Europe’s largest supermarket chain, Carrefour SA (FR:CA), impressed investors with a delectable taste of superior dividends, buybacks, and solid results. Carrefour bumped up its dividend for Fiscal 2023 by an impressive 55% to €0.87 per share while announcing a fresh share repurchase plan of €700 million. CA shares gained 4.9% on February 21 on the news.
Further Details of Carrefour’s Performance
For the full year of Fiscal 2023, Carrefour generated solid cash flows of €1.62 billion, helping the grocery giant reward shareholders handsomely. Sales for the full year rose 10.4% on a like-for-like basis to €94.13 billion, while adjusted earnings grew 12% year-over-year to €1.83 per share. Moreover, the company posted a recurring operating income of €2.26 billion for the full year. However, EBITDA margin declined to 5.5% from 5.7% in 2022.
The unwarranted attacks in the Red Sea have disturbed the logistics channel. A delay in shipments and increased transport costs between Asia and Europe have impacted Carrefour. Even so, CFO Matthieu Malige said that the company will not pass on these higher costs to customers but will find ways to absorb them.
In its main French market, Carrefour posted an 18.5% jump in operating profits backed by effective cost-cutting measures and enhanced sales of private label brands. Meanwhile, like-for-like sales grew a modest 1% due to slower sales of discretionary items.
Importantly, Carrefour has initiated a competitive drive in France, whereby it has cut the prices on 2,000 products to boost sales. The company intends to continue cutting product prices in France and other markets even in 2024 to gain a higher market share.
In Carrefour’s second-largest market, Brazil, the company posted a 26.9% decline in operating profit due to extraordinary items reported during the year.
Looking ahead, Carrefour remains optimistic about its performance in 2024, as both interest rates and food inflation are expected to reduce. At the same time, negotiations with PepsiCo (NASDAQ:PEP) are underway as Carrefour has removed the beverage giant’s products from its shelves in France and other countries.
Is Carrefour a Good Investment?
Following the results, three analysts reiterated their Buy views on CA shares, while one maintained a Hold rating.
On TipRanks, CA stock has a Moderate Buy consensus rating, backed by four Buys and four Hold ratings. The Carrefour SA share price forecast of €19.04 implies 15.2% upside potential from current levels.
