Like its larger compatriot Carrefour, French retail group Casino has reported a significant lessening of the adverse currency effect in its latest set of results, an indication that its steady growth in organic sales could begin to pay dividends in the next few months.
The company has reported first half sales of €11.01 billion, up 5.5 per cent on a like-for-like basis and just 0.2 per cent lower than 2002 as exchange rates continued to improve. Operating profits were 10.3 per cent ahead of last year at €442.9 million, even including the impact of exchange rates, while net profit was up 12.1 per cent to €199 million.
A number of factors were responsible for the good performance, Casino said. Domestic sales rose by 4.7 per cent, helped not only by organic growth but also by the addition of 60,000 square metres of additional selling space, most of which came from the discount formats Leader Price and Franprix or from superettes.
These two business units were among the best performers for the group in the first half, with sales increasing by 9.3 per cent and 11.9 per cent respectively, Casino said. Operating profits at the discount format stores rose by 19.7 per cent during the period, while superettes showed an 18.2 per cent improvement.
Outside France, sales grew by 8 per cent at constant exchange rates, with organic growth accelerating throughout the period - it was 5.1 per cent in the first quarter and 8.3 per cent in the second - helped by a significant like-for-like improvement in markets such as Poland and Taiwan.
First half was also marked by a significant improvement in the results from Laurus, the Dutch retailer in which Casino has a stake: the chain posted operating profits of €27 million in the first half of 2003, compared to losses of €5 million a year earlier.
While exchange rates continue to be the main factor impacting results from Casino's foreign operations, the company said it had taken action to address other areas of concern at its international businesses.
For example, it has worked hard to improve productivity at its Géant hypermarket unit in Poland, and to accelerate the rollout of the Leader Price fascia there, while in Taiwan and the US it decided to dispose of its least profitable businesses.
All these factors should help improve the company's results in the second half, and Casino is bullish about its prospects for the year as a whole. The retailer is predicting organic sales growth of more than 6 per cent and profit growth in line with that of 2002 despite tougher market conditions.
Growth in France will continue as the company rolls out more stores in the increasingly popular discount and superette formats, while international sales should return to growth as exchange rates improve and Laurus contributes more to consolidated results.