Carrefour - 2017 Registration Document

MANAGEMENT’S DISCUSSION AND ANALYSIS AS OF DECEMBER 31, 2017 Consolidated sales and earnings performance 2017 REGISTRATION DOCUMENT | CARREFOUR 4. 172 Consolidated sales and earnings performance 4.1 Main earnings indicators 4.1.1 (in millions of euros) 2017 2016 % change % change at constant exchange rates Net sales 78,897 76,645 2.9% 2.6% Gross margin from recurring operations 18,214 17,985 1.3% 1.2% in % of net sales 23.1% 23.5% (0.4)% (0.3)% Sales, general and administrative expenses and amortisation (16,209) (15,634) 3.7% 3.9% Recurring operating income 2,006 2,351 (14.7)% (17.2)% Recurring operating income before depreciation and amortisation (1) 3,636 3,886 (6.4)% (9.7)% Recurring operating income after net income from companies accounted for by the equity method 2,010 2,315 (13.2)% (16.0)% Non-recurring operating income and expenses, net (1,310) (372) na na Finance costs and other financial income and expenses, net (445) (515) (13.6)% (13.5)% Income tax expense (618) (494) 25.1% 24.5% Net income/(loss) from continuing operations - Group share (531) 786 (167.6)% (175.0)% Net income/(loss) from discontinued operations - Group share 1 (40) (101.7)% (101.7)% NET INCOME/(LOSS) - GROUP SHARE (531) 746 (171.1)% (179.0)% FREE CASH FLOW (INCLUDING NON-RECURRING ITEMS) (2) 503 603 NET DEBT AT DECEMBER 31, 2017 3,743 4,531 In 2017, consolidated sales rose 2.6% at constant exchange rates ● to 78.9 billion euros; Recurring operating income before depreciation and ● amortisation (1) came in at 3,636 million euros (down 9.7% at constant exchange rates); Recurring operating income totalled 2,006 million euros, down ● 14.7% at current exchange rates reflecting strong competitive pressure, particularly in France, an increase in distribution costs in the Group’s main markets, an increase in depreciation after a period of significant investments and a more difficult situation in Argentina; Non-recurring operating income and expenses represented a ● net expense of 1,310 million euros, and mainly comprised an impairment loss charged against goodwill allocated to the Group’s Italian operations for 700 million euros, and writedowns relating to the network of ex-Dia stores; Finance costs and other financial income and expenses, net, ● stood at 445 million euros, a 70 million-euro improvement compared with 2016, thanks in particular to a decrease in the Group’s net debt; Income tax expense amounted to 618 million euros, ● representing an effective tax rate of 242.0% as a result of non-recurring items recorded in 2017; The net loss from continuing operations – Group share came in ● at 531 million euros, compared with net income of 786 million euros in 2016; Net income from discontinued operations – Group share ● totalled 1 million euros; Taking into account all of these items, the Group ended the ● period with a net loss – Group share of 531 million euros, versus net income of 746 million euros in 2016; Free cash flow (2) came to 503 million euros, versus 603 million ● euros in 2016, taking into account lower capital expenditure (excluding Cargo Property), which was down 355 million euros to 2,415 million euros. Recurring operating income before depreciation and amortisation relating to logistics equipment included in the cost of sales. (1) Free cash flow corresponds to cash flows from/(used in) operating activities before net finance costs, and after the change in working capital (2) requirement, less cash flows from/(used in) investing activities.