January 17, 2017 / 10:33 AM / 2 years ago

UPDATE 1-Retailer Casino confident over 2017 as France and Brazil improve

* Q4 sales up 5.1 pct l-f-l

* Estimated 2016 French op profit slightly over 500 mln euros

* Eyes group sales, profitability growth in 2017 (Adds CFO comments, shares, analysts)

By Dominique Vidalon

PARIS, Jan 17 (Reuters) - Retailer Casino said on Tuesday it was confident it could further increase revenue and profitability this year, thanks to cost savings and improving sales in France and Brazil.

Casino also told investors it would deliver on its French profit forecast for 2016 after fourth-quarter sales reflected an improvement in France, its biggest market, on a same-store basis, notably at the Geant hypermarkets and Monoprix stores.

In recession-hit Brazil, its second-biggest market by revenue, food retail sales showed signs of robustness, driven by the cash and carry Assai stores and promotional activity at the Extra hypermarkets, Casino said.

Casino, whose credit rating was cut to junk by Standard & Poor’s last March, is under pressure to revive profits in France, where it now makes more than 50 percent of its sales, at a time of slower growth in Brazil.

“We end 2016 with good sales momentum and are confident on the momentum for 2017. The sales trend in France over the last four weeks was positive,” Chief Financial Officer Antoine Giscard d’Estaing told a conference call.

“We expect group consolidated sales and profitability to continue to expand in 2017,” he added.

Casino, which controls Brazil’s Grupo Pao de Acucar , posted fourth-quarter sales of 10.929 billion euros ($11.65 billion).

Stripping out acquisitions, disposals, currency effects and fuel, group sales rose 5.1 percent year-on-year.

Casino, which reports earnings in March, said full-year 2016 trading profit in France - estimated and unaudited - was slightly over 500 million euros, as forecast by the company.

The group has also forecast free cash flow of over 550 million euros before dividends, and net capex of 350 million euros in France in 2016, and Giscard d’Estaing said he had no reason to change these previous indications.

Bryan Garnier analysts kept a “buy” rating on Casino shares, saying that Casino’s confirmation of its 2016 French profit guidance was positive, even if Casino’s French sales growth in the quarter was slightly below their forecasts.

Casino shares were flat in mid-session trading, with the stock up around 10 percent so far in 2017, outperforming a 2 percent fall on the STOXX Europe 600 Retail index.

$1 = 0.9381 euros Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta

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