Carrefour profit rises

August 30, 2001 Posted: 1249 GMT

LONDON (CNN) -- Carrefour, Europe's largest retailer, said on Thursday profit rose 6 percent as it won back customers that had deserted it for price cutting rivals.

The French company, the world's second-largest retailer after U.S. behemoth Wal-Mart (WMT: Research, Estimates), earns almost 70 percent of its revenue in France and Spain where it faces a fierce price war. 

Profit before one-time items in the first six months of the year came in at 320 million ($290 million), up from 302 million in the year earlier period.

Analysts had expected a rise of between six to eight percent, as it integrated recent acquisitions, according to a Reuters poll.

The company maintained its target for a 15 percent rise in full-year net profit before acquisition and goodwill costs.

Shares in Carrefour rose 0.7 percent to 60.75 in midday trade in Paris. The stock has lost a third of its value since a November 1999 high of 96.60.

But analysts were concerned that EBITDA (earnings before interest, tax, depreciation and amortisation – a measure of profitability) rose 2.3 percent to 1.85 billion in the six months, and said that Carrefour will face an uphill struggle to deliver its full-year forecast.

"Margins did come down at the EBITDA level. That will put into question the company's guidance of 15 percent growth for the year," Alberto Montagne, European retail analyst at Lehman Brothers in London, told Reuters.

"It means margins have to improve considerably in the second half. Given pricing pressure, particularly in the French market, that is going to be tough to achieve," he said.

Carrefour expects business to remain "well-oriented in Europe and Asia, but

difficult in Latin America" in the second half.

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