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PARIS (Reuters) – Carrefour (PA:CARR) said on Wednesday it was confident about its turnaround 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.
On the back of these strong results Carrefour handed investors an 8% dividend hike to 0.52 euros per share and launched a new share buyback plan of 750 million euros for 2022.
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.
“These results attest to the success of the group’s transformation and give us great confidence in our performance ahead,” Chairman and Chief Executive Alexandre Bompard said in a statement.
“We look to the future with great ambition and will present our next strategic plan in early fall.”
Carrefour reported a well-flagged 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%.
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 it launched in January 2018 to cut costs and boost e-commerce investment to improve profits and sales, as it seeks to tackle competition from online rivals such as Amazon (NASDAQ:AMZN) and discounters like Lidl and unlisted retailer Leclerc.
Bompard, who Carrefour reappointed in May 2021 to lead for another three years, is working on a new strategic plan and is 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)
