Ladies and gentlemen, welcome to the Carrefour Analyst Conference Call. I now hand over to Alexandre Bompard, Chairman and Chief Executive Officer. Sir, please go ahead.
Good evening to all of you. Thank you for joining us for this presentation of our annual results. Before diving into figures, I'd like to say that they reflect our achievements from the past years with a strong push in digital, fast-paced expansion, allowing us to achieve our 2022 targets one year ahead of time, an attractive own brand leading the food transition for all, a leaner organization open to lease management and franchise, and laser-focused execution to better serve our customers. All of this has changed the face of Carrefour. One year ago, I said that we have moved from a turnaround model to a profitable and cash-generating growth model that will drive further results going forward. Today brings more proof that our model is delivering, making 2021 another year of strong performance in all areas.
Sales continue to grow steadily quarter after quarter, a performance that comes on top of a very strong year in 2020 and amounts to more than 10% over two years. All our key countries continued to gain market share. This growth model came with increased profit as group recurring operating income is up 8% in 2021. In this favorable landscape, France stands out, beating the market in each and every format, gaining 20 basis points in terms of market share for the first time in over a decade, and delivering impressive growth of 20% in operating profit. Lastly, our growth model generated a record level of net free cash flow over EUR 1.2 billion, largely exceeding our objective, which is obviously satisfying. This excellent financial situation allows us to step up our shareholder-oriented policy.
We are proposing to increase the dividend to EUR 0.52 per share for the 2021 financial year. As we expect our cash generation to remain strong and above EUR 1 billion in 2022, we are announcing another EUR 750 million share buyback for 2022. This results in a total return of 8.6% to Carrefour shareholders in 2022 at the current share price. This high level of performance extends to our social and environmental actions. In 2021, we strengthened our ambitions, particularly in the fight against climate change, as we set the target to achieve carbon neutrality by 2040. We stepped up our action to reduce excess packaging, and we favored inclusion by better serving disabled people and onboarding many young workers coming from underprivileged areas. Once again, we exceeded our annual targets.
Our food transition and CSR index stood at 111, and our progress is recognized both by third parties and customers. On a personal note, I'm delighted to see that our group was ranked number 1 among CAC 40 companies by young French graduates from our contributions to society and the environment. In all respects, we have greatly enhanced our attractiveness, and I would like to thank our teams who continue to work in challenging conditions, for our success is the result of their commitment. Turning now to 2022, we look at this year with confidence. Of course, geopolitical tensions are on the rise, and we see the global environment remaining uncertain as it has been since the beginning of the pandemic. Rising costs of energy, raw materials and logistics are adding to the challenge. Inflation is a key day-to-day focus for us right now.
We are very much in control of our model, and we commit to protecting customers' purchasing power while reinforcing our economic model. To this end, we have good commercial momentum that appeal to suppliers, a competitive Carrefour program that offers concrete and suite price solutions to customers on a tight budget, long-standing experience of inflationary environments. On top of that, we are raising our cost-saving program to EUR 2.7 billion on a full-year basis by 2023. Looking at the bigger picture, 2022 is the start of a new cycle for Carrefour as we prepare our next strategic plan. We are poised to be leaders in this new phase, and we are building on key decisions that secure a strong future for our group. I will recap three of them. The first strategic decision was to turn Carrefour into a digital retail leader.
We set out very clear 2026 ambitions to reach EUR 10 billion in e-commerce GMV and to add EUR 600 million to our operating profit by improving our online operations, digitizing our financial services, and ramping up data and retail media activities. This is a new business model for Carrefour, built on our omni-channel capabilities on the wealth of our data, which are unique assets in the industry. This step change is already underway. We are leaders in the grocery home delivery market in continental Europe and notably in France, where we grew our market share to more than 30%, a 6-point increase in one year. In 2021, we also played offense on new markets, quick commerce with Uber and Cajoo, personal shopping with Everli, on social commerce with Brut, and also the buildup of our data-forward solutions like Carrefour Links.
Second decision, in addition to digital, we encode our model in the most buoyant market trends. Trends that are contributing to our leading position. Growth formats such as convenience, cash and carry, and discount, where we have strong results and expertise on healthy, sustainable food, from organic, to plant-based, to low-calorie products, food quality and health concerns are top of mind for customers, and we have a track record of making them affordable to all. This is the very purpose we serve. The third decision was the acquisition of Grupo BIG, which further consolidates our leading position in Brazil. The acquisition process is moving along at pace. We received the good news that the Brazilian antitrust agency recommended that the deal be approved. This will soon contribute sustained growth, significant synergies, in fact, higher than we initially expected, and strong value creation.
Looking at all the opportunities on value creation ahead, it is an exciting time for us. I look forward to presenting our next and new strategic plan for the coming years in our own time. Until then, we are fully focused on running our operations, and we have great confidence for this year. Thank you for your attention. I will now hand over to Matthiew.
Thank you, Alexandre, and hello to everyone. Let's start our financial review with some key takeaways on slide five of the presentation. 2021 confirms Carrefour's consistent growth even on high comps. All our operating and financial KPIs are solid, which reflects solid execution of our strategy. Food e-commerce grew +20% last year and more than doubled since 2019. In France, growth reached 18% and 77% over two years, strongly outperforming the market. Private labels accounted for 31% of sales, up 2 percentage points versus 2020. Carrefour branded products are well-established and recognized by customers, and we gain market share on that segment. We are on track to reach 33% of sales by year-end. Two of the Carrefour 2022 strategic plan targets have already been met one year ahead of plan.
On expansion, with more than 1,100 convenience stores opened last year, we surpassed the objective of 2,700 new stores by far. On the disposal of non-strategic real estate assets, we already completed the target of EUR 300 million, notably thanks to some divestments in Spain in 2021. As we execute our plan, we see the improvement in customer satisfaction, driving market share gains and top-line growth. Like-for-like sales for the year were up 2.3% with Q4 roughly in line with Q3 as planned. Our recurring operating income reached EUR 2.272 billion up 8% at constant currency. As you have already understood, this was very much driven by France, which delivered a strong year.
We ended the year ahead of target on our cost savings plan with EUR 930 million achieved last year. In view of the inflationary environment we are facing today, we decided to increase our cost savings initiatives and are raising the initial objective of EUR 2.4 billion over three years to EUR 2.7 billion. Of which at least EUR 900 million in 2022. Lastly, we generated EUR 1,228 million in net free cash flow, clearly above the EUR 1 billion target, as announced last July. Before we dive into the group's results, I would like to emphasize a couple of key operating achievements, starting with market share gains on slide 6. As you can see, we gained market share in all three core markets of France, Spain, and Brazil, among others.
This is obviously a milestone for France, where Carrefour have been under pressure for many years. We are reaping the benefits of our commercial and operating strategy. We have repositioned in terms of prices, we pay very close attention to our customer satisfaction, and that drives steady improvement in our brand equity. This is also true for e-commerce, as we will see shortly. Spain also enjoys sound momentum, and our Spanish hypermarkets are performing extremely well. Brazil is another satisfaction, notably thanks to Atacadão. We are now a firm leader in the country, and as you know, we'll make a step change in market share this year with the integration of Grupo BIG. The deal is expected to close by the end of Q2 as planned. CADE, the local competition authority, made a positive recommendation a few weeks ago.
CADE's statement notably foresees the divestment of a maximum of 11 stores or less than 3% of total Grupo BIG's portfolio. We are getting to better know Grupo BIG as we prepare for its integration. We have gained the conviction the synergies objective of BRL 1.7 billion we announced last year will be exceeded. We now target at least BRL 2 billion. As you can see on slide 7, we are progressing fast on e-commerce, and France is at the forefront in that matter. 2021 was expected to be a challenging year for e-commerce after a very strong 2020, which benefited from sanitary measures and lockdowns. At the end, market was up again in 2021, and Carrefour posted strong 18% growth, outperforming the market both on click and collect, drive, and home delivery.
Carrefour today presents about 1/3 of the fast-growing home delivery market in France, and we increased our market share by almost 6 points last year. Again, this is strategy at work as we constantly improve our digital offer and optimize logistics for better service. Part of this growth comes from express and quick commerce, segments that grew more than five-fold at Carrefour last year. Let's move on to slide 8 with a view on the two-year like-for-like sales growth. These numbers are a good reflection of Carrefour momentum throughout the pandemic. Taking into account the comparable base of 2020, the performance in H2 2021 is consistent with the previous periods. All in all, sales growth over two years remains quite stable, around 10% like-for-like, with a slight improvement in Q4 versus Q3.
Moving on to slide 9 and more details on Q4 revenue. Q4 like-for-like growth reached 0.7% after strong 8.7% growth in Q4 2020. The performance was particularly solid around December and the festive period. Expansion and M&A contributed to 1.9%. Petrol sales picked up sharply with the rise in oil prices and volumes sold with the easing of COVID constraints in Europe against a favorable comparable base. Forex was a slightly negative 0.6%, primarily due to the erosion of the Argentine peso. In total, revenue was up 5.7% in Q4. As you can see on slide 10, the performance in France was strong.
Like-for-like over two years shows +5.2% for Q4, with a solid 2.1% increase for hypermarkets and high single-digit growth for supermarkets and convenience stores. Over the full year, like-for-like sales grew 1.8% with all formats in positive territory. Once again, the commercial performance was strong, driven by constant focus on customer satisfaction and operational excellence. France was the main driver for the group's strong recurring operating income performance in 2021, with a 20% increase at EUR 757 million and a 30 basis points increase in operating margin. Margin in France has been a key focus for you analysts and investors for a little while, and rightly so. It's also been the case for us.
Moving on to slide 11, you can see that the improvement has been consistent over the past three years. This continuous trend is the result of all the initiatives put in place by the French team on all key operating aspects. First, driving top-line growth through reinforced commercial attractiveness and customer satisfaction, translating into market share gains. Second, fine-tuning operations with the 5-5-5 method and the TOP project, which we presented to you last year. Third, reshaping the store portfolio through the conversion to lease management and franchise. Finally, constantly optimizing the cost structure. We now have a solid track record of improvements. We are confident that we can carry on going forward. All the levers I mentioned still offer room for further progress, so we are confident that we will keep improving our recurring operating margin and reach the medium-term objective of around 3%.
Next, slide is Europe on page 12. Overall, Europe delivered a good year. Recurring operating income was up 3.3% at EUR 718 million, despite marginally negative like-for-like sales growth against high comps. The market environment is quite different from one country to another. Spain was broadly stable at top line level, with a satisfactory Q4 at +1.6% like-for-like, reflecting both market share improvement and a bit of inflation in the past few months. Over two years, this represents a strong 7% like-for-like growth. The acquisition of Supersol is now complete, and all stores have now been converted to Carrefour banners. Italy is on a positive trend and a progressive recovery path. Sales were up for the second consecutive quarter in Q4 at +2.5% like-for-like.
Operations are turning around under the new management team in place, with a steady improvement in customer satisfaction and price image, driving NPS to record high levels. It will take time to fully recover, but the trajectory is positive. We did face a tough environment in Belgium, with a highly competitive market and deflationary strategies of some peers, plus material disruption at one of our key third-party operated logistics platforms. We faced some supply shortages in our stores across H2. As a result, sales were down 6.8% in Q4. Things are progressively returning to normal in the country. Conversely, Poland benefited from a favorable dynamic, notably driven by the recovery in household consumption and the reopening of shopping malls in 2021.
Finally, Romania delivered another good year, with sales up 2% year-on-year, despite some pressure in Q4 as access to shopping malls was restricted to the fully vaccinated population, which is still a minority in the country. In this context, recurring operating margin in Europe increased by 9 basis points to 3.4%. All countries, except Belgium, posted an increase in both recurring operating income and margin. Profitability improvement in 2021 was particularly marked in Spain and in Italy. Moving on to Latin America on slide 13. Sales growth remained high to the region at 9.3% like-for-like, against a very strong 23% increase in 2020. In Brazil, sales were up 1% versus 2020, and 19% versus 2019.
A solid performance in a macroeconomic environment that progressively deteriorated over the year, with high inflation weighing on consumers' purchasing power. Food sales continued to grow, while non-food sales were down against a record high last year, but still up 10% on a two-year stack. Financial services delivered strong results, with billings up close to 15% in 2021. Q4 was a challenging one, but we believe this is temporary due to inflation pressuring consumption. Indeed, we noted that after strong action by Brazil's central bank, macro drivers, including inflation, unemployment, and consumer trends, seemed to be improving at the end of 2021 and in January. In this context, our sales trend reversed in January with positive like-for-like sales growth in Brazil, driven by growth in food, both at Atacadão and Carrefour Retail.
In Argentina, like-for-like sales were up 50% like-for-like, after 49% in 2020. Beyond high food inflation, this performance reflects increase in volumes, meaning continued market share gains. Recurring operating income in Latin America for 2021 was up 6.3%, or EUR 49 million at constant exchange rate to EUR 768 million, after a strong increase of 26% in 2020. We emphasize the impact of Forex on the slide. As you can see on a two-year stack, LatAm generated an incremental EUR 269 million in operating income, which were more than offset by EUR 335 million of negative Forex impact. Operating income showed a 32% profit growth over two years at constant currency.
In Brazil, recurring operating income was at EUR 9 million at constant exchange rates to EUR 714 million, after a strong increase of EUR 184 million in 2020. Improvement in financial services and Atacadão's profitability in 2021 was partly offset by the impact of decreasing non-food sales at Carrefour Retail on very high comparable base. In Argentina, profits kept improving noticeably, thanks to excellent commercial momentum and a continued focus on cost. Recurring operating income amounted to EUR 55 million, representing a 2.4% margin. Let's complete the regional review with Taiwan on slide 14. 2021 sales were up 16.7% at constant exchange rate, thanks notably to the integration of the Wellcome convenience stores. like-for-like sales were up 2.3% in Q4, despite the impact of COVID-related constraints.
Government coupons to boost consumption resumed in October and supported top-line growth. Recurring operating income was down to EUR 78 million over the year, notably due to the impact of sanitary measures which affected traffic in hypermarkets and shopping malls, as well as the integration and conversion cost of Wellcome stores. Let's come back to Group's results now with recurring operating income on slide 15. As you can see, our gross margin further decreased to 21.3%. The trend is now in line with our track record and our expectations. This notably includes the change in mix of operating modes from integrated to more franchise and lease management, and investments in price and competitiveness. In 2021, the 57 basis points margin decrease was also related to the strong increase in petrol sales, which carry low margin. Excluding petrol, the drop was 24 basis points.
Distribution costs were also down to 15.4%, reflecting the benefit of our cost savings plan, which offsets additional expenses for openings, digital, and the impact of inflation. Recurring operating income reached EUR 2,272 million, 7.7% at constant exchange rates. Our operating margin was 8 basis points at constant exchange rates to 3.1%. Moving on to slide 16. The recurring operating income improvement in 2021 reflected various elements. First, the increase in profitability of retail activities despite the situation in Belgium, which had negative impact of several dozen million EUR, and the negative effects linked to the consolidation and conversion cost of recent acquisitions as planned. These acquisitions will contribute positively to Group recurring operating income in 2022.
Second, the improvement in the contribution of financial services, particularly in Spain and Brazil, with a growing credit portfolio and good control over the cost of risk. Moving on to the bottom part of the P&L on slide 17 with a few highlights on key metrics and variations. Non-recurring income and expenses stood at -EUR 374 million, including EUR 385 million of provisions for restructuring. Net financial expense improved by EUR 55 million, which is mainly due to foreign gains and to accounting impact of hyperinflation in Argentina. Income tax decreased to EUR 372 million, driven by the decrease in CVAE in France and the recognition of tax credits. The normative tax rates reduced to 29.9%, reflecting the evolution of the geographic mix of earnings and the decrease in the French corporate tax rate.
Adjusted net income group share improved by 14% to EUR 1,158 million. Adjusted EPS improved by 17% to EUR 1.47 per share, which also reflects the decrease in the number of outstanding shares after the EUR 700 million buyback last year. Net free cash flow on slide 18 increased by EUR 172 million. It amounted to EUR 1,228 million, comfortably above the EUR 1 billion mark as we guided last summer. This is a sound achievement after a sharp increase in 2020, and the confirmation that EUR 1 billion is now a secured floor. We are happy to confirm this target once more for 2022. Let me highlight the key variations for this record level of cash flow on slide 19.
EBITDA was up EUR 85 million. Cash outs for exceptional items, including restructuring costs, were down EUR 177 million. The change in working capital deteriorated by EUR 122 million due to a higher level of inventories at year-end, as we anticipated some purchases in the context of expected inflation and risks on the global supply chain. CapEx reached EUR 1,626 million, very much in line with the EUR 1.5 billion-EUR 1.7 billion objective announced for 2021. A few words on our balance sheets now on slide 20 with the net debt evolution. Our net financial debt was stable year on year, as net free cash flow generation was roughly balanced by returns to shareholders.
The ordinary dividend to group shareholders amounted to EUR 383 million, and dividends to minorities accounted for EUR 192 million. We bought back Carrefour shares for a total of EUR 700 million. Acquisitions and disposals netted to a EUR -88 million impact on debt, including Makro, EUR 27 million, Supersol, the minority stake in Cajoo, and the 10% down payment for the acquisition of Grupo BIG in Brazil.
On the disposal side, the sale of 60% of Market Pay brought EUR 189 million in cash. The final word on slide 21. All key metrics improved steadily in 2021 on top of a very strong year in 2020. We are gaining market share, growing profits year after year, and we are delivering strong cash flows. The trajectory is clear, and we are confident that this will carry on going forward. In view of these dynamics, our confidence in our solid financial position, we are happy to propose a dividend of EUR 0.52 per share to our shareholders at our AGM, which will be held next June. This is consistent with our policy to grow the dividend regularly.
In addition, we are continuing our buyback policy with a new EUR 750 million buyback that will be completed before year-end. Carrefour is running at a good pace, and we look at 2022 with confidence. Thank you for your attention. Alexandre and I are 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 the telephone keypad. First question is from Madame Fabienne Caron from Kepler Cheuvreux. Madame, please go ahead.
Yes. Good evening, everyone. You printed very strong results for 2021, so my questions will be more regarding 2022. Do you believe you could print positive like-for-like in 2022 in France and Europe, would be my first question. Second question, do you expect as well further support from financial services in 2022, please?
Good evening, Fabienne. Yes, we are confident about the commercial momentum in 2022 on the capability for us to deliver a positive like-for-like for, I would say, two type of reasons. The first one is the fact that we have a good commercial momentum. We gain market share in all our geographies, in particular in Europe, in the main geographies and in all the formats. Even if we remain always cautious, we are very confident about our capability to continue to deliver a solid market share performance.
This dynamic of course treats our confidence in the like-for-like. Additionally, I think that the consumption will remain quite dynamic. There have been changes in the industry with the COVID and the out-of-home consumption is continuing to be at a higher level than before. We are going to continue to profit from these positive trends.
These two elements, our own performance and capability to win the market in terms of market share and the fact that the consumption would remain dynamic in food particularly, will shield our confidence about our like-for-like performance.
On your second question, Fabienne, regarding the financial services, as you have understood, we have recovered in 2021 from the drop of 2020, but we have not fully recovered yet. The good news is the credit portfolio is growing globally. We have managed to keep the cost of risk under control.
We are expecting that this trend should keep developing in 2022, with a positive impact on the profit generated there. On top of that, you may remember that we have many initiatives, which will take place, as soon as 2022 in the financial services that were presented to you, during the Digital Day, notably. We are expecting positive credit production trend from these initiatives. Financial services in Brazil will be rolled out to the Grupo BIG perimeter after the due diligence is completed. We think that there will be appetite from Grupo BIG customers for our financial services.
For all these reasons, yes, we are confident that we can keep growing the contribution to profit from the financial service.
Okay. Thank you very much. Very clear.
Thank you, Madame. Next question is from Mr. Nicolas Champ from Barclays. Sir, please go ahead.
Yes, good evening. I have three questions. First of all, could you update on the tariff negotiation with suppliers in France? And more precisely, where do you see food inflation will evolve this year in France? Do you see this as a positive catalyst for your activity or negative? The second question is, you mentioned during the presentation at 3%, you talk again about a 3% EBIT margin target in France in the medium term. What do you think in terms of medium term? I mean, should we consider that this 3% EBIT margin is achievable, let's say, in a three years timeframe, for instance? The third question, could you update on the strategic review of your international operations?
More precisely, could you let us know if you make any progress regarding a potential plan to exit some countries such as Taiwan and Poland, for instance, as reported by the press? Thank you.
Thank you for this question. Of course, inflation is a matter of a very close attention at the moment in Europe. We monitor it very closely. Our industry is facing inflation pressures for micro reasons that everyone has in mind, increase in petrol and energy, shortage of some agricultural products, stress on the worldwide supply chain. Of course, in 2021, the impact was mainly on distribution costs, notably on energy, on logistics. We were able to absorb this inflation, thanks to our strong commercial dynamic and accelerated cost savings.
The inflation was limited on costs because as you know, the majority of the prices were secured through annual contract. Of course, in 2022 inflation would be higher. We expect prices to increase on average low- to mid-single digits in Europe. The conviction we have is that we are in very good position to protect the customers' purchasing power, and in the meantime, to continue to enforce our economic model. I would say that we have a series of advantages for that. We have a strong commercial dynamic, and of course, it's very important for our suppliers, and it enables us to be in good conditions for negotiating.
We have an outstanding experience of inflationary environments, structural or temporary in Latin America, and we share best practices across country. We have the capability to increase our cost-saving programs, which will enable us to absorb inflation. Last of all the work we have been doing on Carrefour branded products and particularly on the entry-price products, Simple brands, it's a good option for customers who wants to preserve their purchasing power on maintaining a good quality standard. We have all this, and we are confident in our capability to reach these two objectives. Concerning the negotiation, of course, it's part of the equation.
The vision we have is that we are quite confident about the way the annual negotiations will end up because we are not in the same position than three or four years ago when we were negotiating. We have a strong dynamic in stores and online. Suppliers appreciate the commercial partnerships with Carrefour. We've never been so important to them. We do think we would be able to close the huge majority of the negotiations in good conditions.
Concerning your second question about France, as you said, it's too early to comment numbers for 2022, but there's no reason why France shouldn't be able to come back to 3% margin in the midterm. You probably remember that in 2018, French margin was 1.3%. Three years later, it has already increased by more than 50%, and we are at 2.1%. We will keep implementing the strategy with very fruitful on what's contributed to the solid margin expansion in France last year. We are not seeking an acceleration. We want to build a sustainable growth model which creates growing profit while being very competitive.
That's what we are doing year after year. Concerning your last question on M&A, nothing very new. As you probably know, we have a new strategic plan beyond 2022, as early fall. We review our asset base. We review every asset base, but of course, it's more important now because of this new strategic plan. The review is progressing. No decision has been made yet in any country. In the meantime, we see value in implementing our strategy in countries where we operate, as our numbers show that very clearly.
Okay. Thank you.
Thank you, sir. Next question is from Mr. Andrew Porteous from HSBC. Sir, please go ahead.
Yeah. Hi, guys, and congrats on a good set of results. A couple from me. Just building on the inflation points, can you just talk about and give us some context on the starting point? You know, where do you see your price position at the moment? Are you happy with it across particular European markets, I guess? It looked like there was some pretty encouraging linear data out recently. Perhaps some comments on that would be helpful. Secondly, perhaps, you know, just talk about the cash flow and what's given you confidence to announce another buyback? I don't think that was necessarily expected. Obviously, you've got the cash out for Brazil this year.
You know, how are you thinking about sort of cash flow and net debt into this year, and how and why does that give you confidence to do another buyback?
Thank you for the question about where we are. I think your question is about France. Constantly for four years, we have been improving our competitive position both in hypermarket and in supermarket. As you probably remember, we have invested in many operations, prix fidélité, prix Grand Marché and vegetable processing, investment in fruit and vegetables. We are consistent in this position of investment. Consequently, we have improved our price perception. In the meantime, we have worked on our price image, working on promotions on plant food, improving our execution to improve price precision in stores.
We are working also on the Carrefour entry-price branded with brand Simpl. We have improved this price reality and this price image. We constantly do that. Of course, the competition remains very dynamic. For four years, we have taken many initiatives. We are back in the game of competition. All our competitors feel that. That's why also we are capable to gain market share this year in all our formats, with the results also of this improvement of our price reality. Concerning the second question, and Matthieu Malige, we complete what is very important to consider is the fact that we have a very strong balance sheet.
We are confident about our annual cash generation. It enables us to do three things in the meantime to have a significant amount in the transformation of our operations. You probably see that CapEx will amount to EUR 1.85 billion in 2022, and we raised digital CapEx by 50%. We invest in the model. In the meantime, and of course it has been proven to be successful. Secondly, we complement this investment with very selective M&A in our core countries and only on accretive EBITDA level for synergy. Notably this year with the acquisition of Grupo BIG in 2022. When this is done on track, we are capable to think about share buyback.
That's why we announced this year EUR 750 million share buyback, because we have the conviction that it is a very accretive investment. Considering the current share price, it's an attractive investment opportunity. The quality of our balance sheet, the capability to generate recurring free cash flow enable us to obtain and to reach these different objectives. Matthew, you want to complete? Thank you.
Thank you, sir. Next question is from Mr. Xavier Dumont from Bank of America. Sir, please go ahead.
Yes. Thank you for taking my question. The first one, you are postponing slightly, you know, the strategic review from initially Q2, now it's early Q4, as you said. Question is what should we expect? I know you're not going to tell me exactly, you know, the details of the plan, but you already did quite a lot. You announced, you know, the digital plan. You have been doing M&A recently. You have been focusing on the full transformation. So what should we expect more or what is the kind of inflection you would like to flag, you know, heading into 2022 and 2023? That's the first question.
Second one, just a bit more technical, but can you help us to understand a bit more the improvement of the profit in France, especially with food service or cash and carry with Promocash and financial services, just to get a sense of what is coming from that and what is coming from the retail operation?
Thank you, Xavier. I will take the first. I hope you would be with us to discover the strategic plan at early fall. You're right about one very important point is the fact that the digital would be at the center of the new model. We communicated a complete global comprehensive vision last November during the Digital Day. We have still a lot of analysis for decisions to take to present a coherent and attractive mid-term strategic plan. It will be released at early fall.
Regarding your second question, Xavier, about the main building blocks in the profit improvement in France. The main contribution comes from the business, from the retailer itself, which again puts interesting commercial dynamics. There is a rebound from Promocash and from the other services like ticketing and travel agencies, which had been closed for some time, but still they were mainly closed until the beginning of the summer. They indeed rebound, but it's a slight rebound than the one in 2021. It mainly comes from the core business.
Okay. If I may, why are you postponing the third day from Q2 to fall?
No, no, it was not postponed. It's the official date. It's the first time we released that. No postpone.
Okay. Thank you.
Thank you, Xavier.
Thank you, sir. Next question is from Mr. Cédric Lecasble from Stifel. Sir, please go ahead.
Thank you. Good evening, Alexandre, Matthieu, and team. I have two questions. The first one on the inflation that you mentioned between low single digits and mid-single digits in Europe. Should we understand that it's a pressure you have from your suppliers, and that you will pass on most of this pressure? Or do you have a different pressure from suppliers, and do you take some of the pressure for yourself? Maybe it could be useful to have, you know, your view on this and how it spreads into the different European countries. The second question is on the consumer behavior. Do you expect any pressure on purchasing power and changes in the consumer behavior, whether in Europe or in Latam, mainly maybe trading down from brands to private labels? What do you expect in 2022?
Thank you very much.
Thank you, Cédric. Now, you know, our role, responsibility is really to combine the two objectives, the protection of the customers' purchasing power and the reinforcement of our economic model. What we see nowadays, and you probably see that some of our peers have made comments about price inflation between 3%-5%, is really consistent with our view of low- to mid-single digits. It's the reality of the market today, and it's this level of food inflation. We have many advantages in the negotiation with the suppliers nowadays due to our market share, and due to the dynamics of our revenues.
We do believe that this level of inflation would be the right path, and it's really coherent with what we see with what our competitors see. On the second questions, you know, I think that nobody is in a better position than us to really feel that the purchasing power is really a key concern for customers. We will also see that in the course of the French election. That's the reality. In the meantime, we see that the consumption fundamentals look dynamic. Salaries are increasing. Unemployment is reducing. Customers made significant savings during the COVID period. There are certain number of support by the government to support purchasing power.
All this gives us confidence in the robustness of consumption. We anticipate the level of inflation I give to you. It's quite limited. At such levels, we do not expect customers to significantly modify their shopping habits. We also have concrete answers to customers who are more impacted by purchasing power constraints. Of course, the private label that accounts for 31% of our revenues and the different All-France Price branded under the Simpl brand. That's what we see today about the consumption fundamentals.
Thank you.
Thank you.
Thank you, sir. Next question is from Mr. Sreedhar Mahamkali from UBS. Sir, please go ahead.
Yes, hi, good evening, everybody. Maybe three questions, sir, then from my side as well, please. First one, just going back, briefly to the French margins in 2022. I think both of you referred to some drivers already, but probably a bit more rebound in non-retail profit contribution to come. Cost savings are accelerating. Again, we have inflation to deal with. Putting them all together, is there any reason why what we've seen in 2021 not a good representation in terms of the run rate to think about next year, I mean 2022, and over the next couple of years? That's the first question.
Second one, can you give us any sense in terms of how significant was the Belgium impact so that we can think about how to model it properly for the European segment in 2022? How is the situation now in Belgium? A third one is slightly more technical. I don't know if you can comment on it just yet, but we believe Grupo BIG has, like, BRL 3.5 billion of tax assets. Do you have any view, early view perhaps, on your ability to leverage these after the closure of the transaction, please? Thank you.
Thank you, Sreedhar. I'll take the first one. I'm not gonna draw you the line as we said on the previous question on the same topic. We feel confident because we think that the growth in profits is here for good reasons, which is competitiveness, customer satisfaction, operational excellence, and good efficiency on operations and costs. When we were meeting three or four years ago, we told you that we wanted to build a model that year after year improved profitability, improved competitiveness in order to grow profits in a sustainable way, and not have any one-off effects. That's what we intend to do for France in the coming years.
About Belgium, as we said, Belgium was the only country in Europe where profitability did not improve last year. That's the combination of two things, the discretionary environment. We probably see that one of our largest competitors tried to regain market share by discounting prices. They drove the whole market down, leading to a situation of deflation, despite the context of cost inflation that we have all in mind. We see that the food inflation in the market went back to a positive territory at the end of the year. It's confirmed in January. The activity is back in the market. Of course, it has affected the performance in 2021.
The second element is related to a supply chain disruption we have had internally with a difficulty by one of our partner in during fall that has impacted our operations for 2 or 3 months. Situation is now solved. Of course, it has had an impact. Consequently, the ROC declined by a few tens of million EUR versus 2020. We are convinced that situation would improve and begins to improve on the market, and our own performance is better also. That's why, 2021 was on particularly the second part of the year was difficult in Belgium.
Thank you.
Yes, on your third question, Trevor, regarding tax assets at Grupo BIG, as you can imagine, they have been identified. It's too early to know exactly how we'll be able to crystallize that, at which phase or which portion of the credits. What I can tell you, and you've seen that in our financial report, is we have an incredible expertise of the tax teams at Carrefour in general and notably in Brazil. We have a fantastic team on the ground there, which is a real asset given the complexity.
We started in 2021 to crystallize, to capture some tax assets, notably ICMS tax credits, which is a very good achievement. We'll try to extend that further in 2022, and then we need to get into the very details of these assets at Grupo BIG. Be assured that it's not outside of the picture.
Got it. Thank you. May I be super short follow-up? In terms of 2022, free cash flow, how should we think about contribution from working capital and cash outflow from restructuring, costs matching? Thank you.
Well, cash out from restructuring has been lower in 2021. We launched a number of restructurings in 2021, which will have a cash out effect in 2022. I think it's fair to assume a greater level of cash outs from restructuring in 2022 versus 2021. Working capital is expected to be a contributor. We notably had a specific situation that I commented earlier on inventory. We decided to put our balance sheet to use in order to have some inventories ahead of the inflation and in order to secure our operations.
I think when we say that we have a solid balance sheet and it's an asset, this is a very practical operating asset. I think it's fair to assume that we have a positive contribution for working capital in 2022.
Thank you both.
Thank you, sir. Next question is from Mr. Clément Genelot from Bryan, Garnier & Co. Sir, please go ahead.
Good evening. Thanks. I would have two questions from my side. Our first one is on cost inflation. Do you see any labor inflation pressures, obviously, because we all have in mind the news of strikes at Carrefour in France around Christmas on this topic. My second question is whether on the cost of marketing the new target implies EUR 300 million additional cost of marketing. Where does this EUR 300 million come from? Is it half in France, half international? Also on that side, should we expect all of these EUR 300 million to fall on our bottom line or rather be invested in prices and so on? Thanks.
Thank you. I think your first question is related to wage inflation.
Indeed.
Okay. Thank you. In 2021, you're right, the wage inflation was fairly limited. We will see more in 2022 in line with the general employment market. We have a quality of discussion with the trade unions for four years, which enable us to transform the company. It's not always easy because, as you know, we take courageous and important decisions for the future of the company. We have a constant dialogue. Of course, we have had this year a dialogue on the annual negotiation.
We have just closed the annual negotiations in hypermarket with an increase of 1.3% of wage in February, and 1.5 in July. We are very positive about the fact that the majority of the trade unions will sign this agreement, which of course is a good sign of the quality of the dialogue and the fact that we managed to both understand and make steps in order to sign agreements. We have signed this agreement. We do think that the majority of the trade unions would sign.
This level of wage inflation will not be a differentiating factor among the retailers as all players traditionally give similar salary rises. We do think it's a positive news for our performance for the company.
On your second question, Clément, about the impact of the increase in cost savings onto the bottom line. It's a three-year objective as you understood. Well, there are many moving parts, notably in 2022. As Alexandre said, we're fully committed to protecting the purchasing power of our consumers while continuing to reinforce our economic model.
I think it's another pocket of value, of resources for us in order to meet these various objectives. We'll see how it develops through the year and in 2023.
Thank you, sir. Next question is from James Grzinic from Jefferies. Sir, please go ahead.
Hi, good evening. Thanks for staying this long. Two quick ones. The first one, just following on from Andrew's point, I want to say I'm also surprised by the extent of the buybacks this early in the year. I just wanted to understand whether that reflects your view that there's greater debt servicing capacity within the balance sheet? Or is it that the at least EUR 1 billion free cash flow you seek for the coming year is perhaps a little bit of a cautious and conservative target this early in the year.
The second one, can I just check, will the integration provisions and costs you'll be taking above the line this year, due to BIG, will that be higher or lower than the ones that you had to take in 2021? I presume it's likely mostly to Wellcome and Supersol in Spain.
Thank you, James. On the buyback and its size, well, I think it's a combination of a strong balance sheet with headroom in credit metrics and an objective to be a solid investment grade. That's where we are comfortably today. Combined with a strong confidence in the cash generation profile of the group. When we combine all that with the fact that at current stock price valuation levels, we consider that buying our shares is an accretive investment that led us to that decision to buy back EUR 750 million.
On your second question regarding Grupo BIG, there was one comment which was made that Grupo BIG will be accretive on profit from year one, which is 2022. I think it's a very different profile of companies versus the one we acquired in 2021. We acquired in 2021 a number of companies which had very high quality assets but which were going through some operational and strategic difficulties. They were breakeven or loss-making, and that's why we had a quite interesting acquisition price.
Now, when you consolidate that and, at the beginning, you consolidate on the first few weeks or months, losses, and progressively you convert the stores, you turn them around, you invest to relaunch them. Now that they're all positive and so we're satisfied with the positions. That was the general profile of the 2021 acquisitions. Grupo BIG is different. It's a profitable business. And although we may have some CapEx, notably investments to relaunch the stores, we anticipate this acquisition to be accretive from 2022 onwards.
Very clear. Thank you, Matthieu.
Thank you, sir. Next question is from Mr. Rob Joyce from Goldman Sachs. Sir, please go ahead.
Thanks very much for taking my questions. Two of them. Firstly, apologies if I missed it, but in terms of EBIT consensus for 2022, I see Visible Alpha at around EUR 2.6 billion, just under. Could you just confirm if you think that's the right level for consensus to be at? The second one, just on your comments on inflation, I guess two things, and if I misheard, apologies, but it sounds like wage inflation running at sort of 1, maybe if you add the two numbers together of 1%-3% for the year. You're expecting food inflation at 3%-5%. In the context of a French market where I don't think we've seen inflation above 1% for at least five years, what gives you the confidence that the...
with those wage levels increasing at that rate, you can fully pass through 3%-5% inflation to the consumer? Thank you.
Thank you, Rob. On the consensus for 2022, we never comment on consensus this early in the year. However, you hear today a message of confidence, which is reinforced by the solid 2021 results, again, in all areas. We confirm the objective for net free cash flow above EUR 1 billion. We won't comment specifically on the recurring operating profit today, but you should hear a message of confidence. About your question on inflation, I think it's years on years, not to say more, that we have not known such a level of increase in energy, transportation, raw material prices, notably agricultural commodities.
It's not possible to compare this year with the years before. We are in a new environment on this point, and of course, you know that by and large considering what happens in all the markets. What we think is that at the end of the day, we believe retailers will have no choice to pass on inflation at some point to customers. There's little room in retailer P&L to absorb cost increases. On what we see, and we see that in the beginning of this year, players are acting rationally. That's what we observed in the past few months in our various geographies as of January.
Some of our peers have made comments about price inflation between 3%-5%, so we are aligned with that, and all the major players share this vision of this level of food inflation. It's a collective conviction and I think it's what we would face this year. Of course, it signifies that we have a very precise analysis week after week, product by product. All the teams are mobilized on that, and it's a very important question to be capable to price at a good level the national brands and the private brands.
At the end, what we see is that inflation would be passed at some point to customers, and that food inflation would be between low to mid-single digits.
Okay, thank you. Just historically, in terms of when you've seen inflation at that level, how have people traded in France? Have they traded into Carrefour? Have they traded down out of Carrefour? How have they done that?
I think we said that we were not at these relatively low levels of inflation. We are not expecting any particular change in consumption behavior. Again, we have a discount format, we have private label, we have a lot of competitiveness. Although we are not expecting that, if it were to happen, I think we are in a good spot.
Very clear. Thank you very much.
Thank you. I think we have one last question.
Yes. The last question is from Mr. Andrew Gwynn from Exane BNP Paribas. Sir, go ahead.
Hi there. Yeah, indeed, most of my questions have been asked, but one particular point I'd like to ask, unfortunately, in terms of excitement. Just looking at the cash flow, there's quite a big disposal proceeds in there. I think it's EUR 277 million. I wasn't expecting to see that in a net free cash flow definition, and it's obviously quite material. Could you just help us first understand what it is, and then secondly, why put it in that net free cash flow figure? Thank you very much.
Thank you, Andrew. Well, that's mainly real estate that we divested. I referred to that in my presentation. That comes on this line. What's interesting is that in the CapEx envelope that we have, so the EUR 1.6 billion last year, there is more than EUR 350 million of real estate that we acquire in that line. A big portion of that is in Latin America. We have a strategy to be quite active on managing and creating value out of real estate side from our, I mean, core retail business.
It means that we acquire, we sell, and so we have pluses and minuses. Again, last year, it's a net investment in real estate, but that's part of our business. It was part of our objective to divest some non-core strategic non-core real estate assets. We're happy we did that, and we keep doing that and creating value out of real estate.
Sorry, just to be clear on it, there's no sort of sale and leasebacks or anything in there like that?
No, it's divestment to third parties. Some of it is maybe a sale and leaseback here or there, but it's mainly managing these assets. We acquire them. We create value. You have some shopping malls there as well. We acquire the shopping mall when we have an opportunity. We create value by reinvesting, by having new tenants, by increasing the occupancy rate. When we feel that the asset is mature and that there is limited value to extract out of it, and when we also take into account that interest rates are low, then we may divest that asset, and in parallel, we would keep investing in other assets where we think we can create real estate value.
Okay. That's it. Thank you so much.
Thank you very much for your attention. It was a pleasure to have this discussion with all of you. We hope to see you in person very soon. Take care and talk to you very soon. Thank you.
Bye-bye.
Bye-bye.
Ladies and gentlemen, this concludes the conference call. Thank you for your participation. You may now disconnect.