The world's second-largest retailer, Carrefour, posts stronger-than-expected H1 profits, boosted by a recovering Europe and a programme of cost cuts that's offsetting lower profitability in its home territory, France. Ciara Lee reports.
It's the world's second-largest retailer and is showing little sign of slowing down. Carrefour posted stronger than expected operating profit for the first half of the year. But the group isn't having as much success in its home market. It reported lower profits in France as well as China. The decline at home reflects the integration of its recently acquired Dia stores. And a rise in taxes on larger commercial spaces. Panmure Gordon's David Buik (SOUNDBITE) (English) DAVID BUIK, MARKET COMMENTATOR, PANMURE GORDON, SAYING: "If you look at the dynamics of the country, it's rural. And I think when people live in rural areas, they are very much more supportive of their local shops and their local produce. And unlike an urban country like the United Kingdom, I think Carrefour has that that problem and it is exacerbated by the fact that I think the French economy, up until three months ago, was a disgrace." A robust Brazil as well as strength in the rest of Europe lifted profits 2.6 percent to 726 million euros. Carrefour, which makes 73 percent of its sales in Europe, is pursuing a global revival by focusing on price and cost cuts. It's also expanding into smaller convenience stores and renovating its core hypermarket network. But the rest of Europe reported a more than three-fold jump in operating profit, with a sharp acceleration in Spain and an improvement in Italy. Latin America was also strong with a good performance in Argentina and in Brazil where Carrefour is proving resilient to a slowing economy.