Carrefour Sales Rise 5.8% on Latin America, Poland (Update2)

Carrefour SA, Europe's biggest retailer, said third-quarter sales increased 5.8 percent, fueled by acquisitions this year in Brazil and Poland.

Revenue in the three months ended Sept. 30 rose to 23.11 billion euros ($32.8 billion) from a restated 21.82 billion euros a year earlier, the Paris-based company said today. That compared with the 23.16 billion-euro median estimate of nine analysts surveyed by Bloomberg.

Chief Executive Officer Jose Luis Duran added stores outside France and cut prices at home to match discounts by competitors such as E.Leclerc. April's acquisition of Atacadao, a Brazilian chain of 34 discount outlets, and the purchase of Royal Ahold NV's 14 superstores and 183 supermarkets in Poland have helped Carrefour tap faster-growing markets. Sales in France, where the retailer gets almost half its revenue, fell 2 percent.

``The results are a little disappointing,'' said Claudie Casimir, an analyst at Natixis Securities in Paris. ``French hypermarkets performed less well than expected.'' She has an ``add'' rating on Carrefour shares.

Sales in France dropped to 10.4 billion euros as warm July weather dampened apparel sales and consumer spending waned. Total French grocery sales fell 1.2 percent in September from a year earlier, according to data yesterday from France's Central Bank.

Spain, Italy

The figures were released after the close of French trading. Carrefour shares rose 25 cents, or 0.5 percent, to 47.71 euros in Paris today.

The stock has lost almost 18 percent since the end of April after gaining 23 percent in the first four months of the year on bid speculation. French billionaire Bernard Arnault and U.S. real-estate investor Colony Capital LLC bought a stake together in March as the retailer ousted Luc Vandevelde as chairman.

Sales excluding acquisitions and currency swings will increase 6 percent to 8 percent next year, Chief Financial Officer Eric Reiss said on a conference call. Operating profit growth will outpace revenue and the retailer will generate 1.5 billion euros in cash flow, the executive said.

European sales outside France advanced 5.1 percent to 8.56 billion euros, helped by a revival in Spain, which accounts for about 15 percent of revenue. Spanish sales advanced 2.5 percent while revenue in Italy, the retailer's third-largest market, fell 2 percent. Italy remains ``highly competitive,'' Reiss said.

Asian Sales

Carrefour plans to close 16 outlets in Belgium, where sales dropped 4.4 percent during the quarter, the executive said.

The purchase of Ahold's Polish operations boosted Carrefour's revenue in eastern Europe. The French retailer plans to open another nine superstores in the country this year.

Sales in Latin America jumped 53 percent to 2.61 billion euros, spurred by increased consumption in Argentina and the $1.09 billion purchase of Atacadao. Half of the chain's 34 superstores are in the state of Sao Paulo, surrounding Brazil's biggest city.

Asian sales gained 13 percent to 1.54 billion euros as the company added more outlets in China. Carrefour expects to add 23 outlets in 2007 and up to 25 annually in coming years.

Carrefour said in August it plans to sell part of its real estate holding in an initial public offering next year, bowing to pressure from investors. The unit, called Carrefour Property, will own 60 percent of the retailer's 24 billion-euro real- estate holdings, based primarily in France, Spain and Italy.

Arnault and Colony have said they won't raise their stake beyond 20 percent until June 2008 unless the company's largest shareholder, the Halley family, decides to sell its 13 percent holding, or another investor buys more than 5 percent. Chairman Robert Halley said in April the family had no intention to sell.

Source:bloomberg.com