Carrefour, Europe's biggest retailer, said it would boost capital spending to revive its struggling hypermarkets after 2012 profits fell 2.6 percent, depressed by falling demand in recession-hit Spain and Italy.The French retailer, which is battling to reverse years of underperformance in Europe, said it would invest between 2.2 billion and 2.3 billion euros against 1.547 billion last year, above analysts' expectations of 1.955 billion euros for 2013.
Carrefour, the world's second-biggest retailer behind Wal-Mart, reported 2012 operating profit fell to 2.140 billion euros, still topping analysts' expectations for 2.061 billion euros in a Thomson Reuters I/B/E/S poll.
Finance Chief Piere-Jean Sivignon told a conference call that Carrefour was still braced for a "difficult" economic climate in 2013 but he did not provide a more detailed outlook.
Retail veteran Georges Plassat became CEO in May 2012 with a brief to come to grips with years of underperformance in Europe, where Carrefour's hypermarkets have been hit by competition from specialist stores and trends toward local and online shopping.
Plassat has vowed to cut costs, improve price competitiveness and simplify product offerings, notably in the troubled non-food sector. He has also pledged to give store managers more autonomy after years of mainly central planning.
As part of a strategy of raising cash to defend positions in key markets of western Europe, China and Brazil and to strengthen its balance sheet, Carrefour has also been exiting non-core countries. It has so far raised 2.8 billion euros from selling units in Indonesia, Colombia and Malaysia.
This strategy, similar to actions taken by European peers such as Tesco and Germany's Metro AG which have curtailed international expansion to revive domestic sales, allowed Carrefour to reduce net debt by 2.6 billion euros to 4.32 billion at end-2012.
Capital gains from asset sales reached 1.081 billion euros last year, lifting net profit to 1.233 billion, Sivignon said.
This allowed Carrefour to raise its dividend to 0.58 euros per share from 0.52 euros, equivalent to a payout ratio of 45 percent of net income.
