French supermarket retailer Casino, which is battling investor concerns over debts and its ability to generate cash, scrapped dividends as it targeted net debts below €1.5 billion in France at the end of 2020.
Casino also confirmed its 2019 earnings and cash flow goals.
Profit Gains
Casino, which has been selling assets to reduce its debt and which also controls Brazil's Grupo Pao de Acucar, said first-half group operating profit reached €347 million against €337 million last year.
However, it posted an underlying first-half group net loss of €16 million compared to a €46 million profit last year, as expenses and high levels of tax credits in Brazil impacted its earnings.
Consolidated net sales were up 3.5% on an organic basis, to €17.8 billion. the company said, while in France, same-store growth was 0.7% in the second quarter.
It added that ‘strong growth’ was maintained in its Latin America business, which rose by 10.1%, led by the performance of Assaí in Brazil.
Asset Disposal
In March, Casino had raised its goal for disposing of assets to at least €2.5 billion to cut debts, seeking to achieve that by the first quarter of 2020. It has so far disposed of €2.1 billion worth of assets.
Casino has been struggling to improve its profits amid a tough business climate in France, raising concerns over its ability to generate enough cash to also pay off the debt of its parent company Rallye through dividends.
In May, Casino Chairman and Chief Executive Jean-Charles Naouri placed Casino's parent companies, including Rallye, under protection from creditors.
While Casino itself was not placed under bankruptcy protection, it was hit with downgrades that left its credit rating deeper in junk territory, with rating agencies Moody's and S&P citing concerns over debts at Casino's parent companies.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
