Carrefour Sa

Good day and thank you for standing by. Welcome to the Council Q3 2025 Sales Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mathieu Malige, CFO. Please go ahead, sir.

Thank you. Good afternoon to all of you and thank you for attending our 2025 Q3 sales call. I'm here with Sébastien Valentin, Head of Investor Relations and our IR team. Before we get into the numbers, I would like to remind you that Carrefour's operations in Italy are now accounted for as discontinued operations in accordance with the IFRS 5 accounting standard. As a reminder, the key restated figures for 2024 and H1 2025 were posted a few weeks ago and are available in the finance section of our website. Let me start with a few key highlights before we get into the details of our third quarter sales. This quarter, we delivered positive like-for-like growth across France, Europe, and Latin America, resulting in the total group sales up 2.1% on a like-for-like basis. That performance was clearly driven by food sales up 2.9% like-for-like over the quarter at group level. Throughout the quarter, we continued to see dynamic markets in Europe, notably in France, and Spain. In France, the positive momentum initiated in the second quarter is confirmed, driven by growth in both volume and value, despite a demanding comparison base linked to the Olympic Games in July and August 2024. FMCG market share is stable over the quarter with a sequential improvement that I will comment on in a minute. notably in view of the latest data released this afternoon by world panel by numerator X Cantar. Over the quarter, Carrefour legacy stores have continued on a positive trend across all formats, in particular in hypermarkets and proximity. French hypermarkets, excluding Cora, reap the benefits of two years of price investments and improved operating excellence. Q3 like-for-like at plus 0.5% is similar to Q2. Food like-for-like even accelerated in Q3 at plus 1.7% versus 1.2% in Q2. In Spain, the food commercial trend is still strong and similar to the one of Q2. On the other hand, in Brazil, we observe a general slowdown and negative volumes in the cash and carry market since May, as high interest rates are affecting the purchasing power of customers. Atacadao outperforms its market again. The group also sustained a robust performance in e-commerce with GMV up 18% year-on-year in Q3. In parallel, Carrefour continued to progress on its strategic review with a few initiatives during the quarter. Firstly, the disposal of Carrefour Italy is progressing and is expected to close by the end of the year. Secondly, Concordis has successfully launched its international expansion with the integration of the German group RTG International, bringing the alliance total revenue to over 125 billion euros. Finally, the group has refinanced 1.4 billion euros out of the 1.5 billion euros of BRL denominated debt. The refinancing of the remaining 100 million euros is currently underway. As already mentioned, we estimate this refinancing will deliver a positive impact of 100 million euros in net free cash flow and net income for the full year 2026, and 20 to 25 million euros already this year. Although this is a sales call, I can share that operating performance has been good and cost savings at the end of September are in line with the annual target of 1.2 billion euros, which is confirmed. On that basis, we confirm our financial targets for the year. I will not walk you in detail through page three, which is straightforward. Just highlighting that expansion and M&A is negative 0.6% over the quarter, which includes perimeter adjustments in Brazil after the divestment of Nacional and Bonpresso stores. Also highlighting that Forex at minus 2.8% is far less negative than it was in H1 or Q2, as BRL has appreciated against the euro in Q3. and parity is almost stable since the beginning of the year. Moving on to more details on the performance of France on slide four. The improvement observed in the French market in Q2 confirmed this quarter, with robust food consumption holding up well, particularly in September. The latest data issued by World Panel by Numerator that just came out on the FMCG market shows growth of 2% in P10, reflecting a sound improvement after summer. In the solid market, Carrefour gained 30 basis points in market share, reflecting strength in hypermarkets of 10 basis points. The success of our commercial initiatives around Carrefour's anniversary in September and the initial ramp-up of the ex-CoRa stores. With the supportive market backdrop and improving commercial dynamics, like-for-like sales were up 0.7% in Q3 and 1.6% excluding CoRa unmatched, continuing the positive like-for-like trend from Q2 despite two days of national strike in September 2019. which we estimate weighed in on like-for-like sales by around 20 basis points over the quarter. This performance was driven by food sales growing at plus 1.5% like-for-like with positive volumes in a rational market environment. Let me flag that proximity posted another strong quarter despite high historicals relating to the Olympics. 75 new proximity stores were open during the quarter. On slide five, we detail the commercial transformation implemented at Cora, which is now completed. All Cora stores have been converted to Carrefour's banner, benefiting from its brand awareness. The alignment of prices to Carrefour's level is clearly visible and resulted in an improvement of our price image. Carrefour branded products have been rolled out and now represent 28% of food sales, an increase of eight points compared to September 2024. Carrefour's promotional framework has been deployed across Xcora stores, implementing a more regular and dense promotional agenda. And finally, the loyalty program, Le Club Carrefour, is now active throughout the network with 1.7 million new active members from the ex-Koha stores. While this negatively impacts our top line in the short term, we already see clear signs of improvements with a gradual acceleration in the number of tickets and improved customer perception. In parallel, we continue to build up the synergies related to the integration of Koha and Match in line with our roadmap, and we confirm our target of €130 million by 2027. Moving on to Europe, on slide 6. CAFO posts another quarter of growth, driven by a sound performance on Spain and Belgium under a supportive consumer environment, offsetting soft trends in Poland and Romania. In Spain, we have a solid momentum in a still supportive market, food sales grew at 2.4% like for like in the quarter, in line with Q2 growth, which stood at 2.9%, 2.9% like for like. Carrefour continued to improve its price positioning, which drove the NPS up by two points. In Belgium, like for like sales increased by 2.1%, outlining a solid commercial momentum driven by positive volumes despite a competitive market. In Romania, the group managed to post a slightly positive performance despite a context of degrading consumer confidence following the austerity measures implemented from July. Finally, the Polish market still remains highly competitive, which weighs on our performance. Nevertheless, our commercial initiatives are well perceived as evidenced by the strong increase in NPS up six points. Let's move on to Latin America on slide seven. In Brazil, since May, the market is marked by a difficult backdrop with record high interest rates impacting strongly consumer purchasing power, notably in the cash and carry market with negative volumes, whereas retail seems more protected. In this context, Atacadao like-for-like remains above the like-for-like of the cash and carry market, but suffers from mid-single-digit negative volumes. Our retail segment remains solid. Carrefour Retail posted a strong performance on both hypermarkets at plus 3.3% like-for-like and supermarkets at plus 4% like-for-like with volume growth and managing to grow the NPS by four points. Carrefour's overall retail, reported like-for-like, was moderated by the slowdown in non-food e-commerce, as Carrefour Brazil prioritized profitability over volume in its non-food digital operations. E-commerce continued to show work growth, or overall e-commerce GMV accelerated by 36% in Q3, boosted by a plus 62% surge in online food sales. Financial services also showed solid momentum with the credit portfolio up 17% in spite of reinforced selective measures in place. Finally, one word about Argentina, where Carrefour's commercial momentum shows market share gains in an environment still shaped by negative volumes on the back of pressure on purchasing powers. Finally, let's move to slide eight for closing remarks. All in all, this quarter confirms the strength and consistency of Carrefour's performance across its key markets. Firstly, a sustained momentum in France and Spain, with French hypermarkets performing particularly well, driven by food. Secondly, in Brazil, we continued to outperform a difficult market. Finally, we are moving ahead on all our strategic initiatives. Overall, we confirm our 2025 objectives of slight growth in EBDA, recurring operating income, and net free cash flow. I thank you for your attention. Sébastien and I are now happy to take your questions.

Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. We will now go to the first question. And your first question today comes from the line of Frederick Wild from Jefferies. Please go ahead.

Good evening, Matthew and Sebastian. Thank you for taking my question. The first one is, could you give us a little bit more detail on the current trading in France? especially post the completion of the Cora renovations and whether that Cora business is now accretive to the overall like-for-like in France. Second, would you mind giving us a bit more detail about what happened in Brazil? I think we're all a little bit surprised by the scale of the slowdown in like-for-like there. If only companies give on that market and what to do forward would be very helpful. And then finally, almost further from that, you've reiterated your guidance for slight growth in EBIT. What gives you confidence in that guidance now you're experiencing that extra slowdown in Brazil and how margin diluted that slowdown will be? Thank you.

Thank you very much for your question. So first one on Cora. As you saw in the restated number, Cora has negatively weighted on the like-for-like of France in Q3. As I said in my comments, the commercial transformation is now complete, and we see traffic in the stores and tickets in the stores ramping up very rapidly. We also see more soft data like net promoter score has also improved very rapidly over the past few months. So we're still, I would say, suffering in terms of like-for-like sales by the magnitude of the commercial investments that I have developed during my comments, the commercial investments that we have implemented in the core. But we see that the traffic and the dynamic is positive, more and more positive month after month. And so we think we're already engaged now into a very good and we think longstanding dynamic at Cora. It had to be done. It was part of our plan. It's been executed perfectly as planned. And now we see customers already reacting. So this is to be followed. but interesting reactions. Now Brazil. So Brazil, as you know, interest rates are very high. They're above 15%. As you know, a number of households in Brazil have a significant level of indebtedness. And so this high level of interest rates which have increased relatively sharply over the course of Q4 last year and H1 this year are putting pressure on, you know, the debt and interest burden for these households, notably the most modest households. And we've also seen a number of credit institutions which have reduced renting not to be consumer credit, you know, to make sure that they managed their level of risk. So the consequence of that is that the cash and carry market has entered into negative volumes. It actually started in May, as I said, Q2 benefited from a very strong Easter campaign and a number of campaigns that we did at Atacadao that we already started to see in the market that volumes were under pressure at the end of the quarter. And that has continued. That has not worsened, but that has continued over Q3. So that's something that we started to see coming. If you take back our H1 press release, we mentioned it. So this is what we see. So we're adapting our model, our operations, reinforcing obviously our cost savings in order to navigate through this environment. The retail segment, Varejo is exposed to customers which tend to have a higher purchasing power. and who seem to be less exposed to this level of high interest rates. And so the Varejo retail market is more resilient, which allowed us to post stronger numbers than Atacadao. Then your third question relates to the outlook and the guidance for the end of the year. Well, there is a... you know, very, I would say, little or positive development over Q3. So that's why we confirm what we already confirmed in July. You've seen the trends in Brazil had already been factored into our landing of the year. In Europe, we were confident at the time that markets would remain positive. They have remained positive in Q3. So this is on these grounds that we confirm our guidance.

That's great. Thank you so much.

Thank you. We will now take the next question. And your next question comes from the line of Francois Degas from Kepler Super. Please go ahead. Francois, is your line muted? Francois, your line is open. I will move to the next question. One moment, please. And your next question comes from the line of Rob Joyce from BNP Paribas. Please go ahead.

Hi, good evening. Thanks for taking the questions. I've got three of them. One is just in terms of the guidance and the confirmation of small underlying profit growth, can you say if you still expect to grow underlying profits excluding the sort of 70 million tailwind from Carrefour Italy moving into discontinued? That's the first one. The second one is, Just sort of drawing on Freddie's question, but when is Cora and Match no longer going to be pulled out as a sort of headwind? It feels like that sort of headwind has dragged on quite a bit further into this year than maybe we expected. And maybe can you just give us an idea what the total profit impact would be in the second half in France from Cora? And then finally, now you're pretty close to closing the Italy transaction. Are you able to help us understand what the total cash out from Italy will be, the 240 million and then whatever cash losses there have been this year, and whether there's any impact on working capital from deconsolidating the asset? Thank you very much.

Thank you, Rob. So on the guidance, let's be clear on, you know, what is the base for saying that we are expecting slight growth. So you have to restate for Italy. So last year we published a ROC, recurring operating income of $2,213,000,000. That was impacted by a negative 67 in Italy. And so this year the pro forma number is 2,280,000,000 as the new reference base for 2024. And so we confirm that our objective is to slightly grow from that base. and you can do the same math with the ABDA that we published in July. As far as the net free cash flow, as you know, under IFRS 5, you do not check Italy out. It's isolated on dedicated line, but there is no restatement of the historical numbers, so the historical number that was published last year is the reference. Now, moving to your second question relating to CORA. So CORA is now part of the like for like from this Q3 for the first time. We've identified, you know, what were the impacts so that you could have a more granular reading as the trends of X core match perimeter is different from the legacy business. So we've provided you additional information for you to be able to feel the impact of both perimeters. And then there's a number of one offs. And so we disclosed in 8.1 you know, what was the performance, I mean, recurring income performance of the legacy perimeter and of the X core match perimeter. It's very likely that we will do the same for H2 and for the full year so that you can have a granular reading as these perimeters have different dynamics.

Okay. Matthew, just to confirm though, for the second half there, to get to the 2.280 underlying some growth on that, we're talking about 2.3 billion. I think, again, drawing on Freddie's question, which divisions are going to deliver the growth to see that through? Any particular highlights?

Well, again, you know, same answer as what I shared with you at the end of July. You've seen no, you know, significant news. Most of the developments that happened here, we anticipated them. There's a number of good news. I think that our commercial performance in France is positive. The fact that the market has been supportive and that we have experience, I mentioned that in my speech, just want to make sure you flagged, you pointed that. We have positive volumes, which is good. Same thing in Spain and Brazil was relatively anticipated. In parallel, our cost savings initiatives are performing per plan, so we're happy with that. And so, you know, this is why we confirm our guidance. Now, I'm not going to get into, you know, a format or country-by-country guidance, but that's where we are. Okay.

Thank you.

Thank you. We will now go to the next question. And the question comes from Francois Degas from Kepler Chivreux.

Hello, I hope you hear me this time.

Yes.

Great. Good evening, Mathieu. So on the last quarter data, could you clarify Carrefour's market share in France, excluding current match? Was it stronger, excluding current match? And can you elaborate on the more Carrefour impacts versus last year? And my second question would be about Brazil. How did Brazil perform sequentially through the quarter? Thank you.

So, well, we just got the data a few minutes ago, so we need to be analyzed. Our feeling is that the market share gains comes from the legacy perimeter, including the hypermarket perimeter, and the contribution from current matches is very, very marginal. Overall, that needs to be confirmed with them, but that's our overall perception. Second question on Brazil, where relatively steady performance through the quarter, as I said on the previous question, the trend in terms of of market dynamic and volume dynamic has been relatively, you know, similar through the month around, you know, mid-single digit negative in terms of volume. And so there's been no significant evolution in a way or another.

Thank you. On the first question, have you seen any impact of the Mois Carrefour that took place during P10, I believe?

Yes, so you're right. It happened. So the Mois Carrefour is the anniversary, which is a commercial event that we have each year. It was exactly on the same week. So there is no, you know, any calendar impact there. It's true that it's been strong on the back of, you know, regular improvements that we share with you of the price image and the net promoter score relating to our hypers. And so same calendar and very good performance of the French teams with strong promotions. which have worked well.

Thank you very much.

Thank you. As a reminder, if you would like to ask a question, please press star 1 and 1 on your telephone. We will now go to the next question. And your next question today comes from the line of Joffrey Michalet from OdoBHS. Please go ahead.

Hi, thank you for taking my question. I have one question regarding France. Its team thinks that the non-food retail part is decelerating in Q3 versus Q2. Do you see this trend continuing? What's your view for Q4 on this topic? The second question I have relates to Poland. You flagged your improved NPS. When do you think it could go back to positive territory in Poland? Thank you very much.

Thank you very much, Geoffrey, for your question. So you're right. Non-food is an important element in the reading and the good understanding of this Q3 data. We had a relatively strong non-food in Q2, which was helped clearly by some weather elements and a number of of seasonal campaigns in the market. This is not specific to Carrefour, but a number of seasonal campaigns which had their impact earlier than they traditionally do. So typically, that has translated some turnover from Q3 to Q2. And so conversely, non-food has been relatively weak in Q3. When you do the average of Q2 and Q3, you're very close to the average of what we deliver in a given quarter. So it's many balancing from one quarter to the other. With its traffic impact, so that's why I think the Q3 underlying performance is strong, because we clearly benefited less than last year from the traffic building from the non-food operations. And so this is why we have flagged in our comments, in the press release, and in the presentation, the food sales trend, which remains quite strong so that you can really have a more precise reading. Second question relates to Poland. So the market is tough there, and so it negatively impacts us. We're already rolling out in the country our strategy, including some price investments. You may have seen that in local public price surveys, and so this is perceived by customers. This is reflecting in the NPS. How to give you an outlook for the Polish market? So I won't make a forecast there, just saying that our relative performance is improving.

Thank you very much.

Thank you. Your next question today comes from the line of Swida Mamankali from UBS. Please go ahead.

Hi. Good evening, Matthew and Sebastian and team. Thanks for taking my questions. Excuse the background noise, please. Maybe just to start with France, Matthew, I think you referred to France being a rational market. Is it a fair read of that statement that you perhaps satisfied with underlying operating margin progression in Q3 in terms of the work you've done and realize it's a trading update but anyhow it's appreciated. Secondly in terms of Brazil you've talked to a difficult consumer high interest rates to leverage consumer households but yet your current portfolio is up 17% it seems a little surprising given that backdrop It seems to have even accelerated from the beginning of the year. I recall more like 15 something. What is the strategy here? And are you not concerned about loan losses accelerating? And third one, just in terms of cash flows, anything we should keep in mind, any transactions you've done that you can alert us to, to keep in mind in terms of property proceeds, disposals, et cetera. Please, what you can share will be helpful. Thank you.

Thank you very much, Shredar. Obviously, I won't guide on France, but the market has been rational. I think you've all been following that through a number of public indices and comments. There's been no specific initiatives aside from the ones that we undertook. As you know, we had the of price decrease at the beginning of Q3 and at the end of August right before the back to school. You've seen that since the beginning of the year our price index slightly improved. And we really see more and more positive comments from consumers around our loyalty program, which gives a 10% permanent discount on fruits and vegetables, and even 15% if you're a pass card holder. And so this impacts very strongly our price image. So no specific reaction in the market, and we remain competitive and want to keep investing into our competitiveness. Absolutely no change of policy here, and as you see regularly, we have waves of price decrease that hit the market. Second point on Brazil, so very important point. Is there a risk on our credit portfolio due to the situation? That's something that the teams have looked at, I must say, have quite well anticipated. And so when I said in my comment that a number of banks have been more stringent in their criteria to grant credit, it's been the case at Carrefour Bank in Brazil. And so there is no bad news to date on the cost of risk, and that's something, as you can imagine, the current environment that is monitored very closely. On the net free cash flow, well, no specific transaction to be reported. We outlined to you at the end of July a quite precise profile on how we saw the net free cash flow in H2 to develop, and this is what is happening, so no specific comments to be made there.

Thank you. Thank you. As a reminder, if you would like to ask a question or a follow-up question, please press star 1 and 1 on your telephone keypad. Once again, if you would like to ask a question, please press star 1 and 1 on your telephone. We will now take our next question. And the question comes from Francois Degas from Kepler Sugar. Please go ahead.

Thank you. Sorry to come back. On Italy, now it is treated as discontinued, but could you elaborate a bit on its recent performance on the rallying trends? And do you expect a similar bottom line contribution from Italy in 2025 than in 2024? Thank you.

Again, this perimeter, I mean, we have an agreement, binding agreement. You know, the buyer and ourselves have been in the process of, you know, meeting conditions precedent for the closing, which has meant, you know, intense dialogue. with antitrust authorities notably. So, you know, this is really virtually pending closing, you know, outside of the perimeter of the group. What I can say is that there is no new significant effect, you know, in terms of price determination and so on. that would materially differ from what we did in our H1 accounts. We already booked some elements, notably in the non-recurring line for P&L in H1. And so this is the bulk of it. If I were to say we might have adjustments, but I think they would be minor.

Thank you very much.

Thank you. We will now take the next question. One moment, please. And your next question comes from Frederick Wild from Jefferies. Please go ahead.

Hi, sorry, I'm back again. I don't suppose you could give us an update on the progress of the we've seen rumored in the news on Argentina and Poland and how we should be thinking about the development of those. Thank you.

Thank you, Frédéric. Well, you know, no specific comments to make. We're really progressing. We're still progressing in our In our strategic review, we made it very clear. There's been a few clear lines that have been set by Alexandre Bompard already in February when we launched it, and I think that he confirmed that on the call in July. First, we consider that France, Spain, and Brazil are already core markets for us where we have very strong operations and where we think we're going to create significant value in the future. Second point is that there is no taboo, meaning that we're already conducting the strategic review And so it concerns, you know, all perimeters, including Poland and Argentina. That being said, you know, the review is underway, and there is no specific comments that I can make. I'm not going to comment on rumors, as you can imagine. And so when a news or a decision arises, as you saw for Italy, you will be informed in due time.

Perfect. Thank you.

Thank you. We have one further follow-up question. And the question comes from the line of Rob Joyce from BNP Paribas. Please go ahead.

Thanks very much. Just quickly, just on Brazil, just to understand, did you say that Brazil kind of the 1.1 run rate we saw in the quarter is an appropriate exit rate to think of going into the fourth quarter there? And just on Argentina, in terms of the first half, I think the profitability was kind of down almost halved in the first half. Is that the sort of, given the sales trajectory, we should be thinking similar for the second half? Is there anything else there we need to be aware of? Thank you.

So for Brazil, yeah, I said that the trend is fairly similar through the month of Q3, so no significant difference in September than the rest of the quarter. Obviously, it can depend on a specific commercial operation, but I think the trend in the market is fairly stable through the quarter. Argentina, well, very volatile situation, as you know, so I won't make any forecast for the full year. As you know, there are important elections in the country in this weekend, this coming weekend, and we know that the consumers' confidence is significantly linked to the political situation in the country. So I won't make any specific outlook for Argentina. Okay. Thank you.

Thank you. There are currently no further questions. I will hand back to Mathieu for closing remarks.

Well, let me thank you very much for attending the call and for your questions. Happy to meet you again on February 17, 2026 for all your results. Many thanks. Have a nice evening.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.