Retailer Casino responded to pressure from US activist investor Muddy Waters with a renewed pledge to cut its debt using proceeds from disposals and the promise of improved profits and cash flow in its main French market.
Muddy Waters "shorted" Casino in December, saying the French group was "dangerously leveraged", sparking a share price fall. Muddy Waters renewed its attack on Casino on March 7th, casting more doubts on its revival in France.
Standard & Poor's also threatened in January to downgrade Casino's credit rating to junk status, citing high debts and weakness in Brazil, where it controls top retailer Grupo Pao de Acucar.
Chief executive Jean-Charles Naouri said he was confident Casino would manage to sell €4 billion of assets to cut debt which totalled €6.1 billion at the end of 2015. He did not rule out exceeding that target.
“We want to stay investment grade and scoring €4 billion in disposals is a key element,” he said.
An S&P decision on the credit rating is expected in the middle of next month.
Casino announced the sale of its 58.6 per cent stake in Thai unit Big C for €3.1 billion last month while several Asian players are eyeing its Vietnam business.
Casino also kept its dividend unchanged at €3.12 per share despite posting a 35 per cent fall in 2015 operating profit, as weakness in recession-hit Brazil weighed.
In another clear message to its doubters, Casino stuck to its profit and cash flow growth goals for its main French business for 2016.
Casino reported operating income of €1.45 billion, down from €2.23 billion in 2014 and in line with analysts forecasts.
Casino said that for French operations in 2016 it was aiming for a 50 per cent jump in trading profit to more than €500 million, as price cuts would boost sales by at least 1.5 per cent like-for-like. Cost cuts and savings from a purchasing deal with French retailer Intermarche would also help.
– Reuters
