Carrefour - 2017 Registration Document

MANAGEMENT’S DISCUSSION AND ANALYSIS AS OF DECEMBER 31, 2017 Consolidated sales and earnings performance 2017 REGISTRATION DOCUMENT | CARREFOUR 4. 174 Recurring operating income by region (in millions of euros) 2017 2016 % change % change at constant exchange rates France 692 1,031 (32.9)% (32.9)% Rest of Europe 677 712 (4.9)% (4.8)% Latin America 715 711 0.6% (7.0)% Asia 4 (58) (107.1)% (97.6)% Global functions (83) (45) 83.1% 82.6% TOTAL 2,006 2,351 (14.7)% (17.2)% Recurring operating income fell by 17.2% year on year, to 2,006 million euros. In France, recurring operating income came to 692 million euros, down 32.9% compared with 2016. Carrefour France suffered from strong competitive pressure. In addition, operating losses generated by the network of ex-Dia stores continued to weigh heavily on the country’s profitability, accounting for 150 million euros of the year-on-year decrease. In Europe (excluding France), recurring operating income dipped by 4.8% at constant exchange rates to 677 million euros, with operating margin (1) contracting by 34 points to 3.2% of sales. Mixed performances were recorded across the region, with operating margin holding firm in Northern Europe while Southern Europe’s was down, also impacted by a tough competitive environment, as well as inflation in distribution costs in Spain. In Latin America, recurring operating income came in at 715 million euros in 2017, down 7.0% at constant exchange rates. Brazil delivered a solid operating performance, despite strong food deflation, driven by the confirmed success of the Atacadão model which improved its profitability. In Argentina, unfavourable macroeconomic conditions resulted in operating losses. In Asia, recurring operating income came to 4 million euros in 2017, an improvement of 62 million euros versus 2016. The Group reaped the fruits of the action plans implemented in China, in particular in terms of cost reduction, in a context that remains highly competitive, marked by rapidly-changing consumption habits. In Taiwan, sales growth remained strong and operating margin continued to improve. Depreciation and amortisation Depreciation and amortisation of tangible and intangible assets, and investment property amounted to 1,567 million euros in 2017. At 1.9% of sales, the ratio was stable compared to 2016. Taking into account the depreciation and amortisation relating to logistics equipment included in the cost of sales, a total of 1,630 million euros was recognised in the 2017 consolidated income statement, compared with 1,535 million euros in 2016. Net income of equity-accounted companies The net income of equity-accounted companies totalled 4 million euros, versus a net loss of 36 million euros in 2016. The increase was mainly due to the improvement in net income from the Group’s investment in Turkey. Recurring operating income as a percentage of net sales. (1)