By Dominique Vidalon and Helen Reid
PARIS (Reuters) -Carrefour, Europe's largest retailer, said on Tuesday it was confident about this year as it reported record cash flow of 1.62 billion euros ($1.8 billion) for 2023 and operating profit up 18.5% in its core French market amid high inflation.
The solid results and strong cash generation allowed Carrefour (EPA:CARR) to hand investors a 55% dividend increase to 0.87 euros per share and launch a new share buyback scheme worth 700 million euros.
"In 2024, the group should see a more favourable market environment in Europe with the ongoing recovery of consumers' purchasing power," Chief Financial Officer Matthieu Malige told reporters.
Carrefour aims to grow its earnings in 2024, Malige said, as food inflation in France will likely come down to a low single-digit level.
In 2023 Carrefour's recurring operating income was 2.26 billion euros, up 9.8% at constant exchange rates. The retailer's operating margin, however, fell to 5.5% from 5.7% in 2022.
A crisis in the Red Sea is driving transport costs up and causing delays of one to two weeks on shipments of products from Asia to Europe, Malige said, adding that Carrefour plans to absorb the increased costs instead of passing them on to shoppers through price hikes.
In the closely-watched French market where Carrefour has been losing market share to rivals, operating profit grew 18.5% to 988 million euros in 2023 thanks to cost cuts and increased sales of private label products.
Like-for-like sales in France were up just 1% in the fourth quarter, however, weighed by a slowdown in non-food sales as shoppers cut back on non-essential purchases.
Carrefour has been lowering prices recently in France as it tries to compete against market leader E. Leclerc.
"We kicked off a process of reinforcing our competitiveness in France in the fourth quarter, by lowering prices on 2,000 products," said Malige, adding that the retailer would keep lowering prices this year in France and in its other markets.
In Brazil, Carrefour's second-largest market, operating profit fell 26.9%, weighed by one-off costs from the integration of Grupo BIG and losses at converted stores in the month following their reopening.
Carrefour's revenue has been unaffected by its ongoing price dispute with U.S. soda and snacks group Pepsico (NASDAQ:PEP), Malige said.
"Negotiations are still not finished," he told reporters on a call, referring to what Carrefour described as unacceptable price increases which prompted it to pull Pepsico products from stores in France and four other countries last month.
($1 = 0.9252 euros)