Carrefour Weighs 2015 Brazil IPO as French Repair Takes Hold

Carrefour SA, (CA) France’s largest retailer, may sell a stake in its Brazil unit next year as it looks to consolidate its position in its second-largest market.

Carrefour will seek to be ready to make a decision by the end of 2014, Chief Executive OfficerGeorges Plassat said today at a presentation in Paris. The company, which doesn’t need financing in Brazil, is committed to retaining control in the country, he said after Boulogne Billancourt, France-based Carrefour reported a 5.3 percent rise in annual earnings.

“I believe that we will be ready to do something in 2015,” Plassat said of the Brazilian business, which includes the Atacadao cash and carry chain. “The alternatives -- whether it be opening up our capital to local investors, big investors, whether it be an IPO, whether it be a combination of both -- all of that is possible.”

Carrefour is focusing on Europe, Latin America and China after retrenching from markets where it viewed prospects as weak. Selling a stake in Carrefour Brazil, which it entered in 1975, will help the grocer achieve its goal of giving operations greater local control with support from partners, Plassat said. The unit has an enterprise value of 6.6 billion euros ($9.1 billion), according to Sanford C. Bernstein estimates.

Photographer: Balint Porneczi/Bloomberg

Carrefour logos sit on the handles of stored shopping carts outside a Carrefour SA supermarket in Portet sur Garonne, near Toulouse, France. Close

Carrefour logos sit on the handles of stored shopping carts outside a Carrefour SA... Read More

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Photographer: Balint Porneczi/Bloomberg

Carrefour logos sit on the handles of stored shopping carts outside a Carrefour SA supermarket in Portet sur Garonne, near Toulouse, France.

The CEO is seeking to turn Carrefour into a “transnational retailer, which involves grasping more in-depth local customer habits and expectations,” said Gildas Aitamer, an analyst at Planet Retail.

Carrefour rose 4.4 percent to 27.83 euros at the close of trading in Paris, trimming the stock’s decline this year to 3.4 percent and valuing the company at about 20 billion euros.

French Revival

Annual recurring operating income rose to 2.24 billion euros last year as investments in price and convenience helped sales rebound in France, Carrefour said today in a statement. Analysts predicted 2.20 billion euros, according to the average of 19 estimates compiled by Bloomberg.

French sales rose 1 percent on a so-called organic basis in 2013, excluding gasoline, Carrefour said last month. French profit as a percentage of sales widened to 3.4 percent from 2.6 percent a year earlier, it said today.

Net sales in Brazil, where Carrefour competes with French rival Casino Guichard-Perrachon SA, reached 10.9 billion euros in 2013, or 14 percent of the total. The retailer plans to export to Brazil some of the measures that have led to a revival in France such as maintaining low prices on food and adding convenience stores, Plassat said.

The company’s priorities for 2014 include investing 2.4 billion euros to 2.5 billion euros in accelerating store remodeling and expanding different formats. About 1 billion euros of that will be allocated to France, Plassat said.

“Carrefour is staying the course in a low-growth environment,” the retailer said. Plassat said he’s “confident” for 2014 and “won’t disappoint the market.”

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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