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Edited Transcript of CA.PA earnings conference call or presentation 28-Feb-19 9:30am GMT

Full Year 2018 Carrefour SA Earnings Call

Levallois Perret Mar 6, 2019 (Thomson StreetEvents) -- Edited Transcript of Carrefour SA earnings conference call or presentation Thursday, February 28, 2019 at 9:30:00am 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

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Conference Call Participants

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* Fabienne Caron

Kepler Cheuvreux, Research Division - Head of Food Retail Sector

* Maxime Mallet

Deutsche Bank AG, Research Division - Research Analyst

* Nicolas Champ

Barclays Bank PLC, Research Division - Director

* Sreedhar Mahamkali

Macquarie Research - Analyst

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Presentation

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Alexandre Bompard, Carrefour SA - Chairman & CEO [1]

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Good morning, ladies and gentlemen. I am delighted to welcome you to Massy this morning. As you know, since the beginning of this year, it is the new Head Office for the group and for France Carrefour. I would like to initially share with you a few messages on the past year and I will show you and talk about the prospects we have for next year. Then Matthieu Malige will give you more details about our financial performance and then together, we will answer your questions.

A few -- couple -- a few words about last year, 2018, which was a key year for our transformation plan called Carrefour 2022. As you know, any transformation process, we started last January, is demanding. It did have an impact on all our businesses, all our processes and it did put into movement all our geographies deeply.

A year ago, one could be entitled to doubt the ability of Carrefour to face up to such a challenge. 1 year after, it is a fact that Carrefour has been able to call into question a lot of fundamentals to pursue a large range of structuring actions and to start moving. You will remember that we did set for ourselves 2 large ambitions by 2022 to become the omnichannel reference for our customers and to be the growing leaders for food transition. To achieve that, we have 1 demand, to make our economic model more healthy.

I had the opportunity a month ago to share with you the results for 2018, I am not going to return to that. I'd like to share with you 3 main objectives that we've been able to achieve in to the last year.

The first 1 on food transition, we did preempt a leading position, a promising position a year ago when we did set ourselves the objective to become the world leader for food transition for all. It was only 1 ambition and in under 1 year, we've been able to take into stride this objective across the world. First of all, Act for Food was the first time that a retailer has committed across the world a global campaign towards food quality. Everywhere across the world and across our stores online, our customers have understood and perceived that Carrefour was leading a new battle. Each country has taken 20 commitments to privilege the French organic products to get rid of antibiotic treatment and pesticides. And now we are present on all future topics beyond food offering to cut out food waste, plastic packaging and also for animal welfare.

Under a period of 1 year, we have led a major change for our leading brand name on all these topics. It is the sign that our topics have taken into stride this ambition and been successful to transform them into concrete results. A year ago, we were not in the race for e-commerce. We did not have the right culture, we did not have the tools, nor the ambition and we were lagging behind. Today, we are with the best ones, Tencent and Google, and we are gained a new presence, a new face in the eyes of our customers, simplified against last year.

More straightforward with food merchant sites which are unique in all our countries, according to the Carrefour FR model, we have distributed our delivery services, revamped the Express delivery, Drive pedestrian Drive, Click & Collect. We have created a new infrastructure for e-commerce which is competitive with the new logistic tools, leading or leading-edge tools, which can now support our ambition. This new infrastructure is the platform for our omnichannel universe and our customers are surfing smoothly between our stores and online. And we have already the first initial results, which are very encouraging and we registered on record this year, a growth of over 30% in our food e-commerce across the world in line with our ambitions. And I know we had doubts about our ambitions to save on costs. And I'd like to give you 2 figures to illustrate, that we have been up to our ambitions, to meet ambitions EUR 1,050,000 of savings have been achieved and the amount of investment is up to EUR 1.6 billion. These results are connected and are due to the introduction of a demanding financial discipline and operational culture in terms of efficiency on our cost. And in terms of investments, we have already operated and engaged fundamental revamping for the group Carrefour.

Three voluntary departure plans for our head office in France, Belgium, Argentina and we have cut out major losses with the closing of 273 former DIA stores in France. These efforts have led us to reinvest on our competitivity prices in France. We invested into supermarkets on our catalogs, hypermarkets catalogs and our own brand. And this momentum has been sped up during the second semester with a like-for-like of plus 2% against 0.7% during the first semester in 2018 and 1.4% of growth in 2017.

Our operational result has increased 4.6%, that is EUR 93 million with LFL against 2017. And we've already improved our situation for the free cash flow of 15% against last year, that's EUR 1.088 billion against EUR 950 million in 2017. Our ambition for 2017, let's talk about ambition is to deepen this momentum acting on our commercial policy of formats and efficiency.

First of all, this year we have decided to have an offensive policy, commercial policy with a clear choice to help people get their purchasing power up and to improve food quality.

Purchasing power in France. As you have seen it, we wanted to support our customers upfront based on the food law in France. We have created as of February 1, the right systems -- the right promotion systems on 200 products of leading brands concerned by the new thresholds to avoid selling with a loss. We have been able to launch our loyalty system for about 10,000 products under the Carrefour brand. It is the first time that we suggest a loyalty program that is so powerful, multiformat, leading loyalty program, thanks to which our customers, encouraged to surf between our physical stores and online. The second sign of our focus on the purchasing power is to develop dedicated formats at the -- for the lowest prices. A few other examples, we are going to increase the imprint of pedestrian drives which bring the prices of all of our markets into downtown areas, mainly for large families or for students who have tight budgets. We are the leaders of that city format. And we are going to continuing developing at a high rate in 2019.

We are going to deepen our discount offer in the areas where our customers are poor. It is the object of the Hypereconomica in Brazil, for Maxi hypermarkets [escan] in Argentina and we are going to launch this year new test in France. Finally we're going to continue developing these outlets for the nonfood discount in our hypermarkets in France. And with about 10 launches in France in 2019.

We've set the ambition to achieve 1/3 of our turnover with the Carrefour brand by 2022. And Carrefour brand is going to be strongly revamped towards food quality with 1,500 new products are rehandled or reviewed in 2019. By the end of this year, we will have 1,000 Carrefour pure products, organic products and the range Carrefour Végé, that will provide and will offer twice -- 2x more SKUs. We've decided also to convert all our Carrefour baby products to organic baby products by the end of this year.

Finally, Carrefour has built, over the last 30 years, tight relationship with over 25,000 producers across the world, of which 20,000 in France and those are what we call the Carrefour quality businesses today. Our 560 businesses represent almost EUR 1 billion in turnover at group level. We are the only retailer that has been able to establish a firm community that is so broad, so large and to support it over time, it is our responsibility to carry on the development of our businesses by helping them to convert to organic by guaranteeing a better pay for their products on the market in response for the high quality of their products, and by giving them access and funding to new technologies such as blockchain.

Secondly in 2019, we will adapt our format to the expectations of our customers. A couple of words on our hypermarkets or superstores in France. Hypermarket is the relevant answer to the concerns of our customers in terms of purchasing power. That's why we have presented to our social partners, trade unions recent transformation plans over the last few days in France and Italy. As you probably know, the concept of everything under 1 roof is not over. Simply, it is not the same roof as before, not the same everything as before. First of all, it's not the same roof, the physical roof of the store must be cut and decreased for customers go shopping faster. That's why we've decided to pick up the reduction of 100,000 square meters in France down to 400,000 square meters by 2022 at group level.

Where the surface of stores is cut, the reach of the scope of stores must grow at the same time to win new customers. It is the objective of opening and expansion of Drive stores and opening of pedestrian Drive, but also the development of home deliveries from super -- from hypermarkets and Click & Collect with collection within 2 hours. It is also the objective to expand for Sunday shopping with over 160 hypermarkets open on a Sunday morning by the end of 2019.

Eventually and later on, it is not the same everything. We have, at the same time, relevant offers for which we are more able to carry out our objective -- more relevant objectives with new missions, everything because it does not mean too much. We are going to increase our objective to cut out assortment to minus 15%, 5 points more than the 10% we have initially planned by 2020.

And by everything that has to be more relevant. Yes, it has to be more relevant. We are ready to stop totally some categories for which, for which SKUs, we're not up to the task like a jury. We're going to concentrate our food offering in order to better meet the expectations of our customers in terms of organic, in terms of bulk, and of course, in fresh food products, of course, to speed up the ready-to-eat and for in-store restoration and food. We are also developing better services, which are easier to use. We are creating service centers, which are going to regroup merchandising services, we are going to have more bank services, insurance, companies but also all services that generate better flow.

Secondly, on growing formats. As you probably know, cash & carry in Latin America and proximity stores are 2 very interesting formats to win more customers for the group. Our results in 2018 confirmed that the sales of Atacadao in Brazil have overpassed our objective by increasing by over 10% this year. The results of last year we are going to carry on our expansion at the same speed with 20 opening of Atacadao in 2019 and in 2021.

In terms of proximity, we have 3 main objectives. We are going to increase our expansion target to 3,000 opening of stores, proximity stores by 2022 against 2,000 that we have planned in the plan. We are going to strengthen our differentiation with innovations of formats and we're going to launch new formats in 2019, namely on the ready-to-eat or ready consume segment. We are going to increase the development of our specialized or dedicated formats, Carrefour BIO, Carrefour organic and I hope very often So.bio as well as the internationalization of our digital offer with Greenweez and Planet Huerto.

Second -- third point, along our formats and ambitions, the customer is going to be at the very center of our multiformat concern. As you probably know, our Transformation Plan had 1 ambition, to bring back the customer at the core of our business. It is not just pure saying or formula, it has become our main objective out in this year. We have the global plan to increase the satisfaction of our customers, this works very well already in Argentina.

It is an approach that I want to support very strongly, that's why I've already launched a new objective in terms of in-house cultural transformation to bring back customers at the core of our objective at the center, and to reevaluate, to revamp our processes. The last major trend for this year, we want to carry on our operation -- healthy operations for our operating model.

Given the momentum that has been started, we are going to increase significantly our target to save money from EUR 2 billion to EUR 2.8 billion this year -- full year by 2020 setting. To reach this objective, we are going to carry on the rationalization movement of our purchases, our non-merchant purchases at the central level in 2018. And to strengthen the mutualization between countries, we're going to use this system in 2019, thanks to the various alliances -- range of alliances who have common or joint purchases that we have already built in 2018.

Within suitability, together with Tesco in France with U and Fnac Darty, in Belgium with Provera and Italy with PAM and VéGé. Eventually in Italy, just like in France, we have carried out efficiency objectives, operational efficiency in certain stores and multipurpose modernization for many different organizations. You did clearly understand, we are fully satisfied with what we have achieved this year.

The momentum with the transformation of our group and the degree of trust for all the projects that we have already started will be carried out further in 2019, and will lead us to revise several KPIs of our plan. According to of our 15% instead of 10% of assortment decrease at group level by 2020, also our commercial model will be reviewed over 3,000 proximity stores will be opened in the world by 2022. 1000 more than the target. A lot remains to be done but we have many -- a lot of ambitions, very precise ambitions and there is a method, which is giving proof and emerging, showing it is working and efficient. We are fully aware that beyond Carrefour, we are carrying a very powerful model, a leading project for our entire business, our entire industry. This transformation is both fascinating and demanding. It is a real passion for us.

Thank you very much for listening. And let me turn the floor to Matthieu Malige.

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Matthieu Malige, Carrefour SA - CFO [2]

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(foreign language) . Thank you, Alexandre. Ladies and gentlemen, good morning. I would like to start with a presentation of the highlights of the financial performance of the group in 2018. In a nutshell, the results for 2018 are satisfactory for this first year of the plan, as you know. The consolidated revenue is up by 1.4% in -- on the comparable basis. The second semester saw a speed up of growth, which reflects a sales trajectory which improved itself over the tax year. For 2018, the like for like is in line with the one of 2018 (sic) [2017]. The reconquest initiatives were set up throughout the year and Carrefour finishes 2018 with a commercial offer, which is more attractive than in 2017.

The ROI reached EUR 1.9 billion after the norm IAS 29, the ROI is at EUR 1.938 billion, up by 4.6% or plus EUR 93 million with a constant exchange rate compared to 2017. This is in line with the forecast estimated on the 22nd of January last.

After 2 years of decrease, this increase of the ROI is positive, it reflects investments to recover our attractiveness in competitive markets, and besides there are cost reduction initiatives by EUR 1.5 billion.

Our net results are at EUR 802 million, our adjusted net income, which is versus EUR 773 million. The cash flow is up by 15% to EUR 1,088 million which shows the decrease of stockpiles and good management of investments, thanks to a better selection and productiveness. As you see, these figures reflect the deep changes within the group.

Let's now detail the revenues of 2018. Consolidated revenue is at -- is up by 2.5% with a constant exchange rate, plus 1.4% with comparable basis. This is due to the strong growth in Latin America with growth at 8%. We have a positive effect of 1.4% linked to the expansion in growth formats and the Cash & Carry.

Now the closings and transfers of stores saw a logic of optimization, and this impacted our revenues by 0.81%. The very negative exchange rate impacted us by minus 5.3% on our revenues. And so you can see the detail of the evolution of currencies where we operate. As you can see, the Brazilian real and the Argentinian peso dropped strongly, which impacted of course our P&L in euros. There was a negative impact, minus EUR 161 million on our ROI for 2018 compared to 2017.

Now let's look at the top of our P&L. ROI, as I said a minute ago, is at EUR 1.8 billion. Stabilization of operational margin is at 2.5%, reflects a decrease of the sales margin and an improvement of our distribution costs. Sales margin is down by 23.1% and 25.2%, considering the mix of franchises and in sales investments made by Carrefour on very competitive markets.

Distribution costs represent 18% of our revenue against 18.6% in 2017. This improvement reflects the reduction -- cost reduction measures and the operational efficiency of the group. Carrefour committed to an ambitious program of cost reduction in all its geographies. EUR 1.5 billion was saved in 2018.

A detail now. Carrefour benefited the first gains of the massification of procurement within the group and negotiations -- more efficient negotiations. Besides in 2018, with the transformation plan, Carrefour has considerably simplified its organization to make it more agile. The group has also decided to go for a more industrialized and efficient policy for all of its operational policies, non merchant and merchant procurement. This means an improvement in our overheads ratio. The dynamics enables us to bring our ambition for cost reduction to EUR 2.2 billion when the initial program was EUR 2 billion.

Now restructuring initiatives are well underway in many countries. In 2018, Carrefour set up that number of voluntary departure schemes; 1,000 people in Argentina, for instance. The DIA stores also left the group and this enabled us to improve our results. Savings will be materialized in our accounts in 2019 with the full year effect.

Let's look at the performance by geography. And let's start with France. In a very tough and disruptive market with social movements, our revenues are stable. Our ROI is at EUR 476 million, an operational margin of 1.3%, down by 62 basis points compared to the margin published in 2017. A reminder, the operational margin was down in identical proportions in the first semester. Moreover, this decrease over the year have been anticipated fairly soon and was already the object of comments as of July last.

Analysis now. France, its ROI is impacted by revenues that are still sluggish at 3.2% of like-for-like. Then investments in our sales suggestion offer were made and carried on during the second semester. This concerned investments in supermarkets, in the national brands and in our own brands. These investments have also to do with a more attractive e-commerce offer with a unique website, carrefour.fr, and the opening in -- of 169 new Drives, pedestrian Drives also. And order preparation centers. The campaign Act for Food was very visible and positioned Carrefour as a leader of a food transition.

Alongside these sales investments, a strong cost reduction policy was implemented. It will take more time in France to pay up because of the agenda of the voluntary departures and transfers because of the size of the organization in France. And then the yellow vest movements have strongly disrupted our activities towards the end of the year, especially for nonfood and hypermarkets.

Let's note that in 2018, Carrefour has still not reaped benefits from its partnerships with Système U and Tesco. The first benefits of these partnerships are expected as of 2019.

Europe now. Revenues down by 1.6% on a comparable basis in a very competitive environment. But we still have a very solid commercial performance in Poland and Romania, while in Western Europe, Spain, Belgium, Italy, these countries have a negative like-for-like.

Overall, in Europe, the cost reduction dynamics enabled us to make up for this situation. ROI is at EUR 646 million, a stable operational margin at 3.2%. In Lat Am, Brazil, strong growth in Brazil thanks to the performance of the stores, but also with the growth model with Atacadao.

Carrefour Retail, good progress, thanks to the commercial initiatives in hypermarkets, supermarkets, markets and convenience stores. Alongside, e-commerce is also making strong progress. Let's note the very good performance of financial services with the continuous success of the Atacadao card associated with a good management of credit risk.

In Argentina, the success of this commercial reconquest plan and Transformation Plan enables us to come back to a ROI which is at a balance after years of loss. The operational margin in Lat Am is progressing strongly at 5.6% against 4.7% in 2017.

Asia now. 2018, there was a significant improvement of ROI at EUR 45 million, in other words operational margin up by 0.8% compared to 0.1% in 2017. This increase is mainly due to an ROI, which is, which improved a lot in China. The commercial model of the hypermarkets was changed and there was a very strong acceleration on the digital and on top of that, the stores that lost many work flows. In Taiwan, the dynamics is very good.

Now after this overview, let's take a look at the bottom of our P&L with our adjusted net income group share. Now you need to compare the EUR 802 million with the EUR 773 million published in 2017. There was a very good compensation of the financial expenses that I will comment in a minute.

Tax now. EUR 539 million, this is an improvement by EUR 79 million. This burden of tax shows a normative and a stable tax rate at 31.4%, compared to 31.7% in 2017, excluding nonrecurrent tax and taxes that are not due to results before tax.

Exceptional events, EUR 1,671 million, they -- EUR 1,161 million, they include the reorganization plans and voluntary departure schemes. Over half of these reorganization costs were cashed out during the tax year 2018. The rest will be in 2019.

There's also the participation in France and the depreciation of the tax credit in Brazil, which is -- concerns us. So we have a free cash flow generation at EUR 1,088,000,000, compared to EUR 950 million in 2017. So a progression of 15%. As you can see the increase of the restructuring is more than compensated by a good control of investments and decrease in stockpiles.

And now I suggest we look at our inventories. Inventories are down by EUR 255 million with a constant exchange rate and EUR 553 million with a non-constant exchange rate at current value. Progression of cash flow is also borne by a better selectiveness and productiveness in the implementation of the investments of the group, which is at EUR 1.6 million in 2018. The group was disciplined, but worked on many projects in 2018, there is the new sales concepts, such as organic areas, modernized e-commerce entity acts, more growth formats especially the 20 new Atacadao's in Brazil.

Net debt. Net debt on the 31st of December 2018 is at EUR 3,785,000,000, mainly stable as compared to end of 2017. On top of the operational cash flow of the year, our debt enjoys the decrease in dividends and to shareholders and minority shareholders, and following the refinancing operations that were carried out in good conditions. Excluding the exchange rate, net debt would have been down by EUR 165 million, despite cash out of over EUR 452 million of exceptional expenses mainly due to restructuring.

You've heard about refinancing of the group. The group proceeded to several operations of refinancing in order to reinforce its liquidity. The group issued on the bond markets for about EUR 1.8 billion with a maturity -- senior maturity of -- with an average of 3.6 years. They were oversubscribed and this shows that investors trust in the Carrefour signature.

Now with our banking partners we also have a credit facility, which has not been used yet, for an amount of EUR 3.9 billion by 2022, 2023. As you can see with a stable debt and a strong cash level, our results are important, especially within the context of fast changes.

The board decided to go for a stable dividend at EUR 0.46 per share. This represents a distribution rate of close to 45% of net benefit. It will be offered either in cash or in shares to be chosen by the shareholders and this will be presented to the board of managers to be held in -- on the 14th of June.

As you've understood the powerful dynamics of transformation that started in 2018 and the results we obtained, in the context -- macroeconomic context, makes us trust in the relevance of the plan for 2022. We have reviewed a set number of key elements of our strategic plan, the simplification of assortments with a reduction target, which is at -- was at 10% initially, and which is now at 15%, reducing our surface by 400,000 square meters by 2022, over 3,000 new stores -- convenience stores to be opened and a savings scheme of EUR 2.2 billion against EUR 2 billion initially -- EUR 2.8 billion of cost reduction plan, sorry.

The transfer of nonstrategic real estate assets, EUR 500 million and EUR 5 million also of revenues from organic products in 2022.

Thank you very much for your attention.

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

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Thank you, Matthieu. We are going to turn to the Q&A session.

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Questions and Answers

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Alexandre Bompard, Carrefour SA - Chairman & CEO [1]

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You want to start because you came in at the end of my speech, that's why you want to be first.

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Unidentified Analyst, [2]

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Bompard, I have 3 questions. Regarding the economic model first, I don't know if you have read the tweet I've sent you, how would you carry out a profitable growth by cutting the assortment by 15% by [MDP] cut by 10 points? Because you are going to cut down the number of national brands and you are going to increase the number of [MDD], which are not generating the highest revenues and profitability. What about pedestrian Drives? You said 31, is it going to be a good mix for our convenience stores, which are into pedestrian Drives. 8 more stores you said, you've made a huge effort 8,000 stores in over 4 years, just how do you intend to achieve that? What is going to be the percentage of convenience stores in the results or income of Carrefour France?

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

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First question. First of all, if only we have to -- we had to increase assortment to achieve profitable growth, we would've realized that over the last few years for sure, we would've done that. Hypermarkets were based on that incredible wealth of assortment and it's a major asset for hypermarkets to have a broad assortment. My personal analysis when I first came in and after that, is that fundamentally, that over the last few years, we have grown the assortments, the number of products, the assortments endlessly, no control. Based on what you've just suggested, with more assortment, we'll have more revenues, but it does not work. In truth, increasing assortments to increase profitable growth, not even profitable growth, that proposal does not work anymore. Of course, we are going to maintain a large, a broad range of assortments, large enough. Given the high number of SKUs we have in hypermarket, we have to keep these high number of SKUs, but we are going to review this assortment policy in order to be clear, more visible in the eyes of customers. You're too familiar with our industry to realize that in a number of hypermarkets, not only with Carrefour, you have realized that the number, large number of assortments is not very easy in the eyes of customers, in order to promote our own brands.

We believe in this because it will express our ambition for food quality for all. It's not any type of own brand or we need national brands, but I do believe strongly, in the own brand to promote food quality, everything we are going to do with the new 1,500 we are about to launch. It's going to help us to express and achieve this ambition. As it is going to be 100% organic products too, you will understand it has a very strong appeal in our commercial offering and a very strong impact for our new positioning. National brands are key, it's core for Carrefour and it will keep -- we're going to keep them going and it will as I say keep them as a central position. And our commercial offering is going to be more appealing, more attractive, that will meet the new positioning we've chosen for ourselves. Let me add and that does not answer your question. You didn't ask that question, when you cut down the assortment, will you be able to cut costs also substantial cost cuts and control growth of national brands that we have gone through last few years. We never realized that it had a negative impact on the results that was not very positive. That's for your first question. Second question, we are very satisfied with pedestrian Drives, we are very satisfied with the ramping up of this format of this service. First of all, we are the leaders, we were not always the leaders with the world Drive. Now we are the leaders with pedestrian Drives. We bring to downtown areas hypermarket prices. And we believe in that, we have about 50 pedestrian Drives and we're going to increase the number. What is interesting, we can see it combines very well with our convenience stores. We realize that our customers do not buy the same type of products.

I have understood also customers have understood how convenient it is to order, to collect and to benefit hypermarket prices, at the same time having access to fresh products and convenience products at the same time as you know. Those are real indicators and we have franchises at all of stores. Naturally those were experts and were worried. We have a lot of franchisees today who want to open their own pedestrian Drives, it's a real ambition for their convenience, it's a real ambition.

Mr. [DeParnasse] discovered this figure with great pleasure, we have this strong ambition that was very high in the past. So we continue to go from 2,000 to 3,000 convenience stores. Why? We are doing a good job. We have a full control on convenience stores, good format, contribution to the figures and to the results is quite positive in France and elsewhere. We want to go further. We are going to innovate strongly the proximity teams in France and elsewhere. Have the objective and they have -- they are quite enthusiastic to invest in this new format convenience stores, it's going to speed up this year, we want to make a difference and we want more innovation. We are lucky, we have 2 new formats opening in a few days for organic products that will increase this convenience offering Carrefour organic, Carrefour BIO for smaller stores and larger stores with different positioning, 2 types of stores that will contribute to the increase of organic products and also the strong link of the multichannel offering because you will have the possibility to collect from pedestrian Drive, it's wonderful. All formats are ready to play, convenience stores can speed up our development. We have a lot of innovation projects, that's why we have decided to increase the number to 3,000 convenience stores.

Yes, sir.

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Maxime Mallet, Deutsche Bank AG, Research Division - Research Analyst [4]

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Maxime from Deutsche Bank. I have 3 questions for you. Sorry. First question, I'd like to return from EUR 2 billion up to EUR 2.8 billion in cost reduction. Could you give us more details? Why do you want to increase the objective you set to cut down the assortments and space -- store space? Does that explain the additional EUR 800 million? Or did you underestimate the -- before you have increased your revenues? Two, hypermarkets in France and Asia remain quite weak in terms of performance especially in like-for-like. When do you think this trend is going to turn around and improve and go up? You had a negative runoff for last 2 years, restructuring has been achieved. What do you anticipate for the next few years? Are we going to have a decrease of runoff as of this year, the new French regulations on prices, what type of food inflation have you seen since this new law was implemented?

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Alexandre Bompard, Carrefour SA - Chairman & CEO [5]

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EUR 2 billion to EUR 2.8 billion. It's quite good to deal with that. There is no judgment unless it's fully legitimate to wonder about it. How can you come up with EUR 2 billion savings by 2020? That was the question last year. At the time, we had the totally opposite conviction. So with EUR 1.5 billion on year 1, for a plan that was started in January. First of all, we have an additional momentum. We do not have the feeling that this momentum is such that we've done a lot during year 1 and we cannot do as much the second year. So EUR 1 billion is turned into EUR 1.5 billion because we have a methodology to involve every country and we have the right processes to turn from EUR 1 billion -- from EUR 2 billion to EUR 2.8 billion and to use the momentum gained during the year 1. To achieve EUR 2.8 billion relies on our efforts to control non-merchant purchasing processes. It's not very sexy but the centralization of processes, the fact we have adopted industrial methods to cut down nonmerchant products. It's true when you go from 20 to 30 tiles or something for power for electricity to something, it's a major cornerstone of these saving stones and we also have joint purchasing centers. It did start working in 2018. They are going to reach cruising speed in 2019 and our countries are focusing on better customer service, we are able to provide better services to our customers by being more efficient, how to combine our efforts with those of other countries, how we can standardize our processes and activities, will help us attain, achieve these ambition. Second question you had like-for-like. As you've heard, you mentioned that, we did not give you indicators, we never told you the turnover is going to be, our revenues are going to be at this level on that date. We have geographies based on different momentum by country. We have different geographic positions. We know that the hypermarket model must be revamped, the hypermarkets model must be revamped. That's why we've announced in France and in Italy we've just done this. We have adopted this approach everywhere. We have a deep transformation project for hypermarkets, the rule of the game and the objective in France and elsewhere is to find a like-for-like dynamic, a momentum which is more sustained.

According to geographies in Lat Am, this momentum is better, to return to a more sustained like-for-like momentum. We have 3 or 4 weeks to carry out diverging and to sort out diverging analyses. Our intimate conviction is when some plan for huge inflation rates is not happening, it's not there for a number of reasons, when you have a lot of competitors, a lot of competitive partners or you don't have a price increase, generally speaking. Some prices have increased, we know what they are. Carrefour has done its homework and the others have done it and we've done our homework on our own brands. And we have launched new loyalty programs. So it has an impact on prices. As of today, we don't see any increase. We only have 3 or 4 weeks behind us. We don't see an increase of inflation. We don't see it happening today. Regarding your runoffs. I'd like to talk to you about this, it was my presentation a few minutes ago. We have significant elements in 2018. 2017 is separate because we had noncash goodwill elements, the transformation system as you've heard it this morning, is going on. It's going on with the revamping of stores, the transformation in our organization. So the year 2018 was in between, it was a huge -- an impacting year in terms of transformation and we are carrying on our efforts. In the figures of 2018, we did spend a lot of money, we have invested in the transformation with a stable net debt. We've invested all at once, we have financed these elements, we can pay dividends and the financial debt has decreased like-for-like. So forex, we have total control over this financial transformation process.

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Unidentified Analyst, [6]

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(foreign language)

I don't have the numbers. I know there was an impact (foreign language). Since we're entitled to 3 questions I will also put you to 3 questions. Regarding e-commerce at no moment in time did you mention nonfood e-commerce. It's quite striking in terms of choice of words. Now I believe this is not by chance. What are your ambitions in nonfood e-commerce? Regarding hypermarkets in France, I mean, I'm not naïve, you're not going to give us the ROI but the question is very simple, are they above or below 0? Because to reach EUR 460 million in France with supers, hypers and proxies, I'm ready to bet that the hypers are under 0 and lose my fortune, which is not that big. And regarding the 400,000 square meters you want to reduce, what could you do with that? Because here you're changing scale. You also perhaps want to change ambition in terms of revamping of these square meters. What are you going to do with these 400,000 square meters? What could be done today with 400,000 square meters?

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Matthieu Malige, Carrefour SA - CFO [7]

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Well you're quite right, it's not by chance, if we talk of food e-commerce, 2 reasons that lead me to talk a lot about food e-commerce. Because the food battle is the battle of battles for the group. The building of an omnichannel model is a battle around food. Therefore, the strongest progression we could make, the place where we must be leader, where we can be leader and where we can be sustainable leaders, is food e-commerce in France and elsewhere. Now as I joined Carrefour, despite the excellent work made on the said number of sites, of course, e-commerce and so on, I did not say ah well, listen here, I believe we could be a big, big leader in nonfood. All we need is I mean look at a company called Amazon, I mean there are other players that you all know and they do their job very well in this respect, and I don't believe we can be leaders over there. And therefore, one of the missions of a manager is to choose the fights with potential that deserve to be fought, considering there are going to be so many things to do that we need to set priorities. And therefore, the priority is food e-commerce. Hypermarkets, I can't tell you because figures like always are very complex and are not very precise. And what changes is scale. We launched this project in France with Pascal Clouzard, Jacques Ehrmann, Marie Cheval,to, deciding to reduce in France. And we see that we can do it, we know how to do this. And you can now take by heart it's an extraordinary change in paradigm. And so we start by stopping increasing size and now we're going to reduce sizes. What does this mean? Well first we need to find a good model for a smaller store and then find a relevant way to reallocate the surface. It must be relevant for the customer but also for us, economically speaking. And so we see that what can be done around e-commerce and the use and the identification of hybrid drive. This is a strong potential for our customers. We also have sales [garys] where there is potential for other retailers and we can develop and we've developed -- I mean, we didn't totally control this model, but I believe in this an awful lot and the first results are very satisfactory despite the fact that we know perfectly well control this system which is outlets. The outlet system where we see there is a true potential and you know this very well. Do you know the sector by heart? We have the first figures, we have customer feedback also. We're going to open 11 new this year. And so moving from 100,000 to 400,000. 400,000 at group level, 100,000 France. We have many ideas. And the first examples, concrete example I mean, we start second half of the year and it's time consuming because there are social consultation that must be made. But the first concrete elements of the surface reductions lead us to believe in our capacity to build a more performing model, more interesting for the customer which combines better physical and digital distribution. And that's what we'll be doing at a group level.

Yes, this gentleman at the first row, it's been quite a while now that you...

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Unidentified Analyst, [8]

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Looking at France, you've done a lot of cost savings, despite that the second-half margin is a bigger drop than in the first half margin. Your explanation is that you're investing a lot in the proposition ahead of the profits. And when I look at your top line in hypermarkets, it's still not really stepping up compared to the competition. So it still looks rather bleak in terms of improvement. Does that mean that we should expect a further drop in French profitability before the top line in France can really step up? That would be my first question. How much longer and how much more drops in French profitability? The second question is related to China. I thought there was going to be a deal with China. I know you're collaborating those as well. Why does that take so long? Should we start worrying about that? And the third one is I think, the consensus has EUR 2.1 billion of ROI regarding operating income expectations for next year, that's a big more than 10% step up in profitability. Given the weakness in France, is that realistic expectation?

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Unidentified Company Representative, [9]

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I'll take your third question relating to the consensus. (foreign language) Sorry, I must speak French. But you understand perfectly well French on top of it. But regarding the consensus, we don't usually comment on consensus but as you know, we are very early in the year so we're not going to do this. But each time we remind people of our position, there is an environment of consumption, a market environment, a macro environment, which is very uncertain, I mean just look at 2018 with money issues, inflation, deflation in the markets, political issues, social issues and no doubt 2019 will be disrupted from a macro standpoint. So it is too early days to comment on 2019. Regarding France, we said during previous publications that we were fully aware of the fact that the size of France is essential and the transformation time of our model in France considering its size and also considering the loss or the -- in our commercial performance in 2016, well, yes, it was time consuming. Now the savings schemes we made elsewhere considering the size and also considering a certain number of rate relation issues. In France, transformation does not -- the pace is always different, so it's more time consuming in France. And therefore, we decided with Pascal Clouzard to say well for all other geographies, we do our saving scheme and we reinvest afterwards. In France, considering the fact that since 2016, we felt this reduction in our sales performance, we decided to reinvest in our competitiveness straightaway, partially early. Price competitiveness, we made a set number of things as of this year, especially in the supermarket format, which we believe was necessary, but I'm not going to come back to what we said on nonprice competitiveness. In order to transform this model, you cannot wait to get the results of all the [cross lashes] to do this, because we believe that this transformation had to be done fast, there was a number of exogenous events, that made this even more complex endogenous. There's a social context, exogenous. There was the yellow vests and all this leads the operational performance of France, but means that this is not the one that we would like to have in the future. Now when you model -- build the model of the future, you start the year with uncertainties. There are always uncertainties, as you know, in France, and this is with what Matthieu just said regarding consensus. But we are in a better position than last year as regards the building of the model, we have behind us complex issues, the [formaja] store, this was not something simple, there's a reorganization of headquarters of several thousands of people, this is not simple. The building of the omnichannel model, this is not a simple issue. So we are starting the year with a dynamic which is higher in our model than last year, but there are many, many uncertainties and there are still many more things that need to be done. And this is what Pascal is about to do with his teams. China, no reason to be worried about China. First, because I believe, we are -- we advanced a lot this year and our loss in China reduced itself this year. And this is the result of the work made on the operational model. We're using the size of our hypermarkets. We also made a lot of progress in our platforms, but also thanks to all what Tencent provide us with on a daily basis. This is quite impressive to see what this type of player can provide in terms of capacity to take traffic, understand E-commerce, understand mobile payment, work on a set number of new technologies in store. We talked a lot about facial recognition in store. So we work on this, and industrially, we are better operationally in our subsidiary, in our discussions. And this is also capitalistic because this is your question, don't worry. I got this. But this is time-consuming, but that is not the real reason for you to be worried.

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Unidentified Participant, [10]

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[Jacques Barta] from [the Beer] Magazine. First question is the increase of SRPs since February 1. We talked about the inflation impact. What about the impact on your sales and the impact on your profit margin? Can you tell us more? Can -- have you been able to measure that, assess that? Second question, on a figure, what do you expect in terms of savings with joint purchasing with Système U -- your alliance with Système. Certainly, you talked about cutting surface from 100,000 to less under 400,000 square meters group. What about the results of France? Is this going to be 100,000 square meters less? You talked about opening hypermarkets for Sunday shopping in France. Can you tell us more about these objective?

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Matthieu Malige, Carrefour SA - CFO [11]

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I'm going to disappoint you for the first 2 questions. Don't hold it against me. I cannot comment on the business results during the first quarter this year. We've not announced any objective for savings through our partnerships we've established. Regarding your third question 400,000 at group level, 4,000 square meters for all geographies. Marie Cheval has presented to trade unions and software partners of project for France, it is likely we will take over the objective we have set for ourselves. Your last question, opening -- Sunday opening. By the end of this year in France, we should reach 160 Sunday opening of hypermarkets, 160 stores. It shows that the social dialogue works, trade union partners have played by the rules of the game have been accepted. We did, they did accept and we found a good model, an attractive partnership and relationship sometimes for some hypermarkets. I would love to expand this Sunday shopping morning period because there is a potential for customers to expand over into the afternoon, let's not be too ambitious. Our ambitions we would have 160 hypermarkets opened on Sunday morning by the end of this year. And it's a good objective for a period of 1 year already. Yes, madame?

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Fabienne Caron, Kepler Cheuvreux, Research Division - Head of Food Retail Sector [12]

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Fabienne Caron from Kepler Cheuvreux. Three questions for me. On the cost cuts, you have been very good this year in terms of cost cuts but you can see there is a cost inflation that was slightly higher than your price drop. For OpEx it has an impact because your revenues are not -- you said EUR 1.1 billion in cost inflation, what about online? And what comes from the business underlying payroll and so on? Second question regarding hypermarket prices. You said before you're not where you want to be, you have to make an extra effort, you have invested in 2018, but not so much in hypermarkets. In 2019, are you going to be able to reach the cost positioning you want to get? Or is it going to be offset by cost or by purchasing? Third question on the French organization. You have a cost-cutting view on format. Do you think an [au chat] type reorganization would make sense for Carrefour or not?

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Matthieu Malige, Carrefour SA - CFO [13]

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Regarding cost cuts, there are several elements that change from 1 year to the other. There's a development in the installed base especially, Atacadao opening more stores, it changes from year to year, you have forex development, so the right movement is the one was the right one distribution costs 18.6% in 2017 and go down to 18% in 2018. We said 3% to 4% inflation in geographies, we're going to be at 25% to 30% in Argentina. And we're going to reach 1% or 2% in Europe. Investments, you're right, made investments into new services. When we open order preparation areas, at the very beginning, during the first months they don't have -- not yet reached cruising speed. So when you introduce a new channel, it does cost money in the beginning. And then we depreciate. We -- so altogether from 18.6% to 18%, 56 basis points and the commercial margin is good. So the system operates quite well so far. So far so good. Regarding prices, you're right. We have made efforts in 2018 including France. What we've done with supermarkets, we've done a number of things with our own brands in 2018 including France.

If the general declaration is not leading to price increases as some have claimed before. However, it's a major part -- change of priority, it's a bit too early to understand what the best momentum will be. We've made the early choice not to fall victim of this new law or regulation but to help and support our customers. The customers who are more sensitive to catalog and lower prices. We have built the loyalty system, multichannel loyalty system, on that basis we try to be as efficient as possible, in line with that new regulation which is going to change a lot of things. And we hope that it's going to contribute. And based on the recent indicators we have obtained over the last few days, everything is far too early. We hope it's going to improve and contribute to improve our price contribution to customers. Regarding the reorganization, the multiformat, as you know regarding multiformat, I mean, favor multisets with multiformat. As you know to be straightforward with you, I'm not 100% sure that what counts for customers. The real issue for customers in fact, is there any clear benefit to remain in the same ecosystem at Carrefour? Is it my best interest if I'm a traditional hypermarket Carrefour customer, if I have Carrefour and Franprix on the same street because I've got the loyalty program, because I'm recognized. Because I have any benefit. That's what we concentrate on. We're lucky against our competitors, it's a major asset to have this multiformat offering, convenience stores, hypermarkets, supermarkets to use that platform. If it turns into bidding reorganization, the answer is yes. But the real issue in the eyes of customers, the issue is, can we have a single model, single offer. For a very first time, it is the first time that we have communication. I'm not talking about loyalty programs, but first weekend came in listeners to radio stations. Now we have a unique approach to all formats, we have the same objectives. It was not the case before, it contributes to the multiformat model what we are building, it's ongoing.

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Unidentified Participant, [14]

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[Angelique Beras] from Le Figaro newspapers. Two questions. First question has to do with hypermarkets. What would be your ideal hypermarket today in terms of offering, in terms of size? You've mentioned jewelry that you're going to cut down and others. And what about shop-in-shop, the [Dati] model. Second question regarding commercial negotiations, we're a few hours away from the new generation commercial negotiation rounds, we hope. What's going to change? Have you been able to sign with most of your suppliers or not? We have heard that Carrefour is quite aggressive in terms of commercial negotiations and price deals. What have been your expectations and demands in this field? Not talking about milk. I cannot talk about milk you say.

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Matthieu Malige, Carrefour SA - CFO [15]

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Let me answer your first question. I'm going to disappoint you. I do not believe in this idea according to which, the hypermarket reform will lead us to build our dreamlike hypermarkets and say that this type of hypermarket of our market is going to be built and opened everywhere across the world. We have tested this idea over the past. I do not believe in this new model because we have different geographies. Why? Because we don't have the same commercial offer according to the area, according to the country, so on and so forth. So what we're trying to do, our teams in France and elsewhere, we're trying to start with this basic idea. What should be the right format? What is the purchasing or shopping basis? Of course, you have understood the size must be cut down, what would be the ideal size? what type of services must be provided? What type of activities that should disappear from this [apram]? That leads us to say, we have several tentative hypermarket formats, several test hypermarket formats. It should not become obsessive but in a very low income area, let's find the best value for money hypermarkets, leading our customers to see there is low prices for them, nonfood low prices. What we're able to do in Brazil and Argentina today and we're going to test that in France. As you've heard all the stores are a poor income, poor profitability as you know, it is the decision made by Pascal Clouzard and Marie Cheval, to give new leverage, new momentum in the field, new dynamism. We need to have the right organization to do it. You cannot decide overnight to give more power to the field, you need to have the right basic conditions to do that. And we have created a number of rebound stores, where we give more flexibility to our teams, more leeway to carry out their productivity efforts. For other stores, we believe these stores have a huge but different potential, provided we cut the size, with more food and with shorter nonfood offering, with our partners when we call our next stores. We're also testing in a number of countries smaller format superstores, that's what we test in 7 countries, with a lot of nonfood products for convenience products. It's not going to be a turnover, a major change of hypermarkets. We cannot do that as a standard everywhere. We listen to our customers, we start from the expectations of our customers in today's world. That's how we have built the new model of our markets, hypermarkets. Of the joint commercial negotiations, they're going to be concluded this week, if I'm not mistaken. The negotiation round is quite important yearly, we have no special comment. Since I cannot talk about milk, nevertheless I will tell you that in this field we've been able to achieve good results in the negotiation with a number of milk co-op or dairy products. We have discussions with our major partners and with a lot of SMEs, thousands of contract things are happening and since we'll end up fine, there's no problem. We're not going to be able to give a single question I'm afraid.

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Sreedhar Mahamkali, Macquarie Research - Analyst [16]

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Sreedhar Mahamkali from Macquarie. In terms of big picture probably, maybe not necessarily whether or not you meet the consensus expectations in ROI, but do you believe you will be able to grow ROI this year on constant currency, right? From the base but we've got EUR 1,905 million. Second one in terms of cost savings in FY '19, whatever that number is. Let's call it another EUR 1 billion, do you have a view by region, how much we can expect? And third one in terms of Italy, are you able to give us what was the magnitude of loss in FY '18 and when can you see a turnaround?

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Matthieu Malige, Carrefour SA - CFO [17]

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Sorry, Sreedhar, your first question?

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Sreedhar Mahamkali, Macquarie Research - Analyst [18]

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Sorry, just big picture level, do you think group ROI you can grow it at constant currency rates?

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Matthieu Malige, Carrefour SA - CFO [19]

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Yes, your second one?

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Sreedhar Mahamkali, Macquarie Research - Analyst [20]

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Second one was cost savings by region in FY '19 if you've got a broad view?

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Matthieu Malige, Carrefour SA - CFO [21]

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Okay, well on (foreign language). Regarding your first question, regarding the first question, I think, I answered to Bruno earlier on, saying it is very early days in the year and the environment is very much disrupted and very uncertain at the macro level. I'm not going to repeat what I already said so I'm not going to comment on this today regarding the figures for ROI in 2019. Regarding this distribution of the EUR 1.5 billion in cost savings per region, what you need to understand, we've said this more or less in our comments on France, that there is a contribution of France compared to group contribution which is lesser than it should be. There is a gap between the actual achievements in the saving schemes in France compared to the rest of the world where there is more capacity to transform socially, we have organizations that are more compact and therefore their capacity to transform themselves and to generate results on our P&L, all this is faster. So the proportions are different. And that's why the impact is also different on the P&L. Regarding Italy now. The market environment is as we know, that the political, social sales environment is complex and uncertain. And therefore, the activities in 2018 were -- so a negative like-for-like, but at the same time in parallel, this showed the resilience of the ROI in Europe as regards the efficiency of our transformation plan that we started to implement in Italy in order to absorb the -- these difficult results in revenues.

So this is the trend for Italy. So some number of announcements were made recently by Gérard [Laminay] in Italy, I believe this was last week, mentioning a Transformation Plan by 2022 with investments, transformations, opening new points of sale, so a roadmap which is there since Gérard now joined the group in -- over there at least in October last.

Other questions?

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Nicolas Champ, Barclays Bank PLC, Research Division - Director [22]

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Yes. Nicolas from Barclays. Three questions. First, about results 2018 I believe your Brazilian subsidiary registered tax credits during Q4 last year and throughout the year. Could you quantify the impact of this tax credit on your accounts, in your books, in euros? And since it seems these are recurrent events because you've included them in your EBIT. So could you give us an idea of your tax credit forecast for Brazil for 2019? Second question, we understood that you do not want to talk about the EBIT for 2019 but I'm going to try my luck on elements that may be more under control for you. Could you give us an idea of the CapEx levels and the tax rate levels? Should we expect diminution of the financial burden in 2019 compared to 2018? Third question, we're a bit lost with the new bookkeeping norm; that is, one you did not mention is the IFRS 16 regarding leases, [the askid's] done it, [Dia] did it. Could you maybe briefly tell us something about the impact this had on your net financial debt and also on your EPS?

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Matthieu Malige, Carrefour SA - CFO [23]

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Regarding your first question about Brazil. So you saw in the release before yesterday, Brazil they recorded BRL 210 million of tax credit. This is in line with something a little bit technical which we call [prizing] the margin where there were decisions made by the Supreme Court in this respect, in a nutshell because it's important. Historically, the Brazilian state would take VAT on theoretical margin assumptions made by distributors and these margins were higher than the one we achieved. So we introduced a case with the Supreme Court and we won regarding recurrence because this is your question about tax credit, it is more the historical situation which was abnormal, where we would pay more VAT than what we should have, than we should have paid and therefore we're back to a more normal situation and therefore, this is in our operational income. But in order to help you understand the change from 1 year to another and for you to understand the operational performance, we disclosed these elements. Now as regards 2019, the tax year 2018 with investments at EUR 1.6 billion, you've understood this. Work is very satisfactory and it has borne its fruits beyond our expectations on selectiveness. So this is good news. Here again, there is a transformation in cost process as an organization but there is also an important transformation in the way we produce and we decide our investments. So you probably remember 1 year ago when we launched the strategic plan, we said that we stopped 1,500 products that were not consistent, not in line with our strategic plans. So this is selectiveness. I will not give you a guidance, CapEx guidance because we have more capacity to invest, thanks to productiveness. Regarding the tax rate, it is more or less stable at 31.4%, 31.7%. So there is an impact related to the weight of each country, but we do not see any significant evolution on that rate. Now the financial burden, will it -- will -- financial fees, will they go on going down? Well, we believe so. You saw the profile of our bonds. There is a refinancing that was made in very satisfactory conditions and we can refinance historical layers with fairly high coupons, with bonds with lower coupons. So this dynamic is on the way. IFRS 16, your last question. We're working on it, and don't worry, but we will communicate in this respect as others have done, more precisely especially to the attention of the financial community, this will be done during Q2. So we are finalizing these elements and therefore, we will make sure you get them for your estimates for second-- for the first semester when you want to publish them. Yes, last question over there. And then I believe we have a few discussions.

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Unidentified Analyst, [24]

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[Morgan Leclair] from [S. A.] I have a question. What would be, according to you, the ideal profile of Carrefour France in 2022? Because the surface of our [vogeses] will reduce strongly considering the what you announced. Proxy must progress an awful lot. So what would be the mix -- the ideal mix within a few years' time? This partnership with Google, how will this pan out? It seems fairly unclear. And then regarding automatic stores, I believe there was a store like Amazon Go that was to be tested. Belgium was about to open (technical difficulty).

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Matthieu Malige, Carrefour SA - CFO [25]

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Okay, well, I will start with your last question. Model the store -- this model store that we will develop massively, these are not stores without staff. We're absolutely convinced that one of the points of conveniences stores versus other formats is to be able to have a discussion or contact, a human contact to be -- to get support. So we are testing technologies for maybe certain times, but these are just tests because we're just trying to really just check all these latest technologies. Now with Google, the partnership is -- it's a full partnership because -- a very complete partnership, because we partnered up with them because we want to build a partnership with different dimensions. There is a dimension which is not -- doesn't seem that central maybe for you, but which is to help support the digital transformation of the group. So we have a lot of training with our groups, for them to adjust to the last -- the latest digital technologies is very important of course, and then there is a lot of work around machine learning, AI, with Google engineers, Carrefour engineers that have worked together. And then in the weeks to come, we should be creating a hub, a common lab, Google and Carrefour, in order to work together on these questions. And then there is a third break, which is the work that we carry out together in implementing a new e-commerce experience from Google and using the various services proposed by Google. There is a lot of progress on nonfood that has been made. There will be innovations on the market that should show up and -- for food. So this is a very complete partnership. We're very happy over how we work together. We learn from each other and we have a project which is yes, working out very nicely. I mean if we have, had 2 hours, I could tell you more about Carrefour, France in 2022 but we don't have 2 hours. But we gave you a certain number of indicators and priorities and we gave you the good idea of what -- this model we want to build. But we are fully aware of the fact that this is an in-depth transformation. There is this idea that the -- we may think what will proxy mean versus hyper, super and -- but this is not the right question. We believe that each format has a position. Every format has a potential and they all are there to support this multichannel offer. And hypermarkets will be important in the future and they will address new functions and they will also be able to serve the other formats we have. So we believe in convenience stores. There is a lot of innovation there. We haven't touched a lot about supermarkets but this is a model which is extremely important for us. We have an innovation team in France with [current investors]. In many countries, we are very much ahead and then there's the digital and regarding the digital offer, we are catching up with our delays and many improvements have been made in quality of service and more to come. This is one of our priorities for the year. So it's a different model. It performs well, it is in line with the expectations of the customer, not yesterday's customer, but the customer of today and of the future. And this is something we're building for 2022. Thank you very much for your attention. I believe, there's certain number of discussions, again, taking place afterwards. We were happy to have you in Massy for the very first time.