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Carrefour Says Dia Spinoff Is Best Option After Approaches Come to Nothing
Carrefour SA (CA) said listing its Dia discount chain is the best way forward for shareholders after approaches by possible buyers of the unit came to nothing.
“If we propose a quotation, it’s because it’s the best way for shareholders to profit from Dia’s full value,” Chief Executive Officer Lars Olofsson said today at a presentation in Paris. “The other alternatives are less interesting.”
The retailer, based in Boulogne-Billancourt, intends to list Dia, the world’s third-largest discounter, in Madrid on July 5, pending approval. The move is part of a plan, which includes spinning off 25 percent of Carrefour’s property assets in France, Italy and Spain as it focuses on the Carrefour brand.
Carrefour repeated in a statement today that it expects sales and operating income to rise this year, boosted by expansion in China and higher sales in Brazil. Western Europe remains difficult and soaring raw-material prices are limiting the ability to negotiate with suppliers, Carrefour said.
Carrefour rose 13 cents, or 0.4 percent, to 30.40 euros in Paris trading today, giving the company a market value of about 20.6 billion euros ($29.1 billion).
Olofsson, who took direct control of Carrefour’s French business this month after it had an “unsatisfactory” start to the year, is trying to improve the retailer’s performance in its biggest market after a decade in which sales barely grew. He is betting a 1.5 billion-euro revamp of Carrefour’s superstores in western Europe with lower prices and more own-label products will boost sales and profit through 2015. That rollout is “on track” and generating faster sales growth, the company said.
‘Encouraging Results’
“The very encouraging results we are seeing from Carrefour Planet, our new hypermarket concept, and the continued execution of our transformation plan, underpin our confidence that we are on track to achieve our goals,” Olofsson said.
Though Italy remains tough, there are encouraging signs in Belgium and Spain, the CEO said. Growth is “solid” in Latin America and Asia, he also said.
Carrefour needs a more coherent promotional strategy in France, where it raised prices in March and April because of cost inflation, the CEO said. While Carrefour is committed to price competitiveness, it won’t “start a price war,” he said.
Dia expects to lift annual sales by 7 percent through 2013 as it opens 450 to 750 new stores a year, Carrefour said. To do so, Dia will have capital expenditure of 300 million euros to 350 million euros a year, Carrefour said. In a separate presentation, Dia forecast revenue of 9.97 billion euros in 2011 and adjusted operating profit of 265 million euros.
Property Spinoff
Carrefour said it continues to prepare for a future listing of its property unit, after this month delaying a plan to spin off the business after investor opposition. Shareholders led by Knight Vinke Asset Management LLC called for the company to reconsider the plan.
Carrefour Property generated about 700 million euros in rent last year and has a pipeline of 100 projects to be completed over a five-year period, it said today. The unit aims for net rental income of 820 million euros in 2015.
To contact the reporter on this story: Andrew Roberts in Paris at aroberts36@bloomberg.net.
To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net
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