Carrefour depends on its operations abroad

Carrefour’s FY2005 figures show how much the French retail giant needs its operations abroad to finance its bloody retail onslaught at home. In France operating profits plummeted by 16 per cent, which was only partially offset by its foreign operations. Abroad Carrefour’s operating margin increased by 19 per cent, but the bottom line was a 2.9 per cent decline in operating profit for the group.Carrefour’s price cutting zeal in France did lead to a reduction of group commercial margin of 0.2 per cent. Net income from continuing operations was up 1.2 per cent. Including discontinued activities however, net income is down 15.6 per cent. This shows that the right divestment decisions are taken (a.o. supermarkets in Brazil and Spain, Czechia and Slovakia), despite a one-off charge of €372mn. The management is however confident that from this year on profitable (organic) growth will be realised. Investing 4 to 5 per cent of sales (about €10bn) between 2006 and 2008, Carrefour intends to open 1,000 new stores, 100 of which will be new hypermarkets. Also, price leadership remains a top priority for Carrefour, which will make this French retail giant even more dependent on good results outside its home base.