Welcome to Casino Group third quarter revenue 2022 conference call. I now hand over to Mr. David Lubek, Chief Financial Officer of Casino Group. Sir, please go ahead.
Thank you. Good morning, everyone. Thank you for attending our quarterly sales conference call. Before going into the details of our release, a few words of introduction regarding our Q3 performance in France and Latin America. In France, the return to growth outlined in our Q2 release is confirmed. Our food retail sales are up 3.9% in like-for-like in Q3, with a clear recovery in our Parisian banners, Monoprix and Franprix. Our expansion plan in franchise stores has continued to deliver, reaching a total of 527 new stores added since the beginning of the year. Food e-commerce is up 22% during the quarter, outperforming the market. The overall improvement in commercial dynamic in our food retail operations, combined with strict management of OpEx and CapEx, has translated into additional EBITDA and cash flows.
Q3 EBITDA after rents is up 26% year-on-year in France, and operational cash flows are up EUR 276 million. Net debt variation over the quarter has shown an improvement of EUR 450 million compared to Q3 2021. Net debt in France is now stable over the last 12 months at the end of September, before taking into account the disposal of GreenYellow. Pro forma, the disposal of GreenYellow for EUR 600 million, net debt improved by EUR 560 million over the last 12 months, resuming our deleveraging trajectory. In Latin America, we have witnessed once again a strong performance of our two main business units, Assaí and Grupo Éxito. Assaí sales were up 29% in Q3 in local currency, including a 20% impact of new stores, while Grupo Éxito delivered 20% in like-for-like.
Combined with the ongoing appreciation of Brazilian real, this has led to a total growth of 23% in Latin America as measured in euros . This number includes the impact of the closure of 70 Extra hypermarkets, which was sold to Assaí to be converted into cash and carry. 45 of these stores will reopen before the end of the year, which should translate into a strong acceleration of Assaí sales from Q4 on. Our Latin American assets now have a total market valuation of more than EUR 2 billion. The spin-off of Éxito, which was announced in September, should be completed during H1 2023. We expect the separation of Éxito and GPA to increase the combined valuation of the company, as happened before with the spin-off of Assaí.
As you know, we now own stakes in three separate listed companies with various options to take advantage of the current favorable macroeconomic conditions and of the strong operational performance. Finally, on our deleveraging strategy, we have moved further into the completion of our EUR 4.5 billion disposal plan in France, with EUR 4.1 billion secured and EUR 4 billion cashed in at the end of October. We are confident that the plan will be completed before the end of 2023, which was the target announced at the beginning of the year. We plan to make use of our disposal proceeds to address our 2024 bond maturities well in advance.
In addition, we have announced this morning, last night to be precise, a new initiative to crystallize some of the value of our Latin American assets and accelerate our deleveraging with the disposal of part of our stake in Assaí. Going now into the details of our quarterly numbers. At group level, sales were up 5.4% in like-for-like. Total sales were up 10.6%, including a positive ForEx effect of 6.9%. Let's start with France and with our food retail business. Three main takeaways. First, improved like-for-like growth with a confirmed recovery of our Parisian banners, Monoprix and Franprix. Second, the fast development of our expansion plan in franchise. Third, the strong performance of our food e-commerce operation. First, sales trends.
Like-for-like sales trends in France have improved quarter after quarter since the beginning of the year, coming from negative territory in Q1 to +3% in Q2 and +3.9% in Q3. In Q3, this performance is linked to the clear recovery of Franprix and Monoprix, our premium banners most exposed to the Parisian area. This was notably driven by the return of tourists, with a particularly strong impact at Franprix. It also reflects the better shape of the Parisian market overall and renewed commercial initiatives at Monoprix under new management. Like-for-like sales were up 4.1% at Monoprix and +8.4% at Franprix during the quarter.
This translates into +4.8% for the total of our Parisian banners to be compared to 2.1% in Q2 and -2.9% in Q1. It is a key step in the recovery of our French food retail profitability with operating leverage translating into higher EBITDA. As for the Casino banners, in hypermarkets and supermarkets, like-for-like growth was +2.2% and +1.6% respectively. We are rolling out the transformation of our hypermarket stores into Casino Hyperfrais with a best-in-class offer in fresh food. 19 such stores have already been converted. Commercial initiatives meant to boost our customer purchasing power have also continued with discounts on the subscription-based loyalty program, regular low price offers such as Fidélité, and targeted operations around gas stations.
The highlight of the Casino banners performance this quarter is the continued excellent commercial dynamic in proximity, with 8% total growth, reflecting a strong 6.1% like-for-like, and the positive impacts of the expansion plan. This leads me to my second key takeaway in France, the ongoing successful rollout of our expansion plan in franchise. We have opened 527 stores since the beginning of the year, in keeping with our objective of at least 800 in December. Our diversified portfolio of banners gives us a clear edge in the convenience market, with the possibility of finding exactly the right store for the right location and the right franchisee. We have opened 67 Franprix in premium areas with high purchasing power. 81 Marché Récollets, a simpler version of Franprix in other urban areas. 94 [B' Corner bar] in touristic and rural areas.
38 Épicerie Délicates, 16 Manos and 17 Naturalia. One key advantage which explains our fast development is the density of our network. This allows for more efficient logistics, since each of our trucks can deliver a number of stores in the same area. This translates into lower costs and better service to franchisees. It is a significant advantage in the context of higher transport costs, and has convinced a growing number of existing independent operators to leave some of our competitors and join our network. 30 independent stores have joined us this way in Q3, and 161 more in October. In total, we have opened on average one store per day in Casino proximity and one store every other day at Franprix since the beginning of the year.
The new stores added this year, either through openings or former competitors joining our network, will generate EUR 400 million of yearly gross merchandise volume on a run rate basis. Finally, my third takeaway is continued growth of our food e-commerce operations at +22% during the quarter, outperforming the market. Our key advantage in home delivery relies on exclusive technological partnerships and on the density of our network. This allows us to grow profitably in this market. Now a few words about Cdiscount. Cnova has already published its detailed sales release. In the top market for non-food in Q3, marketplace GMV, our key commercial indicator, was up 7% compared to pre-COVID numbers and down -3% compared to last year.
This resilience of the marketplace has led to a sharp improvement in Cdiscount's business mix, with a marketplace share at 9 points compared to last year at 52%. Direct sales, which do not contribute to the bottom line of Cdiscount, decreased again this quarter as expe`cted. Octopia, ou`r B2B marketplace as a service offer, now has 25 customers, out of which nine are already live. Finally, Cdiscount has advanced quickly on its EUR 75 million yearly cost savings plan in OpEx and CapEx, with a EUR 30 million impact in H2 already secured. Before moving to Latin America, a few words on financial performance in France at the end of Q3. As we expected, the commercial recovery in France, combined with tight cost control, has translated into higher EBITDA, +26%, which represents an increase of EUR 37 million over the quarter.
As for our cash flows, which are a key financial priority, they have improved in total by EUR 415 million over the quarter compared to Q3 2021. This is due first to operational cash flows, which have increased by EUR 276 million over the quarter due to higher EBITDA, better working capital variation, and lower CapEx. As mentioned before, our expansion plan is based on a franchise model, which allows us to reduce our CapEx while growing the business. We remain fully committed to cash flow management and control, which are a key part of all our management team quarterly objectives.
On top of this operational improvement, the EUR 415 million gain in net cash flows during the quarter also includes the positive impact of disposals for EUR 140 million, including the unwinding of the Mercialys KRAs. With the impact of this quarterly performance, net debt at the end of September is now stable over the last 12 months. Pro forma disposal of GreenYellow of EUR 600 million, which was finalized on October eighteenth, net debt improved by EUR 560 million over the last 12 months, resuming our deleveraging trajectory. As mentioned at the beginning of the year, we remain fully committed to the finalization of our EUR 4.5 billion disposal plan in France, of which EUR 4.1 billion has been signed and EUR 4 billion cashed in.
Since the end of July, we have signed EUR 150 million of new disposals, including the sale of 95% of Ceetrus' subsidiary, C Chez Vous, to Geopost for EUR 64 million and EUR 51 million of real estate disposals. We confirm our objective to finish this plan before the end of 2023, and we are confident in our ability to do so with the processes that are now underway. Our liquidity position stands at EUR 2.5 billion in France as of September 30, with EUR 400 million of cash and EUR 2.1 billion of undrawn credit lines, since our secured RCF is wholly undrawn at this date.
With these numbers, our RCF covenants are comfortably met at the end of Q3, with a margin of EUR 605 million in secured debt on our secured debt over EBITDA ratio and a margin of EUR 300 million in EBITDA on our EBITDA of net financial cost ratio. Now, a few words about Latin America. GPA, Assaí, and Éxito sales have already been published, so we'll concentrate on the main takeaways. Latam sales showed a very good dynamic overall, with 23.4% total growth and +11.2% like-for-like. 99% sales growth in local currency, driven by a solid like-for-like performance at +9% and an excellent performance from the fourth store opened in the last 12 months. Including the positive ForEx effect, total sales at Assaí were up +49% in euros.
The Assaí format, with its broad and low-price offering, is particularly attractive for customers in the current context in Brazil. The Assaí teams are fully mobilized on the conversion of the 70 Extra hypermarket stores bought from GPA. The converting process began in July and advanced rapidly, with 19 stores converted to date. Assaí now expects 45 stores to be converted in H2 2022, ahead of its initial target of 40. Combined with organic expansion, this plan should bring Assaí's total gross sales to BRL 100 billion by 2024, as confirmed again recently by the management. GPA Brazil sales were at +7% year-on-year in like-for-like. Total sales at GPA decreased, as expected, by -21% due to the closure of Extra hypermarket, 70 sold to Assaí, and 23 already converted in supermarkets to date.
This strategic move allows GPA to focus on convenience, premium, and online, with a footfall concentrated on the high-value areas in São Paulo and Rio de Janeiro. Convenience recorded +21.7% like-for-like, thanks to the increase in the flow of transit stores. Premium, from the Assaí card, delivered +5.5% like-for-like. Online food sales, excluding hypermarket, grew +8% over the quarter. Finally, Grupo Éxito showed, again, a very strong performance with like-for-like sales of +23%. Colombia registered 14.8% like-for-like growth, driven notably by solid performance of the cash-and-carry business, while Uruguay posted 11% in like-for-like. This ongoing momentum should naturally underpin the success of the expected spin-off of Éxito, one of the most attractive food retail assets in the region.
To sum up, there are three main grounds for satisfaction in the numbers published today. First, a confirmed recovery of our Parisian banners in Q3. Second, year-on-year improvement of our net debt valuation in France, thanks mostly to our operational cash flows. Third, an excellent performance once again at Éxito and Assaí. We are fully committed to the deleveraging of the company. This is why we have initiated, as communicated last night, the study of a sale of a part of our stake in Assaí for an amount of EUR 500 million, which could be increased, as the case may be, depending on market conditions. This transaction would take the form of a secondary offering and could be completed by the end of November. It should allow us to accelerate the reduction of our debt while keeping a significant exposure to the high-growth potential of this company.
Thank you for your attention. I am now ready to take your questions.
Thank you. Ladies and gentlemen, if you wish to ask a question, please press zero one on your telephone keypad. Please ask your question at the same time. We have a first question from Xavier Le Mené from Bank of America Securities. Sir, please go ahead.
Yes, good morning, and thank you for taking my question. Three if I may. The first one, can you please comment on your cost structure in France, especially labor cost, energy, and what you've been seeing, you know, in Q3 and what you're expecting, you know, going forward, especially in 2023? An indication of your inflation for this cost would be important. Just on the debt covenant, would it be possible for you to-
comment what would have been the impact excluding the EUR 300 million of the bridge loan you had some, just to understand exactly, how it played, you know, in September. Lastly, what is rationale, you know, behind Assaí potential placing? I understand you want to improve, of course, you know, the balance sheet, but you always said that you saw a lot of value creation within Assaí . Why selling it now? Are you potentially seeing more pressure to come in Q1, Q2, 2023 with your covenant, and that is the reason behind the disposal? I just want to understand why doing it now, actually.
Okay. Thank you, Xavier. First question on our cost structure. Energy, we have worked for years with GreenYellow to control our energy cost, and it has worked well. First, in 2022, we've seen very little increase in our energy costs, thanks to very efficient hedging and cost cutting and cost optimization in the stores. GreenYellow has a very efficient offer on that. On 2023, we expect lower increase in our energy costs than the average in the market. We have been hedging before the rest of the market, from what we understand from what our competitors are saying. GreenYellow has done that, and we are designing new cost saving initiatives in energy.
Overall, the goal is to keep the costs, be it energy or other costs, the cost evolution below the food inflation and below the growth of our sales. This is what we've been seeing so far, and this is what we expect in our budget for next year. As long as this endures, we have operating leverage, and this translates into higher EBITDA. About the debt covenant, well, it's quite straightforward to make the calculation. You see on page two, we give the headroom of EUR 600 million or EUR 5 million on net debt. If you subtract from that the EUR 350 million, you get to a margin of EUR 250 million, which is basically the same margin as in Q2.
We have had the same, actually slightly better margin on the covenant than in Q2, even without the Farallon operation, which allowed us to buy back bonds with a discount, as we have published. As for the rationale for Assaí , I think the release we did is quite clear. We want to accelerate the deleveraging, and that is why we are initiating this operation. I understand there can be many questions about this operation, but I think the release is very clear in itself and is quite straightforward. Of course, we have, as I said before, and I said that in last June when I was asked about the covenant Q3, we don't expect, of course, any problem on our covenant. This is not the issue.
The issue is we just want to accelerate our deleverage.
Yeah, thank you. Just one word potentially on the labor costs, wages.
Yeah. Overall, you've seen the kind of increase in wages that we've had this year. Overall, the total cost of our wages are kept, if you include everything, at a level that allows us to have sales growth above our cost growth. You've seen the kind of growth that we've had.
Okay. Thank you.
Thank you.
Thank you. Next question from Andrew Gwynn, from BNP Paribas Exane. Sir, please go ahead.
Hey, good morning, David. Two questions, if I can. Firstly, just on the Assaí , is there a plan to sell that stake down even further than the $500 million? Secondly, on Monoprix, could you just comment on those discretionary sales that the business has? Should we expect, or have you seen any sign of that softening given the consumer? Thank you very much.
Sorry, the last question for you. Say it again, Andrew. I didn't hear well.
Discretionary sales in Monoprix.
Oh, okay.
If there's been a sign of weakness. Thank you.
Yeah. What you call discretionary sale, and I suppose it's non-food and textile and all of this, it's performed well as the rest of the Monoprix sales. There has been no difference. Non-food in general is not performing very well in France today. That's a problem for big hypermarkets with a lot of non-food. It's not the case for the offer at Monoprix, which is a high-value textile offer that people like, and an offer in the other non-food offer that you have at Monoprix, same thing, it's a very targeted offer, and they have had good trends in the last few quarters. No problem here. Same trend as in food at Monoprix. That's a very nice recovery we've seen. On Assaí , again, I can't say more than what's in the release.
The announcement is on the operation that is being announced last night, and there's no further, no other thing to communicate, obviously.
Okay. Thank you very much.
Thank you. Next question from Rob Joyce from Goldman Sachs. Sir, please go ahead.
Thanks, David. Thanks for taking the questions. Just firstly, trying to understand a bit of the Farallon cash in. It looks like you said you had quite a bit of headroom anyway. Just wondering why you wanted that cash in early and how much that actually cost you to access. On Assaí, if you do, I think that implies your ownership would go down to roughly 30% if you complete the $500 million sale. Will that still enable you to maintain control of the board with that level of ownership? And then finally, very quick on EBITDA, is there anything from property in the EBITDA in the quarter? Thank you.
Thank you, Rob. On your last question, no, there is no property development profits in EBITDA in Q3. It's just food retail profits linked to the growth of the sales and good control of the costs. That's just it. On the Farallon cashing, as I mentioned before, the goal of this operation that we did with Farallon, which was already involved, of course, in the GreenYellow deal, as you remember. They financed GreenYellow's need for CapEx in H1 and helped us in that way realize a good transaction. The goal was to have available cash quickly to be able to buy back bonds and take advantage of discounts in the market, which are quite significant discounts today, especially on the March 2024 bonds.
We published the cancellation of those bonds between October. You've seen that the beginning of October, we have canceled EUR 49 million of bonds. We publish cancellation when we reach certain thresholds. Of course, we can buy back more, and we publish it when we reach the relevant thresholds. What I can say is that this operation has been more than self-financed, when you take into account the discounts that we captured on the bond buyback. That was the goal of this operation. Of course, the covenants themselves, you as you see clearly from the publication, we have the same margin as in Q2 without this operation. As for Assaí, again, no more comments on the Assaí operation than the one in the press release. I'm sorry, yeah.
I have several questions on that, but I will stick to the press release and maintain this level of communication.
Okay. Thank you.
Thank you. Next question from Nicolas Champ from Barclays. Sir, please go ahead.
Yes, good morning. Thanks for taking my questions. I have three actually to follow up on Rob's, but I think this is important. I mean, is it possible to know how much you paid for this EUR 350 million loan from Farallon? I mean, the press reported you possibly pay around a 4% interest rates, which represent more than EUR 10 million. Could you confirm this number or provide us a number? And why didn't you draw on your RCF instead, which is, I guess, cheaper? The second question is, again, sorry to follow up, but I think this is important for our models. Following the disposal of this EUR 500 million stake in Assaí, will you continue to fully consolidate Assaí?
That would be very helpful to know, again, to build our forecast and our model. A third question is about a clarification. Could you confirm that the growth number of EUR 5.7 billion at the end of September, which is I think page seven of your press release, does this number includes the EUR 350 million from Farallon, please?
Sorry. The last question I didn't understand very well. What was the last question?
The EUR 5.7 billion of gross debt
Yeah.
That you report in your press release, I think it is on page eight. Does it include the EUR 350 million of debt from Farallon?
Yes. The answer is yes. As we mentioned, page eight, in accordance with IFRS norms, the transaction with Farallon had no impact on net debt, which means it had a positive cash impact. We recorded a gross debt that was, of course, canceled on the 18th of October. That's just the IFRS computation. Yes, the EUR 350 is included in the gross debt at the end of September. Again, on the Farallon deal, I think I've been clear. We have used this cash to buy back loans. We don't disclose specific details of private transaction. We don't disclose either how much we paid for each and every one of the advisors we have on every deal.
It's part of the overall, you know, let's say the fees, the overall fees of the overall deal of GreenYellow. That's it. It's not very material compared to the overall operation. Again, in itself, it was more than paid for by the buybacks we're doing. We consolidate Assaí because we control the board. That is the case today, and that will be the case until it changes. There's no reason to think at this stage that this will change.
Okay. Thank you.
Thank you. Next question from Clément Genelot from Bryan, Garnier. Sir, please go ahead.
Yeah, morning. Only one my side, maybe on GreenYellow. If I'm right, a few days ago, the CEO announced a capital raise in Les Echos, and more, and also others to follow. Do you intend to really participate in those capital raises? Or do you prefer to save cash and rather being diluted in the short term? Thank you.
GreenYellow is now the 15% we keep after some, the transaction is a financial participation, so we don't intend to participate in capital increase at GreenYellow. That's it.
Thank you.
Thank you. Next question from James Grzinic from Jefferies. Please go ahead.
Thank you. Yes, good morning, David . I just had a quick question around pricing in France. If you can update us in terms of Q3, how much of the LFL was being driven by inflation? Perhaps more broadly, where you sense price perceptions are shifting for some of your key brands, and thank you particularly Monoprix, I guess now, would be very helpful. Thank you. I don't know if you've got any NPS that you can share with us on that count.
Yeah. James, th ank you. Well, as a matter of fact, our most premium banners are the ones that could be perceived as the most expensive, so to speak, that have performed the best during this quarter. When we look at price, we always have to remember that we are located in high revenue areas. 70% of our sales in France are done in the three highest revenue and highest growth regions in France, the Parisian zone, Paris Île-de-France, the Couloir Rhodanien around Lyon, the Rhône-Alpes-Auvergne region, and Provence-Alpes-Côte d'Azur, the south of France. These are high revenue, high growth, both in demographic and in economy.
When you compare the average price in these regions, the average price of all the markets, and not our price, the price of the market, even without Cdiscount, it's basically 10%-15% higher than in the rest of France. When you consider the average price on a national basis, you'll have to look at how do we compare locally, and we are of course concentrated in those high revenue regions. Now, in these high revenue regions, our banners have a value proposition that is obviously in line with the pricing. That is what we see with a good dynamic at Monoprix. We have no issue at all today, especially in our premium banners in terms of relative pricing.
What we're doing in all banners, actually the premium banners and the other banners as well, keeping in mind that most of our banners are relatively premium now, is targeted operations to address purchasing power issues for the customers in general. We have these offers, such as Two for the Price of One, in the hyper and supermarkets. We have specific offers around private labels, around specific choices every week, every month. Overall, our pricing we think is perfectly relevant. In terms of NPS, I don't think we have communicated this NPS number, but we can confirm that NPS trends are well oriented at Monoprix.
Thank you for that, David. Can you please perhaps then clarify the inflation component within.
Yeah, of course. There's obviously an inflation component in the growth of sales. At Monoprix, we actually have increasing volumes in Q3, so obviously, it's not just inflation. Overall, our goal is to have sales basically close to inflation. The average volume in France today is slightly down in food, not much, but slightly down. There's a small mix effect, national brands transferring somewhat to private labels. When that happens, since the average price of a private label is a bit lower than the average price of a national brand, you have this negative mix effect on the sales, but not on the margin, since private labels have a good margin. That's the picture.
The overall goal is to have LFL sales rather close to inflation and costs below that level, which creates operating leverage and translates into this 26% increase in EBITDA that we've seen in Q3.
Thank you.
Thank you. Mr. Lubek, we have no more questions by phone.
Thank you. Thank you everyone. Have a good day.
Thank you. Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.