Shares in French supermarket operator Casino (CGUSY) tumbled Tuesday after the company's annual sales and profits missed analyst expectations while forecasts for the coming year also failed to impress.
Casino shares fell almost 5% to €49.70 in early trading in Paris, as investors balked at the group's promise of an increase of "at least 10%" in 2017 trading profits.
"FY17 guidance...is over 10% below consensus," noted Goldman Sachs. "Given Casino has performed strongly year to date (+12% vs peers +2%) and we see downside risk to consensus estimates implied in (the) guidance, we would expect the stock to underperform today."
Sales from the group's outlets, primarily located in France and Brazil, were €36 billion ($38 billion) over 2017, up 5.7% year-on-year, while consolidated trading profit was €1.03 billion, up from €997 million. Analysts had expected sales marginally above €36 billion, while operating profit missed consensus estimates of €1.06 billion by about 2.7%.
"The group achieved its objectives in France, with a confirmed recovery in profitability, strong cash flow generation and a reduction in net debt," said Chairman and CEO Jean-Charles Naouri. "It now aims to continue to grow its sales and results in 2017."
Saint-Etienne-based Casino, which operates France's iconic Monoprix stores, has spent much of the last year overhauling operations and expanding it e-commerce offering in an effort to boost sluggish French growth and mitigate a slide in Brazil, where an economic downturn and related fall in the value of the Brazilian real has hurt earnings.
Casino's EBITDA in France advanced to €872 million over 2016, up from €726 million in 2015, while Latin American earnings fell to €880 million from €980 million.
Casino's consolidated net debt position was the notable bright spot in its results. Consolidated net debt of €3.37 billion at the end of 2016, was almost half the previous year's figure of €6.07 billion, and below analyst expectations of €3.6 billion. The reduction still fell short of Casino's own promise. made last year, to lop €4 billion off its net debt over the course of 2016.
Casino sold assets, including a 58.6% stake in its Big C Thailand operation for €3.1 billion, to reduce debt after it came under fire from short seller Muddy Waters. The hedge fund, headed by Carson Block, last year accused Casino of overstating earnings and its cash position. Those claims were strongly denied by Casino.
Casino said it will propose a full year dividend of €3.12, including the €1.56 already paid as an interim dividend.