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In a striking reversal of fortunes, Carrefour Brasil, under the control of France's Carrefour, declared a net profit of 39 million reais ($7.7 million) for the first quarter. This marks a significant turnaround from the losses experienced in the same period last year.
According to Reuters, the company attributed this recovery partly to the higher food inflation, which expanded its profits beyond expectations. On an adjusted basis, the firm also returned to profitability with a 52-million-real net profit, although this figure fell short of the anticipated 137.4 million reais projected by analysts surveyed by LSEG.
Sales Growth and Inflation Impact
US News reported that revelations showed Carrefour Brasil's first-quarter sales increased by 2.5% year-on-year in late April. A notable performer within the group, the hybrid wholesale unit Atacadao, which constitutes nearly 70% of the group's activity, saw its sales grow by an impressive 6.6%. "Recovery of food inflation to positive levels had a positive effect on our prices and volumes," commented CEO Stephane Maquaire during a press briefing.
The recent upward trends in food inflation have particularly benefitted sales to corporate customers, especially smaller grocery outlets, which previously curbed their purchases amid financial strains from dwindling margins.
Strategic Adjustments and EBITDA Growth
In response to the declining sales in its retail segment, which dropped over 10% in the quarter, Maquarie revealed that Carrefour Brasil is exploring lower pricing strategies for some basic items to enhance performance.
Furthermore, the conglomerate reported a 36.6% increase in its consolidated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to 1.42 billion reais, slightly surpassing analyst forecasts of 1.33 billion reais. Adjusted EBITDA margins also improved, rising to 5.7% from 4.3% a year earlier.
Navigating Natural Disasters
The CEO also disclosed the temporary closure of seven Rio Grande do Sul stores due to the devastating floods affecting Brazil's southernmost state. Demonstrating community support, Maquaire announced a price freeze on all products in the region until the end of May to aid those impacted by the natural disaster.
This gesture underscores Carrefour Brasil's commitment to navigating economic fluctuations and supporting its customer base during critical times.
Photo: Carrefour Newsroom
