Carrefour Group prepares for IPO in Brazil in 2015

Carrefour will this year an intense phase of preparations in relation to its strategy of expansion in Brazil. That's because in 2015 the French group-global retail leader, behind the Walmart-you can perform an initial public offering of shares (IPO, the acronym in English) or sell a Brazilian affiliate participation a local investor, stated yesterday Georges Plassat, World President of Carrefour, during the presentation of the annual balance sheet of the company, in Paris. But until then, the network will not stand by: approximately € 500 million will be invested in Brazil in 2014, said Plassat.
The direction of Carrefour prefers to wait for the completion of the World Cup and the presidential elections in the country to do an IPO or selling a piece of the business to a corporate investor, for example (or even both at the same time, as said Plassat). "We want to be ready by the end of 2014 to begin consideration of the appropriate time in 2015," he said. "Anything is possible as long as we keep control of the Brazilian subsidiary," added the Executive, noting that Carrefour "needs no capital in the country," but the presence of Brazilian investors "will carry forward our development policy."
The investments foreseen in 2014 in Brazil confirm the importance of this market for the Group: the amount of about € 500 million (nearly $ 1.6 billion) represents a fifth of the overall investment envisaged by the group this year, € 2.4 billion to € 2.5 billion, intended mainly to "acceleration" of the renewal of stores and the expansion of the number of units. In France, the amount provided is € 1 billion. Namely, after France and Brazil, will be € 1 billion for the rest of the world.
Plassat has made it clear that Carrefour's prospects for the country are ambitious. "We're stepping on the gas in Brazil", says the President sometimes when referring to the strengthening of the operations of this branch, which became the world's second largest market of the group, soon after France and ahead of Spain. "We are preparing the company to play a role in the future of great importance [retail] in Brazil," he said.
In practice, the goal is to seek new weapons to face competition from French rival Casino, controller of Grupo Pão de Açúcar (GPA), that Plassat has not hesitated to stick a PIN in, albeit covertly, during his presentation. At some point, commenting that can implement changes in the Brazilian market for profitability, "comfortable" in the country, stated that he doesn't want to be "overtaken gradually by people who need more than Brazil in its financial results than the Carrefour". The country accounts for nearly 40% of global revenues from the Casino. In the case of Carrefour, the Brazilian subsidiary does not reach 15% of worldwide revenue.
But, for now, despite the enthusiasm expressed by the retailer, almost nothing was said about the operation to raise capital or in relation to the strategy for the development of activities in the country.
Plassat has ensured, however, that the pace of opening shops in the Brazilian market will be "fast". This year, 15 are planned new units of flag Atacadão (who already has a hundred shops). In the long run, second there Plassat "many other" inaugurations that network, which sells wholesale and also to the final consumer. "But this will be done selectively because real estate in Brazil are expensive," said the CEO.
The projects do not stop there, since the strategy is "long-term construction". Carrefour also wants to expand the segment of neighborhood stores. "We have about 50 supermarkets in the region of São Paulo. Is a base from which we are studying the development of neighborhood units, "he said. "The Brazil has an excellent potential for the group."
In addition, "vigorous network" Atacadão, hypermarkets-who recorded, second Plassat, increase revenues and profitability in 2013-"will win, certainly, market share," he says. "We are working towards the variety of products, commercial policy and diversity of the clientele of the hypermarkets in the area function. We're doing now in Brazil the same as was done in France, but let's do it quietly, "said the CEO, noting that the group will also re-launch real estate activities in Brazil.
In its balance sheet, Carrefour reported that her performance in Brazil last year was "excellent" in all kinds of stores. Due to the devaluation of the real, Brazil sales in euros were 3.7% drop compared to 2012 to € 10,85 billion (US $ 31.2 billion). The conversion of the values for real, by the average rate of Exchange in each year, shows a revenue growth of around 10%. In Latin America, the devaluation of the currencies caused 2.7% drop in turnover. Taking into account the existing shops for over 12 months and disregarding the currency effect, sales rose 12.3% in the region last year.
The devaluation of the Brazilian real and also, to a lesser extent, of the Argentine peso, have they had an impact of € 2.3 billion in global accounts group. The total revenue of € 74.9 billion would have been € 77.2 billion at constant exchange rates, representing increase of 2%. But after adjusting the currencies, global revenue shrank 1 percent in 2013.
According to the criterion of the same number of stores, sales rose 1.6 percent, "the best result registered by Carrefour since 2007," said Plassat. The operating profit grew 5.3%, totaling € 2.2 billion (at constant exchange rates the increase was of 9.8 percent). In France, sales rose in all kinds of stores, reaching € 35.4 billion (47% of the global billing), with progression of 1%. "The France entered into a dynamic and we see concrete signs of recovery" said Plassat.
By coincidence, Carrefour presented its annual accounts at the same site of events near the American Embassy, in the place de la Concorde, where the rival Casino also released its financial results in February.