Carrefour Brasil profit slumps nearly 60% on high interest rates
5:58 pm Wednesday, November 09th, 2022
SAO PAULO (Reuters) -Carrefour Brasil on Wednesday posted a third-quarter adjusted net profit that slumped 59% from a year earlier, hit by high interest rates on the retailer’s surging debt following its acquisition of Grupo BIG.The Brazilian arm of French supermarket giant Carrefour posted a quarterly profit of 256 million reais ($49.5 million) compared to 621 million reais in the same period last year.
The company pointed to high interest rates on its debt, as well as costs it incurred from its acquisition of Grupo BIG, one of Brazil’s biggest food retailers, which it agreed to buy last year for a 7.5 billion reais price tag.
“We had the effect of the cost of the acquisition, debt going up, interest rates going up too. This has a logical effect on the net income level,” finance chief David Murciano told journalists.
“This drop (in profits) was already expected,” he said.
Carrefour’s net debt almost doubled from a year earlier to reach close to 19 billion reais, largely due to the acquisition, while its operating costs grew 56% to 3.57 billion reais.
Brazil’s benchmark interest rate currently stands at 13.75% after an aggressive monetary tightening aimed at curbing high inflation.
The group’s net sales however climbed 40% to reach 26.38 billion reais, bringing its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) up 14% to 1.7 billion reais.
Carrefour Brasil said it has opened six new hybrid wholesale stores and has converted seven stores acquired from Grupo BIG during the quarter.
($1 = 5.1740 reais)
(Reporting by Andre Romani, Writing by Carolina Pulice; Editing by Sarah Morland)
