Update on recent S&P announcement

Good morning, Ladies & Gentlemen

In the context of the Credit Watch announced by S&P last Friday, we have received a number of questions from investors and we would like to take the opportunity of this call to answer them in a transparent and efficient way.

This communication will answer 11 meaningful questions that we have received.
There will be no Q&A session afterwards.

The first question reads as follows:

1) What is a Credit Watch Negative?

  • A Credit Watch is a formal rating review process, which aims to be concluded within 90 days
  • During this process, Casino will actively engage with S&P, as we have always done, to discuss in full transparency the Group’s strategy, its confidence on its business prospects and its deleveraging plan
  • At the end of the Credit Watch period, our credit rating could be either maintained or lowered
  • At this stage, Casino’s S&P credit rating is unchanged at BBB

The second question reads as follows:

2) What has triggered the Credit Watch in your view?

  • In our view, the Credit Watch has been triggered by the following recent developments that may have an impact on Casino’s credit profile
    • S&P’s Credit Watch review occurred after the publication of our Q4 2015 sales, in a context of rising concerns over the macroeconomic situation in emerging markets and the recession in Brazil
    • Casino also announced last week the launch of the sale process for its operations in Thailand after having received strong indications of interest
  • Independently from short-term market volatility, S&P’s credit rating generally relies on the review of a company’s Business Risk and Financial Risk profile, factoring long-term strategic drivers and financial trends

The third question reads as follows:

3) Do you share S&P’s concerns on Brazil?

  • As a reminder, S&P downgraded Brazil’s sovereign credit rating to sub-Investment Grade on 9 September 2015
  • As we pointed out during our recent Q4 2015 sales update, our Brazilian operations continue to deliver a good performance in food retail, with market share gains in cash & carry, supermarkets and convenience stores; we are confident in GPA’s ability to deliver a good performance in 2016
  • Regarding non-food activities, our sales have declined in the context of soft discretionary spending by Brazilian households. Nevertheless, we succeeded in limiting the decline in sales of Via Varejo in Q4 2015 compared to previous quarters, thanks to targeted action plans aimed at finding a better price positioning, particularly through more effective promotions
  • As in 2015, our priority for 2016 is to maintain a positive operating FCF for all our Brazilian activities

Read the full press release

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