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French retailer Carrefour on Thursday lifted its targets for cost savings, as the group unveiled results for 2018 in which it saved €1.05bn during the 12 months.

In the first set of full-year figures since Carrefour unveiled a 2022 transformation plan in January last year, the company said overall group sales rose 1.4 per cent in 2018 on a like-for-like basis, accelerating in the second half of the year. 

The figures mark a tentative step in the right direction for Carrefour under chairman and chief executive Alexandre Bompard, who joined Europe’s largest retailer in July 2017.

His challenge is to reduce the group’s dependency on hypermarkets in its home market through German discounters to online giants like Amazon. The group has also been trying to position itself for changing consumer habits by expanding its organic range.

Carrefour’s operating profit dropped 3.4 per cent in 2018 as performance in Brazil was offset by France, where it continued to face a highly competitive environment, as well as investment and restructuring costs, and the impact of the gilets jaunes anti-government protests in the fourth quarter.

“We continue to revitalise our commercial policy, with a strong push in favour of purchasing power and food quality,” said Mr Bompard in a statement. “We are adopting our formats, especially hypermarkets, and accelerating the development of our growth formats and a benchmark omnichannel offer. And we continue to improve our operational efficiency.”

Analysts at Bernstein cautioned that while the cost savings at Carrefour are progressing well, they are not enough to reinvigorate the crucial French market yet. “Clearly, the cost savings aren’t dropping to the bottom line,” Bernstein analysts wrote in a note. “It is concerning that we’re not seeing any customer traction yet.”

Carrefour increased cost savings targets from €2bn a year by 2020 to €2.8bn a year. It also raised other objectives, announcing that it will simplify its assortment range by 15 per cent, reduce its sales area globally by 400,000 square metres, and accelerate its expansion of convenience stores, with 3,000 store openings planned by 2022. 

Excluding exceptional items, free cash flow improved from €950m in 2017 to €1.09bn. Carrefour’s annual dividend remained unchanged at €0.46.

The group, which has been ramping up in e-commerce through partnerships with Tencent and Google, said that online food sales rose more than 30 per cent in 2018 to almost €1.2bn. It confirmed its target of e-commerce food sales of €5bn in 2022.

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