Carrefour Sa

Good day and thank you for standing by. Welcome to the CAFA full year 2025 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 have the conference with your first speaker today, Mr. Bompard, Chairman and CEO. Please go ahead.

Merci. Good evening, everyone. Thank you for joining us for the presentation of our 2025 results. As you know, we look forward to welcoming you tomorrow morning in Massy for the presentation of our new strategic plan. Today's call will mostly focus on 2025 achievements. On a strategic note, we accelerated our portfolio reshaping, taking full control of Carrefour Brazil, disposing of Carrefour Italy, and signing an exclusivity agreement last week regarding Carrefour Romania. If I come to operations, we pushed our transformation and our investments forward in our three key countries, and we released today financial results that show steady delivery. In a nutshell, our performance was solid, with good commercial dynamics in France and Spain, a growing recurring operating income, excluding CORA, and a strong cash flow generation. If we deep dive on our three main countries, Carrefour France, CORE delivered another outstanding year. We continued to invest in our commercial model and in price, narrowing the price gap with the market. These efforts were recognized by customers with satisfaction continuing to improve year on year on NPS up by three points in Q4. In parallel, we opened a record 456 new convenience stores, driven by a record number of new partners joining Carrefour. We also continued the conversion of hypermarket and supermarkets to franchise and lease management models. As a result, our group's market share increased over the year with a clear acceleration towards year-end, reaching 22% its highest point since 2015. This performance was achieved while maintaining strict cost control and capturing purchasing synergies enabling Carrefour Core operating margin to reach the 3% milestone. Coming to core and match integration. In 2025, the group rolled out its commercial model by implementing significant price cuts in the former Core Hypermarket, substantially increasing the share of Carrefour branded products in the assortment, underlining the promotional policy with the dancer promotional intensity of Carrefour stores. On one end, these initiatives had a temporary impact on France operating results with a negative effect of 120 million euros over the year. On the other end, these initiatives helped revive Coral Match with growing traffic on market share momentum towards the end of the year. Overall, we confirm our synergies target at 130 million euros for 2027. To finish, in Q4, Carrefour France sales were slightly up in the market marked by consumer trade downs on festive products. In January 2026, Public data confirmed that the environment was back to a positive trend. Let's move to Spain. In Spain, we benefit from a solid momentum in a dynamic market. Food sales showed strong growth, up 2.3% in 2025, driven by fresh products. Non-food sales are also positive. We continue to strengthen our price leadership and we have reached our best position in the market since 2022, while further expanding our convenience store network. As a result, profitability increased by 13.5% in 2025, driven by both retail and financial services, with an improvement of 45 bps in profit margin. Let's move to Brazil, our third key country. After a strong 2024, the Brazilian market is facing a challenging environment marked by record high interest rates and negative volumes, particularly in the cash and carry segments. In this context, our strict cost discipline helped protect margins. In Q4, inflation was lower and led to purchasing power gains. As a result, volumes were more resilient from mid single digit negative into free to low single digit negative into four the ongoing volume improvement in january seems to indicate that the cycle 12 is now behind us in total our group continued to execute on its transformation roadmap we strengthened our price competitiveness and customer satisfaction, and delivered solid progress across all our key operational priorities, particularly in private label and e-commerce. At the same time, our cost savings plan remains fully on track, delivering 1.1 billion euros, excluding Italy in annual savings as planned. As a result, Recurring operating income increased by 2.2%, excluding current match. EBITDA was stable on net free cash flow amounted to 1.5 billion euros, excluding Carrefour Italy. Beyond financial performance, we also delivered strong results on our social and environmental commitments. We achieved a CSR index score of 113%, In particular, our top 100 suppliers program continues to deliver progress. 87 of our industrial partners are now fully aligned with a 1.5% degree trajectory. Reflecting the solid performance, we will propose to increase the ordinary dividend to 0.97 euros per share in line with our guidance of a 5% increase. Following the disposal of Romania, on subject to the completion of the transaction, the payment of a special dividend of €150 million will be proposed. To conclude, building on our financial performance and commercial achievements in 2025, we approach 2026 with confidence in both the underlying market dynamics and our model's ability to capture consumption momentum. And I will leave the floor to Mathieu for more details on our financial results.

Thank you, Alexandre, and good afternoon to everyone. It's a pleasure to be with you to cover our 2025 financial results in detail. Let's start on slide eight of the presentation with the details of our Q4 sales. Total sales for the quarter reached 24.3 billion euros. Like-for-like sales were up 1.6% over the quarter. Expansion and M&A had a negative contribution of minus 0.7% over the quarter, which includes perimeter adjustments in Brazil, notably after the divestment of National and Bonpresso stores. Forex had an unfavorable impact on total sales growth of minus 2.3% over the quarter, essentially reflecting the depreciation of the Argentine peso and the Brazilian real versus the euro. Moving to slide 9, recurring operating income for the group amounted to 2,158,000,000 euros, or 2.6% of net sales. As you can see, this full-year recurring operating income is penalized by two effects. First, a negative forex effect of minus 102 million euros, and then the effect of the consolidation and integration of COHA and MATCH, which posted a recurring operating income of minus 120 million euros over the year. This figure includes 95 million euros of non-recurring integration costs as planned and guided. Restated from these two effects, recurring operating income shows growth in absolute terms and at the percentage of sales. Let's turn to slide 10 with more details on the performance of France. At 0.4%, like-for-like slowdown in Q4 in France compared to Q3. This is due to the market slowing down with consumers trading down on festive products during the Christmas campaign. This was a surprising trend that did not continue in January as evidenced by Syrcana data. Syrcana indicates that volumes in the market were down 0.4% in November and down 0.7% in December and turned back to positive in January at plus 1.2%. Cora and Match still weighted on Like for Like with a decrease in the average product price following price investments. Excluding core and match, like-for-like sales grew by 0.8%, supported by food sales up 1.3%, with an encouraging trend in hypermarkets where food sales increased by 0.8% in Q4. The convenience format continued to boast a solid performance. In parallel, we continued to expand with 107 new convenience stores opened in the fourth quarter. Over the quarter, Carrefour maintained a stable market share and managed to further grow NPS by three points. Excluding Cora and Match, recurring operating income for the historical perimeter grew by a strong 11.3% in 2025, with a margin expansion of 31 basis points, reaching 3% of sales. Let's move on to slide 11 with more details on Cora and Match. First, as we shared last October, the integration process for CORE and MATCH has been completed in Q3. Total integration costs are slightly below initial targets, a sign that the integration process has been well controlled. Integration OPEX totalled 145 million euros versus 150 million expected. and integration capex amounted to 85 million euros versus 100 million expected. Recurring operating income was a negative 120 million euros for CORA and MATCH in 2025, including 95 million euros of non-recurring integration costs. Excluding these costs, recurring operating income would have been minus 25 million euros in 2025. This figure has suffered from a decline in gross margin rates versus historicals. As you know, we deployed Carrefour's commercial model within the ex-CoA stores over the summer of 2025. We aligned prices with Carrefour's, which were 6% to 7% lower. We rolled out Carrefour private levels, leading to a 10-point increase in private levels penetration. And finally, we deployed CAS4's more intense promotional model. We have buying synergies to compensate for a great part of this investment, but overall, this new commercial model weighs on gross margin of Korean match. While this is a short-term headwind on our financial performance, we are already seeing a positive reaction from our customers with the number of tickets up 2.9% in Q4 and market share gains since December, and an improvement of 20 points in the Net Promoter Score following the integration. With this trend, we are confident in the dynamic for 2026. With this trend and cost synergies progressing well, we confirm the objective of €130 million of synergies by 2027. Moving on to slide 12, you can see the evolution of recurring operating income in France for our legacy perimeter. We have consistently increased recurring operating income, both in absolute terms and in terms of operating margin, since 2018. In 2025, we have reached the 3% mark, up 31 basis points. This long-awaited milestone is a confirmation that all the initiatives implemented in the frame of CAR426 namely on private levels, e-commerce, cost, and franchise, are making their way to the bottom line while allowing for further price competitiveness. Let's now talk to our European operations outside of France on slide 13, where we have delivered a solid set of results characterized by improving profitability and resilient top-line growth. Like for like sales in the fourth quarter, grew by 0.9%, closing a full year of positive momentum with full-year like-for-like up 1.2%. This was achieved despite a contrasting landscape across the region. Performance was led by Spain, posting 2% like-for-like growth in Q4 on the back of a solid market showing both positive inflation and volume growth. Carrefour Spain maintained a strong momentum on the back of commercial initiatives that are resonating well with customers. In Belgium, the environment remained challenging, yet our operations have shown resilience. We landed Q4 at a slight positive of 0.2% like-for-like, securing full year growth of 0.8% like-for-like despite persistent competitive intensity. Romania also remained in positive territory with plus 0.5% like in Q4 and 1.5% for the full year. Finally, regarding Poland, the market remained highly competitive and was marked by a slowdown in volumes. Looking at recurring operating income, Europe grew by 3.7% to 481 million euros, up from 464 million in 2024. This translates into a margin expansion of 9 basis points to 2.4%. The improvement was primarily driven by a strong increase in profitability in Spain, which combined with a sound execution in Belgium, more than offset the headwinds we faced in Poland and Romania. Let's move to slide 14, with a focus on Spain, where we continue to see a positive and dynamic market, driven by both positive volumes and prices. Spain delivered a strong performance this year, confirming its role as a key growth engine for the group. We continue to invest in price over the second half, reaching our best positioning since 2022 and reinforcing our price leadership in the country. We maintain solid commercial dynamics underpinned by our sustained price leadership. Food sales grew by 2.3% on a like-for-like basis. This was powered by a strong performance in fresh products, where our focus on quality and availability is clearly paying off. Carrefour Spain also posted positive growth in non-food, up 0.7% like-for-like. This strong commercial activity has translated into material improvements in our financial results. Recurring operating income increased by 13.5% to 463 million euros, with operating margin up 45 basis points to reach 4.2%. Moving on to Latin America on slide 15. We faced a challenging environment last year characterized by volatile macroeconomic conditions and currency headwinds. In Brazil, our like-for-like performance was broadly flat in Q4. This primarily reflects the slowdown in inflation and a difficult backdrop as record high interest rates have continued to penalize the market and particularly the cash and carry segment. However, we have seen encouraging signs in the underlying trends as food volumes sequentially improved from mid-single-digit negative in Q3 to low-single-digit negative in Q4. There was sharp deflation on certain commodities in Q4, helping partially restore household purchasing power. The retail segments showed again more resilience, with food sales growing by 4.3% like for life, with positive volumes notably driven by our commercial strategy towards B2B customers. In the meantime, we stabilized sales at Sam's Club, and we continued to grow our e-commerce business by 41% in Q4. In Argentina, Carrefour delivered 24% like-for-like growth in an environment that remains marked by pressure on consumption. We have successfully strengthened our leadership. We achieved steady market share gains throughout the year in both value and volumes. In terms of recurring operating income, our performance in Latin America remains stable year-over-year at constant exchange rates. The decline in the reported figure is entirely attributable to a negative currency impact of minus 101 million euros in the region. Brazil delivered a recurring operating income of 790 million euros and 4% of margin. Margin was down 7 basis points on the back of negative volumes and price investments compensated by cost savings. Argentina contributed €70 million to the group recurring operating income, compared to €115 million in 2024. All in all, while the context in Latin America remains demanding, our market leadership allows us to navigate these cycles with resilience. Coming to our global P&L on slide 16, our gross margin rate came down 22 basis points, reflecting our continued investment in prices and the structural shift of our business models towards more franchise-operated stores, which naturally impacts the gross margin rate but is accretive to recurring operating income. Our strict financial discipline continued to yield results, SG&A expenses, stood at 14.4% of sales, an improvement of 16 basis points compared to last year. As mentioned previously, the integration of core and match had a short-term dilutive effect on the operating margin. If we exclude this scope to look at the core performance, Carrefour's recurring operating margin actually expanded by 13 basis points to reach 2.9% for the year, meaning that our core profitability improved demonstrating the structural dynamic of our model. Turning to slide 17, let's walk through the P&L items below the operating line. Non-recurring expenses decreased to 62 million euros, reflecting lower restructuring costs this year. Cost of debt remained stable. Other financial income and expenses normalized this year after 2024 was impacted by Forex volatility and costs related to dividend payments in Argentina. The tax charge amounted to 516 million euros compared to 302 million euros in 2024. The increase compared to last year is driven by three main factors. The increase in our pre-tax income, the temporary extra corporate tax for large companies in France, and certain non-deductible expenses in 2025. Net income from these continued operations was minus €657 billion, mainly corresponding to the exit of ETH. So bottom line, adjusted net income group share reached €1,090,000,000. This translates to an adjusted EPS of €1.60 for the full year 2025. Now let's move to the net free cash flow on slide 18. We generated €1,565,000,000 in 2025, excluding the impact of Italy, which was a negative cash flow of €260 million. That number for Italy is higher than the €180 million negative for 2024, mainly due to the closing date of the sale. Indeed, as we closed at the end of November, we did not capture the traditional positive cash generation of December. This was compensated by a lower cash contribution to the disposal, as I will detail in the net bridge in a minute. Besides, the cash flow profile for the year was driven by the following elements. First, a normalization of our financial results after being impacted by the negative effects in Argentina in 2024. Second, lower restructuring cash outs, which decreased to 189 million euros. Regarding working capital, the contribution also normalized at 263 million euros. As anticipated, this is much lower than the exceptional inflow recorded in 2024. We are now back in the 100 to 300 million euro range of annual contribution to cash flow as guided. Regarding inventories, the level decreased by 1.2 days in total. Finally, CAPEX was reduced to €1,523,025 on the back of lower investments in non-core countries as we posed on a number of projects during the strategic review. Net free cash flow excluding real estate CAPEX and disposals is provided on slide 19. Carrefour generated net real estate proceeds of €264 million in 2025, slightly up from €227 million in 2024. Disposals were actually slightly down at €517 million. Real estate capex were reduced in 2025 on the back of a slowdown in expansion in Brazil. excluding real estate, net free cash flow totaled a bit more than 1 billion euros in 2025. On slide 20, we look back at our initial assumptions for full-year cash flow as shared with you in July. As you can see, most parameters came exactly in line with our expectations. As already commented, EBITDA was only stable when we expected growth, Core hand match and weaker markets in Q4 in France and Brazil explain most of the gap. Reversely, our capital expenditures came below initial outlook as we decided to slow down our investments in perimeters under a strategic review. Moving on to total net debt on slide 21. Net debt amounts to close to 4 billion euros on December 31st, 2025. Net free cash flow over the last 12 months amounted to 1.3 billion euros and covered dividend payments and tax paid on 2024 share buyback for a total of 866 million euros. M&A was an outflow of 106 million euros, including the acquisition of minority interest in Brazil. Finally, the sale of Carrefour Italy impacted net debt by 181 million euros, a lower amount than the planned €240 million cash injection due to the closing debt and working capital variation. Let me now detail a few numbers relating to the disposal of Carrefour Romania on slide 22. This transaction is based on an enterprise value of €823 million. This implies a valuation multiple of 4.8 times 2025 EBITDA which we believe is an attractive valuation of the asset. You will note that operating margin was 1% in 2025 and net free cash flow was a negative 53 million euros. The closing of the transaction is subject to customary regulatory approvals and is expected to take place in the second half of 2026. A quick word now on capital allocation on slide 23. Carrefour continues to follow its disciplined capital allocation strategy, ensuring strong shareholder returns and maintaining a strong balance sheet. At the upcoming AGM in May, we will propose an ordinary cash dividend of 97 cents per share, reflecting a 5.4% increase compared to last year. In addition, subject to the closing of the disposal of Carrefour Romania, we will propose a special dividend of 150 million euros. These 150 million euros represent roughly 30% of the enterprise value, excluding IFRS 16. These 150 million euros represent 21 cents per share, bringing the total dividend to 1.18 euros per share. This represents a cash yield of approximately 8.3% on the basis of the share price as of December 31st, 2025. This concludes my presentation. I thank you for your attention. Alexan and I are now available to take your questions.