(BFM Stock Exchange) – In a note written as a prelude to the results of the first half of the distributor, the bank estimates that the group will reveal degraded half -year accounts and has thus revised its forecasts downwards. The establishment has placed the value under negative surveillance.
Carrefour hardly on the stock market this Thursday, June 26. The distribution group plunges 8.6% to 11.65 euros this Thursday, June 26 in the middle of the afternoon, by far accusing the highest drop in CAC 40.
The group led by Alexandre Bompard is sealed by JPMorgan. In a note published this Thursday, the American bank warned expect a complicated first half for the company of CAC 40.
The establishment confirmed to “sub-ponderation” (equivalent to “sell”) its advice on action, and lowered its price objective against ten euros previously. JPMorgan also placed the title under negative surveillance (“Negative Catalyst Watch”), which means that it expects that an unfavorable event will occur on action soon.
Since the start of the year, the bank explains that the company’s underlying dynamics in terms of Carrefour’s profits and cash flows seem “less healthy” than those suggested at first by the company’s figures.
JPMorgan thinks that the first half -2025 of Carrefour, which will be published on July 24 will attest to a degradation of these trends.
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Degraded profitability
The Bank believes in particular that the current operating profit of the company in its three key areas (France, Europe and Latin America) will receive more than 10%, while consensus tables on a stability of this indicator for these three geographies.
In detail, the bank sees the operating profit running in France falling from 13.3% over one year to 248 million euros in the first half, for a corresponding rate of 1.3% against 1.6% a year earlier. In Europe the withdrawal would amount to 12.8% for a rate of 0.7% while in Latin America the current operating profit would drop by 10.8%.
At the level of the entire group, the current operating profit would decrease by 11.4% while profitability would fall to 1.6% against 1.8% in the first half of 2024.
The Bank explains in particular that Carrefour will go through additional operational costs of 100 million euros and investment expenses (CAPEX) of 60 million euros this year, these charges being linked to the buyouts of the CORA and Match brands.
However, the bulk of the impact of these expenses must occur in the first half, which the market has not a priori integrated, according to JPMorgan.
In addition, France faces “market pressures”, underlines Jpmorgan. The bank notes that consumer expenses of French households fell 0.2% over a year over the period from April 21 to May 18 in major brands.
Towards an offensive from Leclerc?
Admittedly, Carrefour saw its market share increase by approximately 2 percentage points to reach 20.6 points, which makes the group the number two of the market behind the Leclerc brands.
But this increase is explained by “inorganic” growth, that is to say the market shares resulting from the match acquisitions and Cora. JPMorgan believes that, retired from these acquisitions, the market share of the company have, at best, stabilized over a year.
This while competition is likely to intensify. “We note that Leclerc no longer gains market share, which, in our opinion, poses the risk of new actions on prices (…) This represents a risk for Carrefour,” says Jpmorgan.
Guest of BFMTV-RMC this Thursday, Michel-Édouard Leclerc, president of the management committee of the E.Leclerc centers, said that his group would still make promotions this summer, even if he did not specify which.
A cash not if cash
Beyond the first half, JPMorgan lowered its estimates of current operating profit by 8%, on average, over the period 2025-2027, and those of benefits per 11%.
Recall that, for the only year 2025, Carrefour tables a slight progression of its gross operating result (EBITDA), its current operating profit and its free cash flow.
JPMorgan, warns that their objectives will not be held. The bank anticipates a decline in the EBITDA located between 2% and 4% and a contraction of 8% of the current operating profit, even by holding a second semester much better than the first.
The establishment is counting on an even stronger withdrawal of profit per share (more than 10%) and expects the cash generation and the dividend to be significantly lower in 2025 than the consensus anticipated it.
By the way, JPMorgan Scratch Carrefour on his cash flow. The establishment notes that the group uses a definition of cash flow which is not “standard”, excluding rents and dividends but which incorporates products from real estate transactions.
In 2024, the generation of cash was largely carried out via the increase in supplier debts and thanks to money from real estate operations, according to the bank. JPMorgan explains that these two factors also played strongly in 2022 and 2023. None of these two elements constitutes “a lasting source of cash flow”, asserts JPMorgan.
For the bank, the real dynamic of the group in terms of cash generation, is actually “rather weak”. Conclusion of the establishment: Carrefour trends in terms of cash generation “are not sustainable”, which constitutes “a constant concern”.
Carrefour in disagreement
Questioned by AFP, the distributor deplored the absence “of a really new argument, apart from very negative forecasts at the lowest of the expectations of the consensus, and clearly below the objectives of the group announced in February and confirmed in April”.
The group also believes that this note does not take into account the most recent consumption and market share dynamics in France “.
In a note written this Thursday, the independent AlphaValue design office believes that Carrefour faces “short-term risks”.
“In France, hypermarkets undergo the wrath of Leclerc and French justice should announce a first decision on the dispute between the distributor and the association of SES (AFC). The underperformance of the ‘Europe (outside France)’ zone should also continue, in particular in Poland and Italy,” he wrote.
“Investors await the results of the current strategic and commercial journal. We would not be surprised if the management announced a withdrawal of one or them country and increased concentration on the Latin America region,” adds AlphaValue.
Julien Marion – © 2025 BFM Bourse
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