Auchan profit hit by international expansion costs
Paris (AFP) - Auchan said Monday its net profit fell by a quarter last year despite rising sales as its international expansion weighed on the bottom line of the France-based supermarket group.
Net profit fell by 25.2 percent to 574 million euros ($624 million).
Meanwhile, sales stripped of taxes rose by 14.7 percent at constant exchange rates to 53.4 billion euros, but this was boosted by the complete integration of Sun Art Retail Group in China into the accounts as well as other expansion.
On a comparable store measure at constant exchange rates, sales dipped 1.0 percent.
A similar effect could be seen in operating profit, which rose by 2.0 percent when measured at constant exchange rates to 2.6 billion euros, but when measured by continuing activities fell by 11.6 percent to 1.1 billion euros.
Auchan, which is present in Russia and Ukraine, said the plunge in the value of the ruble and hryvnia had a considerable negative impact on its results, as did changes in the value of China's yuan.
Adverse currency changes led it to book a charge of 148 million euros against earnings.
"Due to a disparate environment in 2014 marked by a rapid rise in exchange rates, our performance was lower than we had expected," board chairman Vianney Mulliez said in a statement.
Sales in its home market France slid 2.2 percent, which Auchan said was mostly due to a drop in prices, although the number of customers increased.
The group now generates 63 percent of its sales abroad.
Mulliez pointed out that the alliances that it has forged at home and abroad will help drive further growth in sales and profitability, and that 2015 should be a year of growth.
"We sealed strategic partnerships both nationally and internationally, as a result of which we now anticipate an improvement in our purchasing terms and therefore in our profitability, while at the same time maintaining our positioning as a discount retailer," he said.
Auchan also managed to reduce its net debt by nearly half to 1.8 billion euros.
