Car­refour re­duces profit fore­cast for sec­ond time

The Pak Banker - - Company& -

PARIS: Car­refour SA, the world's sec­ond-largest re­tailer, cut its 2010 profit fore­cast for the sec­ond time in two months, cit­ing in­creased write­downs in Brazil and lower-than-ex­pected de­mand in Europe.

So-called ac­tiv­ity con­tri­bu­tion, a mea­sure of op­er­at­ing profit, will be about 3 bil­lion eu­ros ($3.91 bil­lion), the Paris­based com­pany said late yes­ter­day. That's about 130 mil­lion eu­ros less than a pre­vi­ous pre­dic­tion. One-time charges in Brazil will be 550 mil­lion eu­ros, up from an Oc­to­ber es­ti­mate of 180 mil­lion eu­ros, and will be taken as non-op­er­at­ing in­come.

Car­refour re­placed its man­age­ment in Brazil and hired KPMG LLP in Oc­to­ber to au­dit its op­er­a­tions there af­ter a poor per­for­mance of the unit's su­per­stores. The re­tailer also com­mis­sioned a sep­a­rate in­ves­ti­ga­tion to iden­tify who may be re­spon­si­ble for the need to make ac­count­ing changes that in­clude ad­just­ments to in­ven­tory and as­set de­pre­ci­a­tion at the unit.

"We are con­fi­dent that we can fix the sit­u­a­tion rapidly to come back to a sus­tain­able, profitable earn­ings sit­u­a­tion in Brazil," Chief Fi­nan­cial Of­fi­cer Pierre Bouchut said on a con­fer­ence call yes­ter­day.

The re­duc­tion in Car­refour's profit out­look stems in part from the Brazil­ian su­per­stores, a worse-than-ex­pected per­for­mance in France since Septem­ber and ad­verse eco­nomic con­di­tions in Italy, Greece and Spain, Bouchut said. The mea­sure of op­er­at­ing profit was also cut by 50 mil­lion eu­ros af­ter the sale of its Thai op­er­a­tions last month. Car­refour shares fell 2.2 per­cent to 34.86 eu­ros yes­ter­day. The stock has risen 3.9 per­cent this year, com­pared with a 30 per­cent in­crease at Metro AG, Ger­many's largest re­tailer. Wal­Mart Stores Inc., the world's biggest re­tailer, has in­creased 1.7 per­cent. -Bloomberg

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