Ladies and gentlemen, welcome to the Carrefour Analyst Conference Call. I now hand over to Mr Matthieu Malige, Chief Financial Officer. Sir, please go ahead.
Good afternoon, everyone, and thanks for being with us on this third quarter 2021 sales conference call. Overall, Carrefour posted another quarter of growth at group level on top of a very strong performance last year and continued to gain market share in its main countries. Over a two-year period, our like-for-like growth remained at a high level, confirming the solidity of our trajectory. It confirms once again our ability to generate structural growth, thanks to our customer-centric approach and impactful strategic initiatives. This is notably the case in digital with strong momentum in e-commerce. This allows us to confirm today that we expect net free cash flow for the full year 2021 to be comfortably above EUR 1 billion as guided in July. Let's start with the global view on slide two of the presentation.
Like-for-like sales were up 0.8% in Q3, which constitutes a solid performance as it comes on the back of a high comparable base. As a matter of fact, sales were up 8.4% like-for-like in Q3 last year in the particular context of important sanitary constraints at the time. Besides this satisfactory like-for-like performance, expansion and M&A contributed for 1.7 percentage points of sales growth, a clear acceleration. This indicator translates the fast organic expansion of our growth formats such as convenience, Supeco, and Atacadão, as well as the benefits from recent acquisitions. Petrol sales picked up significantly and contributed for two points to the total sales growth. This reflects the increase in oil prices and the easing of sanitary measures in Europe against a very favorable comparable base as travel was vastly constrained last year.
Forex, while remaining slightly negative at -0.7%, eased versus H1 thanks to the relative stability of the Brazilian real versus last year, which helped offset the depreciation of the Argentine peso. In total, revenue was up 4% in Q3. As you can see on Slide three, the two-year stack for Q3 remains at a very high level, +9.2% cumulative like-for-like despite high comps and headwinds in Q3 versus H1. These headwinds include sanitary constraints affecting our business, notably in France, much more consumption in bars and restaurants in Europe and importantly in Spain, and the progressive return of workers to their offices across all geographies. Let's now review our different markets in more detail, starting with France on Slide four. Like-for-like sales growth was marginally negative at -0.3% against a strong +3.8% in Q3 last year.
This decrease was notably driven by the negative effect of the sanitary pass that was implemented from mid-August to end September by the French authorities restricting access to large shopping malls. The measure affected up to 25% of our hypermarkets at peak, including the largest ones. We estimate that it affected the total French like-for-like performance by 0.8 percentage points in the quarter, which means that the underlying like-for-like growth for France would have been positive by about 0.5% in Q3. Despite this and the fact that we are a bit more exposed than peers to large shopping malls that were constrained, we gained market share over the period, another sign of the strength of our commercial dynamics. Hypers decreased by -2.8% like-for-like over the quarter, of which more than half was related to the implementation of the pass.
The other formats kept generating solid like-for-like growth, which we see as very satisfactory against challenging comps. Supermarkets were up 2.2% over the quarter, and convenience stores were up 1.2%. Last, e-commerce was up 19% against very high comps, which confirms our anticipation that we would keep growing on the high levels of sales reached during COVID. Moving on to other European countries on Slide 5. A number of positive elements to have in mind this quarter. In Spain, Carrefour enjoyed good market share gains despite high comps, notably in non-food, and the rise in out-of-home food consumption. Those two drivers mostly impacted the hypermarket format while other formats did pretty well, notably Express and Supeco. The Supersol integration is well underway and starting to generate positive effects. Italy was back in positive territory with +0.8% like-for-like growth driven by food sales.
We see this as a very satisfactory sign that our efforts in the country are starting to pay off. NPS has been increasing steadily for a few months and reached record highs, notably thanks to a much-improved price perception. Romania was also strong, with like-for-like sales up +5.9%. The Romanian economy is picking up nicely, which is supporting our activity. In addition, we continue with our self-help story, including a fast launch of our loyalty program in the country and ongoing momentum for Bringo and our e-commerce offer. Poland was marginally positive at +0.9% like-for-like. Belgium was disappointing, down -5.4% like-for-like in Q3, as we had to face a deflationary market. We were also temporarily affected by some social issues at one of our logistics suppliers, which affected product availability in our stores at the end of September.
Moving on to Latin America on Slide six, starting with Brazil. Atacadão keeps capitalizing on its leadership position and its best-in-class price competitiveness. like-for-like sales were up 2.7% in the format over the quarter, a very strong performance after 25.8% growth achieved in Q3 last year. The pace of expansion remains fast, with 48 new stores opened over the last 12 months, including Makro. We anticipate Atacadão will further consolidate its market share leadership next year as we close the Grupo BIG acquisition. The 13.3% decrease in like-for-like sales at Carrefour Retail was expected and fully driven by non-food, as food sales remained stable against record levels achieved last year. On a two-year stack, both food and non-food delivered positive sales growth. Financial services enjoyed a +26% increase in billings in Q3. Activity has now fully recovered from the COVID-related drop last year.
Argentina's performance was once again shaped around a very high level of inflation. In that context, Carrefour continued to outperform the market with 57% like-for-like revenue growth, reflecting a record level even when restated for inflation, thanks to sharp volume growth driven by all-time high NPS levels. A word on Taiwan now on Slide seven. Sales were up 16.8% over the quarter, thanks to the Wellcome integration, and down 5.2% on a like-for-like basis. The conversion of the Wellcome stores to our Carrefour banners deliver results above their historical numbers and our own expectations. As a matter of fact, all converted stores ramped up extremely fast as they reopened. This is very promising. In Q3, the underlying business was affected by ongoing sanitary restrictions that affected important festive events, including the Double 11 celebrations and the Moon Festival. A word on digital on Slide eight.
Q3 was another quarter of strong performance for our e-commerce activity, as it grew by close to 20% after a very strong increase last year. Food e-commerce at Carrefour has more than doubled over the past two years. Customers have a strong appetite for click and collect and for home delivery services. We are meeting their expectations. Our NPS for e-commerce shows great improvements. We consistently gain market share. We launched many initiatives in all our geographies. One of them is the acquisition of a minority stake in Cajoo in July, a French pioneer in quick commerce. We see a lot of potential in this emerging segment, which we are also exploring through our new Carouf service, which offers 1,000 SKUs to be delivered in 15 minutes and our partnerships with Uber and Deliveroo. Another key highlight of the quarter is Atacadão.
Less than 18 months ago, after we launched Atacadão digital channel, it already represents more than half of Carrefour Brazil sales in food e-commerce. This underscores the attractiveness and growth potential of this model. We will continue to deploy it at a rapid pace. Before we move to closing remarks and your questions, I would like to say a few words on our ongoing transformation on Slide 9. There were a few announcements since we last spoke in July, which highlight our fast pace. In February 2020, we announced an additional disposal plan for non-strategic real estate assets for EUR 300 million, following the initial EUR 500 million that had been delivered a year ahead of initial plan. Well, we're in advance once again.
More than 80% of the new plan, or EUR 250 million, have already been secured following the disposal of real estate of seven hypermarkets in Spain through a EUR 93 million agreement last September. Another key pillar of our transformation is the transfer of directly operated stores to franchise and lease management. A few weeks ago, Carrefour Italy announced that over 50 stores would switch from directly owned to franchise in 2021, and that 25 additional stores would switch in Q1 2022. Last week we announced the conversion in France of 43 stores, 16 hypermarkets, and 27 supermarkets into lease management for 2022. In a nutshell, on slide 10, the key takeaways we wanted to share with you today are the following. A satisfactory sales performance in Q3 against very high comps and despite a few external factors affecting us.
Based on this performance and our expectations for Q4, we confirm that we anticipate 2021 net free cash flow to be comfortably above EUR 1 billion, as said in July. We keep delivering on our strategic roadmap, notably on the disposal of non-core real estate assets and on the transfer of company-operated stores to lease management and franchise. At last, we maintain a strong momentum on e-commerce in all markets with solid revenue growth on high COVID related numbers last year and improving NPS levels. We are all impatient to see you in person in Paris on 9 November to deep dive into our digital ambitions going forward. I thank you for your attention, and I am now ready to take your questions.
Thank you, sir. Ladies and gentlemen, if you wish to ask a question, you may press zero, one on your telephone keypad. It's 01 on your telephone keypad. First question is from Madame Fabienne Caron from Kepler Cheuvreux. Madame, please go ahead.
Hi, good afternoon, everyone. I've got a simple question on the last announcement you've done on the 16 hyper regarding lease management in France. Matthieu, can you confirm that including these stores, it will be roughly one third of the hypermarket in France being either franchisee or under lease management? This would be my first question. My second question is, I was surprised when I looked at the size of the store. They are very big stores, above 10,000 sq m, of which one of 19,000 sq m. I was wondering if you could tell us a bit more about this strategy, moving big stores, which has not been done so far, and if you have a feeling regarding the sales and the EBIT loss of those stores. Thank you.
Thank you very much, Fabienne. Yes, you're perfectly right. We did announce 16 hypermarkets and 27 supermarkets to switch to lease management and franchise in the course of 2022. We will get close to 30% of the portfolio of hypermarkets by the end of 2022, when these hypermarkets have been transferred. Let me come back on our strategy and what are our main takeouts from the first hypermarkets that were transferred to lease management a few years ago. It appears that lease management is an efficient way to turn less profitable stores and hypermarkets in general, to turn them around. The lease manager, the operator, brings an entrepreneurial spirit in the stores. He has less constraints, more autonomy in the way he manages the organization of the stores. He has a great focus, maybe a greater focus on operations, customers, and the bottom line of the stores.
We have seen in the past tremendous improvements in performance, commercial performance, operating performance, and also financial performance and profitability in the hypers that were converted. At the end of the day, our studies show that our partner is satisfied, our customer are satisfied. The overall performance of the store is positive, and t hrough that transfer, we have improved the performance. You're right. It is a win-win move that allows notably to address some hypermarkets that are loss-making. You're right. We have decided to extend the approach to bigger hypers than what we did in the 1st wave. We're confident that we will see a similar profitable aspect and dynamic in these stores. As far as the numbers, so the sales and profitability, we are not disclosing that level of details. Thank you.
Okay. Thank you, Matthieu, v ery useful. Thank you a lot.
Thank you, Nadia. Next question is from Mr. Cédric Lecasble from Stifel. Sir, go ahead.
Yes, thank you for taking my question. Good evening, Matthieu and team. I would have two questions. First one on the potential reconsidering the scope through either consolidation in France. I would be interested in your recent thoughts on your updated thoughts on potential consolidation of the market in France and where you stand in terms of potential disposals. I'm thinking of the smaller countries that are not necessarily core in your portfolio. The second question would be on the strong free cash flow improvement this year. Could you come back maybe and quantify maybe the big pieces, the big part of the free cash flow improvement, maybe going through cash generation, your CapEx, working capital, maybe to help us understand the big drivers. Thank you very much.
Thank you, Cedric, for that. On your first question on the perimeters, I will not comment any further the recent press articles. I think our strategy is very clear, and it's been a constant for months as far as M&A on the acquisition side first, and I will come on potential divestment in a minute. We are taking initiatives exclusively on potential bolt-on M&A, with a focus on our three core markets, France, Spain, and Brazil. We don't need any transformational M&A. This is our strategy as to expansion. Yes, we've seen examples of that. I think Grupo BIG was an example. Makro was an example. Supersol was an example. Wellcome was one, Bio c' Bon also. This is our constant strategy. Yes, we are active in our various geographies to see if we have any further opportunities for bolt-on M&A.
As far as potential disposals, no decision has been made on any evolution of the perimeter of the group. We are constantly analyzing the value that as a group we can bring to each of our geographies. In particular, at the moment, we have stated that very clearly. We are preparing for a new strategic plan that we would share with you at some point next year. We are reviewing the situation that we have in each of our geographies, analyzing the potential of development of such geography in a very standard strategic review. That's about perimeter, so very continuation of our ongoing strategy.
As far as the free cash flow improvement, I shared with you a slide, if I recall well, that was probably in February during the full year results presentation, where I tried to guide you as to what would be the main breaks to move from the 2020 EUR 1 billion cash flow to the objective of being above EUR 1 billion that we set at the time for 2021. Clearly, I don't have the page in front of me, but I think the main breaks are absolutely valid. Clearly, a growth of our profitability levels versus last year, a decrease in cash out of restructuring and exceptional expenses. As you know, we've had a number of restructuring plans at the beginning of the year plan in 2018, 2019, which were cashed out in the following years. 2021, we see less cashing out that we had last year.
An increase of CapEx. We had a low level of CapEx last year, EUR 1.2 billion, and we are guiding towards EUR 1.5 to 1.7 billion this year, so that would be a drag on the cash flow versus last year.
Okay, no change versus your previous comments.
That's the plan.
Yeah, o kay. Nothing, no break has really changed since your initial comments.
Exactly, yes. The plan is really delivering as we had planned.
Okay, that's fine. Thank you.
Thank you, sir. Next question is from Mr. Nicolas Champ from Barclays. Sir, go ahead.
Yes. Good afternoon. Thanks for taking my question. I have three questions. The first one is maybe just to follow up on Cédric's question. Could you elaborate a bit more on the working capital valuation you expect for the end of the year, and especially in the context of maybe some supply chain disruptions in non-food, in France or in the rest of Europe? Do you see any risk of disruptions, and again, how it could impact your working capital for this year, for the end of the year? The second question is, could you maybe elaborate a bit on your performances since the beginning of October? Exit rate. Do you still see hypermarket performance improving? The negative impact of the sanitary pass disappearing.
My third question is, could you please comment on the Bloomberg consensus, EBIT consensus, expectation for this year, which is, I think, if I am correct, EUR 2.26 billion for this year, EBIT. Are you comfortable with this number? Thank you.
Thank you very much, Nicolas. Thanks for raising the points on supply chain and potential shortage. It's a new topic, which is very important for us. We look at it very seriously. We know that the risk of shortage may come from many origins, we pay a lot of attention to it. This being said, as far as the end of the year is concerned, we've been quite active in securing merchandise delivery over the past month. I think the teams have done a very good job at anticipating that well. As far as our international shipping capacity is concerned, they are booked many quarters and many months in advance. We see no significant pressure on the capacity for international supply chain.
That being said, we're reasonably confident that we will receive our merchandise for the end of the year season, obviously remaining very focused and prudent about this given the international context. So far we are reasonably confident. Beyond the end of the year, that is going to be an important topic for next year. We're also already monitoring the situation closely for the first half. So far, we are also in good control, but we are monitoring that very closely. As far as working capital associated to that, we don't anticipate any significant impact for the end of the year. We may decide to have a little bit of overstock on a given product category to make sure that we can serve our customers, but I anticipate that to be limited in terms of impact.
In terms of performance since the beginning of October, I'm obviously not going to comment on that. Just to come back maybe on the sanitary pass. The impact on a given store has been quite significant when the sanitary pass was implemented with a significant decrease in sales performance on the first days where the pass was implemented. When the pass was released, the sales performance went back very quickly in just a few days, to their initial trend. I think the teams have also been very active in sending messages, notably to the customers of these stores, to make them well aware that they could freely access to their store. Once the sanitary pass was over, the trend went back to normal. There is nothing specific to report on the first weeks of October.
On your last question regarding the full-year consensus in terms of recurring operating income, well, we think that the ongoing expectations are consistent with the current trend of the business and our current expectations for Q4. We all know that this Q4 is an important quarter in our industry. The environment is particularly volatile, maybe given the current economic and sanitary context. With all this taken into account, we're confident and are targeting to close the year roughly in line with the current consensus.
Very clear. Thanks, Matthieu.
Thank you, sir. Next question is from Mr. Arnaud Joly from Societe Generale. Sir, please go ahead.
Yes, good evening, Mathieu and team. I have three questions. The first one on the potential margin recovery in France. Of course, this is related with the recent Auchan episode. Do you think that the consolidation of the market is a necessary condition to reach a kind of normalized level, or do you think that it can be achieved with the current market structure? The second question is on the disposal of the real estate of seven hypermarkets in Spain. Why is the ownership of these stores not strategic in this specific case? The last question on France again, what is your view on the new law, Egalim 2? In your view, what could be the potential impact on your negotiations with suppliers? Thanks.
Thank you very much, Arnaud. On the margins in France, I think we have a very constant position. We have a dynamic of improving our recurring operating income in France for the past two, three years. We were, if I have the numbers well in mind, at roughly 1.5% of sales, and we were probably last year at 2%, and we posted some growth again in H1 this year. We have a good top line, market share, NPS dynamics. This is combined with very efficient operations and cost savings dynamic. We can both keep improving our competitiveness, keep improving the satisfaction of our customers, develop e-commerce while increasing our profitability.
As we have been sharing with a number of you and with investors, we see no reason why we wouldn't be able to get back to the levels of profitability in France that we reached a few years ago, close to 3% of profitability. This is clearly our target. We don't need any M&A or consolidation in the market to get there. We have the right strategy. It is performing. We're proving it quarter after quarter, and we are very confident in that dynamic. In terms of real estate in Spain, it's a very granular analysis that is made to analyze what's the competition, to see if the competitors are renting or leasing their stores, and what is the potential value for that real estate.
If we consider that owning the real estate is not strategic, if we consider that we don't have a potential to develop that real estate and extract value from that real estate in the future, you know very well our capital allocation policy, it makes sense, if we find the right terms, to divest that real estate, reemploy our capital in our capital allocation policy. We're very close to the EUR 300 million that we set as an objective, this is progressing very smoothly. Last question that you asked was on Egalim 2. As you all know, there is a new law called Egalim 2, which is being passed in parliament over these few days. Let me say that we are aligned with the spirit of the law, which is to protect the revenue of farmer.
This is really at the core of our mission to be the leader in the food transition. We're also in favor of more transparency, notably on what is ultimately paid to the farmers, and what is ultimately paid to the farmers is mostly the responsibility of the industrial players. Inside the retailer community, we are clearly the more advanced on the matter with thousands of contracts with producers. That's the Filières Qualité Carrefour, the Carrefour Quality Line that we've been pursuing for close to 30 years now. There is a new law. We need to wait for the implementation of the decree to know exactly what will be the range of products that will be concerned by the new law. It's not very clear as we speak. We don't think it is going to change structurally and impact structurally our business.
There's been probably 15 laws over the past 15 years, so it is a pattern of the French regulatory environment. We have always adapted to these new laws. They have never been a factor of performance or counter-performance for one given player. It may change a little bit the way we negotiate with suppliers. We will adapt, but we do not think it will impact our overall business. We need to wait a few weeks to see how it crystallizes in detail.
Thank you very much.
Thank you, sir. Next question is from Mr. Xavier Le Mené from Bank of America Securities. Sir, please go ahead.
Yes, good afternoon. two questions, if I may, then. The first one, we've seen a strong growth of your financial services in Brazil, but can you also comment what financial services are doing in France? Whether we should expect some more provision coming in the second half or not because of the growth you're seeing. That would be my first question. The second one, actually, Italy, you made some progress and you said you are happy with already some initiatives, but how confident are you that you can continue to deliver positive like-for-like in the coming quarters? I know it won't be a straight line, but just to see what kind of initiatives you have been implementing and how confident you are for the coming quarters in Italy.
Thank you, Xavier. Yes, financial services. Let me maybe complement what we have said on Brazil, I will move on to our other European geographies. You're right, very strong dynamics of building, of credit production in Brazil. The portfolio of credit is ramping up and is above its pre-COVID crisis level. The level of provision is stable. We're increasing a little bit as we're producing more credits, but the credit quality remains very well under control. We're very satisfied with the quality of the new credits that we have produced. Consequently, the profitability of our bank in Brazil is improving, and we anticipate it to keep improving for the full year. In Europe, quite different situation. The trends in the markets are that the production of credit is relatively slow, roughly in line with the trends we had over the first half.
No big slowdown, neither any acceleration, which is overall quite a low level of credit production. The quality of the credit portfolio is very good. That allows us to have positive news on the provision side. The profitability in Europe is very well under control and even increasing a little bit as we speak, and that's so far what we anticipate for the end of the year. In Italy, yes, good news that we are returning back to a positive level. I think behind this positive like-for-like is clearly a direct impact of the initiatives that were taken by the management, including decreasing prices, focusing on execution, 5-5-5 approach. The top, also, organization model has been implemented in the stores. Consequently, we see, and actually we have seen for now quite a few months, the NPS going in the right direction.
When we dig a little bit, we see that the price image aspect of the NPS is clearly lifting the overall satisfaction of customers. That's very positive. I don't think it's the end of the game. I think it is a positive sign, but I think it remains fragile, so we will need to confirm that in the future. Let's see where it comes in the future. We see structural positive results. Let's give it a little more time. Happy to share positive news with you regarding Italy.
Okay. Thank you very much.
Thank you, sir. Next question is from Mr. James Grzinic from Jefferies. Sir, go ahead.
Thank you. Good evening, Mathieu and team. I had two quick ones, actually. First one is a follow-up on the financial services. Should we expect any provisions write-backs given what you're saying on the credit quality, Mathieu, on the bad debt experience in the past few months? Is your thinking around the full year EBIT exclusive or anything that might come from provision write-backs? Secondly, quickly, to give you a point in terms of disruption from the past to the French hypers, can you perhaps tell us relative to that 25% peak disrupted store base, where we are now, how much of the hyper base is now disrupted? Thank you.
Thank you, James. Well, we will go through the full provision exercise as part of the closing of the accounts of the year. I think that if the credit quality remains good, there should be opportunity to have write-backs. This will be balanced, notably in Brazil, with more credit production. You know, in IFRS 9, we need to allocate some provision when we produce a credit regardless of the performance of the customer, which is a statistical provision. Yes, I think the overall credit portfolio quality is going in the right direction. In terms of the sanitary pass in France, let me indeed come back on that. The pass is over now. Let me maybe say that was maybe not clear, meaning that we have no stores that are concerned by the sanitary pass any longer. All stores can be freely accessed.
Let me come back on how it developed. The sanitary pass was imposed mid-August, in 27 French departments, French counties. Indeed, 25% of our hypers were concerned with significant sales impact, as I said to Nicolas. The implementation of the pass was dependent on the level of COVID cases in the local area. As we had no fourth wave and the level of COVID decreased weeks after weeks, the measure was lifted progressively. We had a first reduction after one week in September, we just had only 10% of our hypers that were concerned. At the end of September, none of our stores were affected anymore by the measure. This is behind us.
This is potentially something that could come back if COVID were to rise, but I think the progress of the vaccination is quite important in France, and we are confident that we should not have any more of this measure in the future.
Thank you, Mathieu and peeps , just a follow-up on that. I appreciate the caveats around, we don't know what may happen by the time we get to December. Assuming there's no changes to current restrictions in France, do you think Q4 trading this year relative to Q4 trading last year should be helped? In other words, was Q4 trading 2020 impacted by restrictions in France in your mind? Would you have done better without those?
We knew in Q3 that we had quite high historicals. I think it was 8.4% in Q3 last year. If I recall, it is 8.7% in Q4 2020, about the same level of historicals. As far as France is concerned, we've had, you may remember, some constraint on some non-food categories last year in November, which had to be closed for a few weeks around the November period. The December and Christmas season was free of any constraint, and you may remember that our performance in Christmas was very good. Well, we are delivering a positive trend on about the same level of historicals in Q3. We'll see, what we know, I think more importantly, is that our business is strong, that we're gaining market share in all our geographies, that our e-commerce is performing well, also gaining market share.
We'll see what the market will be, but we're very confident in our relative performance versus peers. I don't see any reason why that would change in particular.
Thank you.
Thank you, sir. Next question is from Mr. Clément Genelot from Bryan Garnier. Sir, go ahead.
Yes, thanks. Good evening, everyone. I've got two questions for Matthieu if I may. The first one is on non-food. What is your current view on non-food in France, and when do you plan to, let's say, resume a reduction of sellings surface in hypers? My second question is rather on the free cash flow and market allocation. What kind of capital allocations do we expect in 2022 between CapEx, M&A, and also shareholder return? Thanks.
Thank you, Clément. First on non-food. The performance, it is hard to read, let us be clear, our non-food performance. That is why we have shared with you numbers over 1 year and over 2 years. There is a good non-food dynamics. I think that we have taken a number of initiatives in that respect. Notably the in and out concept that you may have seen in a number of our stores. This is some products that change, so the assortment changes. There is some treasure hunt dynamic for our customers. The prices are very low, and this is products where we would compete with competitors like Action or Lidl on the non-food part. They are very well appreciated by customers and a significant driver of traffic. We keep also accelerating online on non-food. We have a number of products that we source and that we use for our stores.
They're great products. We are proposing them also online. We're going to keep moving on with this strategy. In terms of sales area reduction, we keep reducing our sales area, notably in the non-food section, when we implement an e-commerce micro-fulfillment center. You know, we have devoted more CapEx, inside the annual envelope, but we have devoted more CapEx to these micro-fulfillment centers. We are comfortable with the model, with the operations of the model, with the operating performance of the micro-fulfillment center. We are now rolling out this model. Consequently, we reduce in specific stores our non-food sales area. On the capital allocation, I think that there is here also no particular change. Our capital allocation policy clearly prioritizes CapEx and the transformation of our business. This is the priority. We don't want to mitigate at all with this.
We need to keep transforming our business. We are convinced that with the envelope of CapEx that we have shared with you, this is the right level of investment to transform and modernize our business. Once this is done and we have this net free cash flow that we've been discussing, well, it's a constant arbitrage between M&A and return to shareholders. The arbitrage is mainly based on value creation. We are value driven and shareholder oriented. Yes, investing in our countries is a key priority along the strategic lines that you know. Once this is done, this is an arbitrage between M&A and giving the money back to shareholders through a regular dividend and share buyback if there is more money to be returned.
Thanks a lot.
Thank you, sir. Next question is from Mr. Sreedhar Mahamkali from UBS. Please go ahead.
Hi, good evening. Thanks for taking my questions, Matthieu. To follow up on James's question earlier on banking, but perhaps more broadly on non-retail, we're clearly seeing a much better trajectory in the second half. We're seeing strong bounce back in Promocash, and your comments on banking in Europe are reassuring as well. It's quite a meaningful impact. Last year, we've seen EUR 90 million, EUR 20 million in France in the second half. That's about EUR 110 million, which is really all the profit growth or just a little bit under the profit growth expected by consensus for the second half of this year relative to last year.
I'm just trying to understand to what extent should we be thinking the profit growth is able to be recovered from that EUR 110 million combined impact in France and Europe, given it's a mix of banking and non-banking sort of activities. Second question, fairly big picture question, maybe you don't want to answer it, but I'll have a go anyway. Just in terms of sort of philosophically thinking about it, what factors and what criteria do you and the board consider when evaluating a potential interest in Carrefour from another party? I know a bit of a theoretical question, I'm sure, but any thoughts there will be very helpful. Thank you.
Thank you, Sreedhar. Thanks for putting the light on these other activities and other services, including ticketing for events, travel agency, and so on. Well, clearly these activities are going back to business. You know, they were closed for some periods, depending on geographies and periods, but they have been closed by a government decision in the past. The business is getting back to life. Would we have recovered the full profitability? I'm not sure. It's going to depend on how the year finishes. What is sure is that these businesses are now performing, and that the level of profitability will be better versus what it was last year. On your second question, I have nothing specific. I think we're already evaluating opportunities like any board would do. I have, well, nothing specific to say there.
Okay v ery quick one. The strategic plan you referred to, Matthieu, should we expect something along those lines with the full year results early next year, or is that at a later point?
Sorry, I missed your question on
The strategic plan that you addressed earlier.
Oh, strategic plan.
Yeah.
Well, no, it will be sometime next year. We've not set any precise moment. I think so we see. I'm not going to develop that. We will have a first, I think, very interesting moment together for the digital day, where a very important part, our digital eCommerce data strategy, will be shared with you. That will be a first discussion, and you will have to wait a little more for the food plan.
Thank you.
Thank you, sir. Next question is from Mr. Andrew Gwynn from Exane BNP Paribas. Sir, please go ahead.
Hi there. Yep. In the interest of time, I'll just keep it to one. Just food inflation, it's obviously still very, very low in France. I think it came through this morning around about 1% for September. Just wondering what's going on there. Are we seeing significant cost inflation at present, and what's the short-term outlook? Apologies to finish on a slightly dull question, less of those have been asked. Thank you.
No, thank you, Andrew, for a question I'm sure a lot have on their mind. Very important and hot topic for today and probably for the other quarters to come. There is low inflation on the customer side because we at Carrefour, and I think for other retailers, have annual contracts for purchasing from suppliers. This is the French law, and actually, it's the case for Carrefour in a high number of geographies, both in merchandise and non-merchandise contracts. These contracts are annual contracts, and so they set the price of a given product for a 12-month period. In France, typically these contracts start on 1 March and end on 28 February of the following year. Clearly, we see some demands from suppliers to raise prices. That's not a surprise. These demands are rejected, and we have on the back of these annual contracts.
This is why we had a paragraph in the press release saying that we were not expecting any significant impact from inflation on our global performance in 2021, because we think these increases would be rejected. Consequently, they've limited pressure to pass any inflation on to customers. The approach of Carrefour is really going forward to preserve the purchasing power of our customers. We will be very aggressive in delaying the increases from suppliers as much as we can and postponing, if they are necessary, price increases to the customers. We'll try to limit as much as we can these price increases. We think that we have a very strong cost savings dynamic, probably the strongest cost savings dynamic in the market. We've proven that over the past few years, being able to invest in our competitiveness while improving our profitability.
This is thanks to a very strong cost savings dynamic. It is still going on. We have this EUR 2.4 billion objective. We're very comfortable with this objective. That's the situation on inflation. We'll see what's the situation for 2022. There will probably be a little more inflation in the market in 2022. I think we have time for a last question, operator.
Yes. The last question is from Mr. Rob Joyce from Goldman Sachs. Sir, go ahead.
Thanks very much. It is just one from me. I think you said then you think there is no reason France cannot get to a 3% EBIT margin. Is there any sort of timeframe we should be thinking about around that number? Thank you.
Clearly, it's an objective, we're working actively to reach that objective. We have not set any specific date. I think you would appreciate the sanitary inflation and macro environment. We are progressing regularly and intend to keep progressing regularly towards that objective, obviously, as fast as we can. Thank you very much all for your questions and attention today, and hope to speak to you very soon. Thank you very much.
Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.