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Edited Transcript of CA.PA earnings conference call or presentation 25-Jul-19 4:15pm GMT

Half Year 2019 Carrefour SA Earnings Call

Levallois Perret Jul 26, 2019 (Thomson StreetEvents) -- Edited Transcript of Carrefour SA earnings conference call or presentation Thursday, July 25, 2019 at 4:15:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Alexandre Bompard

Carrefour SA - Chairman & CEO

* Matthieu Malige

Carrefour SA - CFO

* Selma Bekhechi

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Conference Call Participants

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* Andrew Ian Porteous

HSBC, Research Division - Analyst, European Retail

* Arnaud Joly

Societe Generale Cross Asset Research - Equity Analyst

* Bruno Monteyne

Sanford C. Bernstein & Co., LLC., Research Division - Senior Analyst

* Carole Gladys Madjo

Exane BNP Paribas, Research Division - Research Analyst

* Cedric Lecasble

MainFirst Bank AG, Research Division - Research Analyst

* Maxime Mallet

Deutsche Bank AG, Research Division - Research Analyst

* Nick Coulter

Citigroup Inc, Research Division - Director

* Sreedhar Mahamkali

Macquarie Research - Analyst

* Xavier Le Mené

BofA Merrill Lynch, Research Division - Head of European Food Retail Equity Research and Director

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Presentation

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Operator [1]

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Ladies and gentlemen, welcome to Carrefour second quarter sales and half year results conference call. I now hand over to Mr. Alexandre Bompard; Mr. Matthieu Malige; and Mrs. Selma Bekhechi. Madame, please go ahead.

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Selma Bekhechi, [2]

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Good evening, everybody, and thank for joining us on this call to present Carrefour Group's 2019 first half results. You have no doubt already seen the press release we issued this evening. Throughout today's call, we will be referring to the presentation that you can find on our corporate website. On tonight's call, Alexandre Bompard, CEO, will present the key advances of the Carrefour 2022 Transformation Plan; Matthieu Malige, CFO, will then comment on the financial highlights of Carrefour's first half performance. We will then open the floor to your questions.

Before I hand over to Alexandre, let me start with a few technical comments relating to our first half 2019 numbers. They were impacted by 3 different accounting standards, which are detailed in Page 2 of the presentation. One, IAS 29 related to hyperinflation in Argentina applied from July 2018; two, IFRS 5 relating to the sale of our business in China, which is accounted for as a discontinued operation as of H1 2019, also reflected in H1 2018 accounts; and three, the IFRS 16 accounting standard, which concerns the principles of accounting for operating leases. I remind you that Carrefour adopted simplified retrospective approach without restating the 2018 consolidated financial statements.

The H1 2018 accounts are pre-IAS 29 and pre-IFRS 16, while the H1 2019 accounts are post-IAS 29 and post-IFRS 16. For the sake of clarity and comparison, we have provided H1 2019 accounts post-IFRS 5, pre-IAS 29, pre-IFRS 16, which are comparable to H1 2018. The comments on the income statement and free cash flow will apply to these accounts. You will find detailed bridges in the Appendix section of today's press release.

I now hand over to Alexandre Bompard.

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Alexandre Bompard, Carrefour SA - Chairman & CEO [3]

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Thank you, Selma. Good afternoon, everyone. Thank you for joining us on this call today in this day of heat wave in Paris. I know there are many financial publications today, so thank you, again, to be here.

We're going to take you through our half year results. Beforehand, I would like to provide a quick update on the significant change that is underway at Carrefour.

First idea, we are well on track in the implementation of our Transformation Plan. First, we are gaining momentum to become the leader of the food transition for all. We have made it our raison d'etre. The strong commitment gives us a strategic edge over the competition. We are leaders in providing consumers with healthy food products. What we have achieved in the organic market is a prime example of that. We are making our organic offer accessible to all. We're supporting farmers in their conversion to organic farming. We are operating all the distribution channels from specialized e-commerce, like Greenweez, to generalized offer in our Bio Experience in-store areas. And we are expanding our organic offer notably through our recently acquired So.bio brands.

This strategy is already paying off. Our global sales of organic products increased by more than 25% in Q2 2019. And in France, Carrefour is the leader of the organic food markets. These actions are part of a wider commitment to reinvent our consumption model and to protect the future of our planet.

This is the goal of our worldwide Act for Food campaign. Let me give you free concrete example amongst many. We fight for the best food quality in Carrefour-branded products that would soon be labeled with a Nutriscore to give consumer precise information on what they are eating.

We fight against controversial components. We eliminated 100 of them from our private labels and 100% of additives from our baby products.

We fight against plastic pollution. We are proud to be the first retailer associated with Loop to reduce plastic packaging. Second, we are becoming a key omnichannel player to provide extended services to our clients. We continue to expand our convenience store portfolio in all geographies. We opened 228 new store in H1, because we know proximity to clients is key to creating a seamless omnichannel experience.

We continue to reinforce our e-commerce offer. We consolidate our website to only one per country so that our clients can easily access a wide variety of e-commerce services, including Drive, pedestrian Drive, Click & Collect, D+1 delivery and express delivery.

We partnered with best-in-class start-up to offer faster delivery services. Since March, we have been working with Rappi in Brazil, and a few days ago, we signed a partnership with Glovo in 4 countries: Spain, Italy, Argentina and France.

Regarding France, more specifically, I'm pleased to tell you that we opened our 100th pedestrian Drive in July, and we're deploying home delivery throughout the country. Our goal is to provide this service in all French cities whose population exceeds 10,000 inhabitants by 2022. These are only a few examples of how we are progressing in the digital space.

Globally, our e-commerce food sales grew by another 30% in Q2, excluding China.

Third, we are improving our price competitiveness. As you know, we strongly believe in loyalty programs to benefit consumers on their purchasing power. And we want to reward our frequent clients who buy our Carrefour-branded products. This is why, in February, we created an omnichannel loyalty program in France that cover 10,000 products, and that comes with a continuous 10% reward.

We are also lowering the prices of everyday products through our special offers. In April, we launched the unbeatable prices campaign on 10 fresh products and 500 key everyday products in France, and we are running similar campaigns in Spain and Italy.

Lastly, we are developing our discount format in many geographies to increase households' purchasing power. In Brazil, we continue to capitalize on the success of the cash & carry format with the inauguration of 5 Atacadão in Brazil in Q2, after 4 in Q1. In Argentina, 11 stores were converted to the Maxi banner in H1. In Europe, we continue to expand the Supeco cash & carry supermarket format with 3 openings in Spain and Romania.

Last, but not least, we are boosting our operational efficiency and our financial structure. We are operating in a tough environment. That's why we remain more focused than ever on cost discipline. Our cost optimization plan is well on its way. We achieved EUR 470 million in cost saving in H1, excluding China, leading to a total of EUR 1.4 billion to date. We are well on track to meet our 2020 new target.

We continue to make our organization leaner and more agile. We signed Rupture Conventionnelle Collective in France as well as a voluntary departure plan in Italy. These recent agreements are well underway, while plans that were announced in 2018 are being finalized.

We are also enhancing operational efficiency in our hypermarkets. We're reducing underproductive selling space. We have removed almost 100,000 square meters at the end of June, excluding China. We are reallocating this space notably to create back stalls, outlets and service hubs at the entrance of stores, and we are offering many payment facilities.

Meanwhile, we acted in a pragmatic way to seize good opportunities and to strengthen our balance sheet. In June, we reached an agreement with the Chinese group, Suning.com, to sell control of Carrefour's operation in Carrefour China. This transaction, which is still subject to the approval of the competition authority in China, should be closed by the end of 2019.

This deal is a concrete example of our mindset. We objectively analyzed the situation in which we were falling behind our competitors, we made alliances in a world where isolation is fatal and we picked our battles. Two years ago, we wouldn't have been able to make such a move in China. It's thanks to the successful recovery plan that we put in place that we would complete this operation at an attractive valuation.

Earlier this month, we announced the sale of our stake in Cargo Property Assets to Argan. This transaction was done at the right time and at good condition and allows us to be significantly ahead of target to meet our objective of selling EUR 500 million worth of nonstrategic real estate by 2020.

All these ongoing efforts are starting to be visible to our customers and in our financial results.

In Q2, we posted a plus 3.9% like-for-like sales growth after a plus 3.2% growth in Q1. We increased our recurring operating income by 4.5% at constant scope and exchange rates to around EUR 620 million. We improved our free cash flow by more than EUR 280 million, excluding exceptional items. With all our -- with all of our projects progressing well, we're capable to confirm all objectives of Carrefour 2020 strategic plan. Objectives are important to monitor change, but what we're doing now is not only monitoring change but driving it. Not only reforming our structures and our processes, but creating a cultural shift in our minds and behaviors.

First, in order to drive change, we are taking a strong customer-oriented approach. 2019 is a year for listening to our clients. It is heart of our daily business and our primary duty. This is why we opened a direct and constructive dialogue as part of the celebration of Carrefour's 60-year anniversary. We plan major events in various cities across France, starting with our city of origin, Annecy, to meet our clients and hear from them.

Going one step further, we are launching a new campaign to involve everyone at Carrefour in this cultural change. We name it Act for Change. We're setting up a system to collect real-time feedback from our clients. We are modernizing our satisfaction indicators on Net Promotor Score to guide our future actions and anticipate new trends. We are placing customer satisfaction at the center of every employee's objective, and we are providing them with more mobility and cross-functional opportunities because we want them to broaden their skills and be more patient to their jobs.

Second, we're engaging in a test-and-learn approach to adapt in a flexible way to our clients' demands. This is why we're bringing more ideas to the table on creating innovative formats. Let me give you 2 examples of how we are applying new concepts to our convenience stores.

The first example is the opening under the So.bio banner of the largest organic store in Paris, 800 square meters. We put a strong focus on sourcing to offer a large choice of high-quality products to our clients with 10,000 SKUs. The second example is the opening of our first Bon Appétit restaurant in the center of Paris. In a casual setting, we offer our clients ready-to-eat food made from our organic and fair trade products to enjoy on-site or to take away. This new concept is a way to tap into a new market with good growth potential.

Let's now talk about innovation in our hypermarkets. We also have new ideas in the pipeline. I give you 2 concrete examples. In Avignon, we took a back-to-basics approach for our hypermarkets. Cost-effective solution on Carrefour-branded products to guarantee low prices for our clients.

In a few weeks, in Dijon, we will test our next hypermarket model, which is based on 4 pillars. Simplicity, with a reduction of seller area and assortment. Expertise. We will focus on our food offer prescribed our core areas. Omnichannel distribution to provide a seamless experience to our clients; and operational efficiency. We will adapt these new concepts or experiences over time based on how our clients respond.

Further, we are attracting new talent to help spread this new customer- and innovation-oriented culture. We refreshed our top management and we hired seasoned experts in organic food and foodservice to help develop our new store concept. We also signed a long-term investment plan to further incentivize our managers. Their compensation is related to Carrefour's financial and share performance. We fostered gender diversity with several women being recently appointed to the executive committee. We also joined forces with best-in-class digital players to shake up and challenge our processes and current ways of thinking. For instance, in the Carrefour (inaudible) opened in March, our teams are working on business cases to optimize our processing, our assortments, our inventory management. All of this has been achieved through detailed monitoring of our Transformation Plan and proactive initiatives.

We still have some way to go, but we're working at a rapid pace to bring more services and better services to our clients at the best price. We act for change and we are confident in our company's future.

I will now turn the call over to Matthieu to discuss our half year results in greater detail.

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Matthieu Malige, Carrefour SA - CFO [4]

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Thank you, Alexandre. Good evening to all of you, and thank you for being with us. I'm going to walk you through the key financial highlights of the second quarter and the first half, making reference to the presentation starting on Page 11.

Carrefour's H1 gross sales, in total, reached EUR 38.8 billion, up 3.5% on a like-for-like basis. Like-for-like growth accelerated in Q2 at 3.9% versus 3.2% in the first quarter. A sequential acceleration in like-for-like growth can be observed in most geographies. Growth remained strong in Latin America and Eastern Europe. In France and Europe, sales in June benefited from exceptional weather conditions in the last days of the month.

Let's look in greater detail at the various currency impacts in the half. The currency effect on sales was strongly negative in the period at minus 3.3%. This negative ForEx impact is mainly due to the depreciation of the Brazilian real and the Argentine peso versus the euro. Currencies contributed to a negative EUR 11 million in H1 recurring operating income when international profits are translated into euros.

Recurring operating income in H1 stands at EUR 618 million. At constant exchange rates, it increased by EUR 27 million or 4.5% versus H1 2018.

Recurring operating income is slightly up by 6 basis points to 1.8%. Price investments weighed on gross margin, which was stable at 22% -- to 22%, thanks to purchasing gains, lower logistic costs and better performance of financial services. In parallel, Carrefour continues its financial discipline in all geographies with distribution cost at 18.4% of net sales that benefited from the cost reduction plan and included costs related to new stores and new customer services, notably in digital.

Carrefour is strongly investing in its future growth while maintaining strict cost discipline.

Let's now focus on the cost reduction plan. We maintained a strong pace of cost reduction in H1, with EUR 470 million in savings, excluding China, coming on top of the EUR 930 million already delivered in 2018, excluding China. Momentum is strong. With EUR 1.4 billion in cost cuts to date, we are a little over halfway on the road to achieving our 2020 objective. These cost reductions reflect the deep transformation Carrefour has undertaken in its organizations in all geographies. We are continuing our efforts in H1 with new initiatives to make our organizations more flexible and more agile.

As part of our continuing cost savings drive across all geographies, we also recorded the first benefits of purchasing partnerships in France and international -- internationally. In France, purchasing gains of Envergure with Système U started becoming visible from March, when the annual round of supplier negotiations ended. With Tesco, negotiations on the product categories with highest potential for Carrefour are gradually gaining momentum. At the same time, Carrefour is pursuing the implementation of an industrialized approach in the redesign of operational processes and purchasings of goods not for resale. The group has already achieved average savings of 20% in 4 categories: lighting, tiles, cold furniture and trolleys.

Let's now turn to our performance by geographies, starting with France. In a market that remains very competitive, sales in France in the first half were up 0.8% on a like-for-like basis. The trend in Q2 was broadly in line with the first quarter with plus 0.7%.

Q2 performance in food remains strong at plus 1.9% like-for-like after plus 2% in Q1, while nonfood continued to be difficult at minus 7.1%. Carrefour consolidated its leadership position in organic food, whose strong momentum continues with growth above 20% in H1.

E-commerce also maintained its positive momentum in the first half, growing much faster than the market. Convenience and other formats continued to post solid growth with like-for-like sales up 2.7% in the quarter. Reductions and reallocations of underproductive selling space in hypermarkets continued in line with the plan.

France recurring operating income in H1 2019 reached EUR 116 million, growing plus 5.3%. This is an important step as it comes after 3 consecutive years of deterioration. This translates into a margin of 0.7% of sales, up 5 bps. The recurring operating income improvement reflects strong momentum in cost reduction and organizational transformation, and also investments in price competitiveness and the attractiveness of Carrefour offer, new services and more digital.

Turning to other European countries. We saw a sequential improvement in Q2 versus Q1 with stable like-for-like sales in Q2. The sequential improvement in trends is visible in most countries. In Q2 2019, we continue to see mixed trends in Europe, with strong like-for-like growth in our Eastern European markets of Poland and Romania, while Western Europe continued to be more challenging. In Spain, like-for-like sales in Q2 were stable. Carrefour accelerated the rollout of strategic actions, notably the strengthening of digital, fresh, organic and Carrefour-branded products.

In Italy, the market remained under pressure with a difficult macroeconomic and competitive context. While improving in Q2 over Q1, like-for-like sales remain negative. The group is implementing the Transformation Plan presented in February and has notably strongly invested in prices in the first half.

In Belgium, Carrefour's performance suffered from a market that deteriorated during the quarter in the context of low inflation and strong competition. The region's recurring operating income amounted to EUR 119 million in H1 compared with EUR 152 million in H1 2018. This drop reflected a soft commercial performance in competitive markets and significant investments to redynamize business, particularly in Italy, mitigated by cost reductions.

On the following slide, we take a closer look at our performance in Latin America, which continues to be a strong growth engine for Carrefour.

H1 like-for-like sales growth worked out at plus 15.2% in the half and even accelerated in Q2 to 15.9%, reflecting strong commercial momentum.

In Brazil, Q2 sales were up 12.9% at constant exchange rates. This resulted both from sustained plus 7.7% like-for-like growth as well as a solid contribution from openings with the full effect of last year's openings as well as the 9 new Atacadão stores opened in H1. It is worth noting that food inflation has been slowing since May in Brazil.

All our formats and businesses contributed to Brazil's solid performance. Atacadão's like-for-like growth improved sequentially to 7.6% in Q2 compared to 6.8% in Q1. In Q2, with 8% growth in like-for-like sales, Carrefour retail posted its best performance in the last 5 years, clearly outperforming the markets in a challenging consumption environment. This strong 8% increase was supported by several satisfactory achievements, of which the price repositioning of hypermarkets initiated in 2018, a good performance in convenience, food transition initiatives and strong e-commerce sales. At the same time, billings increased by a strong 28% in Q2 in our financial services business.

In Argentina, where like-for-like growth reached 50% in Q2, the transformational plans continues to bear fruits. Carrefour posted an improvement in traffic and volumes, and sales were also boosted by high food inflation in the country. At constant exchange rates, profitability was robust in Latin America, increasing by EUR 61 million in H1, plus 19%.

Recurring operating income reached EUR 368 million with an operating margin of 5.2% and was up both in Brazil and in Argentina.

Let's now turn to Asia. With the recent announcement of an agreement for the sale of Carrefour China, China has been reclassified as discontinued operations under IFRS 5. The Asia zone now corresponds to Carrefour Taiwan's activity. Q2 was marked by a return to like-for-like growth at plus 3% in Taiwan. H1 2019 sales increased plus 0.8% like-for-like.

Recurring operating income was up 8% at constant exchange rate. It reached EUR 41 million, reflecting an improvement of 23 basis points in operating margin at 4.2%.

After this geographic review, let's move down the consolidated P&L. Adjusted net income group share from continuing operations increased to EUR 179 million from EUR 135 million last year. This half was marked by a nonrecurring charge of EUR 593 million. This amount reflects the cost relating to the reorganization plans in the various countries for an amount of EUR 342 million as well as EUR 194 million of other nonrecurring items, mainly related to provisions for tax litigation in Brazil. Carrefour's net financial expenses decreased by EUR 18 million, thanks to the group's improved refinancing terms. The normalized tax rate of 33.4% decreased by 1 percentage point. This is principally due to a decrease in the corporate tax rate on banking activities in Brazil.

Net income from discontinued operations group share at minus EUR 26 million mainly includes China activity.

Let's now look at the free cash flow. In H1, the group posted an improvement in free cash flow adjusted for exceptional items and discontinued operations of plus EUR 282 million. The change in working capital requirements improved by EUR 143 million. Inventory reduction continued. Other working capital items benefited from the increase in purchasing volumes linked to more sustained activity than in H1 2018 as well as a positive calendar effect on trade payables.

Reported free cash flow is slightly down by minus EUR 43 million, notably impacted by significant exceptional cash-outs in this half linked to the reorganization plan in various countries. In the context of IFRS 16, we are also introducing a new line, net free cash flow after payment of operating leases and cost of debt.

In H1, we improved our inventory management and continued to be disciplined in our CapEx. In detail, inventories decreased by EUR 41 million at constant exchange rate and by EUR 72 million at current exchange rate. Investments continued to be benefit from selectivity and productivity measures and stood at EUR 628 million in H1 2019, excluding China. They increased by EUR 81 million compared to H1 2018, driven by the launch of new strategic projects, including new business concepts, digital and expansion of growth formats.

Net debt, including discontinued operations, was stable at EUR 5.9 billion at June 30, 2019. Excluding the foreign exchange impact of EUR 110 million, net financial debt decreased by EUR 122 million. Bear in mind that net financial debt will be positively impacted by the cash-in from the upcoming closing of the China divestments and the Cargo transaction.

I would like to focus on Carrefour's solid balance sheet and enhanced liquidity. This May, Carrefour issued bonds in the amount of EUR 500 million with an 8-year maturity. The success of this operation, largely oversubscribed, attests to the strong confidence of bond investors in Carrefour's signature. The maturity of the debt was extended to 3.9 years in June 2019.

In addition, Carrefour successfully amended and extended 2 credit facilities for a total amount of EUR 3.9 billion, incorporating an innovative Corporate Social Responsibility component. Carrefour Group does benefit from a solid balance sheet. This is an important asset in the context of the fast-changing food retail sector. At June 30, 2019, the group was rated Baa1 negative outlook by Moody's, and BBB stable outlook by Standard & Poor's.

On the back of these good results, the financial objectives of Carrefour 2022 plan are confirmed. You will find them detailed in our press release.

In summary, Carrefour posted an encouraging performance in the first half with growth in like-for-like sales, recurring operating income and free cash flow, excluding exceptional items. This performance reflects the solid execution of the Carrefour 2022 plan.

With this, I thank you for your attention, Alexandre and I are happy to take your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We have a first question from Cedric Lecasble from MainFirst.

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Cedric Lecasble, MainFirst Bank AG, Research Division - Research Analyst [2]

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I have 3 actually. So first one for Alexandre regarding consumer surveys and Net Promotor Scores. What do you see in your surveys? What has improved since you launched all the initiatives, since you are in charge? What is still to be done? What's the perception of the consumer in France, in particular?

The second question is linked to the progress in Spain and Italy in Q2. Could you elaborate a little bit, maybe to give us some color on what drove these better like-for-likes in Q2? Was it traffic, was it volume? Was it the number of items purchased? Maybe you can explain what's going on in these countries? And should we believe that this trajectory can be sustained in the second half?

And the third question is on cost, and on the one part of the purchasing synergies. Without being totally explicit, I imagine, maybe you could help us, tell us how much or how far you can go with your 2 partners. And what you can expect from the Tesco deal, which is -- which has been signed quite a time ago and it seems to be delivering quite slowly. Maybe you have more to say on this?

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Alexandre Bompard, Carrefour SA - Chairman & CEO [3]

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Thank you, Cedric. I will take the first and third. But if I speak about the customers, it can take all the -- over the call. But I will try to be quite quick. You're absolutely right. We have a clear focus, and I would even use the word obsession, on how the customer reacts to the Transformation Plan through all our initiatives. For doing that, of course, we use the Net Promoter Score very closely. We have tried also to modernize all the item of measuring the customer satisfaction. We have also integrated into the management remuneration this criteria of customer satisfaction. And when there is a good practice somewhere, example in Taiwan and in Argentina, we try to develop them, generalize in all the group.

So now to answer to the second part of your question is what we see -- what we clearly see is that our customers appreciate the fact, and understand the fact that we create new services with a better shopping experience, that we want to be their privileged retailer, which means to be capable to deliver all the services useful for them: delivery, Drive, pedestrian Drive, Click & Collect and so on. And clearly, we see in all our studies that our customers are aware of that. I would also say that our customer, according to all our surveys, have a clear understanding of the new mission. Our raison d'etre: transition, food for all. The Act for Food campaign is working very well. At the beginning, of course, there was a little bit of skepticism, which was completely normal, but we managed through a series of actions to deliver a concrete example on every field that I've mentioned before. That it is a clear mission, it is a clear ambition of all the group. So we clearly see that now we're well-positioned under (inaudible), the quality food for all. We clearly see that we are leading this battle. We clearly see that our customers are more and more aware of the fact that we create services linked to the omnichannels, and it is something, of course, which is brand new for our group. After, we still have many things to do. First and foremost, the quality of all the services. We also know that in spite of all the efforts we made for a year in terms of price competitiveness, we have still room to improve. We have invested a lot for 18 months in many ways to improve this price competitiveness, particularly in France. We have more attention to everyday low price and to loyalty schemes, but there's room to improve and to change the image for our customers. But I would say, when I look at the surveys, I'm quite impressed about the level of understanding, and I will say, addition of our customers.

On your third question about purchasing alliances. We were completely convinced that Carrefour needed to regain attractiveness and end its isolation when we joined the companies. That's why we have decided to partner with companies which are similar ambitions than us on many things, Tesco and Système.

Let's speak of the 2 partnership. The cooperation with Système involves processing negotiation with the biggest national and international brands. Gains started to become visible from March, when the annual round of supplier negotiation ended in France. And we would continue to think about this co-op particularly in direct processing. With Tesco, it's different. As you know, the alliance covers joint processor on products and goods not for resales as well as strategic relationships with global suppliers. We do think that the negotiations on the product categories with highest potential for Carrefour are gradually gaining momentum. We continue to be convinced that our combined customer base and joint expertise in private label represent great opportunity for both parties. So we're very confident that there will be more savings on processing going forward coming from these processing alliances. Matthieu, on the (inaudible) Q2?

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Matthieu Malige, Carrefour SA - CFO [4]

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Yes, I'm going to take your second question, Cedric, on Spain and Italy and the trend in Q2. Indeed, there's been better like-for-like in the quarter. Well, this was mainly driven by traffic. Well, as you know, it's very different situations in Spain and Italy. We think our operations in Spain are very solid. We have a very strong position in the country. We have, in the course of the first half, continued to deploy our key strategic actions, including digital, in fresh. We invested in prices, quality. We expanded the range of organic products and the range of private labels. As you know, a new management arrived in June. There is a very strong energy around this arrival. Well, I think, in Spain, looking forward, we need to continue to accelerate and to implement our strategic actions. This is the mission of the new team.

In Italy, as you know, we have a more challenger situation. New manager arrived at the end of 2018, a new plan was released in February. So this plan is being implemented, that includes significant price investments, notably around the Prezzo ribassato that we mentioned in the press release on more than 5,000 products. We are also launching the plan with new openings in supermarket, in express formats, also strengthening the e-commerce, reducing sales area in a number of hypermarkets. And we are also reorganizing the headquarter to gain efficiencies. So I think we -- in the 2 countries, looking forward, we need to keep working, keep implementing our strategic actions. We have a more positive trend in the quarter, clearly not a satisfactory trend with negative like-for-likes, so we need to keep working there.

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Operator [5]

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And your next question comes from Xavier Le Mené from Bank of America Merrill Lynch.

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Xavier Le Mené, BofA Merrill Lynch, Research Division - Head of European Food Retail Equity Research and Director [6]

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Two if I may. Can you give us a sense of where you are today? Last year you were talking about urgency -- your sense of urgency. You were investing more than what you were saving. So were you there -- can you tell us that you potentially expect to see some of the cost savings falling to the EBIT and the bottom line? So what is the kind of outlook we can expect for H2? And then in Europe, should we say that you've got a sense of urgency that you have last year in France? Are you investing more than your savings today? Can you also give us a bit of color there?

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Alexandre Bompard, Carrefour SA - Chairman & CEO [7]

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Yes, of course. As you know, we thought that last year France like-for-like was penalized at the beginning of the year because of the fact that we are behind the curve in a number of areas. So we have spoken about that many time. And last year, we decided to make France investments early in the Europe ahead of benefit of cost savings. This put results under pressure, but that was a decision because we were completely convinced that it was highly necessary on many formats, particularly to the supermarkets to invest. In H1, 2019, the situation is really different. We have begun this year in a far better position. We have decided to increase the level of -- the number of projects we deploy. We continue to invest in price competitiveness, on non-price competitiveness. As you know, on price competitiveness, with the new regulation, we have made a shift with less promotion, which enabled us to be less dependent on (inaudible), but more offensive on more clients loyalty scheme program, royalty channel. And we'll battle on price, unbeatable price for fresh products for PPC products. So we continue to invest in line with the cost cutting. So -- in the meantime, we continue, of course, to invest on all the main workshop. Of course, on the omnichannel organization, the change of the format, the innovation of the format, the reduction of the hypermarkets, we will continue to revamp hypermarket. So I would say that this year, thanks to the fact that our cost saving deliver results in France, for example, the headquarter plans, which make its effects sure in 2019, we have the capability to continue to invest in a very voluntary way in all the subjects, but in line -- or related to the cost saving cuts, which increase.

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Matthieu Malige, Carrefour SA - CFO [8]

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On Europe, as I said, I think, the performance was mixed, although the like-for-like improved in Q2 in almost all countries. Clearly, we're not where we want to be in a number of countries in terms of like-for-like trends. So that's -- the trend in the recurring operating income was down. Clearly there's been here also significant commercial investments. The trend in the markets were difficult and these commercial investments were mitigated by cost reduction. A good portion of the decline was driven by Italy, where you saw negative like-for-likes, and as I said, heavy investment to redynamize the business. The other geographies were more pluses and minuses.

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Operator [9]

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And next question comes from Arnaud Joly from Societe Generale.

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Arnaud Joly, Societe Generale Cross Asset Research - Equity Analyst [10]

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So I have 3 questions, please. The first one, can you please disclose some flavor on the first year results in terms of sales and profitability for your new concept in France or French hypermarkets. So in Saint-Etienne and Hesdin? My second question, have you started to regain some clients in your Western European countries? Do your royalty cards give you some evidence of this? And the last question, for France, you delivered minus 7.1% for non-food in the -- in Q2. Can you tell us what is the part of the decrease linked to the selling space reduction?

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Alexandre Bompard, Carrefour SA - Chairman & CEO [11]

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So I start with the first because I would disappoint you. I won't give you many elements coming from these new concept. As you know, as I'm sure was an Avenue, let's say, 3 or 4 months have always great news, but just to give you some elements -- some colors. What we see clearly is the fact that all the transformation leading the Hesdin hypermarkets to be better process, to be better organize, to streamline the organization. So we think about how we are organized have positive impact on our performance. So of course, we need time to clearly monitor generalized that, but we see a very interesting thing on that. On essential, it's brand new. It's really a revolution in the way it's been done. When you visit the store in avenue, you clearly understand that you are in a newer concept of stores. We have many things quite interesting for us to analyze, but it's to -- so we sent to give you some elements.

On the capability to attract new customers. I would say that the main battle on that is the capability to be the preferred retailer, which means have the capability to deliver all the services that the customers wants. And I think when you think like that and not only in terms of organization, but when you think about how can I be capable to offer to my customers the best ecosystem with delivery services, Click & Collect, picking point, Drive and so on and so on and work on that, you have the capability to increase the number of your customers in the omnichannel model. That's why we have -- we have invested and continue to invest on the digital proposal. That's what we work on the single web, that's why we work with all these services, and we clearly see that we are now capable to have a certain number of customers coming back or coming for the first time because we offer all these services. Of course, it's not the only way. The loyalty program is really key. When we decided to launch just under the (inaudible), the first omnichannel loyalty program, that was something very, very important for us. And it's the first time there is a loyalty program widespread in the group on the product grounds, and we clearly see also that it creates a more faithful from our customers. We have this new policy of Carrefour, we see that we are less dependent on (inaudible) and people just coming from promotion. But more faithful with loyalty program and unbeatable prices and retail price and so on. So when you gather all these type of actions, the capability, and I'm speaking for France, but we have almost the same policy, commercial policy in the different geographies, associated also with our obsession with put transition for organic veggie and so on and so on. We clearly see that we have the capability to increase the number of customers.

One additional work on your last question, which, I think, is nonfood. As you know, we are absolutely determined to build the good model for hypermarket. For that, we know that the good model for hypermarket and for our customers need to make some choice, need to change the way on the size of our hypermarket. So we have decided to reduce the size of the hypermarket, to close underproductive sales area, to stop a certain number of activities, to reduce the assortment of nonfood categories, but we have an objective improve the customer experience. So of course, at the beginning, there's a slight effect on the sales of the nonfood categories, but we're absolutely aware, absolutely convinced considering all the customer satisfaction surveys we lead that we're in the right direction, reduced, create a new atmosphere, create a more attractive food offer, reduce the size of the hypermarket. So of course, nonfood -- on the figures of nonfood affected above all by the reduction of the size on the [size] of certain number of activities.

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Operator [12]

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Next question comes from Bruno Monteyne from Bernstein.

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Bruno Monteyne, Sanford C. Bernstein & Co., LLC., Research Division - Senior Analyst [13]

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Three for me, please. Last year you mentioned that operational deleveraging was part of the reason why you still had profit decline in the second half in France. Would you argue that today, your like-for-like in France is strong enough to stop that negative operating leverage? Or how much more like-for-like improvement would you need to see in France, especially the hypermarket, to stop that drag on profitability? And my second question is, if I go back to something you said on the previous questions, whereas you said you'll continue to invest in prices and services at the same level you save in cost. You are implicitly saying that there will be still limited drop-to from your cost savings to margin improvement. By the end of the year, you will have had not nearly most of your cost savings, EUR 2 billion out of the EUR 2.6 billion, so are you therefore implicitly saying the amount of medium term margin recovery in the business is rather limited given how little of the cost savings are falling between the bottom line and [I believe] in the second half. And my last question is somewhere in the note it talks about the price investments on the 500 FMCG product, the fast-selling consumer products in France. Is that quite a material investment and therefore, should we expect the second half in terms of the price investments in France to be quite different from the first half?

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Alexandre Bompard, Carrefour SA - Chairman & CEO [14]

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So I think the word on your 2 -- first 2 question, and because it's quite the same. You're right. Last year our -- we decided to make upfront investment in France early in the year, right of benefits from the cost savings on the goods are ready to work results under pressure. In H1, we are able to stabilize and even slightly increase recurring operating income in France despite heavy investments in the period in the situation of the negative operating leverage. For us typically, it's a clear achievement after 4 consecutive years of decline of the performance in France. Regarding H2 expectation, it's too early to comment. But as you know, it's not our policy to provide guidance in an environment which remains very volatile. Where we continue to invest? Where we continue to revamp hypermarkets, invest in price with the different mechanism that we have created in the first semester, also continue, of course, to invest in nonprice competitiveness. All these initiatives and it's the answer to your second questions. And then objective and they are necessary to return to a sustainable pace of growth. We have these objectives. We want a sustainable like-for-like growth. And for that, we continue to invest. We invest in many fields; in the same time, we have strict financial discipline because it's compulsory to be capable, not only to have like-for-like growth, but sustainable like-for-like growth and that's the model we are creating in some geography, and of course, in France. Even if we know that in France, we were behind the curve more than the other geographies, and of course, it's not exactly the same situation in other countries. Matthieu, on the last question?

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Matthieu Malige, Carrefour SA - CFO [15]

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On the last question, it's, I think we've been quite clear since the launch of the plan that's the price investments would be wave after wave. So there was a number of initiatives last year. There are new initiatives. We've mentioned them in the call tonight, including the 500 FMCG unbeatable products. So clearly, they will have a full semester impact in H2. Well, there are other savings also coming, there are other investments that were made last year. So well, it's really a continuous process of small waves after small wave, which, at the end, will contribute to reinforcing the attractiveness of our formats. And these price investments, obviously, are made in prior to the nonprice investments that Alexandre mentioned.

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Operator [16]

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Next question comes from Carole Madjo from Exane BNP Paribas.

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Carole Gladys Madjo, Exane BNP Paribas, Research Division - Research Analyst [17]

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Few questions for me. First of all, going back to France, you haven't talked about the partnership with Smeg [D'Arcy] for a while. Could you maybe give us some update on the trends that you've seen there on those stores? And the second one on the regulatory change in France following the (inaudible). So did you see any positive impact in your margins in H1? And the last question, in other Europe, so in Italy, should we expect a similar price investment again in H2?

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Alexandre Bompard, Carrefour SA - Chairman & CEO [18]

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Thank you. First question on Smeg [D'Arcy]. As you know, we develop to shop-in-shop past since the end of last year, and we open a store, I think, end of November or beginning of December. It's a very interesting test for us. It's something that drive customer satisfaction. We still have, of course, many improvements to operate because it's a different proposal than what we were doing before. We work very closely with Smeg D'Arcy teams in order to have the best proposals for our customers. We improve the performance or so. But it is something for us very positive for the moment, and we continue to believe that a certain number of categories could particularly possess. It's very interesting for us to be capable to partner with the best.

One word about Asia, of course, which is the new regulation system. As you know, the low now 4 months of existence and you know, of course, the [feel of the field of] Low was to make sure that some value flows to producers. And we have to keep on this philosophy, and we have fine agreements to evalue the price of the certain number of products. Milk, for example, or meat for producers. But when you consider, when you analyze the consequence on the price, the situation is the following one. There's no real inflationary impact of the Slow, globally speaking. There's no inflation in food linked to the Slow. There are a certain number of products that have increased the price of AGI products, but the price of some other private label has increased in the meantime. So no inflationary impact. But inside this stability, we clearly see that there are less promotion or fewer promotions going to focus on everyday low price and better attractiveness of loyalties came for grants. It means that, of course, it's a big change in the place of these different tools. France is very positive because you probably you remember when I present the plan in 2018, I say that we need long-term commercial strategy, we need to be more focused on loyalty to limit the term and to create more fiscal from our customers. We need to play the battle of everyday low price. And this new regulation law accompanies the choice we have made to modify the place of the different tools of commercial policy.

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Matthieu Malige, Carrefour SA - CFO [19]

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Italy. On Italy and the -- I think the -- as far as the price investments, and you're asking about H2. I think, we're quite clear and that was part of my previous answer to Bruno's question. We made price investments then we just increase them because we need to reinforce the attractiveness of all of our formats. So the plan that was disclosed in Italy is very comprehensive. It includes price investments. It also include some cost savings. You saw that in number of reorganizations were launched up to a maximum of 590 FTEs. So a number of cost initiatives, but clearly as far as the price investments, they would continue in the country.

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Operator [20]

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Next question comes from Maxime Mallet from Deutsche Bank.

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Maxime Mallet, Deutsche Bank AG, Research Division - Research Analyst [21]

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I have 3 left, actually. The first one was we should get to the shape of Q2 which was a market that is showing June being stronger, I just wanted to confirm that you saw trends through the quarter with an improvement of the consumer environment in France, but also in Europe notably in June. And therefore, like the context right now and the sales growth you're seeing right now is above what you've seen basically over Q2.

The second one is coming back on the margin in Europe and the weakness that you saw in H1. Is it fair to assume that you generated this growth you're seeing out of cost saving in H1 this year versus H1 last year? Is fair to assume that the geographical split of this cost saving was certainly more skewed towards France, which would explain why France improved but Europe weakened? And you saw -- do you expect that this kind of geographical split for the cost saving will be roughly the same for the rest of the year?

And the last one, I think last year, at this time of the year, you commented on the conference, just expectation for the full year. I see that Bloomberg cost saving, EUR 2.1 billion of EBIT for you. Do you feel comfortable with this level?

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Alexandre Bompard, Carrefour SA - Chairman & CEO [22]

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First question, we have not noticed a particular change of macro-economy in the second quarter. The only thing we have been capable is to improve our own performance, which lead to the 3.9% of growth compared to the 3.2% at the first quarter. So no commentary on the macro.

On the -- what was it? The amount?

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Maxime Mallet, Deutsche Bank AG, Research Division - Research Analyst [23]

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The amount.

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Alexandre Bompard, Carrefour SA - Chairman & CEO [24]

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Yes, you're absolutely right on the cost. France is today stronger in proportion than it was last year. We told you last year that, of course, it took more time in France due to social process, due to the size of the country and so on to deliver. Now of course, we are at a good pace. So you are absolutely right. The pace on the proportion of the cost saving in France is far stronger than it was last year.

Considering the pace of the cost saving, as you know, of course, by half, we have decided to increase our target for 2020 to EUR 2.8 billion, EUR 2.6 billion, excluding China. We are perfectly aligned with this objective with EUR 1.4 billion already reached today. We are at a good pace, very satisfying with the fact that this new culture, this new discipline on the cost is widespread everywhere and that effort to deliver this level of performance, and we are confident about our capability to continue on that.

On the consensus, no real chance. As you know, it's not our policy to command the consensus or provide guidance given the volatile environment. Macro-economy remains very volatile. Just as a reminder, I was thinking about that just before coming. Over the last 18 months, we have had the social context troubled, yellow vest, for example, in France; instable political contest in Italy, Belgium, Brazil; ForEx, volatile; global instability in the world; Brazil with macroeconomic environment inflation and deflation; even inflation in Argentina and a new regulation, very important, in France with the EGR. So I think it's quite responsible to consider that given this volatile environment, commanding the consensus is not absolutely the good answer. So that's the answer.

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Maxime Mallet, Deutsche Bank AG, Research Division - Research Analyst [25]

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Okay. Just on H2 cost savings. The only thing I want you to confirm is that you expect most of the cost saving again to come from France?

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Matthieu Malige, Carrefour SA - CFO [26]

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Well, we were not -- we're not being very detailed on the split and the contribution that, as Alexandre said, there's been a number of actions that took time to materialize in the number. We now have the right pace. It's -- there is momentum in these dynamics. So the positive dynamics in France will continue in H2.

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Operator [27]

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Next question comes from Sreedhar Mahamkali from Macquarie.

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Sreedhar Mahamkali, Macquarie Research - Analyst [28]

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Three questions as well, please. Just to go back to France. Perhaps same sort of thinking as Bruno's, but maybe slightly differently asked. I'll try. Again, I appreciate lots of moving parts within France, but would I be right in interpreting your commentary and confidence that -- especially in terms of purchasing alliances contribution coming through -- only through halfway in the first half to build in the second half. Is that then all kind of leading us to think profit growth in France can accelerate in the second half versus 5% in the first half? Is that a fair conclusion? That's the first question.

Second one, in terms of Tesco partnership. Are you able to give us a sense of magnitude how much are you buying together? I think Tesco has given us a couple of numbers in terms of on-brand buying and goods not for resale, et cetera. Are you able to share your numbers in terms of what is the size of buy? If not, can you tell us what percent of combined by both in terms of private label and goods not for resale? Have you already sort of attacked so far? Second one.

And the last one is just in terms of thinking about the scope of the business, following your sale of majority stake in China. Do you believe presence in Taiwan still makes sense from a management standpoint of view? Do you still see that you need to remain in Taiwan? Those are the 3 questions.

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Matthieu Malige, Carrefour SA - CFO [29]

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Thank you, Sreedhar, for your questions. Well, on France, as you can imagine, we're not going to guide you on H2, except being very clear about what we're doing and what we're going to be doing in H2.

As I answered to Maxime, we have the dynamics of cost savings. We also have the dynamics of investments, price and non-price. We discussed that.

As far as like-for-likes, we are still not where we are -- where our ambitions stand for our like-for-like in France so we're going to keep the investing to enforce the attractiveness of our banners in H2.

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Alexandre Bompard, Carrefour SA - Chairman & CEO [30]

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Considering partnership with Tesco, as you know, it covers joint processing of own products, own goods not for resale as well as strategic relationships with global suppliers. We consider that our combined customer base on joining spec is in private label, and particularly considering the level of expertise of Tesco will present a great opportunity for both parties. Of course, each company will continue to work with suppliers, partners at a local and national level.

Given the size of the group, it's fair to assume that for some categories, volume covered by common negotiation will evolve strongly, can even double. And it's worth noting that both businesses will continue to work with small innovative suppliers and local farmers in order to serve our customer better.

Considering Taiwan, the operation in China has no impact at all about Taiwan. There was not a lot -- not to say more synergies between the 2 geographies. We are very satisfied with our position in Taiwan, very satisfied with the fact that Transformation Plan is working very well. The customers' satisfaction is increasing very quickly, and we continue to believe in our potential in this country, and it's, for us, a very interesting country in the future.

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Sreedhar Mahamkali, Macquarie Research - Analyst [31]

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So quickly coming back, if I can, on Tesco partnership. Tesco has talked about potentially collaborating on nonfood sourcing as well. Have you got any thoughts? Is that something you guys looked at already? Any thoughts there, please?

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Alexandre Bompard, Carrefour SA - Chairman & CEO [32]

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Sorry, Sreedhar. Can you repeat that? The line was...

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Sreedhar Mahamkali, Macquarie Research - Analyst [33]

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Potentially extending the collaborating with Tesco to sourcing nonfood. Can you talk about that if you have any thoughts on that?

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Alexandre Bompard, Carrefour SA - Chairman & CEO [34]

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Well, as we said, it's the first step. So we're happy to have the partnership. Things are progressing so I think we already have some stuff on the table with the scope that we have today. So we're going to be progressing on these aspects first.

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Operator [35]

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Next question come from Andrew Porteous from HSBC.

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Andrew Ian Porteous, HSBC, Research Division - Analyst, European Retail [36]

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Couple of questions for me, if I may. Just on your like-for-like. You've done sort of roughly 3% like-for-like again in France on the food side of the business. But obviously, you're putting -- it sounds like you're putting a lot of deflation to yourselves' line through price investments. And could you perhaps talk about where volume is relative to that 2%? Are we talking about a meaningfully higher number?

And then if I think about back to last year. I think when you were talking about elasticity is where you were doing price investments. They were a little bit on the low side and I just wondered whether where you're investing in price, are you seeing a good consumer response for those price investments?

And then the last question I had was on free cash flow. I mean, you've done the EUR 282 million improvement in H1 underlying free cash flow. I appreciate there's some timing impact in that, but could you give us an idea on how that might develop for the full year? Would you expect to see a similar improvement? Obviously there's more improvement in H2 in free cash flow.

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Alexandre Bompard, Carrefour SA - Chairman & CEO [37]

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Thank you, Andrew. Well, you're right on the food side that there is a little bit of self-inflicted deflation due to the price investments. It's hard to quantify that. As you understand, it's very competitive information.

In terms of -- and the relation with the elasticity, we still feel that we need to invest. We've made substantial investments in this very semester so they are recently recent. They are quite recent, even the 500 unbeatable FMCG products. They're just a few weeks old. So I think we need to give it more time, but we're clearly in a phase where we think we still have a room to grow. We have a number of ideas, as we shared, new innovations, new initiatives, rollout of the existing ones. So we still -- we have a lot to go to keep reinforcing the attractiveness of our business.

As far as the free cash flow, I'm not going to give you a number, but what is clear is that there's a number of initiatives that contribute to a healthy cash generation which are fundamental and structural initiatives that we're putting in the business. Obviously, inventory reduction is something we're very attached to. We decreased inventories in '17, in '18 and here again in H1, so we'll keep putting pressure on that.

As far as CapEx is concerned, the -- we were very satisfied. You remember when we disclosed our full year numbers for 2018 about the success of the selectivity and productivity measures that we had implemented. We're going to keep implementing that. That's allowed us to have a little more room for extra projects. This is the sense of the slight increase in CapEx in H1. So well, all this is under control and it would remain under control for the -- in the second half.

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Operator [38]

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The last question comes from Nick Coulter from Citi.

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Nick Coulter, Citigroup Inc, Research Division - Director [39]

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Just to follow up on Mr. Porteous' very good questions, if I may. Are you able to comment whether you are volume positive in food for France, and specifically in your French hypers, please. That would be the first question. Then secondly following up on the free cash flow question and on the non-recurring expenses, I think of EUR 593 million and the cash impact of EUR 269 million. Would it be possible to get a sense for the full year, please? And whether the difference to an expense and cash is timing or whether that's due to the nature of the exceptionals. And then finally, have you seen any sort of competitive response to the 500 FMCG focus SKUs, particularly from those competitors that you have that do focus on FMCG prices?

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Alexandre Bompard, Carrefour SA - Chairman & CEO [40]

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Well, on the volume -- thank you, Nick. On the volume aspect, well, it's hard to answer. It's very sensitive datas. It could be extrapolate to understand what would be the magnitude of the price investments we're putting into the business. So it's hard to answer to that.

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Nick Coulter, Citigroup Inc, Research Division - Director [41]

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Or can you comment on categories then. Can you comment on whether you're positive in fresh food as an overall category? Then I'll say it wouldn't be commercial. I'm just trying to get a sense of your starting point for the initiatives that you continue to execute.

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Alexandre Bompard, Carrefour SA - Chairman & CEO [42]

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Well, we're not going to take that one. It's -- French hypers, very sensitive. I think we're quite clear with what we're implementing into the business. Coming on your second question relating to the exceptionals. Obviously, there is a time lag when you book the provision in the P&L. So the EUR 593 million that you were referring to relate to decisions and actions which were launched in the course of this first half. Most of the cash out was relating to actions that were launched in the course of 2018. So there's a 6 to 12 months lag. It obviously depends on the nature of the exceptionals. Inside the EUR 593 million, we have I think disclosed what relates to some restructuring and organization change. So these at some point will have a cash impact. When it comes to provision on tax credits in Brazil in relation to the decisions of the Supreme Court, it's more an accounting aspect and so there is to be no cash impact of that in the near future.

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Nick Coulter, Citigroup Inc, Research Division - Director [43]

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Okay. That's helpful. And then on the competitive response?

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Alexandre Bompard, Carrefour SA - Chairman & CEO [44]

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Can you repeat the question, please?

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Nick Coulter, Citigroup Inc, Research Division - Director [45]

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So just on the 500 FMCG lines that you've focused on. Have you seen any competitive response, particularly from those competitors that are all very focused on meeting their offer with the competitiveness of FMCG prices? Have you seen any reaction?

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Alexandre Bompard, Carrefour SA - Chairman & CEO [46]

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We try not to comment too precisely what we see and what we do on these type of figures because it's very important informations, of course. What we do know and do feel since the new regulation law enter that we are clearly the price maker. It doesn't mean of course that we are the low -- price the lowest, but we are the price maker in terms of initiatives. Just a few days after the law in France, we develop the loyalty schemes omnichannel. We have decided 1 month after to launch the 10 Unbeatable price on first products. 1 month after, we decided to continue with the 500 FMCG products. Which is very interesting is that probably in the past, our competitors, particularly the independent players, didn't spend too much time watching our commercial policy. Now, we clearly see that this is the case. And I think it's a good match to the fact that the team work in innovative and volatile way on the commercial policy.

Thank you very much to all of you. Have a good holidays for the one who take holidays. Bye-bye.

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Matthieu Malige, Carrefour SA - CFO [47]

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Goodbye.

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Operator [48]

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Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.