Slide 1: 2004 Results Analyst meeting – March 10th 2005
2004 Results Analyst meeting – March 10th 2005 Presentation to Analysts / 10.03.2005 1
Slide 2: Summary
Summary The 2004 numbers Section 1 What we have done in 2004 What we will do better in 2005 Section 2 The 3 year vision Section 3 Conclusion Section 4 Presentation to Analysts / 10.03.2005 2
Slide 3: The 2004 numbers
The 2004 numbers Presentation to Analysts / 10.03.2005 3
Slide 4: In 2004, we reinforced our competitive position
The 2004 numbers In 2004, we reinforced our competitive position Change 2004/2003 Sales ex. VAT + 3.1 % EBITDA (% of sales) 6.8 % + 0.9 % EBIT (% of sales) 4.5 % - 0.5 % Net attributable profit (€m) 1 662 + 2.6 % Presentation to Analysts / 10.03.2005 4
Slide 5: We did so while improving our financial ratios
The 2004 numbers We did so while improving our financial ratios Change 2004/2003 Average net debt reduction -1.6bn € - 14.0% Interest cover 11.6x + 10.5 % Gearing 90% - 15.9% Presentation to Analysts / 10.03.2005 5
Slide 6: 2004 results are in line with our revised expectations
The 2004 numbers 2004 results are in line with our revised expectations for the year 2004 2003 Net Sales 72 668 70 486 Cost of sales (56 554) (54 630) Commercial margin 16 114 15 856 SG&A (11 793) (11 478) Other income/expenses 596 494 EBITDA 4 917 4 871 Depreciation & provisions 1 683 1 620 EBIT 3
Slide 7: As we invested in price, gross margin trended lower
The 2004 numbers As we invested in price, gross margin trended lower 2004 Change 2003 Commercial margin 16 114 + 1.6% 15 856 in % of sales 22.2% 22.5% • The trend in commercial margin reflects significant price investment in all countries and across all formats Presentation to Analysts / 10.03.2005
Slide 8: However, we have improved SG&A as a % of sales
The 2004 numbers However, we have improved SG&A as a % of sales 2004 Change 2003 SG & A (11 793) + 2.7% (11 478) in % of sales 16.2% 16.3% SG&A as a % of sales has declined by around 10 basis points as a result of • 10 bp reduction in labour costs and as a % of sales • 10 bp reduction in general and
Slide 9: As a result, EBITDA has increased by 0.9%
The 2004 numbers As a result, EBITDA has increased by 0.9% 2004 Change 2003 EBITDA 4 917 + 0.9% 4 871 in % of sales 6.8% 6.9% Other products/costs has increased €102m due to • an increase in rental income, particularly in Asia • a decrease in pre-opening costs • an increase in capital gains from on-
Slide 10: EBITDA growth outside France compensated for price investment in France
The 2004 numbers EBITDA growth outside France compensated for the cost of price investment in France Presentation to Analysts / 10.03.2005 10
Slide 11: Higher depreciation means that EBIT is slightly down
The 2004 numbers Higher depreciation means that EBIT is slightly down 2004 Change 2003 EBIT 3 234 - 0.5% 3 251 in % of sales 4.5% 4.6% • An acceleration of new square metres in France, against broadly flat sales, has meant that depreciation and provisions as a % of sales has increased Presentation t
Slide 12: We have cut our net debt and reduced our financial costs
The 2004 numbers We have cut our net debt and reduced our financial costs 2004 Change 2003 Financial costs (424) - 8.5% (464) • We have reduced financial costs by €40m due to a reduction of average net debt of €1.6bn • Financial costs includes provision for shares purchased for option schemes • The
Slide 13: The tax charge is down, associates' contribution broadly stable
The 2004 numbers The tax charge is down, in line with our expectations, while our associates’ contribution is broadly stable 2004 Change 2003 Tax (836) - 1.2% (846) Equity acctd cies 101 - 5.4% 107 • The tax charge was down from 30.4% to 29.8%, as expected • The contribution from associates reflects
Slide 14: Minorities have declined, goodwill is stable
The 2004 numbers Minorities have declined, goodwill is stable 2004 Change 2003 Minorities (94) - 15.4% (111) Goodwill amortization (319) + 0.4% (318) • The reduction in minorities is largely due to France which offset an improvement in profitability in Turkey Presentation to Analysts / 10.03.2005 14
Slide 15: We have grown earnings per share
The 2004 numbers We have grown earnings per share 2004 Change 2003 Net profit Gp sh. bef GW 1 981 + 2.2% 1 938 Net profit Gp sh. after GW 1 662 + 2.6% 1 620 • EPS before goodwill up 2.5% to 2.73€* • EPS after goodwill up 2.8% to 2.29€* *Number of shares used for calculation of eps: 726,299,477. This
Slide 16: Non-recurring items increased significantly
The 2004 numbers Non-recurring items increased significantly 2004 Change 2003 Non recurring items Gp Share (275) ns 9.1 Non-recurring items in the period reflect mainly • €(97.8)m impairment charges • €(90.0)m provision for loss of value in Japan • €(83.3) charge for restructuring and closure of sto
Slide 17: We have strengthened further our balance sheet
The 2004 numbers We have strengthened further our balance sheet •Inventories (m €) 2004 2003 2004 2003 decreased by 0.2 days on average, Intangible + 25 133 24 542 Shareholders 7 586 7 380 but increased fixed assets equity significantly at + financials year end as we stocked-up to Inventories 6 243
Slide 18: We have reduced net debt due to strong cash flow
The 2004 numbers We have reduced net debt due to strong cash flow and good working capital management 2004 2003 Net debt opening (in €bn) (7 892) (9 021) Cash Flow 3 406 3 433 Change in working capital 841 323 Cash flow from operations 4 247 3 756 Capex (2 564) (2 717) Free cash flow 1683 1 039 Fina
Slide 19: We have reduced average and year end financial debt
The 2004 numbers We have reduced average and year end financial debt Average net debt (€bn) Net debt at end December (€ bn) 13 12,7 12,5 10 - €1.6bn 9,5 9,0 - €1.1bn 12 11,1 9 11,5 8,5 7,9 11 8 10,5 7,5 6,8 10 9,5 7 9,5 6,5 9 6 Dec 2002 Dec 2003 Dec 2004 Dec 2002 Dec 2003 Dec 2004 Presentation to An
Slide 20: We have again improved our financial ratios
The 2004 numbers We have again improved our financial ratios 2004 2003 EBITDA / Financial result 11.6 x 10.5 x EBIT / Financial result 7.6 x 7.0 x Net debt / Ebitda 1.38 x 1.62 x Cash Flow / Net debt 50 % 43 % Gearing 90% 107% Presentation to Analysts / 10.03.2005 20
Slide 21: In summary
The 2004 numbers In summary, • In 2004, we reinforced our competitive position • The scale of our price investments meant that gross margin fell • We offset this, however, by an improvement in SG&A. As a result, EBITDA increased by 0.9% • We reduced net debt due to strong cash flow and good working
Slide 22: What we have done in 2004 / What we will do better in 2005
What we have done in 2004 What we will do better in 2005 Presentation to Analysts / 10.03.2005 22
Slide 23: In 2005, we will accelerate our efforts
Introduction In 2005, we will accelerate our efforts • To improve our price image in French hypermarkets • To win market share in France • To improve further profitability and ROCE outside France (including cleaning up and upgrading our portfolio of assets) • To prepare for accelerated growth in 200
Slide 24: In 2004, we repositioned our French hypermarkets on price
Price image In 2004, we repositioned our French hypermarkets on price • We cut prices significantly, mainly in dry grocery • All our stores are now either number one or number two on price locally • We launched our loyalty card But our price image is still not strong enough Presentation to Analysts
Slide 25: In 2005, we will cut prices further
Price image In 2005, we will cut prices further • We will continue to invest whatever is necessary to maximise the impact on our price image • The target is to be number one on price locally in all our stores • We will extend our price cuts to fresh food, own label and non-food Presentation to Analy
Slide 26: In 2004, we maintained food market share in France
Market share In 2004, we maintained food market share in France* • We lost 0.3 percentage points of market share in French hypermarkets last year • Market share gains in supermarkets and hard discount, however, meant we were able to maintain food market share at 24.4% Maintaining market share is not
Slide 27: In 2005, we must begin to grow market share
Market share In 2005, we must begin to grow market share • We are number one locally on price in three quarters of our French hypermarkets. However, our price image is still too weak • We also must improve our price image through better communication to the consumer • We must reinforce our non-food
Slide 28: Improve price image through better communication
Market share We also must improve our price image through better communication • We are adopting a new direct marketing approach which is more price and product oriented (less institutional) • We will use our database of 6.5 million Carte Carrefour holders to move progressively from mass marketing t
Slide 29: We must reinforce our non-food offer
Market share We must reinforce our non-food offer • We are extending our price cuts to non-food in 2005 • We have selected key non-food categories where we are growing our exclusive brands ¾ In apparel, Tex has become the leading brand in France ¾ In consumer electronics, we are growing Bluesky and
Slide 30: We must accelerate growth in new m2 in France
Market share We must accelerate growth in new m2 in France • We will open 260,000 new square metres in France including 60,000 square metres of planned new hypermarket space • We will enlarge 22 hypermarkets in 2005 versus 11 hypers in 2004. We will also open 26 new supermarkets and enlarge supermar
Slide 31: 2004 progress on profitability and ROCE outside France
Growing profits and ROCE outside France In 2004, we made progress growing profitability and ROCE outside France • Our sales ex-France grew 8.3% on constant exchange rates • EBIT ex-France grew 14.6% • ROCE ex-France in 2004 increased to 11.1% from 8.3% in 2003 However, ROCE outside of France is stil
Slide 32: In 2005, we will improve profitability and ROCE outside France
Growing profits and ROCE outside France In 2005, we will improve further our profitability and ROCE outside France • We expect all countries and all formats to show growth in sales and EBIT in 2005 • We expect a significant improvement in ROCE from our activities outside France in 2005 • We will foc
Slide 33: In 2004, we began to divest underperforming or non-core assets
Growing profits and ROCE outside France In 2004, we began to divest underperforming or non-core assets • We sold or closed 18 supermarkets in Spain, 23 in Argentina and 16 in Brazil • We also sold our 22% stake in Modelo Continente for €345m in November Presentation to Analysts / 10.03.2005 33
Slide 34: In 2005, we are accelerating our divestment programme
Growing profits and ROCE outside France In 2005, we are accelerating our divestment programme • With the sale of Mexico and Japan we have nearly achieved our initial €1bn programme of divestments • Every business unit must create value. We will continue to analyse our asset portfolio to determine wh
Slide 35: 2004 acquisitions and partnerships in key markets
Growing profits and ROCE outside France In 2004, we reinforced key markets through acquisitions and partnerships • We bought 26 stores in Greece from Xinos in July (8 supers, 18 convenience stores) • We acquired 12 hypermarkets in Poland from Ahold in November • We reinforced ED’s position in France
Slide 36: In 2005, we will grow faster through acquisitions and partnerships
Growing profits and ROCE outside France In 2005, we will grow faster through acquisitions and partnerships • We have already reinforced our partnerships in Italy and France through new agreements with Finiper and Hyparlo ¾ Hyparlo: in January, we reinforced our partnership with the Arlaud family by
Slide 37: In 2004, we met our target of one million square metres
Preparing for accelerated growth in 2006-2008 In 2004, we met our target of one million square metres of gross new space 9,0% 20,8% 2,1% 38,5% 50,8% 28,8% 27,0% 1,3% 21,6% France Asia Latin America Europe Hypermarket Supermarket Hard discount C&C Convenience ¾ France’s share of new space increased f
Slide 38: In 2005, we will again open at least one million square metres
Preparing for accelerated growth in 2006-2008 In 2005, we will again open at least one million square metres of new space • We will accelerate new store openings in markets where we have already a strong commercial model • This year, we will open 15 new hypermarkets in China, 7 in Brazil, 6 in Colom
Slide 39: Preparing for accelerated growth in 2006–2008
Preparing for accelerated growth in 2006-2008 And we will prepare for accelerated growth in 2006 – 2008 • Although we can guarantee one million square metres in 2005, this is not enough. We need to prepare to accelerate our opening programme from 2006 onwards • We will examine how to use our skills
Slide 40: In summary, in 2004
Summary In summary, in 2004 • We repositioned our French hypermarkets on price and we maintained food market share in France overall • We grew profitability and ROCE outside France. As a result, we grew group EBITDA, despite a fall in France • We began to divest underperforming or non-core assets wh
Slide 41: In 2005, we have to achieve four key goals
Summary But in 2005, we have to achieve four key goals • Strengthen our price image in France by investing what is necessary and communicating better • Grow customer traffic in our French hypermarkets to win market share • Improve significantly profitability and ROCE outside of France • Prepare for
Slide 42: Our new management structure is key to this process
Management structure Our new management structure is key to this process • Changes to corporate governance: more collegiate • Changes to top management: simpler organisation, more efficient • Changes to the reporting lines of country managers: more direct • Local management: more customer oriented w
Slide 43: What about 2005 guidance?
Guidance What about 2005 guidance? • We are confident in the quality of our teams, our commercial strategy, our healthy cost structure • We are cautious in predicting changes to the legal environment, the competitive environment, trends in consumption • What we can promise: ¾ All necessary price inv
Slide 44: The 3 year vision
The 3 year vision Presentation to Analysts / 10.03.2005 44
Slide 45: Our main strategic priority is sustainable sales growth
The 3 year vision Our main strategic priority is to achieve sustainable sales growth • We need to accelerate our organic growth (one million square metres is not enough) • We must be among the top 3 players in each market where we choose to trade • We need an economic model which allows us to grow E
Slide 46: Average sales growth 2006-2008 of 5-10%
The 3 year vision Our main strategic priority is to achieve sustainable sales growth • We need average sales growth between 2006 and 2008 of 5-10% (on constant currency) 2004 (%) New space 3 3-5 Like for like 1 1-3 Acquisitions 0 1–2 Total 4 5 - 10 Presentation to Analysts / 10.03.2005 46
Slide 47: Conclusion
Conclusion Presentation to Analysts / 10.03.2005 47
Slide 48: Conclusion
Conclusion • We have been underperforming our potential • We understand our strengths and our weaknesses • We will go faster ¾ growing sales in France ¾ improving profitability and ROCE outside France ¾ divesting assets ¾ opening new square metres • Our main strategic priority is to achieve sustaina
Slide 49: Imagine a Carrefour: consumer electronics offer in France
Conclusion Imagine a Carrefour which could combine… Our consumer electronics offer in France Presentation to Analysts / 10.03.2005 49
Slide 50: Imagine a Carrefour: general merchandise offer in Argentina
Conclusion Imagine a Carrefour which could combine… Our general merchandise offer in Argentina Presentation to Analysts / 10.03.2005 50
Slide 51: Imagine a Carrefour: apparel offer in Spain
Conclusion Imagine a Carrefour which could combine… Our apparel offer in Spain Presentation to Analysts / 10.03.2005 51
Slide 52: Imagine a Carrefour: fresh offer in Italy
Conclusion Imagine a Carrefour which could combine… Our fresh offer in Italy Presentation to Analysts / 10.03.2005 52
Slide 53: Imagine a Carrefour: local adaptation of stores in Asia
Conclusion Imagine a Carrefour which could combine… The local adaptation of our stores in Asia Presentation to Analysts / 10.03.2005 53
Slide 54: Imagine a Carrefour: assortment and ranging of MaxiDia
Conclusion Imagine a Carrefour which could combine… The clear assortment and ranging of MaxiDia Presentation to Analysts / 10.03.2005 54
Slide 55: Imagine a Carrefour: success of Champion loyalty programme
Conclusion Imagine a Carrefour which could combine… The success of our Champion loyalty programme Presentation to Analysts / 10.03.2005 55
Slide 56: For Carrefour to fulfill its potential
Conclusion For Carrefour to fulfill its potential • We must share best practice better and more widely across the group • We have to develop a real multiformat strategy • We must regain our « quart d’heure d’avance » (spirit of innovation) • Operating management must have the freedom to focus on the
Slide 57: Appendices
Appendices Presentation to Analysts / 10.03.2005 57
Slide 58: Consolidated store network at end of December 2004
Consolidated store network at end of December 2004 Presentation to Analysts / 10.03.2005 58
Slide 59: Consolidated net sales per format / zone
Consolidated net sales per format / zone Presentation to Analysts / 10.03.2005 59
Slide 60: Stores under banner (incl. Franchisees and partners)
Stores under banner (incl. Franchisees and partners) Presentation to Analysts / 10.03.2005 60
Slide 61: Sales incl. VAT under banners per format / zone
Sales incl. VAT under banners per format / zone Presentation to Analysts / 10.03.2005 61
Slide 62: EBITDA per zone
EBITDA per zone * * At current exchange rates Presentation to Analysts / 10.03.2005 62
Slide 63: EBIT per zone
EBIT per zone * * At current exchange rates Presentation to Analysts / 10.03.2005 63
Slide 64: Breakdown of non-recurring items
Breakdown of non-reccuring items Presentation to Analysts / 10.03.2005 64
Slide 65: Expansion in 2003 and 2004 per zone / format
Expansion in 2003 and 2004 per zone /format 2003 * 2004 * 2003 * 2004 * * Including franchised stores Presentation to Analysts / 10.03.2005 65
Slide 66: 2005 calendar impact on sales in France
2005 calendar impact on sales in France 3,3 3,8 1,7 1,1 -0,1 0,0 0,1 -0,7 -0,3 -0,9 -2,6 -5,7 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 1,18 0,83 -0,05 -2,07 Q1 Q2 Q3 Q4 Presentation to Analysts / 10.03.2005 66