Le Groupe Rallye

Message from Jean-Charles Naouri, Rallye's Chairman

Jean-Charles Naouri - Casino

Jean-Charles Naouri

Casino, Rallye’s main asset, represents 98% of consolidated net sales and is a global leader in the food retail sector. In France, its sales performance is secured by a mix of banners and formats that are well adapted both to the economic environment and to major, lasting social trends. Internationally, its expansion strategy is focused on emerging markets with high growth potential, primarily in Latin America, where its subsidiaries benefit from deep local roots and leadership positions.
For the Casino Group, 2016 was marked by a confirmed recovery in business and results in France as well as robust sales momentum. Casino achieved a 0.1 percentage-point gain in market share(1) in 2016, spurred by Géant and by Casino Supermarkets. Organic sales were up 0.8% and gross merchandise volumes climbed 1.5%(2) driven by the 2.0%(2) increase in food retail.
Outside France, the Casino Group's organic sales growth accelerated in 2016. Organic net sales were up 10.8%(2) for the Éxito Group (excluding GPA Food), buoyed by all formats. Organic sales in Brazil climbed 11.7%(2), fuelled by the success of the Extra relaunch plan that resulted in an acceleration in market share gains. The Pão de Açúcar banner also delivered satisfying growth in 2016.
During the year, the Casino Group implemented a new streamlined structure and deleveraging strategy to give the Group added financial flexibility. Efforts to simplify the Group's structure began in first-half 2016, with the disposal of operations in Thailand and Vietnam, the restructuring of E-commerce activities and the announcement of the plan to sell Via Varejo, which was classified within discontinued operations in 2015 and 2016. A significant amount of debt was paid down by the Group and in France during the year, particularly as a result of these disposals. At 31 December 2016, consolidated net debt stood at €3.4 billion for the Casino Group and at €3.2 billion for France(3) (down almost 47% over the year).
Casino's primary objectives for 2017 will be to improve its net-debt-to-EBITDA ratio, to increase recurring operating income in food retail by around 15%, and to ramp up consolidated recurring operating income by at least 10% at current exchange rates.
Rallye's consolidated net sales amounted to €36.8 billion in 2016 for recurring operating income of €1,033 million.
Net debt for Rallye's consolidated holding company amounted to €2,899 million at 31 December 2016 as against €2,968 million at end-2015. Recurring free cash flow for Rallye was positive in 2016 at €29 million versus an outflow of €74 million in 2015, notably thanks to the ongoing improvement in financial expenses, the decrease in general expenses and the introduction by Casino of an interim dividend policy(4).
Rallye's cost of net debt decreased again in 2016 to €105 million compared with €112 million one year earlier. All told, it has fallen by close to 45% in three years.
Underlying net income, Group share, increased to €17 million from €3 million in 2015.
Rallye's investment portfolio was valued at €71 million at end-2016, notably as a result of the €25 million in net proceeds generated over the year.
Consolidated net sales for Groupe GO Sport amounted to €749 million in 2016, up 3.5% on a same-store basis and at constant exchange rates. Gross merchandise volumes climbed by a sharp 11% to over €930 million before tax for the year, reflecting the development of all networks (consolidated stores, affiliates and e-commerce).
Rallye benefits from a very robust liquidity position, with €1.8 billion in confirmed credit lines (€1.5 billion of which undrawn) that have an average maturity of four years, and no major payments to meet before October 2018. It intends to continue improving its recurring free cash flow in 2017, by optimising financial and general expenses and implementing an adjusted dividend policy that includes a scrip dividend option.
Rallye reiterates its strategy of maximising the value of its assets and reinforcing its financial structure, in particular by maintaining positive recurring cash flow.
To achieve this, the Board of Directors' meeting of 6 March 2017 approved the proposal of an adjusted dividend of €1.40 per share at the next Shareholders' Meeting on 10 May 2017. The dividend will be paid on 9 June 2017 and shareholders will also be able to opt for payment in stock.
(1) Cumulative year-to-date, based on Kantar P13 data.
(2) Excluding fuel and calendar effect.
(3) Casino Group holding company scope, including French operations and wholly-owned subsidiaries.
(4) Payment decided by the company's Board of Directors.

Jean-Charles NAOURI