Slide 1: Focusing on profitable growth
Focusing on profitable growth First Half Results 2006 1
Slide 2: Summary
SUMMARY 2006: making the new business model work Page 3 H1 06: reinforcing our key priorities, customers and growth Page 10 H1 06 results: in line with our expectations Page 23 On track to achieve our goals Page 37 Concluding observations Page 42 First Half Results 2006 2
Slide 3: 2006: making the new business model work
2006: making the new business model work First Half Results 2006 3
Slide 4: We are on track to return to profitable growth in 2006
2006: making the new business model work We are on track to return to profitable growth in 2006 • With 8.8% recorded in H1 2006, sales growth is accelerating thanks to the execution of a customer-focused strategy and the opening of new m² • Better management of the margin mix, and good cost control,
Slide 5: Sales are growing faster than at any point in the last 5 years
2006: making the new business model work Sales are growing faster than at any point in the last 5 years • Net sales growth, at constant exchange rates 8,0% 7,0% 6,0% 5,0% 4,0% 3,0% 2,0% 1,0% 0,0% 2002 / 2001 2003 / 2002 2004 / 2003 2005 / 2004 H1 2006 / H1 2005 First Half Results 2006 5
Slide 6: We are consistently winning market share in France
2006: making the new business model work We are consistently winning market share in France • Food market share evolution % 1,2 0,8 0,4 - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 -0,4 -0,8 -1,2 Hypermarkets Total France -1,6 2002 2003 2004 2005 2006 Source: TNS Secodip First Half Result
Slide 7: Our sales driven model is beginning to work (EBITDA)
2006: making the new business model work Our sales driven model is beginning to work • Comparison between net sales growth at constant exchange rates and EBITDA growth 8,0% 6,0% 4,0% 2,0% 0,0% 2002 / 2003 / 2004 / 2005 / H1 2006 / -2,0% 2001 2002 2003 2004 H1 2005 -4,0% -6,0% Net sales EBITDA * * Un
Slide 8: Our sales driven model is beginning to work (EBIT)
2006: making the new business model work Our sales driven model is beginning to work • Comparison between net sales growth at constant exchange rates and EBIT growth 10,0% 8,0% 6,0% 4,0% 2,0% 0,0% 2002 / 2003 / 2004 / 2005 / H1 2006 / -2,0% 2001 2002 2003 2004 H1 2005 Net sales EBIT * * Under IFRS,
Slide 9: My convictions
2006: making the new business model work My convictions • The foundations for growth are in place (assets, cash flow, commercial model) • We are well equipped to compete thanks to a consistent focus on customers and growth • Our teams are motivated and committed • We are on target to achieve our goa
Slide 10: H1 06: reinforcing our key priorities, customers and growth
H1 06: reinforcing our key priorities, customers and growth First Half Results 2006 10
Slide 11: What we said to the teams in February 2005
H1 06: reinforcing our key priorities, customers and growth What we said to the teams in February 2005 • “Focus all your efforts on meeting customer needs” • “Every Business Unit must deliver market share growth, stronger brand recognition, and improving returns” • “Growth is essential” These messag
Slide 12: Price competitiveness is non-negotiable: France
H1 06: reinforcing our key priorities, customers and growth Price competitiveness is non-negotiable: France • Price remains key: our French hypermarkets are #1 or #2 in their catchment areas; our price image has been improving over the last eighteen months • The introduction of our “Red Line” in Apr
Slide 13: Price competitiveness is non-negotiable: other countries
H1 06: reinforcing our key priorities, customers and growth Price competitiveness is non-negotiable: other countries • Carrefour and Dia are now two of the top 3 Argentine retailers ranked on price perception • In Poland, we are now top 4 in terms of price image, having been ranked 7 eighteen months
Slide 14: How we have been building our sales growth model in French hypermarkets
H1 06: reinforcing our key priorities, customers and growth How we have been building our sales growth model in French hypermarkets d el o thm ro w s g 4- CUSTOMER SERVICES al e g s in u ild 3- ASSORTMENT B 2- CUSTOMER KNOWLEDGE 1- PRICE 2004 2005 2006 First Half Results 2006 14
Slide 15: We are strengthening customer knowledge and rewards for loyalty
H1 06: reinforcing our key priorities, customers and growth We are strengthening customer knowledge and rewards for loyalty • We have celebrated the second anniversary of our loyalty card in French hypers: • 8.1m card members at the end of June • Further segmentation is under way to better address c
Slide 16: Beyond price, customers ask for choice and for a reliable brand
H1 06: reinforcing our key priorities, customers and growth Beyond price, customers ask for choice and for a reliable brand… • We have strengthened assortments with around 10% more SKUs in both our French hypermarkets and supermarkets since the beginning of the year • With half of our food own-brand
Slide 17: … and for service
H1 06: reinforcing our key priorities, customers and growth … and for service • 200 new managers have been added to French hypermarkets in H1 • We have introduced Carte Pass to Champion and launched the Pack Services Champion with offers on insurance, leisure and personal finance • We are about to l
Slide 18: Our asset portfolio is becoming stronger (1/2)
H1 06: reinforcing our key priorities, customers and growth Our asset portfolio is becoming stronger (1/2) • We have undertaken further divestments as necessary (Korea) • We have continued to strengthen key markets through acquisitions of selected assets • In Spain, acquisition of 4 hypermarkets fro
Slide 19: Our asset portfolio is becoming stronger (2/2)
H1 06: reinforcing our key priorities, customers and growth Our asset portfolio is becoming stronger (2/2) • We have now completed the integration of the 102 ex-Penny Market stores in France under the ED banner • We are now consolidating the 6 hypermarkets acquired from Tesco in Taiwan • We have beg
Slide 20: The growth pipeline is full as we accelerate the opening of new m2
H1 06: reinforcing our key priorities, customers and growth The growth pipeline is full as we accelerate the opening of new m2 • In H1, we opened or acquired 423 stores, representing 584,000 new m2 • Of these, 538,000 m² were opened organically, a 24% increase vs. last year New organic m² 1H 06 1H 0
Slide 21: Our new flexible multi format strategy offers new growth opportunities
H1 06: reinforcing our key priorities, customers and growth Our new flexible multi format strategy offers new growth opportunities • The 54 Carrefour Express in Spain we operated at the end of H1 recorded sales growth close to 30%; we are targeting 85 stores by year-end • We have exceeded our target
Slide 22: Summary
H1 06: reinforcing our key priorities, customers and growth Summary • Our strategy remains focused on our two key priorities: customers and growth • Our teams understand these priorities • Local price leadership is non-negotiable • Growth in new m² is essential where we have a successful commercial
Slide 23: H1 2006 results: in line with our expectations
H1 2006 results: in line with our expectations First Half Results 2006 23
Slide 24: H1 results reflect consistent execution of our strategy
H1 2006 results: in line with our expectations H1 results reflect consistent execution of our strategy € Million H1 2006 H1 2005 Change Net sales 37,298 34,272 + 8.8% Activity Contribution, bef. Depreciation 2,139 1,990 + 7.5% (ACDA) Activity Contribution 1,355 1,295 + 4.7% EBIT 1,345 1,307 + 2.9% N
Slide 25: We managed our operating margin well while making key investments
H1 2006 results: in line with our expectations We managed our operating margin well while making key investments to grow the business € Million H1 2006 H1 2005 Change Commercial income 8,427 7,736 +8.9% Commercial income as % of sales 22.6% 22.6% SG&A & depreciation (7,071) (6,441) +9.8% SG&A & dep.
Slide 26: Our commercial margin was stable thanks to good management of margin mix
H1 2006 results: in line with our expectations Our commercial margin was stable thanks to good management of our margin mix • Percentage growth H1 2006 vs. H1 2005 14% 11,3% 11,6% 12% 10% 8,8% 8,9% 8% 6,2% 6,1% 6% 4% 2% 0% France International Total Sales Commercial margin First Half Results 2006 26
Slide 27: We kept a firm grip on expenses
H1 2006 results: in line with our expectations We kept a firm grip on expenses although asset costs increased as we accelerated our growth program € Million H1 06 H1 05 Change SG&A excluding rentals 5,873 5,392 + 8.9% Asset costs (rentals & depreciation) 1,198 1,049 + 14.2% Total Group (SG&A & depre
Slide 28: In France, we grew Activity Contribution
H1 2006 results: in line with our expectations In France, we grew Activity Contribution while strengthening our price competitiveness and service on the shop floor Sales +6.2% Activity FRANCE Commercial Contribution income +1.2% +6.1% SG&A & depreciation +7.4% First Half Results 2006 28
Slide 29: In Europe ex-France, AC margin was stable
H1 2006 results: in line with our expectations In Europe ex-France, AC margin was stable thanks to strong sales growth and good control of costs Sales +7.3% EUROPE Activity Commercial Contribution EX- income FRANCE +7.5% +6.4% SG&A & depreciation +6.3% First Half Results 2006 29
Slide 30: Margins increased in Latin America
H1 2006 results: in line with our expectations Margins increased in Latin America as sales growth increased significantly Sales +29.4% Activity LATIN Contribution Commercial AMERICA income +68.6% +34.5% SG&A & depreciation +32.7% First Half Results 2006 30
Slide 31: In Asia, strong sales growth but higher asset costs
H1 2006 results: in line with our expectations In Asia, acceleration in new m² resulted in strong sales growth but higher asset costs Sales +18.2% Activity ASIA Commercial Contribution income +3.8% +21.8% SG&A & depreciation +25.2% First Half Results 2006 31
Slide 32: All zones contributed to growth in Activity Contribution
H1 2006 results: in line with our expectations All zones contributed to growth in Activity Contribution • Our businesses outside France again accounted for an increasing share of AC € Million H1 06 H1 05 Change France 779 770 + 1.2% Europe 452 420 + 7.5% Latin America 40 24 + 68.6% Asia 84 81 + 3.8%
Slide 33: Financial costs are up, tax rate is in line with 2005
H1 2006 results: in line with our expectations Financial costs are up, tax rate is in line with 2005 € Million H1 2006 H1 2005 Change Financial costs (241) (214) + 12.4% Tax charge (326) (318) Tax rate 29.5% 29.1% Associates 14.9 13.9 + 7.2 % Net result before discontinued activities, Group share 73
Slide 34: Our balance sheet and key ratios remain solid
H1 2006 results: in line with our expectations Our balance sheet and key ratios remain solid H1 2006 H1 2005 Net Debt €10,831m €9,876m ACDA / Financial Result 8,9 x 9.3 x Gearing 118.7% 120.4% Cash Flow/net debt 15% 16% First Half Results 2006 34
Slide 35: Our cash flow supports our growth plans
H1 2006 results: in line with our expectations Our cash flow supports our growth plans Million € H1 2006 H1 2005 Net debt opening (6,790) (6,770) Cash Flow 1,587 1,535 Change in Working Capital (2,755) (1,982) Others (340) (152) Cash flow from operations (1,508) (600) Capex (1,187) (1,107) Others (2
Slide 36: Summary
H1 2006 results: in line with our expectations Summary • H1 results were in line with our expectations • Commercial margin was broadly stable, reflecting stronger sales growth and better margin mix • We controlled costs well despite the necessary decisions we took to restore growth • Activity Contri
Slide 37: On track to achieve our goals
On track to achieve our goals First Half Results 2006 37
Slide 38: In 2006, we will deliver our strongest ever organic growth in m2
On track to achieve our goals In 2006, we will deliver our strongest ever organic growth in m2 • Around 100 new hypermarkets • 1000 new stores in total • Around 1.5m new m2 Faster organic growth enables us to confirm our objective of faster sales growth in 2006 than in 2005 First Half Results 2006 3
Slide 39: We will further reinforce key markets
On track to achieve our goals We will further reinforce key markets where we already have strong market positions 2005 2006 China 14 21 — 25 Brazil 4 11 — 15 Colombia 6 9 — 10 Indonesia 5 9 — 10 Poland 3 7 — 8 5 largest contributors 32 57 — 68 Other countries 20 33 — 37 Number of new organic 52 90 —
Slide 40: Our capital allocation process is rigorous
On track to achieve our goals Our capital allocation process is rigorous • An Investment Committee was set up at the beginning of 2005 to oversee allocation of capital spending • All 2006 openings are locked in, in addition to 75% of 2007 openings and 35% of 2008 openings First Half Results 2006 40
Slide 41: Summary
On track to achieve our goals Summary • No change to 2006 objectives • We will grow sales faster than in 2005 • We will also grow Activity Contribution • We expect faster sales growth in 2007, and again in 2008 • We expect to grow AC by around 10% from 2008, in line with sales First Half Results 200
Slide 42: Concluding observations
Concluding observations First Half Results 2006 42
Slide 43: Concluding observations
Concluding observations “Our strategy is delivering results. We will continue to focus on our two key priorities: customers and growth. As sales grow faster, we are better able to leverage our fixed costs. We are able also to manage our margin mix better. We have an increasing proportion of immature
Slide 44: Concluding observations
Concluding observations “Consumer spending remains under pressure, mainly because of higher petrol prices and higher interest rates. Within this context, a consistent and determined pricing strategy is as important as it has ever been. Our markets remain challenging and our industry is full of compe
Slide 45: Appendices
Appendices First Half Results 2006 45
Slide 46: Profit and loss account summary H1 2006
Profit and loss account summary H1 2006 € Million H1 2006 H1 2005 Change Net Sales 37,297.7 34, 271.7 +8.8% Other revenues 500.7 454.9 +10.1% Cost of sales (29,371.8) (26, 990.4) +8.8% Commercial income 8,426.6 7,736.1 +8.9% SG&A (6,288.0) (5,746.4) +9.4% ACDA* 2,138.6 1,989.7 +7.5% Activity Contrib
Slide 47: Key operating ratios H1 2006
Key operating ratios H1 2006 € Million H1 2006 H1 2005 Change Net Sales 37,297.7 34,271.7 +8.8% Other revenues 500.7 454.9 +10.1% Commercial margin 22.6% 22.6% SG&A as % of sales (16.9%) (16.8%) ACDA* as % of sales 5.7% 5.8% Depreciation/Amortisation as % of sales (2.1%) (2.0%) Activity contribution
Slide 48: Balance sheet summary H1 2006
Balance sheet summary H1 2006 € Million H1 2006 H1 2005 H1 2006 H1 2005 Intangible + fixed 27,239 26,373 Shareholders Equity 9,123 8,203 assets + financials Inventories 5,994 5,518 Provisions & 2,541 2,293 deferred tax Bank loans portfolio 3,888 3,283 Net debt 10,831 9,876 Net trade payable 9,917 9,
Slide 49: Cash Flow summary H1 2006
Cash Flow summary H1 2006 € Million H1 2006 H1 2005 Net debt opening (6,790) (6,770) Cash Flow 1,587 1,535 Change in Working Capital (2,755) (1,982) Others (340) (152) Cash Flow from operations (1,508) (600) Capital Expenditure (1,187) (1,107) Others (261) (225) Free Cash Flow (2,956) (1,931) Financ
Slide 50: Consolidated store network at end of June 2006
Consolidated store network at end of June 2006 HYPERS SUPERS HARD DISC. CASH & C CONVENIENCE TOTAL France 191 617 796 104 - 1 708 Spain 140 81 1 924 - - 2 145 Italy 52 240 - 16 156 464 Belgium 56 79 - - - 135 Switzerland 9 - - - - 9 Greece 21 151 278 - 52 502 Poland 32 74 - - - 106 Portugal 8 - 300
Slide 51: Consolidated net sales per format / zone H1 2006
Consolidated net sales per format / zone H1 2006 € Million France Europe Americas Asia Total % sales Hypermarkets 10,320 7,703 2,320 2,377 22,720 60.9% Supermarkets 4,871 3,124 253 - 8,248 22.1% Hard discount 1,299 2,344 248 40 3,931 10.5% Other 1,451 948 - - 2,399 6.5% Total 17,941 14,119 2,821 2,4
Slide 52: Stores under banner at end of June 2006
Stores under banner (incl. Franchisees and partners) at end of June 2006 HYPERS SUPERS HARD DISC. CASH & C. CONVENIENCE TOTAL France 217 1 028 829 134 1 652 3 860 Spain 146 81 2 760 - - 2 987 Italy 53 457 - 19 1 000 1 529 Belgium 56 277 - - 214 547 Switzerland 12 - - - - 12 Greece 21 154 369 - 161 7
Slide 53: Sales incl. VAT under banners per format / zone H1 2006
Sales incl. VAT under banners per format / zone H1 2006 € Million France Europe Americas Asia Total % sales Hypermarkets 11,405 10,021 2,773 3,515 27,714 58.7% Supermarkets 6,696 4,247 310 - 11,253 23.8% Hard discount 1,422 2,709 309 46 4,486 9.5% Other 2,448 1,320 - - 3,768 8.0% Total 21,971 18,297
Slide 54: First Half Results 2006
Photos: © Carrefour Photo Library, all rights reserved First Half Results 2006 54