Brazil’s Carrefour Brasil posts 28% drop in Q4 adjusted net profit

SAO PAULO (Reuters) – Carrefour Brasil reported on Monday its fourth-quarter adjusted net profit decreased 28.2% from a year earlier to 550 million reais ($106.19 million), hit by a double digit increase in expenses.

The Brazilian arm of French retailer Carrefour SA said net sales rose 36.3% to 28.16 billion reais, partly lifted following its acquisition of food retailer Grupo BIG.

Carrefour Brasil’s Atacadao unit posted 22.6% growth in net sales.

Operating expenses were 4.15 billion reais, a 64.9% rise from a year earlier, fueled by an “expected” increase in expenses related to Grupo BIG’s integration and the acceleration of store conversions, as well as high interest rates.

Stores conversion impacted profit, the firm’s chief financial officer David Murciano said, adding the company will see growth in sales once all the stores are completely converted.

Meanwhile, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) grew 12.4% to 1.974 billion reais. Excluding Grupo BIG, the company posted 17.6% growth in its adjusted EBITDA to 2.07 billion reais.

Carrefour Brasil said it has opened six new wholesale format stores. The firm said 52 stores from Grupo BIG were converted to Carrefour’s brand in the fourth-quarter.

($1 = 5.1796 reais)

(Reporting by Andre Romani; Writing by Carolina Pulice; Editing by Anthony Esposito)