Carrefour faces tough choices to fund revival
REUTERS
PARIS: World No.2 retailer Carrefour may need to raise up to 3 billion euros ($ 3.7 billion) to fund a revival plan for its struggling European hypermarkets, but tight finances and dire economic times leave its new boss with hard choices.
Having pulled out of recession-hit Greece in June, Carrefour could quit more non-strategic countries such as Turkey, Indonesia or Poland to free up cash.
But in tough times, disposals could take too long, so CEO Georges Plassat could be weighing alternative solutions to fund a turnaround, such as a partial listing of its emerging-market businesses, notably profitable Latin America.
“Restructuring the group will be an extremely challenging and costly process,” Natixis analyst Pierre-Edouard Boudot said.
“Carrefour’s finances are already stretched, so the turnaround plan will have to be financed using outside resources.”
Carrefour declined to comment.
Plassat took over in May with a brief to reverse years of underperformance in Carrefour’s European markets. He is expected to detail his recovery plan on Aug. 30 with first-half results.
The retail veteran has said he needs three years to turn around Carrefour, whose challenges include halting a fall in market share in France, where it makes 43 percent of sales, cutting debt and weathering a difficult economic climate in Italy and Spain, where it makes just under 20 percent.
Plassat’s arrival has raised hopes that Carrefour’s hypermarket format, which has been hit by competition from specialist stores and online shopping, will survive.
Since July 12, when Carrefour defied fears of another profit warning, saying it was comfortable with the market consensus for 2012 operating profit, the stock has risen 26 percent from 18-year lows, outperforming a 9.5 percent gain in the European retail sector.
Limited cash and high debt levels are complicating his task.
“Carrefour needs cash now and must act quickly,” said Milos Ryba, an analyst at research firm PlanetRetail.”
Carrefour burnt a lot of cash last year as capital expenditure rose 27 percent and profit slumped 19 percent. Free cash flow sank to 77 million euros from 839 million in 2010, leaving it with net debt of about 7 billion euros at year-end.
In March, Moody’s, Standard & Poor’s and Fitch cut their credit ratings on Carrefour in view of additional pressure on the balance sheet.
To preserve cash, Carrefour halved its dividend, and former CEO Lars Olofsson halted his brainchild Planet project, the costly revamp of its European hypermarkets.
This cut capital spending to 1.6-1.7 billion euros for this year, or 2 percent of sales, a level analysts say barely covers the cost of maintaining existing stores. French rival Casino , by contrast, is expected to spend 3.5 percent of sales on capex, and estimates for Tesco, the world’s third-largest retailer, run higher still, at 4-4.5 percent.
Plassat told shareholders in June that while Planet was dead, some European hypermarkets still needed renovation. His challenge is to find the extra cash needed for that task while also reducing debt.
“It will cost between 600 million and 1 billion euros to renovate the store network,” said Boudot at Natixis, who estimates that 395 hypermarkets in Europe still need renovation.
He said Carrefour would also have to reinvest in cutting prices, at least in France, at a cost of 400 million to 1.1 billion.
Oddo Securities analysts said Carrefour would have to spend about 3 billion euros to cover maintenance and expansion.
In June, Plassat hinted at further cost savings, saying overhead and advertising costs were too high.
Nomura analysts expect Carrefour to target 1-2 billion euros of savings over two to three years and reinvest these mainly in closing the price gap of 3-4 percent with French rival Leclerc.
In recent years, Carrefour has abandoned several countries including Japan, Mexico, Russia and Thailand.
Plassat has made clear Carrefour will stay in Brazil and China, but analysts expect disposals in Indonesia, Turkey, Poland, Romania, Malaysia, Taiwan and Singapore to follow, with proceeds between 1 and 3 billion euros.
Britain’s Tesco, France’s Auchan and US giant Wal-Mart are seen as potential buyers of eastern Europe assets.
“Its central and eastern European assets could represent a great opportunity for Auchan, an operator who is well established in Russia, Poland and Romania,” Ryba said.
Carrefour will not be alone in offloading assets, however, as German retailer Metro’s Real may look to sell some eastern European businesses, analysts added.
In Indonesia, CT Corp, a conglomerate with banking and media interests, told Reuters in July it was in talks with Carrefour about raising its stake in its unit there.
In Turkey, the situation is less clear. Carrefour said in July that it was reviewing the “strategic future” of its local joint venture with Turkish partner Sabanci Holding after its chairman and three other board members quit.
Sabanci is seen as the only potential buyer, and it is unclear whether it has the funds to buy Carrefour’s stake, analysts said.
Because these disposals could take time, Carrefour may look for other alternatives.
Activist shareholder Knight Vinke, owner of a 1.5 percent stake, in June suggested listing Carrefour’s international business to raise cash.
This option might make sense for Carrefour’s assets in Latin America and China, Boudot said. Listing 20 percent of its Latin American assets could raise more than 2 billion euros and 20 percent of China 675 million, based on a multiple of 11 times estimated 2012 EBITDA, in line with average multiples for Latin America and Asia.
The IPO of China’s Sun Art Retail Group, a joint venture between Taiwan’s Ruentex Group and Auchan, raised $1.1 billion in Hong Kong last year.
Latin America prospects may be particularly attractive, with UBS analysts predicting compound average growth of 9 percent for sales and 12.5 percent for operating profit between 2012 and 2015.
Brazil alone, where Carrefour is No. 2 in a dynamic food retail market, would be a good candidate for a listing.
“Carrefour could sell non-strategic or underperforming assets for more than 1.3 billion euros, while the flotation of a 25 percent stake of Carrefour Brazil would enable the group to raise 1.2 billion euros,” Barclays analysts said in a note.
A capital hike seems unlikely, given Carrefour’s low share price, but if the asset sale and IPO options take too long, it could be an option to raise cash quickly, analysts said.
It would, however, likely put Plassat on a collision course with top shareholder Blue Capital, which is an alliance of France’s richest man, Bernard Arnault, and US private equity group Colony Capital. Blue Capital declined to comment.
Carrefour faces tough choices to fund revival
Carrefour faces tough choices to fund revival
UAE shares end higher as outcome of US-China trade talks awaited
LONDON: Stock markets in the UAE ended higher on Monday, in step with Asian peers, as investors awaited the outcome of US-China trade talks in London in the hope that a deal could boost the global economic outlook.
Top US and Chinese officials will sit down in London on Monday for talks aimed at defusing the high-stakes trade dispute between the two super powers that has widened to export controls over goods and components critical to global supply chains.
Dubai’s benchmark index hit its highest levels since 2008 and settled up 1 percent, with almost all sectors in positive territory.
Tolls operator Salik Company gained 2.3 percent and Deyaar Development surged 14.6 percent.
In Abu Dhabi, the index was up for a third straight session and gained 0.1 percent, lifted by a 1.6 percent rise in blue-chip developer Aldar Properties and a 1.8 percent advance in Abu Dhabi’s flagship energy firm Abu Dhabi National Energy Company.
Most stock markets in the Gulf and Egypt including Saudi, Qatar, Kuwait are closed on Monday due to a public holiday.
Saudi commercial bank profits jump 16% in April, topping $2bn before zakat, tax
- Year-to-date earnings reached SR32.97 billion, an annual rise of 20%
- Banks getting balance sheets ready for next investment wave
RIYADH: Saudi Arabia’s banking sector extended its winning streak in April, posting SR7.77 billion ($2.07 billion) in pre-zakat and tax profits, a 16 percent increase compared to the same month last year.
According to the Saudi Central Bank, also known as SAMA, this brought year-to-date earnings to SR32.97 billion, an annual rise of 20 percent, keeping the Kingdom firmly on course for another record-breaking period.
The sustained momentum is attributed to a robust mix of state spending on giga-projects, resilient consumer demand, and still-elevated interest rates.
Financing volumes continue to climb, driven primarily by corporate borrowers across a growing range of industries, including manufacturing, utilities, insurance, and private education.
Contractors are also racing to secure long-term credit for giga-projects such as NEOM, Diriyah, and the Jafurah gas field.
A wider Gulf picture
Strong as those local figures are, the broader region is also gaining momentum. A Kamco Invest report released in May showed that Gulf banks collectively earned a record $15.6 billion in the first quarter of 2025, an 8.6 percent increase from a year earlier.
Financial institutions in the UAE posted the largest absolute increase, adding $639.6 million, while Saudi lenders recorded the fastest annual growth at 17.2 percent.
Kamco added that fee income is rising, costs are under control, and loan-loss provisions fell sharply during the period, cushioning a small dip in net interest income.
Investor appetite is visible in market valuations. Forbes Middle East’s “30 Most Valuable Banks 2025” March list includes 10 Saudi lenders with a combined market cap of about $269 billion— roughly one-third of the entire ranking.
Al Rajhi Bank led the pack at $105.6 billion, with Saudi National Bank following at $54.7 billion.
Global Finance named Saudi Awwal Bank the Kingdom’s best lender in its May “World’s Best Banks in the Middle East 2025” release, highlighting its HSBC-backed mobile app upgrades, Visa Direct payments, and one-stop small and medium-sized enterprises lending platform.
Cleaning the books and raising cash
Banks are also getting balance sheets ready for the next investment wave.
Bloomberg reported in March that lenders are exploring sales of older non-performing loans to specialist investors to free up capital for upcoming mega project drawdowns.
They’re also tapping capital markets. By June, they had issued over $5.6 billion in Additional Tier-1 bonds, already a full-year record and the world’s second-largest AT1 issuance in 2025, according to Bloomberg.
The spree includes Al Rajhi Bank’s $1.25 billion deal in April, Banque Saudi Fransi’s $650 million perpetual at 6.375 percent in May, Saudi Awwal Bank’s $650 million inaugural issue, and Alinma Bank’s $500 million of sustainable sukuk, all heavily oversubscribed.
By tapping eager investors now, while margins remain healthy and global demand for Gulf paper is strong, lenders are bulking up capital buffers and keeping loan-to-deposit ratios in check. That leaves them better prepared to fund the fast-rising credit needs of projects like NEOM and Diriyah without tripping liquidity alarms later in the year.
Fintech role
Fintech is reshaping Saudi banking from the ground up. The Saudi Central Bank’s Open Banking Framework — most recently updated in September to cover payment-initiation services — sets common technical rules that let lenders and start-ups plug their systems together safely and at speed.
Speaking at the inaugural 24 Fintech conference in September, Finance Minister Mohammed Al-Jadaan revealed that the Kingdom had licensed 224 fintech firms by the second quarter of 2024, up from fewer than 100 just three years earlier.
One of the newest players is Riyadh-based Stitch, which closed a $10 million seed round on May 28. The company offers a single set of application-programming interfaces that lets banks, fintechs and even non-financial brands bolt on real-time payments and open-banking functions far faster than older systems.
Early adopters already include Lulu Exchange and point-of-sale platform Foodics. The founders say the fresh cash will go toward doubling the engineering team and expanding the product suite.
Looking ahead
Riyad Capital’s first-quarter preview, released in April, expects another double-digit profit rise this year, about SR19 billion for the listed banks it tracks, as loan growth stays strong and rate cuts arrive slowly.
S&P Global, in its Saudi Arabia Banking Sector Outlook 2025 report, says a 10 percent increase in lending should outweigh a 20- to 30-basis-point dip in margins, keeping sector returns on assets near 2.1 percent to 2.2 percent.
Funding is the main watchpoint. Moody’s shifted its system outlook to stable on Feb. 25, saying strong credit growth is tightening liquidity, but capital buffers remain solid.
For now, asset-quality risks remain low. S&P expects non-performing loans to edge up to just 1.7 percent by the end of 2025, while loan-loss provisions are projected to stay around 50 to 60 basis points. Banks’ total capital ratios, hovering near 19 percent, provide a solid buffer to absorb potential shocks from falling oil prices or rising private-sector leverage.
Saudi lenders are still the region’s earnings workhorse. Profits are rising, market values are high, and fresh money — from bond buyers to venture capitalists — is flowing in. If they can keep gathering deposits quickly enough to fund a fast-growing loan book, the Kingdom’s banks look set to stay ahead of their Gulf neighbors in both profit and ambition well into next year.
Saudi carrier flynas to expand operations across 4 hubs, official says
- Hubs include Riyadh, Jeddah, Madinah, and Dammam as part of growth plan
- Carrier expanded its summer schedule, launching four new international destinations
RIYADH: Saudi Arabia’s low-cost carrier flynas is set to expand operations across its four main hubs — Riyadh, Jeddah, Madinah, and Dammam — as part of an ambitious growth plan, according to a top official.
In an interview with Al-Eqtisadiah, Waleed Ahmed, the company’s official spokesperson, said that flynas holds the largest aircraft order in the Kingdom and one of the biggest in the Middle East, with a total of 280 aircraft set to be received.
This follows a major deal signed in July with Airbus to acquire 160 new aircraft, including 30 wide-body A330neo and 130 single-aisle jets across A320neo, A321neo, and A321LR models.
The airline has seen a sharp rise in passenger traffic, with volumes climbing from around 11 million in 2023 to more than 14.7 million in 2024, reflecting the low-cost carrier’s rapid expansion in line with Saudi Arabia’s push to position itself as a leading global hub for tourism and business.
“These numbers reinforce the company’s role in supporting Vision 2030, which aims to increase the number of passengers to 330 million and attract more than 150 million international passengers by that year.” Ahmed said, as quoted by Al-Eqtisadiah.
He also highlighted that, as part of its ambitious strategic plan, flynas has expanded its summer schedule by launching four new destinations for the first time: Krakow in Poland, Geneva in Switzerland, Milan in Italy, and Rize in Turkiye, in addition to its usual summer routes.
Last week, flynas finalized its initial public offering at SR80 ($21) per share — the top of its indicated price range — following strong demand from both institutional and retail investors.
The pricing values the airline at an estimated market capitalization of SR13.6 billion at listing.
The offering followed the company’s announcement last month of its intention to float 30 percent of its share capital on the Saudi Exchange, making flynas the first airline in the Kingdom to go public and the first Gulf airline IPO in nearly two decades.
In line with its ongoing fleet expansion, flynas recently took delivery of its fourth Airbus A320neo of 2025, bringing the total number of A320neo aircraft in its all-Airbus fleet to 57. The current fleet includes 63 aircraft — 57 A320neo, four A320ceo, and two A330neo wide-body jets.
Al-Habtoor Group chairman to lead high-level delegation to Syria, exploring investment opportunities
Al-Habtoor Group chairman to lead high-level delegation to Syria, exploring investment opportunities
- Group said visit reflects its ongoing strategy to explore new cooperation with Syrian government
- Khalaf Al-Habtoor to visit Syria in coming days
RIYADH: The head of Dubai conglomerate Al-Habtoor Group is set to visit Syria with a delegation of senior executives to discuss potential investments and partnerships with the new government.
According to a statement, the visit reflects the group’s ongoing strategy to explore new avenues of cooperation with the Syrian government and to assess potential investment opportunities across multiple sectors.
It added that the trip stems from “a firm belief” in Syria’s ability to recover its strength and regional standing and the importance of public-private partnerships in the country’s rebuilding phase.
The move comes as Syria’s transitional government, led by President Ahmed Al-Sharaa, pushes economic reforms to attract foreign investment, including privatizations, relaxed trade policies, and major infrastructure deals.
Speaking ahead of the trip, the group’s Chairman Khalaf Ahmad Al-Habtoor said: “Syria is a country rich in culture, history, and capable people. We believe in its future potential and are eager to play a role in its revival through meaningful projects that generate employment.”
He added: “We look to Syria with great confidence. Its people possess the energy and resilience needed to shape a strong and prosperous future. As an Arab group with deep regional roots, we consider it both a moral and economic responsibility to stand as a partner in rebuilding stable and thriving societies.”
Al-Habtoor Group, a UAE-based multinational with a strong presence in the hospitality, real estate, and automotive industries, has a history of large-scale investments in the Middle East. The move follows the organization’s recent withdrawal from Lebanon, where it cited instability as a barrier to business.
Jordan’s foreign exchange reserves hold steady at $22.76bn in May
- Gold holdings at the end of May were valued at $7.76 billion
- Qatar Central Bank recorded a 3.6% increase in its foreign currency reserves and liquidity
RIYADH: Jordan’s foreign exchange reserves remained largely unchanged in May, standing at $22.76 billion, as per new data released by the Central Bank of Jordan.
The slight month-on-month dip — about 0.2 percent from April — reflects broad stability in the Kingdom’s external buffers.
Jordan’s foreign exchange figures are broadly in line with trends observed across other Middle East and North African countries.
The Qatar Central Bank recorded a 3.6 percent increase in its foreign currency reserves and liquidity, reaching 258.135 billion Qatari riyals ($70.9 billion) in May, up from 249.165 billion riyals in May 2024.
Egypt’s foreign exchange reserves rose to $48.525 billion by the end of May, compared to $48.144 billion in April, marking an increase of $381 million.
“The Central Bank of Jordan stated in a statement today that its total foreign reserves are sufficient to cover the country’s imports of goods and services for approximately nine months,” the Qatar News Agency reported.
The central bank also reported that gold holdings at the end of May were valued at $7.76 billion, totaling 2.345 million ounces, underscoring the role of bullion in Jordan’s reserve composition.
“It added that the presence of comfortable levels of foreign reserves enhances the ability to influence exchange rates, provides a stable economic environment, and enhances the confidence of foreign creditors and investors,” the QNA report stated, citing the Jordan Central Bank.
In May, Jordan’s long-term foreign-currency issuer default rating was affirmed at “BB-” with a stable outlook by Fitch Ratings, citing the country’s macroeconomic stability and progress on fiscal and economic reforms.
The US-based credit rating agency noted that the rating and stable outlook also reflect Jordan’s resilient financing sources — including a liquid banking sector, a robust public pension fund, and sustained international support.
Despite the stable outlook, Jordan’s credit rating remains below that of several other countries in the region. In February, Fitch affirmed Saudi Arabia’s IDR at “A+” with a stable outlook, while the UAE was rated “AA-.”
Fitch said the ratings are constrained by high government debt, moderate growth, risks from domestic and regional politics, as well as current account deficits and net external debt levels that exceed those of rating peers.
A “BB” rating indicates elevated vulnerability to default risk, particularly in the event of adverse shifts in business or economic conditions. However, it also suggests some degree of financial or operational flexibility in meeting commitments.
Fitch also noted that Jordan’s government remains committed to advancing its three-pillar reform agenda — spanning economic, public administration, and political sectors — despite external pressures.
The agency added that the pace of reforms will continue to be shaped by the need to preserve social stability, resistance from vested interests, and institutional capacity limitations.
