28 Nov - Belgian discount supermarket chain Colruyt has posted its interim results.
A. Income statement
During the first six months of 2008/09, Colruyt Group's revenue increased by 14,0%, from EUR 2.714,7 million to EUR 3.094,5 million.
The group's gross profit rose by 13,9%, to EUR 755,5 million, compared to EUR 663,6 million in the first six months of 2007/08 and maintaining a gross profit margin of 24,4%.
The operating cash flow (EBITDA) increased by 9,0% to EUR 268,5 million. The group's operating profit (EBIT) increased by 7,7% to EUR 212,5 million, resulting in a decrease of the EBIT-margin from 7,3% to 6,9%.
This reduction of EBIT margin is due to risen energy and labour costs. The latter rose faster than revenue, partly as a consequence of the current wage inflation, caused by the Belgian system of automatic wage indexation following the price index. In addition to this, there were extra costs for temporary employees and for training of new staff, both required to support the group's growth. On 30 September 2008, Colruyt Group employed 19.496 staff, or 1.814 more than last year.
For the first half year 2008/09, net financing income dropped by 60,3% to EUR 3,5 million, versus EUR 8,8 million last year. This decrease was caused by the financial crisis on the capital markets, reducing the return of the Colruyt Group's investment portfolio.
Income tax expense rose by 3,5% to EUR 65,4 million, resulting in an effective tax rate of 30,3%, versus 30,7% last year.
The profit for the period (Group share) improved by 5,2% to EUR 150,4 million. Earnings per share (EPS) increased by 7,3% to EUR 4,68 versus EUR 4,36.
B. Review of income statement by segment
I. RETAIL Revenue +12,5 %; EBITDA +7,8%; Operating profit +6,7 %
The retail segment represents 76,0% of Colruyt Group's consolidated revenue. At the end of September 2008, the group's food retail segment in Belgium consisted of 207 Colruyt stores, 54 OKay stores en 5 Bio-Planet stores. Belgian non-food activities were composed of 34 DreamLand, dream and DreamBaby stores. In France, the retail segment included 45 integrated stores.
As from the end of 2007, food inflation started to rise considerably, fluctuating around 5% during the first 9 months of 2008. Today, food inflation has gone down to 3,5%, reducing the pressure on the group's gross profit margin, which evolves in a normal way again.
Compared to the same period last year, the Colruyt stores achieved a revenue growth of 12,4%. During the first six months of the financial year 2008/09, revenue rose to EUR 2.050,0 million, versus EUR 1.823,9 million last year. This growth was stimulated by the introduction of the 'Extra Discount' card in the month of May. Furthermore, in the present climate of uncertainty and inflation, consumers tend to focus more on price. This trend, combined with the successful continuation of Colruyt's lowest prices strategy, has resulted in a continuously growing market share. The OKay & Bio-Planet stores once again achieved a considerable increase in revenue. The combined revenues grew by 23,6% to EUR 142,4 million.
In France, our integrated stores saw their revenue rise by 13,1% to EUR 62,1 million. This result was achieved by consistently implementing the 'lowest prices for national brands' strategy on the French market. However, new legislation on price-fixing (Loi Chattel), combined with our lowest prices strategy, has put a little more pressure on the gross profit.
Revenue of our non-food retaill stores DreamLand, DreamBaby and dream increased by 7,5% during the first six months of 2008/09. This increase was achieved by opening 2 new DreamLand and 1 new DreamBaby stores. Despite this good performance, the DreamLand group is being confronted with a decline in buying power and less impulse shopping.