Carrefour, the world’s second-largest retailer, on Thursday pledged to grow sales and free cash flow this year after posting a steeper than expected fall in 2016 earnings, as profits dropped at its core French market.
Europe’s biggest retailer also said it was ready to float its Carmila property unit and its Brazilian business this year, market conditions permitting.
The French company, which has started looking for a successor to the chairman and chief executive Georges Plassat whose mandate expires in May 2018, also announced it would hold its annual shareholders meeting on June 15.
Carrefour kept its 2016 dividend unchanged at €0.70 per share after recurring operating profit fell 3.8 per cent to €2.35 billion (Dh10.49bn) in 2016, below an average of €2.37bn euros in a Reuters poll.
Accounting for currency exchange rate variations, net sales in Asia fell 7.3 per cent to €6.17bn year on year while in emerging markets they slid 1.3 per cent to €20.68bn. Total sales slipped 0.4 per cent to €76.64bn.
Since taking over as the chief executive in 2012, Mr Plassat has presided over signs of a recovery at Carrefour, which has numerous stores in the UAE but makes 73 per cent of its sales in Europe and around a quarter of sales in France.
He has focused on price cuts along with an expansion into smaller convenience stores, while also renovating its chain of hypermarkets, starting in France.
Yet while Carrefour has made good progress in most European countries and in Brazil, its second-largest market, it has lagged behind on its French hypermarkets.
In France, operating profits fell 13.4 per cent to €1.03bn, with margins down by 40 basis points to 2.9 per cent.
This reflected costs tied to the integration of the loss-making Dia discount stores and increased promotional activity at French hypermarkets amid cut-throat competition in the sector.
“2017 will be the year when Dia results start improving,” said the finance head Pierre-Jean Sivignon.
Elsewhere in Europe, however, operating profits rose 25.7 per cent, driven by a continued recovery in Spain and improved profitability in Italy.
In Latin America, Brazil put in a strong performance in spite of difficult market conditions but China, which makes 5 per cent of sales, was still a loss-making area.
“The second-half was a low-point for China,” Mr Sivignon said.
Carrefour vowed to grow group sales by 3 to 5 per cent this year and increase free cash flow, as it pares back on investments to renovate its stores although it would continue to expand its store network and invest in E-commerce, added Mr Sivignon.
* Reuters
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School counsellors on mental well-being
Schools counsellors in Abu Dhabi have put a number of provisions in place to help support pupils returning to the classroom next week.
Many children will resume in-person lessons for the first time in 10 months and parents previously raised concerns about the long-term effects of distance learning.
Schools leaders and counsellors said extra support will be offered to anyone that needs it. Additionally, heads of years will be on hand to offer advice or coping mechanisms to ease any concerns.
“Anxiety this time round has really spiralled, more so than from the first lockdown at the beginning of the pandemic,” said Priya Mitchell, counsellor at The British School Al Khubairat in Abu Dhabi.
“Some have got used to being at home don’t want to go back, while others are desperate to get back.
“We have seen an increase in depressive symptoms, especially with older pupils, and self-harm is starting younger.
“It is worrying and has taught us how important it is that we prioritise mental well-being.”
Ms Mitchell said she was liaising more with heads of year so they can support and offer advice to pupils if the demand is there.
The school will also carry out mental well-being checks so they can pick up on any behavioural patterns and put interventions in place to help pupils.
At Raha International School, the well-being team has provided parents with assessment surveys to see how they can support students at home to transition back to school.
“They have created a Well-being Resource Bank that parents have access to on information on various domains of mental health for students and families,” a team member said.
“Our pastoral team have been working with students to help ease the transition and reduce anxiety that [pupils] may experience after some have been nearly a year off campus.
"Special secondary tutorial classes have also focused on preparing students for their return; going over new guidelines, expectations and daily schedules.”
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1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
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