Eurofood: Casino maintains strong position after mega-merger - Brief Article

France's number two food retailer, Casino, is undaunted by the prospect of the new giant market leader formed by the merger of Carrefour and Promodes. Its first half results issued just a few days after the mega-merger was announced show that profits rose by a healthy 24.3% to ??105m on sales ahead 8.5% to ??8.5bn, leaving Casino predicting full year profits up 20%.

Casino's solid growth has been built on the back of a rapid foreign expansion programme which will see the group with more foreign stores than domestic ones next year. Some 35% of group turnover this year is expected to come from outside France, helped by the group' s entry into new markets in Thailand, Colombia, Venezuela and Brazil. Casino is also present in the US, Uruguay, Argentina, Poland and Taiwan, operating a total of 800 stores in the nine countries.

US RECOVERY

In the US, the group's operations have recovered well after a difficult period, posting a sales increase of 14% and operating profits up more than eight times. In Poland, where the group operates under the Geant fascia, a further seven hypermarkets have opened their doors this year, allowing the division to reach break even during the half; the Big C arm in Thailand posted an 8.4% increase in sales, while Latin American profits are expected to reach around 66.6bn this year.

The strong position of the company also reduces the pressure on Casino to follow its larger counterparts and seek a merger partner, despite the increasing consolidation of the industry worldwide. Casino's shareholder structure also makes it virtually impregnable to a hostile takeover, with one shareholder owning 50% of the stock and 60% of the voting rights.

CORA TAKEOVER POSSIBLE?

Analysts are nonetheless suggesting that Casino might be interested in acquiring Cora, the retail group in which Carrefour has a 42% stake which it is unlikely to be allowed to keep following the Promodes deal. Casino already has a 50-50 joint venture with Cora - the joint purchasing company Opera-and could see the benefit of a full takeover of the family-owned chain.