Carrefour SA - FR0000120172

Financial Performance and Margin Management

Carrefour's financial performance in 2024 underscores its ability to maintain profitability despite macroeconomic headwinds. The company achieved EUR 1.240 billion in cost savings, aligning with its targets, and demonstrated disciplined margin management across key markets. France's operating margin expanded, reflecting the success of price investments and operational efficiency initiatives. Brazil's strong performance was a standout, with margin improvements driven by cost control and revenue growth. However, challenges in certain European regions, coupled with currency fluctuations, slightly offset these gains. Management emphasized a focus on sustainable cost savings and margin optimization to drive future growth, particularly in core markets like France and Spain.

Regional Market Dynamics and Strategic Focus

Carrefour's regional strategy remained a key driver of its performance. France, a critical market, saw market share gains, fueled by a 5-point rise in NPS and aggressive price investments. Spain demonstrated stabilization in like-for-like sales, with management highlighting the success of its price competitiveness strategy. Brazil's strong growth continued, with recurring operating income surging 25%, reflecting the company's ability to capitalize on local market dynamics. Despite challenges in certain European markets, Carrefour maintained its focus on transformation initiatives, including e-commerce expansion and real estate optimization, to drive long-term value creation.

Valuation and Dividend Policy

Carrefour's valuation metrics suggest the market is pricing in its ability to sustain growth and profitability. With a trailing P/E ratio of 10.76 and a price-to-sales ratio of 0.1, the stock appears attractively valued relative to peers. The company's free cash flow yield of 36.29% highlights its strong cash generation capabilities, while its ROIC of 4.08% underscores efficient capital allocation. Management's emphasis on disciplined capital allocation, including a shift to special dividends to minimize French buyback taxes, aligns with shareholder value creation. The dividend yield of 6.79% further reinforces the company's commitment to returning value to shareholders while maintaining financial flexibility to invest in growth initiatives.

Outlook and Risks

Looking ahead, Carrefour remains focused on its strategic plan, with a strong emphasis on price competitiveness, cost discipline, and transformation initiatives. The company's long-term free cash flow target of over EUR 1.7 billion by 2026 remains a key focus, with management outlining plans to balance investments in growth with financial discipline. Risks remain, particularly in Europe, where the competitive landscape is intensifying. However, Carrefour's ability to adapt its strategy to regional dynamics, coupled with its strong balance sheet and disciplined capital allocation, positions it well to navigate these challenges. Analysts estimate revenue growth of 2.3% for 2025, reflecting confidence in the company's ability to sustain its momentum in key markets.