A new report by Moody's has found that improving conditions in emerging markets such as Eastern Europe and Latin America will likely be credit positive for groups with a large presence in these regions, such as Carrefour and Metro.
The report, Emerging Markets Will Support The Credit Quality Of European Food Retailers, says that as those markets pull out of recession, retail sales will grow, leading to increased margins and revenue for key players.
Key Players
"Economic recovery in emerging markets will be credit positive for European grocers with sizable operations in these regions, such as Metro, Carrefour, Dia, Casino and Auchan," ays says Vincent Gusdorf, Vice President - Senior Analyst at Moody's.
"On the flip side, food retailers with more of a domestic focus, such as the UK's Morrisons and Sainsbury's, are less likely to benefit."
Over the next two years, the report states, the geographical footprint of European food retailers is unlikely to change all that much, although targeted acquisitions or disposals are possible.
'Grocers have refocused their operations on Eastern Europe, Latin America and China over recent years, as they sold some of their international subsidiaries to improve their credit quality', says Moody's.
Russia Recovery
Russia is seen as a market with better growth prospects than many other European markets, as the effects of economic sanctions subside.
'Russia's market structure also benefits European grocers as it is very fragmented and under-penetrated by modern retail formats,' says Moody's.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
