May 12, 2020 / 2:15 AM / in 17 days

UPDATE 1-Carrefour Brasil's Q1 profit slides as taxes, expenses offset COVID-19 sales

(Adds further financial details and context)

By Gabriela Mello

SAO PAULO, May 11 (Reuters) - Brazilian food retailer Carrefour Brasil SA on Monday reported a 15.8% drop in first-quarter net income, hurt by higher taxes and financial expenses despite double-digit sales growth driven partly by the coronavirus outbreak.

The local subsidiary of France’s Carrefour SA posted a quarterly net profit of 425 million reais ($73.06 million), down from 505 million reais a year before, the company said in a securities filing.

In adjusted terms, net income attributed to controlling shareholders came in at 401 million reais, 1.5% down from a year ago.

Earnings before interest, taxes, depreciation and amortization (EBITDA), however, rose by 6.9% to 1.1 billion reais driven by higher customer demand in the last two weeks of March. Ebitda margin fell to 7.7% from 8.1% a year before.

On April 13, Reuters reported that the cost of new hiring and other measures taken by Carrefour Brasil to cope with the pandemic could offset stronger sales in the period and keep a lid on margins.

Sales, administrative and general expenses grew by 9.6% to 2 billion reais in the quarter ended on March 31. Meanwhile, financial expenses totaled 176 million reais, 50.4% higher from a year ago, due to leasing costs, as well as foreign exchange losses.

As reported in late April, total gross sales excluding gasoline grew by 12.5% in the quarter ended on March 31 to 15.197 billion reais ($2.69 billion), of which 10.79 billion reais came from its fast-growing wholesale unit Atacadao.

Carrefour Brasil, like the Brazilian unit of French rival Casino Guichard Perrachon SA, has invested heavily in the so-called cash-and-carry format, which offers wholesale discounts to bargain-seeking Brazilians.

Food e-commerce under the flagship chain Carrefour jumped by 235% in the first quarter, as coronavirus-related social distancing measures led Brazilians to shop online and stockpile.

Shares in Carrefour Brasil have fallen around 17% so far this year but are outperforming Brazil’s benchmark index Ibovespa, which has tumbled over 30% in the same period.

In a separate filing, Carrefour Brasil said Atacadão’s Chief Financial Officer Vitor Fagá de Almeida has resigned. His duties will be taken by the holding company’s CFO Sébastien Durchon.

$1 = 5.8172 reais Reporting by Gabriela Mello; Editing by Richard Pullin

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