By Dominique Vidalon
PARIS (Reuters) – Carrefour SA said on Wednesday it looked to 2022 with confidence after Europe’s largest food retailer delivered record free cash flow of 1.23 billion euros ($1.40 billion) and a 7.7% rise in operating profit for 2021.
Chairman and Chief Executive Alexandre Bompard said cash generation would remain above one billion euros in 2022 and good commercial momentum would continue despite inflationary pressure.
He also said he would unveil his new strategic plan for the group in autumn.
Strong results and cash generation allowed Carrefour to hand investors an 8% dividend hike to 0.52 euros per share and launch a new share buyback plan of 750 million euros for 2022.
“It is an exciting time for us with a new plan in the fall. We have great confidence for this year,” Bompard told analysts.
Cash is also key to the French food retailer’s plans to step up digital commerce expansion without the extra financial resources that would have been on hand if two planned tie-ups last year had not failed – one with Canada’s Couche-Tard and one with France’s Auchan.
Carrefour reported a 7.7% rise in 2021 recurring operating profit to 2.27 billion euros at constant exchange rates, driven notably by its core French market.
The performance reflected cost cuts and 2021 sales which grew 2.3% on a like-for-like basis to 81.245 billion euros, with market share gains in key countries France, Brazil and Spain.
In France, where Bompard has made reviving flagging sales at hypermarket stores a priority, operating profit rose 20% to 757 million euros on sales that rose 1.8%.
Carrefour said it expected its French operations to further improve their operating margin to 3% of sales in the mid-term, from 2.1% in 2021.
With inflation accelerating, Carrefour said it would intensify cost savings.
It raised its cost-cutting goal to 2.7 billion euros on an annual basis in 2021-23 from an initial target of 2.4 billion, having achieved 930 million in cost savings in 2021.
Carrefour is in the last leg of a five-year plan launched in January 2018 to cut costs and boost e-commerce investment to improve profits and sales, as it seeks to tackle online rivals such as Amazon.com Inc and discounters like Lidl and unlisted retailer Leclerc.
Bompard, whom Carrefour reappointed in May 2021 to lead for another three years, is working on a new strategic plan and conducting an asset review as part of the process.
In November, Carrefour pledged to spend 3 billion euros between 2022 and 2026 to step up digital expansion, one of the pillars of the future strategy plan.
Carrefour shares have gained 7% so far this year but still trade 20% below their level when Bompard took over in July 2017.
($1 = 0.8800 euros)
(Reporting by Dominique Vidalon; Editing by GV De Clercq, Jan Harvey and Richard Chang)
