Casino Reports Weak Earnings and Outlook

French retail company, Casino Group released on Tuesday its full year 2016 earnings report, showing lower-than-expected results for the fiscal 2016, as well as below estimates 2017 outlook, which general disappointed most investors, given that the company has previously performed fairly well against other companies in the same industry.

“In 2016, Casino simplified its organization and considerably reduced its debt. The Group achieved its objectives in France, with a confirmed recovery in profitability, strong cash flow generation and a reduction in net debt. It now aims to continue growing its sales and results in 2017,” said Casino chairman and CEO Jean-Charles Naouri.

Consolidated net sales were reported at a total of €36.0 billion, which was 5.7% higher from the previous year. Same store sales in France grew 0.3%, with a 0.8% increase under organic sales, and 1.5% for gross sales under banners for full year 2016. Meanwhile for Casino’s Latin American stores, operating organic growth saw an increase of 10.8% at Exito. Casino’s e-commerce segment saw its same-store sales grow by 13.6% in 2016.

For the full year consolidated trading profit, Casino reported a total of €1.03 billion, with France stores reported profit of €508 million, while Latin America has continued with high margins but saw low profits in Brazil due to sales revitalization programs as well as economic environment.

The retailing company attributed its 2016 growth from a stronger French market.  “Trading profit in France improved significantly to €508 million from €337 million in 2015. Retail operations, (i.e. excluding property development) trading profit in France totaled €421 million. This sharp increase reflects solid operating performances at Monoprix, Franprix, and Supermarches Casino. In 2016, Leader Prices resumed profitability and the Geant banner strongly reduced its losses,” Casino Group said.

The sharper reduction to its consolidated financial net debt, which came in at €3.4 billion for 2016, vs. the €6.1 billion net debt in 2015, also has a partial contribution to strong growth in 2016.

Although Casino saw its net sales grow, the results still disappointed several investors, as most speculated for a data higher than €36 billion, while net profit also fell short of analyst forecasts of €1.06 billion by 2.7%.

Casino will pay its shareholders with a dividend of €3.12 per share.

Due to the disappointing results from Casino’s full year 2016 earnings, the company’s stock (EPA: CO) plummeted in Tuesday trading, down by €2.71, or 5.19%, to €49.53 per share. Its market value is currently at €5.41 billion, with a dividend yield of 6.24%.

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