Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Casino Guichard-Perrachon SA (FRA:CAJ1, Financial) has made significant progress in restructuring, including reducing debt by EUR 5 billion and injecting equity.
- The company has a strong brand presence with a unique geographical footprint, particularly in city centers like Paris, which provides a competitive advantage.
- Casino's commitment to environmental, social, and governance principles is recognized, with achievements like a 57% reduction in CO2 emissions since 2015.
- The company has a highly skilled and loyal workforce, which is crucial for its ongoing transformation and recovery efforts.
- Casino's e-commerce platform, CDiscount, is showing positive growth in its marketplace activity, indicating potential for future expansion.
Negative Points
- Net sales for the first half of 2024 declined by 3.5% on a like-for-like basis, primarily due to planned reductions in direct sales.
- Adjusted EBITDA decreased by EUR 79 million year-on-year, impacted by operational expenditure inflation and less favorable margin rates.
- The company reported a free cash flow deficit of EUR 413 million, influenced by deferred tax and social charge payments from financial restructuring.
- Casino's financial results were significantly impacted by noncash items, including a EUR 422 million Franprix goodwill depreciation.
- The company faces challenges in adapting its logistics network and reorganizing operational centers to generate synergies and cost efficiencies.
Q & A Highlights
Q: Could you explain the situation at Franprix and your convenience advantage, especially regarding margins and franchise contracts?
A: Philippe Palazzi, CEO, explained that despite challenges, no franchisees have expressed a desire to leave the network. The company is renewing long-term contracts and focusing on a healthier state of operations by being selective with franchisees and store locations. There is no forced margin reset; instead, they are working with franchisees to improve competitiveness and commercial dynamics.
Q: Have you seen any sales uptick in Paris with the start of the Olympics?
A: Philippe Palazzi noted that while there was an expected increase in Olympic-related activity, typical summer tourists might offset this. However, recent days have shown double-digit growth in Monoprix and Franprix stores in downtown Paris, indicating a positive trend.
Q: What is the expected cash burn from hypermarkets and supermarkets in H2, and will there be restructuring costs?
A: Angelique Cristofari, CFO, stated that most stores will close by September 30, reducing cash burn to just one quarter. The number of remaining stores is small, and while she did not provide specific forecasts, they are actively managing costs.
Q: Can you provide guidance on CapEx levels for the full year and working capital variations?
A: Angelique Cristofari mentioned that CapEx will remain steady, focusing on short-term profit and ROI. Working capital improvements are expected as hypermarkets and supermarkets are phased out, but no specific guidance was given.
Q: What are your main positive and negative surprises after managing the business for six months?
A: Philippe Palazzi highlighted the dedication and resilience of the team and the strength of the brands as positives. He noted the strong relationship with franchisees and the potential for growth. No specific negatives were mentioned beyond expected challenges.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
