March 9, 2017 / 6:55 AM / a year ago

Retailer Carrefour's 2016 operating profits fall, with France a weak spot

PARIS, March 9 (Reuters) - Carrefour, the world’s second-largest retailer, on Thursday vowed to grow its sales by 3-5 percent this year and to further increase free cash flow, as it pares back on investments to renovate its stores.

The company also said it was ready to float its Carmila property unit and its Brazilian business this year, market conditions permitting.

Europe’s biggest retailer kept its 2016 dividend unchanged at 0.70 euros per share after recurring operating profit fell 3.8 percent to 2.351 billion euros ($2.5 billion) in 2016, below an average of 2.37 billion euros in a Reuters poll.

In the group’s biggest market of France, operating profit fell 13.4 percent to 1.031 billion euros, with margins down by 40 basis points to 2.9 percent.

This reflected costs tied to the integration of the loss-making Dia discount stores and increased promotional activity at French hypermarkets amid cut-throat competition in the sector.

Elsewhere in Europe, however operating profits rose, driven by a continued recovery in Spain and improved profitability in Italy. In Latin America, Brazil put in a strong performance in spite of difficult market conditions but China, which makes 5 percet of sales, was still a loss-making area.

Carrefour said it would invest 2.4 billion euros in 2017 on renovating and expanding its stores, less than 2.5 billion euros last year.

$1 = 0.9492 euros Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta

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