Carrefour H1 profits up as Brazil, Europe improve

PARIS, France - Carrefour, the world's second-largest retailer, reported higher first-half profitability in its core French business and in Brazil and Argentina, while China stayed under pressure.

The French group said first-half recurring operating profit rose 13.8 percent to 833 million euros ($1.12 billion), while first half adjusted net income rose 16.7 percent at current foreign exchange rates to 274 million euros.

Carrefour is battling to reverse years of underperformance in Europe, where it makes 73 percent of its sales. Its problems are partly due to a reliance on the hypermarket format it pioneered, as customers favour more local and online shopping.

In response, Chief Executive Georges Plassat has lowered costs, revamped stores, cut prices, simplified product offerings and given more autonomy to store managers, starting in France.

The first-half increase in recurring operating profit was driven by growth of 7.8 percent in Carrefour's core French market and 19.2 percent in emerging markets, with particularly strong performance in Brazil and Argentina.

Carrefour is the second-largest operator in the Brazilian food retail market, behind leader Grupo Pao de Acucar (GPA), controlled by Carrefour's arch-rival Casino, and just ahead of world number one retailer U.S. group Wal-Mart.

Carrefour, which has said it would spend more cash this year to revive its European hypermarkets and expand further in both emerging markets of China and Brazil, said its gross cash flow rose 1.9 percent excluding exceptionals to 1.3 billion euros.

Chief Financial Officer Pierre-Jean Sivignon said earlier in July that the analysts' consensus forecast for an operating profit of about 2.38 billion euros this year was "reasonable". That would be a 6.3 percent rise on 2013.

1 US dollar = 0.7465 euro