Casino’s profitability soars in first half of 2006

Today, French retailer Casino published its figures for the first half of the 2006 business year. Net sales of Casino’s continuing operations increased 16.5 per cent to €11.6 bn and its net income soared 27.6 per cent to €258mn. In France sales grew 3.6 per cent, but operating income was down 8.4 per cent due to increased costs. International sales grew 75.8 per cent – mainly following acquisitions of controlling stakes – and therefore international operational profit grew by 127.2 per cent.

Casino is optimistic about the initial benefits of its cross-banner projects in France which leads to better performing private labels, enhanced loyalty programmes and an internal supply chain programme named “Operational Excellence”. This benefits sales, market share and Casino’s commercial margin (+30 basis points as a result from succesful private labels and extended ranges of fresh products) but it also leads to increased costs. Labour costs grew by 5.4 per cent due to improved service levels (optimisation of checkout flows and redeployment of the fruit and vegetable counters) and there were €11mn non-recurring costs due to the launch of these cross-banner projects.

Internationally Casino strengthens its position in markets where it built a position (e.g. the consolidation of CBD in Brazil and Big C in Thailand, and the acquisition of a controlling stake in Colombian retailer Carulla Vivero by Casino’s local partner Exito) while divesting non core and underperforming assets both in France and abroad. The disposal programme has up to now resulted in a reduction of net debt by €1.5bn and Casino intends to have its net debt reduced by €2bn at the end of 2007. Casino confirms its targets for the full 2006 business year which are increased organic sales growth and growth in operating income.