Casino/Rallye - comment

And finally, the sale has been announced. Casino have managed to sell GreenYellow, for €1.4bn enterprise value, with c.€1.1bn equity. Casino owns 72%. Casino net proceeds will be €600m after Casino reinvests a further €165m into the Company. These proceeds, plus the €86m from the TRS to sell the remaining Mercialys stake are expected in H2 and will be used to pay down debt. Operationally, the story remains a mixed bag. H1 numbers were weaker than we had expected, although Q2 sales numbers (and last 4 weeks) are showing good momentum.

Post the asset sale, the same questions will remain. The French retail business is unable to provide positive cashflow, and therefore further asset sales are likely to be required to meet upcoming maturities. Although the Company do not disclose what assets will be sold to meet the €4.5bn target (€4bn achieved) of asset sales by end of FY23, most analysts had expected cDiscount to be the likely source. Unfortunately, cDiscount’s performance has been relatively poor and no longer deserves the lofty multiples previously touted about.

In the plus column, the LATAM businesses continue to perform strongly with revenue and EBITDA growing in line with the changes in format outlined by both management. LATAM still remains the key for Casino to deleverage meaningfully.