March 14, 2019 / 7:07 AM / 9 days ago

UPDATE 1-Retailer Casino eyes more profit growth in three year strategy plan

* 2018 operating profit 1.209 bln euros, up 18 pct organic

* Targets at least 2.5 bln euros asset disposals by Q1 2020

* Eyes 10 pct annual growth in French retail profit (Adds details)

By Dominique Vidalon

PARIS, March 14 (Reuters) - French retailer Casino , which is battling investor concerns over its high debts, raised its targets regarding asset disposals and vowed to boost profits and cash flow in its core French market under a three-year strategy plan.

The plan puts the spotlight on levers for profit growth ranging from energy services, the monetisation of client data, savings from purchasing deals, a greater focus on E-commerce and organic food, and convenience stores.

Casino’s plan targets 10 percent growth per year in trading profit for the French retail business between 2019 and 2021, and the generation of 500 million euros ($566 million) in free cash flow per year.

Casino, which controls Brazil’s top retailer Grupo Pao de Acucar, set out those targets after it reported 2018 group operating profit of 1.209 billion euros, a rise of 18 percent on an organic basis, excluding tax credits, which beat the company’s own guidance for 10 percent growth.

French retail operations alone achieved operating profit of 518 million euros, an organic increase of 15.7 percent.

Casino, which had its credit rating cut to junk by Standard & Poor’s in March 2016, has embarked upon asset sales to reduce its debt and ease concerns over the financial position of both Casino and its parent holding company Rallye.

Casino said on Thursday it was raising its goal for the disposal of non-strategic assets to at least 2.5 billion euros, to be achieved by the first quarter of 2020.

The company said it was doing this as it had completed a 1.5 billion euros asset disposal plan in January, ahead of schedule, and in light of indicative offers received for other assets.

NEW SERVICES

Casino, along with domestic peers such as Carrefour and Auchan, faces intense price competition in its home market as well as challenges from online players such as Amazon which has made in-roads in the sector.

In response, Casino has in recent years notably sought to diversify revenue sources away from its core retail business.

Casino is already making money from its data through its ‘relevanC’ and ‘3WRegie’ units, and handles power and energy sales via its GreenYellow and Cdiscount Energie units.

Last December, it signed a deal to install data centres in its warehouses and storerooms through the ScaleMax joint venture.

Under the three-year plan for France, Casino aims to further reduce its exposure to the hypermarket format to 15 percent of gross sales by 2021 from 21 percent in 2018, while in turn opening 300 premium and convenience stores.

It is also targeting organic sales of 1.5 billion euros by 2021 against 1 billion in 2018, and wants to increase the contribution of E-commerce to its sales to 30 percent by 2021 from 18 percent.

Casino shares have gained 24 percent so far this year after falling 28 percent last year.

$1 = 0.8836 euros Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta

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