Waiting for an agreement on its debt, Casino sinks in the first half of the year

Europe 1 with AFP // Photo credit: MAUD DUPUY / HANS LUCAS / HANS LUCAS VIA AFP 10:44 am, July 27, 2023

The group with 200,000 employees, a quarter of whom are in France, announced Thursday that it had made a net loss of 2.23 billion euros in the first half of 2023, due in particular to impairments, against 259 million euros a year earlier.

He also warned that "the situation presents to date an uncertainty" as to its ability "to continue its operation". And this, "given the legal steps remaining to be taken to implement the financial restructuring" on which the group has been working for months as part of an amicable conciliation procedure on its debt.

The latter amounted to €6.1 billion at 30 June, including €5.5 billion in France. A year earlier at the same time, the group's debt was 5.97 billion.

A share suspended on the stock exchange

Casino had given the green light on July 18 to the offer to recapitalize and restructure its debt presented by billionaires Daniel Kretinsky and Marc Ladreit de Lacharrière, backed by the British investment fund Attestor.

He had set himself the date of Thursday to find an agreement in principle with his creditors, who must decide on the offer presented and give their approval. During a telephone press briefing Thursday morning, Casino Chief Financial Officer David Lubek reaffirmed this goal, saying he was "confident" to the extent that "there is a common interest" in doing so.

Heard on europe1:

Heard on europe1:

The takeover candidates' offer includes the contribution of €1.2 billion in new money and a strong debt restructuring - albeit slightly less than initially expected. They intend to sell the group's activities in Latin America - particularly in Brazil - for which three quarters of the group's employees work.

On the stock exchange, the share was suspended, at the request of Casino, "pending the publication of a press release". The price has fallen by more than 68% since the beginning of the year and amounted to 3.11 euros at the close Wednesday evening.

Need to move fast

If an agreement in principle is indeed ratified, Casino then plans to submit the plan to the approval of its current shareholders - whose weight will be significantly reduced, starting with the current CEO Jean-Charles Naouri - "at the latest" on September 30, for a restructuring of its debt expected by the end of the year. For Daniel Kretinsky, the sooner the better, because the group's commercial activity is in great pain.

The group's sales fell in the first half of 2023, from €11.45 billion in 2022 (figure restated after the sale of the Brazilian brand Assai) to €10.96 billion (-4.2%), in a context of high food inflation that is inflating supermarket turnover.

Casino puts this decline in turnover on the account of price reductions of around 10% in its French supermarkets and hypermarkets, decided after a year 2022 where the group had kept a higher price positioning than the competition.

Its net loss is the result "mainly" of "operating losses of Casino France" on the one hand and, on the other hand, impairments of "deferred taxes assets in France" and "goodwill and brands".

Unions on the alert

The distributor's situation is fraught with uncertainty for its employees. Daniel Kretinsky pledged to "preserve the maximum possible perimeter" of hypermarkets and supermarkets. According to the group's first union, Force Ouvrière, the buyers plan to "franchise a large number of stores", a model in which the majority of costs are the responsibility of the manager.

The situation of Casino "augurs new transformations whose employees could once again be the variable of adjustment", also alerted the CFDT Services, for which the passage of stores in franchise would be as many "restructuring that do not say their name". She hopes for "a real involvement of the public authorities".

In front of the National Assembly, the Minister of the Economy Bruno Le Maire had declared on July 11 that the State would be vigilant on "the future of the 50,000 employees of the group" in France and on the maintenance of the historic headquarters of the group in Saint-Etienne. Employees "do not have to pay for mistakes that may have been made by management," he said.

The candidates for the takeover of Casino have indicated that they want to maintain the headquarters in Saint-Etienne and make it "the center of innovation" of the group.