French retailer Carrefour said it was confident about the second half of the year after reporting higher first-half operating profit and raising its 2022 cost-savings target amid accelerating inflation.
Carrefour said cash generation would remain above €1 billion in 2022, as it now aims for savings of €1 billion this year against €900 million previously, having achieved €480 million in the first half.
"There is no sign of inflation slowing down. We will have to deal with a high level of inflation in the second half and we will have to navigate it," chairman and CEO Alexandre Bompard told analysts.
"We can consider the effect of inflation on customers will be higher than in the first half with a little bit more trading down," he added.
Finance chief Matthieu Malige said the current market consensus for full year recurring operating profit seemed "consistent" with the first-half performance. Analysts cite a figure of €2.45 billion.
Carrefour reported a 1.6% rise in first-half recurring operating profit to €814 million at constant exchange rates.
The performance reflected cost cuts and first-half sales which grew 5.4% on a like-for-like basis to €43.42 billion, with Brazil, the group's second-largest market, driving growth.
"Carrefour continues its forward march and will present its new strategic plan on November 8, initiating its 2026 trajectory and reinforcing its long-term ambitions," Bompard said
Bompard, whom Carrefour reappointed in May 2021 to lead for another three years, is working on a new strategic plan and conducting an asset review as part of the process.
The new strategy will notably allow the French retailer to step up digital expansion and be more resilient amid an increasingly uncertain environment, Bompard has said.
During the second quarter, Carrefour said it observed a "slight evolution" in consumer purchasing behaviour, particularly in European countries where inflation is the most pronounced such as Spain and Romania, reflecting "growing consumer attention to purchasing power constraints."
The extra savings Carrefour will generate this year will help it protect the purchasing power of customers while consolidating its economic model, the group said.
It can notably rely on its Carrefour branded products, which now account for 32% of sales, promotional activities and loyalty programmes.
In the core French market, sales rose 1.4% like-for-like in the second quarter, with closely watched hypermarkets benefitting from their attractiveness in terms of offers, prices and promotions. Convenience stores were particularly dynamic, driven by a resumption of tourism in big cities.