Casino Group: H1 2018 Results

7/26/2018, 7:21 AM (Source: GlobeNewswire)

Good operating performance across all businesses in H1 2018
Increased underlying net profit
Reduction in net debt in France and at Group level

Consolidated net sales of €17.8bn, reflecting organic growth of +4.1% and -3.4% after taking into account the negative impact of currency, compared with H1 2017
-          France: organic growth of +1.3% and same-store growth of +1.5%
-          Latin America: organic growth of +7.3% and same-store growth of +3.1%, led by the dynamism of cash & carry business and the recovery of Multivarejo
-          E-commerce: net sales up +5.7% on an organic basis(1) and gross merchandise volume (GMV) up +7.5% on an organic basis(1), supported by rapid marketplace expansion
            
 Group trading profit:
-          €439m, a growth of +10.3% on an organic basis and a variation of -2.4% after taking into account the negative impact of currency, compared with H1 2017
-          €339m excluding tax credits in Brazil, an increase of +6.1% and +17.3% on an organic basis compared with H1 2017
                                 
 Trading profit in France up +23.0% at €136m compared with H1 2017 (€110m)
-          €114m for the retail business, an increase of +47.3% and +37.4% on an organic basis compared with H1 2017
                           
 Underlying net profit, Group share of €48m, up +28.6% compared with H1 2017 (€37m)
                   
 Free cash flow from continuing operations of €1.6bn for the 12-month rolling period to 30 June 2018, excluding non-recurring items and before dividends(2)
                                                                                    
 Group net debt reduced by -€149m to €5,445m and net debt in France reduced by -€295m
to €4,019m compared with H1 2017                                     
                               
 The Group's objective is to complete half of the €1.5bn disposal plan (announced on 11 June 2018) this year. Taking into account:
-          the definitive sale of 15% of Mercialys equity through an equity swap with a bank for €213m,
-          indicative offers received in July 2018 for other Group's assets representing around half
of the disposal plan,
the Group confirms this objective.
 Confirmation of annual financial objectives and deleveraging objective in France      

Key figures
In €m
H1 2017 H1 2018 Change Organic change(3)
Net sales 18,439 17,816 -3.4% +4.1%
EBITDA 798 773 -3.2% +7.3%
EBITDA margin 4.3% 4.3% +1bp +13bp
         
Trading profit 450 439 -2.4% +10.3%
Trading margin 2.4% 2.5% +3bp +14bp
         
Net profit (loss) from continuing operations, Group share (88) (67) +24.1% n.a.
Underlying net profit, Group share 37 48 +28.6% +73.6%
         
Consolidated net debt 5,594 5,445 -€149m n.a.
Net debt of Casino in France 4,314 4,019 -€295m n.a.

In the first half of 2018, the Casino Group adopted IFRS 15 - « Revenue from Contracts with Customers » with retrospective application to 2017. In light of the ongoing process to sell Via Varejo in Q2 2018, this business has been classified as a discontinued operation in both 2017 and H1 2018 in accordance with IFRS 5.

(1) Data published by the subsidiary. The organic changes exclude sales of technical products and household equipment generated with customers of the Casino Group hypermarkets and supermarkets (impact of -6.4 pts and -8.9 pts on GMV and net sales, respectively), but include sales generated in corners. (2) Prior to dividends paid to shareholders of the parent company, TSSDI holders and excluding financial expenses (3) The organic change corresponds to the total change adjusted for changes in exchange rates and scope of consolidation. Note: Organic and same-store changes exclude fuel and calendar effects

 

 

 



Consolidated net sales of €17.8bn supported by a good performance of the activity in France and organic sales growth in Latin America

In H1 2018, the Group reported consolidated net sales of €17.8bn, representing organic growth
of +4.1% and -3.4% after taking into account the negative impact of currency.

In France, growth stood at +1.3% on an organic basis and +1.5% on a same-store basis, with food sales up +2.3%. The increase reflected good performances by Monoprix, Casino Supermarkets and Franprix, and strong growth at Géant Hypermarkets. Same-store sales by the Convenience franchise network attested to the format's solid momentum over the semester. Leader Price continued to improve its level of same-store growth.

E-commerce (Cdiscount) GMV grew by +7.5% on an organic basis(1), sustained by the strong organic growth and contribution from Géant non-food sales. The marketplace has seen a sharp acceleration in business since the beginning of Q3 2017 and its contribution to GMV now stands
at 34.4%. Cdiscount benefits from the rapid growth of B2C services including Cdiscount Energie
and the acceleration of financial services.

The food retail business in Latin America delivered organic growth of +7.3% and same-store growth of +3.1% in the first half, reflecting the good performance of the cash & carry business, the return
to growth of Multivarejo and organic and same-store growth at Exito.

Group trading profit up +10.3% on an organic basis, led by higher profitability in retail business
in France and a good organic performance in Latin America

Group trading profit came to €439m, up +10.3% on an organic basis compared to H1 2017
and down -2.4% after taking into account the negative impact of currency. Excluding tax credits
in Brazil, Group trading profit amounted to €339m, an increase of +6.1% and +17.3% on an organic basis compared with H1 2017.

In France, trading profit totalled €136m, up +23.0% compared with H1 2017. Trading profit in France for the retail business amounted to €114m, an increase of +47.3% and +37.4% on an organic basis compared with H1 2017 (€78m). The significant increase reflected improved performances
by the main banners and a favourable change in format mix.

The E-commerce segment posted a trading loss of -€23m. Gross margin improved by +31bp, thanks to dynamic growth in the marketplace contribution and in revenue from data monetisation initiatives. The controlled increase in costs, mainly related to deliveries, drove a +45.3% improvement in EBITDA on an organic basis compared to H1 2017.

Trading profit from food retail operations in Latin America came to €326m, up +6.8% on an organic basis compared to H1 2017. The total includes the tax credits recorded by GPA in H1 2018
for an amount of €100m versus €130m in H1 2017. Adjusted for these items, trading profit stood
at €226m, reflecting organic growth of +14.8% that was attributable to the good performance
of Assaí and the recovery of Multivarejo.

Underlying net financial expense and net profit, Group share(2)

Underlying net financial expense amounted to -€206m, a +€39m improvement compared
with H1 2017 that mainly concerned Latam Retail. In Latin America, the Group benefited from lower average interest rates in Brazil (-527bp) and Colombia (-207bp), as well as from declines in local currencies.

Net profit (loss) from continuing operations, Group share was -€67m, representing a +24.1% improvement on H1 2017 (-€88m).

Underlying net profit (loss) from continuing operations, Group share was €48m, up +28.6% compared to H1 2017 (€37m).

  1. Data published by the subsidiary. The organic changes exclude sales of technical products and household equipment generated with customers of the Casino Group hypermarkets and supermarkets  (impact of -6.4 pts and -8.9 pts on GMV and net sales, respectively), but include sales generated in corners
  2. See definition on page 6

 

Financial position at 30 June 2018

Free cash flow(1) from continuing operations amounted to €1.6bn for the 12-month rolling period
to 30 June 2018,
excluding non-recurring items and before dividends(2).

Casino Group consolidated net debt at 30 June 2018 stood at €5,445m vs €5,594m at 30 June 2017, a decrease of -€149m.

Free cash flow from operations in France amounted to €500m for the 12-month rolling period
to 30 June 2018
, after non-recurring items, interest and dividends. After taking into account financial investments, cash transfers from subsidiary and bond buybacks for the period, the net debt position in France(3) improved by €295m compared with H1 2017.

At 30 June 2018, Casino in France(3) had €5.5bn in liquidity, with a gross cash position of €2.1bn
and confirmed undrawn lines of credit of €3.3bn.

Casino has been rated Ba1 (stable outlook) by Moody's since 30 November 2017 and BB+
by Standard & Poor's (negative outlook since 24 April 2018).

Status of the disposal plan announced on 11 June, 2018

  • The Group's objective is to complete half of the €1.5bn disposal plan (announced
    on 11 June 2018) this year. Taking into account:
  • the definitive sale of 15% of Mercialys equity through an equity swap with a bank for €213m,
  • indicative offers received in July 2018 for other Group's assets representing around half of the disposal plan,

the Group confirms this objective.

2018 outlook - Full-year objectives confirmed

The Group confirms its 2018 objectives, and updates them to take into account the asset disposal plan announced in June 2018:

Trading profit:

  • In France, it targets in food retail an organic(4) growth above 10% of trading profit excluding property development, led by growth in the most profitable formats, by improved hypermarket and convenience profitability
  • In all, the Group is aiming to deliver organic(4) growth of its consolidated trading profit
    and above 10% excluding tax credits
  • In France, a free cash flow(2) from operations excluding exceptional items covering financial expenses and dividends and enabling to improve net financial debt
  • Reduction in net debt in France by around €1bn at 31 December 2018 thanks to self-financing
    and the proceeds from the asset disposals announced in June
  • A reduction in Group net financial debt, with:

- Return to breakeven for Cdiscount's free cash flow

- Free cash flow(2) from continuing operations excluding exceptional items of over €1bn in total

- A CAPEX envelop of around €1bn

- And the impact of the disposal of Via Varejo

The presentation of the 2018 half-year results is available on the Casino Group corporate website (www.groupe-casino.fr/en/).

***

(1)  The definitions of the main non-GAAP indicators are available on the Casino Group website:
 https://www.groupe-casino.fr/wp-content/uploads/2018/07/Group-Casino-FY-2017-Alternative-performance-indicators.pdf
(2)  Prior to dividends paid to shareholders of the parent company, TSSDI holders and excluding financial expenses
(3)  Casino in France comprises the Casino, Guichard Perrachon parent company, French businesses and wholly-owned holding companies
(4)  Excluding currency effect and scope impact

 

APPENDICES

Consolidated net sales by segment

Net sales
In €m
H1 2017 H1 2018 Organic
change
France Retail 9,208 9,310 +1.3%
E-commerce 835 876 +4.8%
Latam Retail 8,397 7,630 +7.3%
Group total 18,439 17,816 +4.1%

 

 

Consolidated EBITDA by segment

EBITDA
In €m
H1 2017 H1 2018 Organic
change
France Retail 281 307 +7.3%
E-commerce (12) (7) +45.3%
Latam Retail 529 473 +6.1%
Group total 798 773 +7.3%

 

 

Consolidated trading profit by segment

Trading profit
In €m
H1 2017 H1 2018 Organic
change
France Retail 110 136 +17.3%
E-commerce (24) (23) +7.4%
Latam Retail 364 326 +6.8%
Group total 450 439 +10.3%
           

 

Notes: The organic change corresponds to the total change adjusted for changes in exchange rates and scope of consolidation
Organic and same-store changes exclude fuel and calendar effects

 

 

 


2018 half-year results

In €m H1 2017 H1 2018
Net sales 18,439 17,816
EBITDA 798 773
Trading profit 450 439
Other operating income and expenses (274) (136)
Operating profit 176 303
Net finance costs (192) (158)
Other financial income and expenses (35) (91)
Income tax 30 (23)
Share of profit of equity associates 5 11
Net profit (loss) from continuing operations, Group share (88) (67)
Net profit (loss) from discontinued operations, Group share (8) 4
Net profit (loss), Group share (96) (63)

Underlying net profit

In €m H1 2017 Restated
items
H1 2017
underlying
H1 2018 Restated
items
H1 2018 underlying
Trading profit 450 0 450 439 0 439
Other operating income and expenses (274) 274 0 (136) 136 0
Operating profit 176 274 450 303 136 439
Net finance costs (192) 0 (192) (158) 0 (158)
Other financial income and expenses(1) (35) (18) (53) (91) 43 (48)
Income tax(2) 30 (81) (51) (23) (39) (62)
Share of profit of equity associates 5 0 5 11 0 11
Net profit (loss) from continuing operations (16) 175 158 42 140 182
Of which attributable
 to minority interests(3)
72 50 122 108 26 135
Of which Group share (88) 125 37 (67) 114 48

Underlying net profit corresponds to net profit from continuing operations, adjusted for (i) the impact of other operating income and expenses, as defined in the "Significant accounting policies" section in the notes to the consolidated financial statements, (ii) the impact of non-recurring financial items, as well as (iii) income tax expense/benefits related to these adjustments.

Underlying financial income corresponds to financial income restated from fair value adjustments to equity derivative instruments for example Total Return Swap (TRS) and forward instruments related to GPA shares and effects of discounting tax liabilities in Brazil.

Underlying minority interests represent the share of underlying net profit attributable to non-controlling interests. This indicator is therefore equal to net profit from continuing operations attributable to non controlling interests, adjusted for other operating income and expenses, non-recurring financial items and non-recurring income tax credits and expenses attributable to these restatements.

 

 (1) Other financial income and expenses have been restated, primarily for the impact of discounting tax liabilities, as well as for changes in the fair value of total return swaps and forwards
(2) Income tax expense is restated for tax effects corresponding to the above restated financial items and the tax effects of the restatements
(3) Minority (non-controlling) interests have been restated for the amounts relating to the restated items listed above

 


Group free cash flow from continuing operations, 12-month rolling period to 30 June 2018

12-month rolling period to 30 June 2018
In €m
Group
Cash flow from continuing operations 1,611
 o/w non-recurring items (259)
Change in working capital 682
Income tax (182)
Net cash from operating activities 2,112
Net CAPEX (797)
Free cash flow from continuing operations before dividends(1) and financial expenses 1,314
Free cash flow from continuing operations, excluding non-recurring items, before dividends(1) and financial expenses 1,573
     

 

Free cash flow from operations in France, 12-month rolling period to 30 June 2018

12-month rolling period to 30 June 2018
In €m
France
Cash flow from continuing operations 628
 o/w non-recurring items (203)
Change in working capital 597
Income tax (29)
Net cash from operating activities 1,196
Net CAPEX (236)
Free cash flow from operations before dividends(1) and financial expenses 960
Free cash flow from operations, excluding non-recurring items, before dividends(1) and financial expenses 1,162

 (1) Prior to dividends paid to shareholders of the parent company, TSSDI holders and excluding financial expenses

 


Simplified H1 2018 balance sheet

In €m H1 2017 H1 2018
Non-current assets 22,887 21,437
Current assets 14,787 15,131
Total assets 37,674 36,568
Total equity 13,426 11,827
Non-current financial liabilities 7,831 7,873
Other non-current liabilities 2,256 2,056
Current liabilities 14,162 14,812
Total equity and liabilities 37,674 36,568

Breakdown of net debt by segment

In €m H1 2017 H1 2018
France Retail (4,314) (4,019)
Latam Retail (1,706) (1,719)
Latam Electronics 641 562
E-commerce (214) (269)
Total (5,594) (5,445)

Exchange rate

  Average
exchange rates
  Closing exchange rates (30 June)  


H1 2017 H1 2018 Change   H1 2017 H1 2018 Change  
Columbia (EUR/COP) (x1000) 3.1659 3.4470 -8.2%   3.4772 3.4154 +1.8%  
Brazil (EUR/BRL) 3.4431 4.1415 -16.9%   3.7600 4.4876 -16.2%  

       

ANALYST AND INVESTOR CONTACTS
Régine Gaggioli - +33 (0)1 53 65 64 17

rgaggioli@groupe-casino.fr

or

+33 (0)1 53 65 24 17
IR_Casino@groupe-casino.fr

 PRESS CONTACTS
Casino Group
+33 (0)1 53 65 24 78
directiondelacommunication@groupe-casino.fr

AGENCE IMAGE SEPT
Karine Allouis - +33 (0)6 11 59 23 26 - kallouis@image7.fr
Grégoire Lucas - gregoire.lucas@image7.fr

 

Disclaimer

 

This press release was prepared solely for information purposes, and should not be construed as a solicitation or an offer to buy or sell securities or related financial instruments. Likewise, it does not provide and should not be treated as providing investment advice. It has no connection with the specific investment objectives, financial situation or needs of any receiver. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein. It should not be regarded by recipients as a substitute for the exercise of their own judgement. All the opinions expressed herein are subject to change without notice.





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