SAO PAULO (Reuters) – Carrefour Brazil, controlled by France Carrefour (EPA:) announced net profits of 39 million riyals ($7.7 million) for the first quarter, offsetting losses in the same period last year, as rising food inflation pushed up its profits.
On an adjusted basis, it also returned to the black with an actual net profit of 52 million riyals, although this profit came in below the 137.4 million riyals forecast by analysts polled by LSEG.
Carrefour Brazil had already revealed first-quarter sales figures in late April, which rose 2.5% year-on-year, with its hybrid wholesale unit Atacadao, accounting for nearly 70% of the group's activity, growing sales of 6.6%.
“We have seen food price inflation rebound to positive levels, which has clearly had positive impacts on our prices and volumes,” CEO Stefan McQuire told reporters on Tuesday.
He added that recent inflation trends in food prices have improved Atakadaw's sales to corporate customers, especially small grocery stores, which have reduced purchases due to financial pressures from lower profit margins.
“Dealers are regaining their buying dynamism to replenish their inventory,” he added, adding that this dynamism is only “just beginning.”
Regarding Carrefour Brazil's retail segment, which saw sales fall by more than 10% in the quarter, McQuire said management has begun testing lower prices for some core products with the aim of increasing the unit's performance.
Carrefour Brazil said its consolidated adjusted earnings before interest, taxes, depreciation and amortization rose 36.6% to 1.42 billion reais, slightly more than analysts' expectations of 1.33 billion reais.
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Adjusted EBITDA margins rose to 5.7% from 4.3% a year ago.
McQuire also said the company has temporarily closed seven of about 100 stores it owns in Brazil's southernmost state of Rio Grande do Sul, where heavy rains have caused deadly flooding in recent days.
He added that the company decided to freeze all prices in Rio Grande do Sul until the end of May.
($1 = 5.0744 riyals)
