- Faster growth in the second quarter, with sales up 8.5%, or 2.9% on an organic basis (excluding petrol)
- Strong sales growth in international markets: up 23.6%
- Fast recovery in Leader Price sales
- Trading profit up 12.0% in the first half, or 5.7% before reclassification of the CVAE under income tax
- Underlying profit attributable to equity holders of the parent up 10.5%
“ Group sales rose significantly in the first half, lifted by brisk business outside France and the initial impact of Leader Price’s sales revitalisation plan. Most of the banners turned in a satisfactory operating performance in a sluggish economic environment in France. Our business units in key countries – Brazil, Thailand, Colombia and Vietnam- achieved remarkable results. The Group’s positioning in convenience and discount formats in France and its presence in countries with high growth potential provide a solid base for continued development” said Jean-Charles Naouri, Casino’s Chairman and Chief Executive Officer.
The financial statements for the six months ended 30 June 2010 prepared by the Board of Directors on 28 July 2010 have been reviewed by the auditors.
Consolidated net sales rose by 8.5% in the second quarter of 2010.
The positive 5.7% currency effect primarily reflected the sharp increase in the Brazilian real, Colombian peso and Thai baht against the euro during the period. The favourable impact of Ponto Frio’s consolidation by Grupo Pao de Açucar (GPA) was offset by the deconsolidation of Venezuelan operations, leading to a negative 0.9% impact from changes in the scope of consolidation.
Higher petrol prices added 0.9% to growth, while the calendar effect was a slightly negative 0.3% in France and neutral in International operations.
Organic growth excluding petrol came to 2.9% in the second quarter, confirming the acceleration recorded in the first quarter (up 2.6%) compared to full-year 2009 (down 0.1%).
Sales in France rose 1.1% in the second quarter.
Organic sales excluding petrol were up 0.2%, an improvement over the 0.9% decrease reported in the first quarter of 2010. This result stems primarily from an upturn in same-store sales at Leader Price. All of the convenience formats (Franprix, Monoprix, Casino Supermarkets and Superettes) continued to perform well and Cdiscount recorded double-digit organic sales growth.
Same-store sales at Leader Price showed a significant improvement in the second quarter, declining by just 1.4% compared with 10.8% in the first three months of the year. The sales revitalisation initiatives deployed since the beginning of the year, such as price repositioning and stepped-up advertising, have generated positive momentum, as seen in the increase in footfalls and the improvement in average basket.
The banner has started to roll out its new store concept, with very satisfactory results. Since the beginning of the year, 31 stores have been renovated. Leader Price also pursued its expansion strategy, opening 18 stores since January, while rationalising its store base. The pace of expansion will accelerate in the second half, as will deployment of the new store concept.
Franprix’s same-store sales rose 2.0% thanks to increases in footfalls and the average basket. The banner continued to implement its new concept, with 152 stores renovated at the end of the first half. The second quarter saw intense expansion, with 38 new store openings. In all, 53 new stores have opened since the beginning of the year. The contribution from new stores rose in the second quarter, leading to a more than 10% increase in banner sales during the period.
In all, Franprix-Leader Price sales rose by 3.2% during the second quarter.
Monoprix’s same-store sales excluding petrol increased by 1.9%. The banner gained market share in food and recorded a good performance in non-food, despite a later start to the summer sales season (30 June 2010 versus 24 June 2009). The new formats (Naturalia and Monop’) showed good momentum. The banner also stepped up its sales initiatives, notably through its partnership with dunnhumby and deployment of a new cosmetics concept.
Monoprix’s total sales rose 4.1%, reflecting sustained expansion in the second quarter. The banner opened five Citymarché stores, four Monop’s and one Naturalia during the period.
Géant Casino sales fell back 6.9% on a same-store basis, excluding petrol. The average basket decreased by 2.0% and footfalls contracted by 5.0%.
Food sales were down 6.9%. The gradual reinvestment of purchasing gains between March and June helped strengthen the banner’s price competitiveness, as reflected in a tangible improvement in price indices. By end-June, the IRI price indices were down 3 pts overall, and 2.4 pts in national brands.
On the non-food side, the banner continued to reposition the offer around the most promising categories, which delivered a good performance, particularly in small appliances. On the other hand, the banner continued to carefully scale back the less promising categories, like DVDs/games/videos and large appliances. Non-food sales declined by 6.8%, dampened by the later start of the summer sales.
Casino Supermarkets’ same-store sales declined by 1.0% excluding petrol during the quarter. The banner opened four new stores during the second quarter, for a total of five since the beginning of the year. Total sales excluding petrol rose 0.5% over the period.
Superette sales decreased by 1.7%. Continued rationalisation of the store base led to 71 closures during the period. At the same time, expansion gained momentum, with the opening of 103 new units.
The Other businesses (Cdiscount, Mercialys, Casino Restauration and Banque Casino) posted sales up 7.2% on an organic basis, lifted by Cdiscount’s double-digit sales growth.
International sales rose by 23.6% during the second quarter.
The positive 17.2% currency effect primarily reflected the sharp increase in the Brazilian real, Colombian peso and Thai baht against the euro during the period. The favourable impact of Ponto Frio’s consolidation by Grupo Pao de Açucar (GPA) was offset by the deconsolidation of Venezuelan operations, leading to a negative 2.6% impact from changes in the scope of consolidation.
Organic sales growth remained very strong, at 9.0%, impelled by sustained momentum in South America
(up 10.9%) and continued robust growth in Asia (up 5.4%).
Same store sales rose 9.1%, lifted by double-digit growth in Brazil and stepped-up momentum in Colombia.
In Brazil, GPA’s same store sales increased by 11.3%*. Sales were strong in both food and non-food items. Total sales rose by 39.4%* on the consolidation of Ponto Frio, which again reported very strong growth with sales up 71.6%* during the period. In particular, electronics sales were boosted by the 2010 World Cup.
In Colombia, Exito’s same-store sales growth accelerated to 4.6%* from 2.6%* in the first quarter, reflecting the success of promotional campaigns and the development of the private label. Exito continued to expand, opening two new stores, and to rationalise its store base, with 12 conversions. Total sales in Colombia ended the quarter up 5.4%*.
Performance in Argentina and Uruguay was satisfactory.
Operations in Asia reported robust organic growth of 5.4%.
Big C in Thailand achieved satisfactory same-store sales growth despite the political unrest during the period, and opened two stores.
Operations in Vietnam again enjoyed strong sales growth, confirming the country’s substantial growth potential.
Same-store sales in the Indian Ocean increased by 3.9%, lifted by successful sales campaigns and the World Cup’s favourable impact on non-food sales. Organic sales were up 4.7%.
* Data published by the companies
Sales rose by a strong 7.1% in the first half of 2010.
The currency effect added 4.5%, while changes in the scope of consolidation had a negative 1.1% impact. Based on constant scope of consolidation and exchange rates, organic growth came to 3.7%, or 2.8% excluding petrol. This represents a noticeable improvement from 2009 (down 0.1% excluding petrol), both
in France (down 0.3% excluding petrol vs 2.7% in 2009) and in International markets (up 9.4% excluding petrol vs 5.0% in 2009).
Trading profit rose 12.0%, or 5.7% before the reclassification of the CVAE under income tax, lifted by vigorous growth in the international operations.
Trading profit in France came to €347 million after reclassification of the CVAE. Trading profit declined by 5.5% on an organic basis, due in particular to the sales revitalisation plans at Géant and Leader Price. Trading margin at Franprix-Leader Price was down 98 points on an organic basis. Monoprix’s trading margin tangibly improved (up 32 points on an organic basis). Casino France’s trading margin narrowed by 9 points due to a lower margin at Géant. Casino Supermarkets and the superettes enjoyed solid profitability, while Mercialys recorded double-digit trading profit growth.
Trading profit in the international operations rose 34.5% on a reported basis to €194 million and 18.6% on an organic basis. Trading margin increased by 30 points on an organic basis. In South America, trading margin improved by 25 points on an organic basis, reflecting solid margin in Brazil and noticeably improved margins in Colombia. In Asia, organic trading margin rose by 73 points thanks to a marked improvement at Big C in Thailand and significantly higher margins in Vietnam.
Other operating income and expense represented a net expense of €56 million, reflecting in particular restructuring provisions and expenses.
Finance costs declined to €154 million from €165 million in first-half 2009 due to a reduction in net debt.
Income tax expense came to €105 million, representing a tax rate of 33.1%. Excluding non-recurring items and before reclassification of the CVAE under income tax, the tax rate came to 28.9% versus 29.9% in the year-earlier period.
Profit attributable to equity holders of the parent amounted to €173 million.
Underlying profit attributable to equity holders of the parent(1) increased by 10.5% to €208 million.
Net debt stood at €5,368 million at 30 June 2010, down from €6,003 million a year earlier, and all debt ratios improved as well.
Two bond exchange offers carried out during the period, in an aggregate amount of around €1.3 billion, have helped to noticeably improve the Group’s debt profile and to increase the average bond debt maturity from 2.9 to 4.4 years.
(1) Underlying profit corresponds to profit from continuing operations adjusted for the impact of other operating income and expense, non-recurring financial items and non-recurring income tax expense/benefits (see appendices).
OUTLOOK AND CONCLUSION
The first-half results confirm the asset portfolio’s effective positioning. The international operations recorded strong growth and significantly increased their contribution to trading profit. In France, the Group saw a return to sales growth thanks to a favourable format mix and sales revitalisation plans.
In France, Casino intends to strengthen market share by improving the banners’ price competitiveness and speeding up the expansion of the convenience and discount formats.
Internationally, the quality of the Group’s assets in high-potential countries is expected to drive strong and profitable business growth in 2010 and beyond.
The Group reaffirms its objective of a net debt/EBITDA ratio of less than 2.2x at the end of 2010, notably by pursuing its €1 billion asset disposal programme.
2010 Investor Calendar
Wednesday, 13 October 2010 (after the close of trading): Third-quarter 2010 sales announcement
Main changes in the scope of consolidation
- Ponto Frio has been consolidated by the Grupo Pao de Açucar (GPA) sub-group since 1 July 2009.
- Operations in Venezuela have no longer been consolidated since 1 January 2010.
Consolidated net sales for second-quarter and first-half 2010
Underlying profit attributable to equity holders of the parent
Underlying profit corresponds to profit from continuing operations adjusted for the impact of other operating income and expense (as defined in the “Significant Accounting Policies” section of the notes to the consolidated financial statements), non-recurring financial items and non-recurring income tax expense/benefits. Non-recurring financial items include fair value adjustments to certain financial instruments whose market value may be highly volatile. For example, fair value adjustments to financial instruments that do not qualify for hedge accounting and embedded derivatives indexed to the Casino share price are excluded from underlying profit. Non-recurring income tax expense/benefits correspond to tax effects related directly to the above adjustments and to direct non-recurring tax effects. In other words, the tax on underlying profit before tax is calculated at the standard average tax rate paid by the Group. Underlying profit is a measure of the Group’s recurring profitability.