidance looks thin outside its 2026 targets.
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