According to French news reports, Carrefour has turned down an acquisition offer from Auchan – 70% in cash (at €21.5 per share) and the remaining 30% in shares. Reportedly, there were differences over the complex deal structure plus valuation. While it may look like a lost opportunity for Carrefour, we reiterate that such a marriage was risky from a strategic perspective (even if the financial deal was much more attractive). This development also reconfirms the attractiveness of Carrefour’s valu
Companies: Carrefour (CA:EPA)Carrefour SA (CA:PAR)
Carrefour posted a strong performance in Q2 and H1 FY21. The lfl sales surged 3.6% in Q2, driven by a strong show in France. The adjusted operating profit (at constant FX) was also strong with 11.2% growth. The key highlight was market share gains across all business formats in France. Ongoing strength of hypers is also noticeable. We will tweak the financial estimates slightly but maintain our positive stance on the stock’s valuation.
Carrefour posted a strong performance in Q1 FY21. The key positives were market share gains in almost all key geographies, a strong performance in France (including the hypermarkets), a robust show in Brazil (despite some headwinds like the cancellation of carnival festivities and the deceleration in food inflation) and the announcement of a share repurchase plan worth €500m (c.4% of market cap). We maintain a positive outlook on the stock’s valuation.
Carrefour has announced the acquisition of Grupo Big Brasil SA, the third largest grocer in Brazil. The deal looks a bit expensive at the first glance, but the value of real estate and the guided profit synergies are attractive enough to boost investors’ sentiment. The transaction is a good strategic fit in our opinion. We also do not expect any trouble in regulatory approval.
Carrefour’s Q4 performance was slightly ahead of ours and market estimates. Strong lfl growth across the key operating geographies and aggressive cost savings resulted in a 16.4% improvement in the recurring operating income (at constant exchange rates). Management’s performance turnaround plan remains on track. An additional cost saving plan should help the retailer to achieve the FCF targets in the forecast years. We maintain the positive stance on the stock recommendation.
Companies: Carrefour SA
Carrefour has been approached by the Canada-based convenience store operator Alimentation Couche-Tard (ACT) group for a friendly acquisition. While we do not see any anti-trust hindrances going forward, the offer price would be a key point. We expect an offer with at least a 30% premium to yesterday’s closing price.
Carrefour’s Q3 trading performance was the best in the past twenty years. The Brazilian and Spanish operations should continue to drive the momentum and France is also expected gradually to gain further strength. While lockdown worries (in France) have dampened investor sentiment, we see Carrefour as well placed to end FY20 on a strong note, and also achieve the targets of the performance improvement plan. We maintain our positive stance on the stock’s valuation.
Carrefour’s Q2 performance was better than expected. The positive lfl sales momentum in LatAm and Spain was aided by the continued success in cost savings, which is part of the Carrefour 2022 plan. E-com is also moving in the right direction. Moreover, we are optimistic about the performance of the new head of the French operations. We maintain a positive stance on the stock’s valuation.
Carrefour’s strong closure to FY19 and further improvement in the cost savings plan are positive developments. We remain optimistic on the potential of Mr Bompard in turning around the operations, especially in Europe. The company needs to be more aggressive in achieving the e-com target of €4.2bn by 2022 (vs €1.3bn in 2019). Positive opinion maintained on the stock.
Carrefour’s Q3 19 performance was slightly below our expectations. While the rebound in the Spanish operations and strong gains in LatAm were encouraging, management needs to do more to revive ailing businesses – French hypers, Italy and Belgium. Q4 19 should see a slightly better performance due to easier comparables. We will tweak our financial estimates but maintain the positive stance on the stock.
Carrefour reported Q2 results in line with our estimates. Lfl revenue growth was once again driven by LatAm and a sequential improvement in France. The recurring operating profit (at constant exchange rate) also grew by 4.5%. While the performance turnaround plan largely remains on track, some European countries (Italy, Spain and Belgium) still need overhauling. Expect minor changes in our financial estimates.
Carrefour has announced it is to sell an 80% stake in its Chinese unit to Suning.com (a local retailer backed by Alibaba). We believe this is the right step by Alexandre Bompard. Moreover, we estimate this deal to have a positive impact on both earnings as well as the stock valuation. No change to the stock recommendation.
2019 has started on a positive note for Carrefour with 2.7% lfl, driven by a robust performance in Brazil (+6.6% lfl), encouraging growth in French food sales (+2.0% lfl) and a sequential improvement in Belgium ((-0.4% lfl vs -3.1% in Q4 18). The performance turnaround plan, Carrefour 2022, is also moving in the right direction. No change in the stock recommendation.
The year has ended on a positive note. While management has achieved the FY18 profit guidance, the cost savings target (under the performance turnaround plan) has also been increased to €2.8bn (vs €2.0bn earlier). We believe management will continue to invest in prices / promotions to enhance the competitiveness. The market share should also stabilise in the mid-term. We continue to believe in the capability of management.
Although five key countries clocked negative lfl in Q4, some of the pain should alleviate gradually. On the positive note, the strong performance in LatAm is likely to continue. We also remain content with the progress of the performance turnaround plan. The guidance of a 4% increase in profit is an encouraging development. The revival of performance in Europe would be a stock price trigger in the near term. We maintain our stock recommendation.
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