Carrefour Sa

Good day and thank you for standing by. Welcome to the CAFA full year 2023 webcast and conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Alexandre Fonpart, Chairman and CEO. Please go ahead, sir.

Good evening to all of you.

Thank you for joining us for this presentation of our annual results. Before we begin, I would like to talk to you about our shareholder on France, Abelio Diniz, who passed away on Sunday night. Since 2015, his life has been deeply intertwined with that of Carrefour, and the story of the Carrefour Group will always be closely linked to him. For nearly a decade, he has served as an example for all of us, and I want to express in the name of the entire Carrefour Group our profound emotion, admiration, and gratitude for his contributions to CARE-4 at group level and in Brazil. Despite our sorrow, I have to present to you the results of our group for the year 2023. Before we get into any figures, I'd like to share some reflections on 2023. Last year was marked by an extremely challenging environment. We face unprecedented macroeconomic challenges that impacted us more clearly in 2023. Surging inflation across Europe, escalating interest rates, and consequences of soaring energy costs. Consequently, we witnessed the most significant decline in volume for decades, at least since the late 80s. Meanwhile, customers increasingly shifted toward private labels and entry price items and showed a heightened dependence on promotions. These trends posed significant challenges to our industry. Retailers faced the pressure of high inflation and the complexities of adjusting pricing policy, which added to the difficulty of negotiating with suppliers. Additionally, the financial services sector experienced tightening margins under intense pressure due to the rising cost of borrowing and the higher cost of risk. Moreover, the landscape of regulatory instability presented an erratic and restrictive backdrop, adding another layer of complexity to our strategic planning and execution. These challenging conditions have led to a clear polarization among retailers. Some have not been able to maintain their footing, while others have seized the opportunity to strengthen their market position. Against these challenges, Carrefour maintained a strong performance and demonstrates the strength and resilience of its economic model. This resilience is reflected in all our key performance metrics. Our sales continued to grow thanks to our commercial strategy. In particular, we reached 36% of sales by our private label products, three points more than in 2022. And our e-commerce has posted remarkable performance with a 26% increase in gross merchandise value with plus 40% in Brazil and plus 16% in France. Regarding the recurring operating income, the group's performance was mixed. In Europe, there was a notable increase in France, plus 19% in Spain. This is an impressive accomplishment given the significant rise in energy costs and challenges in financial services. On the other hand, in Brazil, recurring operating income decreased due to the challenges of integrating BIG within a volatile market environment alongside one-off events and store conversions. Mathieu will detail this shortly. Last but not least, we delivered a record high net free cash flow at 1.6 billion euros. This was made possible thanks to our continuous efforts year after year to improve our cash conversion ratio. This financial performance demonstrates our ability to maintain strict control over our operations. We've met several important goals as part of our CARE42026 plan, proving that our strategic moves are paying off the penetration of private label the growth of e-commerce with substantial improvements in profitability a clear indication of the robustness of our model after years of strategic investments the expansion of our successful formats further strengthening our market footprint and the development of our franchise model especially in convenience stores along with our lease management approach for our performance. By 2024, we aim to have half of our revenue coming from franchised stores in France. On top of this, after the important acquisition of BIG in 2022, we carried out significant moves in M&A. In France, we announced the acquisition of Koha on Match, which is our first major acquisition in our own market in more than 20 years. We carried out this operation under excellent conditions and acquired valuable assets at favorable prices, which should result in a value-creating transaction. This strategic operation involving a robust range of assets will strengthen our position in the domestic market and boost our growth in the years to come. The store's geography we are integrating is highly complementary to ours, promising synergies that will enhance our market presence. And in Spain, we reached an agreement to acquire 47 stores from El Corte Ingles to strengthen our position in several key regions of the country. These acquisitions demonstrate our ability to pursue our external growth strategy through targeted and strategic acquisitions. This leads to market share gains on synergies at a reasonable cost thanks to the strength of our balance sheet, itself also the result of our transformation. Lastly, our performance extends to our social and environmental actions and reflects our commitment to making a positive impact. We have surpassed our non-financial objectives as measured by our Corporate Social Responsibility Index achieving a score of 110%. In particular, we met our scope one and two emissions reduction goals two years ahead of the planned timeline with a reduction of already minus 38 by the end of 2023. Furthermore, we've achieved substantial advancements in aligning our top 100 suppliers with a 1.5 degree climate trajectory engaging 44% of them in this crucial effort. We have also made significant strides in women's health initiatives, demonstrating our commitment to the well-being and empowerment of our workforce. And finally, our Carrefour Invest program has been a success, enabling over 30,000 employees to become shareholders, fostering a sense of ownership and alignment with our company's vision. In summary, 2023 has been a year of significant accomplishments, highlighting the strength of our model. All this was made possible thanks to the commitment of our team and our franchising partners. I'd like to pay tribute to their work, especially in such an uncertain context. Now, let's consider what 2024 might hold for us. We are moving into the new year with confidence for several important reasons. First, the macro landscape is expected to gradually normalize. The high food inflation in Europe seems to be behind us. In addition, there are indications suggesting a stabilization of purchasing power with a possible positive impact on consumer credit, especially in countries like Brazil and Spain. Second, in 2024, we'll see the outcome of projects that were implemented in 2023. In Brazil, We anticipate enhanced performance, driven by the complete transformation of big stores, a strong focus on the quality of operations and on cost management. Furthermore, our Eureka purchasing platform is set for significant ramp-up, promising major economic gains for all our European countries. The rollout of Maxi across all our stores will enhance in-store productivity, and the efficiency of our supply chain. And we plan to intensify our cost-saving initiatives, especially in our European operations on the quarters as we move towards a more integrated European framework. The initiatives of Carrefour 2026 will also continue to contribute to our growth. In particular, the expansion of our private label portfolio and its program of innovations make us very confident about reaching our goal of 40% of sales by 2026. We'll also continue to benefit from our digital transformation, helping to streamline our operations and enhance the customer experience. And we will place a greater emphasis on price competitiveness in France as our customers are more sensitive to permanent price. Following the market leader's aggressive pricing strategy, we have initiated price adjustment since the fall, which have already resulted in an improvement in our net promoter score. In 2024, we will continue to improve our pricing strategy without compromising our financial performance, including the growth of our financial metrics in France. To wrap up, We are confident in achieving our 2026 targets. This confidence comes from a strong track record, proving our ability to perform and deliver constant improvements over the last six years and the changing conditions, including net free cash flow on earnings per share, which have shown steady growth. It's based on this confidence on our very strong balance sheet that we decided to increase the total shareholder return, including dividend and buybacks, to €1.3 billion in 2023. We also decided to raise our dividend to 80 cents per share, and we confirm our objectives to grow this dividend per share by a minimum of 5% per year going forward. With this increase, the dividend level is the highest since close to 15 years in parallel we are announcing a new share buyback program worth 700 million euro in 2024 to conclude 2024 is shaping up to be a sporty year fueled not just by our drive to lead the pack but also by our partnerships with the paris 2024 olympics and paralympics It's a fantastic chance to bring together our teams and customers, turning every campaign into a team sport. Following the Olympic motto of higher, faster, stronger, we are ready to boost our collective efforts and achieve new heights together. Thank you for your attention. I will now hand over to Mathieu.