Carrefour reduces profit forecast for second time
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