July 24, 2019 / 10:17 PM / 4 months ago

Carrefour Brasil sees stimulus package boosting second-half results: CFO

SAO PAULO (Reuters) - Carrefour Brasil SA (CRFB3.SA), the country’s biggest retailer, expects the government’s stimulus package to boost consumption and its businesses in the second half of 2019, Chief Financial Officer Sébastien Durchon said on Wednesday.

Brazil’s Economy Ministry this afternoon announced measures allowing employees to access 42 billion reais ($11.13 billion)from worker guarantee funds known as FGTS this year and next, in an effort to boost flagging economic growth.

“We expect a positive impact in the second half of 2019 in both store sales and our financial services division,” Durchon told journalists in a call to discuss quarterly results. “In past, when the government did a similar thing, people mostly used the money to repay debt and go shopping.”

Durchon said the economic environment remained challenging in the second quarter and a stronger performance in coming months will also depend on the approval of key economic reforms such as the overhaul of Brazil’s costly pension system.

In a securities filing, the local subsidiary of France’s Carrefour SA (CARR.PA) posted quarterly net income from recurring operations of 419 million reais ($111 million), up 11% from a year earlier, as its wholesale unit Atacadão drove double-digit sales growth.

Carrefour Brasil, like the Brazilian subsidiary of French rival Casino Guichard Perrachon SA (CASP.PA), has invested heavily in the Atacadão format, which offers discounts to bargain-seeking Brazilians still recovering from a deep economic recession.

Total gross sales grew 12.9% in the second quarter to 15.28 billion reais. Excluding gasoline, the local subsidiary of France’s Carrefour SA (CARR.PA) reported a 13.5% increase in gross sales, to 14.588 billion reais, most of which came from Atacadão.

On a like-for-like basis, quarterly gross sales climbed 7.6% in the wholesale unit and 8% in other formats under the division known as “Carrefour Varejo.”

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 12.7% in the second quarter to 1.053 billion reais compared to a consensus estimate of 1.031 billion reais compiled by Refinitiv.

Shares in Carrefour Brasil have climbed more than 30% so far this year, outperforming rival Grupo Pão de Açúcar (PCAR4.SA), whose shares have risen less than 10% since the beginning of 2019.

Reporting by Gabriela Mello in Sao Paulo; Editing by Matthew Lewis and Leslie Adler

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