Carrefour S.A.

Good morning, everyone. Thank you for joining us today for the presentation of our annual results.

I'm at our headquarters in Merci, with Matthieu Malige, our group CFO; Laurent Vallee, our Group General Secretary; and Rami Baitieh, Executive Director of Carrefour France. We will share with you a few convictions about this past year and about the years to come for Carrefour.

First, conviction. In 2020, Carrefour was at the forefront of the response to the crisis.

Every day bodes a new challenge. Business as usual, went out of the window, and everything went faster.

In 2020, we had to step up. We had to protect our staff and our customers.

We have to secure our supplies. We had to adapt in real-time to the sanitary and regulatory situation, while making sure we operate it as reliably as possible.

And we did. I think our mindset was one of responsibility and solidarity.

Our teams on the ground perfectly embodied this spirit. I thank them again for it.

We never pulled back on our ambitions to achieve the full transition forward. Our food transition on CSR indexed reached a score of 115 in 2020.

Laurent Vallee will tell you more in a moment. We will continue to step-up this year.

We will remain just as rigorous on the sanitary front and just as committed to our social responsibilities. As you may know, we are committed to hiring 15,000 young workers in France this year, with half the new recruits coming from underprivileged areas.

They are the hardest hit by this crisis. And as CEO, I want us to do our part.

My second conviction, I would even call it certainty, is that 2020 marks a successful turning point for Carrefour. We implemented a model that ensures lasting sales growth and profitability for our group.

First, our growth dynamic has further accelerated. Our like-for-like sales performance was our best in over 20 years.

This crisis makes the full market more buoyant overall, but we outperformed the market, resulting in a positive market share dynamic in our core countries. Our Brazilian ecosystem is getting stronger and stronger, gaining more market share from an already leading position.

Spain. Spain Is amplifying its commercial success, gaining ground and building momentum.

France renewed vitality is obvious. All our formats on most notably, hypermarkets are growing in France.

On Carrefour France, in H2, posted its best half year in terms of market share in several years. Second, our growth model is long lasting for 2 reasons.

First, it's based on a strong rise in customer satisfaction level. Group NPS increased 3x faster than in the last 2 years.

This shows just how obsessed we are with customer satisfaction. It's the first priority for our country directors.

Rami Baitieh will amplify that in a moment. Our group model -- our growth model is also based on consumer trends that have been amplified by this crisis.

These trends are very favorable to us. E-commerce.

E-commerce boomed in the context of the crisis. Our investments and expertise in food e-commerce translated into growth of over 70% in 2020.

We gained 1.3 million new customers last year, and we gained market share in food e-commerce everywhere. The increase in volumes and our higher productivity structurally improved our food e-commerce business model.

This contribute positively to our profitability. Our niche channel model is already an advantage today.

And 2 more, it will be a highly valuable asset as our niche channel clients are our best customers. On our products, our positioning is attractive.

We have strengthened our leadership on organic products, with sales increased by 18% in 2020, despite the logistical challenges that were caused by the pandemic. At the same time, Carrefour branded products have grown faster than the market.

They account for 29% of our sales. We have also been able to seize the non-food opportunities that emerge in 2020, such as home office or new forms of mobility.

Finally, on all formats, whose growth has been strengthened by this crisis, cash and carry, discounts and convenience stores, our expansion is fast paced. For more than a year, we have also been adding active external growth through targeted acquisitions in Brazil, in Taiwan, in Spain and in France.

Speaking of M&A. A quick word about the unsolicited offer we received from Kuchta early January.

The way I see it, first, this [indiscernible] is a positive sign that Carrefour has become attractive once again. Second, my responsibility was to look at this offer seriously.

Discussions were still at a very preliminary stage when they were cut short by the government. Lastly, global M&A operations are not a necessity for us.

We have a clear trajectory on our home, and we are on the offensive on our markets. Bolt-on M&A is part of our strategy.

It leverages our strong balance sheet and operational expertise in order to reinforce our market positions. And it adds profitable growth to our group.

Third, our growth model is indeed profitable. Our recurring operating income improved once again by more than 16% this year, even though it has been a difficult year for B2B sales and for our services, especially financial.

This means that it is our distribution activities that performed extremely well. The contribution to the group's recurring operating income is up EUR 630 million and our financial discipline has remained strict.

But our strongest performance comes from our cash management. We have generated EUR 1.1 billion of net free cash flow in 2020.

To realize the full extent of these results, let me remind you that for the past decade, we were averaging a total of 0. So yes, this is a momentous turnaround.

My fourth conviction is that we have mastered our operational sales and financial models. This allows us to look to the future with confidence.

Based on this analysis, we have taken new and significant commitments starting in 2021. First commitment steadily increase customer satisfaction.

We have raised our NPS target to 30 points by 2022. By achieving this goal, we'll meet high customer expectations in terms of pricing of quality service and omnichannel distribution.

Second commitment control our costs and our operations even more. It is part of a permanent process.

And by announcing today a new target of an additional EUR 2.4 billion in annual cost savings by 2023. Third commitment, cash generation.

We have reached an inflection point as confidence in the sustainability of our growth model. For the first time, we are introducing a target of over EUR 1 billion in net free cash flow per year starting at 2021.

With this level of confidence in our financial models, we are putting an end to 10 years of scrip dividends at Carrefour, and we will distribute dividend fully in cash. We are proposing a dividend of EUR 0.48 per share for the 2020 financial year, and it is set to grow in the coming years.

This is part of a clear allocation policy, well balanced between stakeholders. In short, 3 years ago, Carrefour was lagging behind.

The launch of the Carrefour 2022 plan set us an ambitious path. The last 4 years of transformation have created an attractive model, which benefits from new consumer trends.

Our group has now reached a turning point. We have ensured growth, profitability and financial capabilities in the long term.

At the close of 2020, I note that despite challenges, we are continuing to grow. Despite emergency, we are reaching our goals, both financial and extra financial.

Despite DF and economic crisis, we are generating trust. We are confident for the future and this confidence translate into renewed goals for Carrefour.

Thank you for your attention. I would now like to invite Rami Baitieh to tell us more about customer satisfaction in France.

Thank you very much, Alexandre. Good morning, everyone.

I'm delighted to be with you today. I had the opportunity to deploy the 555 culture in several Carrefour countries, and this has produced and delivered great results.

Today, I'm very happy to share with you also how the 555 is delivering result in Carrefour France, how it is bringing back our attractiveness and bringing our customers to our hypermarket. The rollout of the 555 gives a general mobilization of all teams in all areas, all departments with one target, which is to get the best customer satisfaction level.

Our key priorities are the price, are the offer in terms of quality, freshness and innovation and in-store experience, when it comes, for example, to waiting time at checkout and availability of product. We put the store management in sales area.

We conduct daily analysis of our Net Promoter Score, and this is done daily store by store. We make daily analysis of, and rankings, of best stores and worse stores for every single irritant, and every irritant is solved.

This led to immediate result. We can see the Net Promoter Scores that grew last year by 17 points in hypermarket.

It grew by 18 points in supermarket and 18 points in drive. This culture of ownership comes with a sharp focus on operational excellence and expenses management.

To do this, we allow top team organization project. Top is a lean methodology that improve the productivity of our teams, and thus, it makes them more available to serve the customer in-store.

Top is the best solution. To solve many irritants, like shrinkage, out of stock, waiting time at the checkout, expiration date and price display and overstock, all unnecessary overstock in-stores.

We already rolled out top in more than 130 hypermarkets and roughly 20 supermarkets. The results are here.

And all the items in the barometer and the dashboard. This rollout of top will be completed by the end of the summer this year.

Our customers are now directly involved in our commercial policy. Our catalogs and promotions are reviewed in advanced by our customers.

From offer point of view, we enriched the entry-level items and the Carrefour branded items outperformed the market in 2020. We also pushed a clear focus on price in-store.

To eliminate all price irritants, we put clear methodology. A dedicated team in every store that check every day, the price accuracy, that price is clear and correct and also a weekly checkup of all the prices with the competition.

This led to a clear result, plus 10 points in the barometer about price image and plus 13 points when it comes to price accuracy. By eliminating all the irritants and by innovating our offer, what we want to do is to bring our customers to our store and to let them buy any additional product they need.

I want to say few about relationship with customers. We are here to serve customers.

My team and I, this is what we do, this is our know-how and this is what we love to do. Our call centers have been given a greater role with the daily feedback.

Every call has been analyzed, identified and solved. Thanks to that, on a year-to-year basis, the number of calls received shrunk by 40% for store-related issue.

We have provided to every cashier in-store a small notebook to allow our customers to write their comments, suggestions and complaints. We have collected over the second semester of the last year, more than 25 feedback from customers.

We conduct regular roundtables with the customers. Over the second semester, we met more than 15,000 customers benefiting from their feedback and guidance.

We inverted the pyramid to put the customers on the top of our priorities and to make the management engaged and more engaged with the employees. The implementation of this ecosystem as well as a renewed executive committee with a strong experience has led to robust results and led to robust results in all our formats.

The key success factors of this culture of ownership are: To think as a customer; to act as an owner; and to make Carrefour the best place to work. As we did in other countries, this strategy is bearing fruit in France day after day.

I am very confident this is the beginning of a fantastic journey. The potential is great, and it is here.

Thank you very much for your kind attention. Thank you, Alexandre.

Thank you, Rami. After 3 years of turnaround, and with this incredibly strong customer-centric approach, France is well on track for further profitable growth.

You know that Carrefour is also a values-driven company with a strong environmental and societal impact. Laurent Vallee will tell you more about progress on extra financial matters for the Carrefour 2022 plan.

Laurent?

Thanks, Alexandre. Good morning, everyone.

Leading on social and environmental issues is part of our core business, and Carrefour is a committed company. Throughout the pandemic, we have been very responsive to all the challenges that we have faced.

We have made significant investments in safety and social distancing measures across every one of our stores so that people can shop safely and with confidence. In France, Spain and Brazil, we were the first retail company to be awarded certifications based on best available practices for risk prevention against the spread of the virus.

We supported our colleagues through exceptional bonuses and helped our communities through dedicated services, donations and support for local producers. We are grateful to our colleagues for bringing their part to our customers who have been supporting our measures, and we thank our suppliers for their partnership.

Now let's discuss Carrefour's role in leading the food transition for all. The progress of our actions is measured by our CSR and food transition index, which is audited.

For the third consecutive year, the index increased, reaching a score of 115%. This shows that we are on track to achieving our objectives.

This is thanks to the ambitious actions that we have taken in-store, on our products as well as for our employees and customers. Moving to some of our key CSR initiatives this year.

Sustainability is key to our customers. We are positioned to deliver the experience they want and to set the ambitious goals that they expect from us as well.

I will take 3 examples. The first one is packaging.

Our results are decreased by more than 6,000 tons in 2017, exceeded our expectations. We did that by taking very concrete action as close as possible to our customers.

For instance, by removing plastic from fruit and vegetables, we removed 450 tons here in 2020. Today, more than 80% of our organic products are plastic-free.

We decided to double our packaging reduction target to reduce it by 20,000 tons by 2025, including 15,000 tons of plastic. Second example, food waste.

The pandemic has caused a surge in the demand for food aid of more than 20% in 2020 versus 2019. This has made the fight against food waste and even greater priority for our customers.

This year, Carrefour has reduced food waste by more than 29%. This is part of our overall objective to halve food waste by 2025.

Third, reducing greenhouse gas emissions. In 2020, our increased energy efficiency and the use of natural refrigerants have enabled us to reduce our CO2 emissions by minus 9%.

We have set a new target approved by SBTI of minus 30% in 2030 and minus 55% in 2040. Our performance has been measured by many of you here through your own methodologies and through internationally recognized rating agencies.

Our positive results for 2020 have placed Carrefour among the top retailers globally and as the top French retailer in the Dow Jones Sustainability Index and in the carbon disclosure project. These results confirm the evolution of our internal index.

Finally, I cannot close the presentation of our extra financial results without mentioning the reprehensible acts of violence that occurred in a hypermarket in Porto Alegre, Brazil. A subcontracted security guard killed one of our clients [indiscernible] on November 19, 2020.

This strategy could not be further from Carrefour's values. We condemn all acts of violence and racism.

We immediately took strong measures to prevent this from ever happening again. We took action to ensure that all those involved in this incident were held accountable.

We launched an internal investigation as well as an internal audit of the security management services. We thoroughly reviewed the training policies for employees and subcontractors.

We developed a detailed action plan, which includes creating objectives to promote diversity and inclusion; reviewing service providers, including a close to combat racism in all our contracts; evaluating security criteria of all stores. Finally, we have established a diversity stakeholder committee with whom we consult on a regular basis and have created a fund to promote diversity.

Thank you for your interest in our company. Alexandre, I leave the floor to you.

Thank you, Laurent. Matthieu Malige will now give you more details regarding our financial performance.

Thank you, Alexandre, and good morning to all of you. I'm very happy to be with you today to give you more color on our 2020 performance.

Let me start with our growth momentum. When detailing the annual like-for-like sales growth of 7.8% by quarter, it appears that all quarters showed a similar pace of growth between 6% and 8%.

It shows the resilience of our sales dynamics across the year despite very different and changing sanitary constraints. It also shows the great adaptability of our teams and the resilience of our food retail model.

Our growth dynamic is also fueled by value-creating acquisitions. As part of our targeted external growth strategy, we acquired companies for a total amount of EUR 760 million in 2020.

They should contribute to more than 2% of additional sales on a full year basis. These acquisitions include notably 30 cash and carry macro stores in Brazil, 224 welcome convenience stores in Taiwan, 172 supermarkets and convenience stores in Spain as well as the [indiscernible] organic food banner in France.

This strategy of targeted acquisitions at attractive conditions is a source of profitable growth and value creation for the future. A word on cost savings.

In January 2018, when we launched our Carrefour 2022 strategic plan, we set the objective to reduce costs by EUR 2 billion by the end of 2020. Quarter-after-quarter, we have delivered cost savings at a very good pace in all countries, constantly beating our initial ambition.

We have finally reached EUR 3 billion of cost savings at the end of 2020, 3 years into our plan. Challenging cost, improving productivity, avoiding unnecessary expenses, being more agile and lean have become daily life of our teams.

Having our operating model well under control puts us in a position to announce today the cost savings plan of EUR 2.4 billion by 2023. It is supported by extra levels of efficiency, both on merchandise and goods not for resale.

Recurring operating income reached EUR 2.173 billion in 2020, growing by 16.4% at constant exchange rates or plus EUR 343 million. This improvement was driven by retail activities, posting a sharp increase of plus EUR 630 million at constant exchange rates.

Dynamic like-for-like and efficient cost savings explains this remarkable performance. This pattern is true in all geographies, with retail recurring operating income improving by EUR 160 million in France, EUR 150 million in Europe, and EUR 280 million in Brazil in 2020.

Let me also highlight that the growth in food e-commerce contributed in 2020 and will continue to contribute to the improvement in recurring operating income and operating margin. This represents a structural improvement in our business model.

This retail contribution growth was compensated by declining contribution of financial services and other activities in the context of the economic crisis and sanitary restrictions. Contribution of financial services declined by EUR 200 million at constant exchange rates.

They suffered from declining net banking income and the increase in the cost of risk in the context of the economic crisis. Net banking income declined as customers were more cautious on their spending and used consumer credits less.

It also declined as we decided to tighten conditions to grant credit in order to reduce future risk. Other activities, including B2B sales to restaurants and hotels, ticketing and travel agencies contributed EUR 80 million less to the recurring operating income.

This is a direct impact of restrictions as a consequence of the sanitary crisis. Now if we move down the P&L.

Adjusted net income group share increased by EUR 154 million. On top of recurring operating income growth, a sharp reduction in nonrecurring expenses contributed to this improvement as fewer restructurings were initiated in 2020.

Financial expenses slightly decreased by EUR 18 million, reflecting proactive debt management. The normative tax rate improved from 21.4% in 2019 to 30.1% in 2020, reflecting the evolution of the geographic mix and lower income tax rate in some countries.

In 2020, Carrefour posted a strong cash generation. The combination of good commercial momentum and financial discipline enabled the generation of net free cash flow of nearly EUR 1.1 billion, up more than EUR 700 million compared to 2019.

Let me inform you that from now on, we will report on comments on this net free cash flow, which corresponds to the free cash flow after net financial cost, net lease payments and cash out of exceptional charges. This aggregate reflects the cash generated when everything has been cashed out just before paying dividend and doing M&A.

It represents the endgame for our shareholders. Hence, they can easily benchmark our cash generation versus other investment opportunities in the market.

This best free cash flow performance in more than 10 years primarily reflects an increase in EBITDA and a good control of our financial model. Indeed, it reflects very selective and productive CapEx, which were reduced to EUR 1.2 billion in the context of the pandemic.

It also reflects a 2-day improvement in inventories, equivalent to 30 days of sales versus 39 days 2 years ago. Let's now move down the cash flow statement in greater details.

The EUR 732 million improvement in net free cash flow in 2020, includes the increase in EBITDA of EUR 49 million. It also includes the following items: The payment of EUR 128 million of exceptional bonuses and similar benefits; a lower cash out for restructuring costs of EUR 341 million versus EUR 580 million in 2019; the decrease of the dividend received from Carmila, reduced CapEx, as I explained earlier; and an improvement of the change in working capital requirement, reflecting a dynamic activity, better inventory management, partly offset by lower petrol sales and hence, lower tax payables; and a decrease in SG&A payables following good cost reductions.

In 2020, net finance show debt decreased by EUR 288 million at constant exchange rates to EUR 2.6 billion. This reflects the strong generation in net free cash flow of nearly EUR 1.1 billion, acquisitions for a total cash out of about EUR 640 million and the payment of dividends for EUR 169 million.

Bolstered by the success of our transformation plan and confidence in the Carrefour model, we are setting today an objective of generating annual free cash flow in excess of EUR 1 billion. How do we see the main building blocks from cash flow evolution in 2021 versus 2020?

First, our solid growth momentum shall steadily improve profitability and EBITDA. Second, as the first 3 years of our plan have experienced heavy transformation, exceptional expenses and other items should decrease over time.

Third, thanks to continued growth and further inventory improvement, working capital requirements is expected to contribute positively to the cash flow. Then CapEx, which were unusually low in 2020, should return to a normative level of between EUR 1.5 billion and EUR 1.7 billion from 2021.

Finally, cost of debt should keep decreasing, thanks to further dynamic debt management. Our good dynamics allows us to normalize our dividend policy and to put an end to almost 10 years of scrip dividend at Carrefour.

Going forward, we will distribute dividends fully in cash. We are proposing a dividend of EUR 0.48 per share for the 2020 financial year, subject to the approval of the annual shareholders' meeting.

The dividend is expected to grow regularly from this point. We have also set an explicit capital allocation policy, which includes the following elements: First, investments in the business and the customer offer, serving our debt; second, an ordinary dividend, fully paid in cash and intended to grow regularly; third, a bolt-on M&A strategy, then a solid investment-grade rating; and finally, potential share buybacks or equivalent.

We thus aim to develop our activities and combine a robust balance sheet, enabling us to seize value creative acquisition opportunities with financial efficiency and with return to shareholders. Thank you for your attention.

Alexandre, back to you.

Thank you, Matthieu. Many thanks to all of you for your attention.

We will now answer the questions you may have.

I have three, if I may. The first one for Alexandre.

To what extent has a pandemic and Carrefour's internal progress changed or not, your view on the need to consolidate the fresh market? And where do you see the strongest potential for bolt-on acquisitions in France?

The second one is for Rami. The wins of French consumer, are there some specificities, differences versus what you have seen and done in other countries?

And what are the most challenging aspects, and you have all the assets and services today, that you need for the turnover? And the last one for Matthieu, you state that food e-com growth positively contributed to profitability.

Could you be maybe more specific and drivers to the KPIs? And how does this compare to your pre-pandemic expectations?

Thank you, Cedric. It was not so easy to absolutely grasp your first question, but I think it's about consolidation in France related to the pandemic, if I heard you well.

What we do think is that we are really in capabilities, thanks to our performance, our financial, our commercial performance, our financial performance, our capability to generate this level of free cash flow recurring to continue to be very offensive in the bolt-on M&A, we have initiated last year. Last year, we spent EUR 716 million to a certain number of acquisitions, Taiwan, Spain, Brazil and France with [indiscernible].

And thanks to this level of recurring free cash flow, we have these capabilities to continue to grasp opportunities. But for that, we have to -- we are very selective, as you know.

We try to clearly analyze, select the companies that we can acquire with a clear criterion. Is there capability to growth?

Is it a growth format? Is it the good -- are we capable to give value to this company?

Carrefour can bring something to this company. And is it an intermediate size?

So we try to see all this criteria. When all these criteria are fulfilled in all geographies, including of core France, we decide to go.

And so in France, we don't think that there would be a major consolidation for Carrefour. It's not today at all at Carrefour Brasil, but we analyze a certain number of situations.

And when all these criteria are fulfilled, we act. And it's exactly the way we will continue to behave in the next year and the years after.

Rami?

Yes. Thank you very much for your question.

The difference, actually, I think that the French customers are very demanding when it comes to the key items of the retail. And I think that the Plan 2022, led by Alexandre, is the basis to address their needs.

And the culture that we have implemented with the inverted pyramid and the mindset of thinking as a customer, acting as an owner and make Carrefour the best place to work, this is fundamental. We need to address this high demanding level of the French customer.

And then we need the methodology. And this is my mission, to bring this methodology and to accelerate what has been done.

The methodology is the 555, with all the tools of the 555. Team organization, projects and others.

So with this methodology, we put ourselves at this customer service. Let me give you 2 examples.

All the members of the Executive Committee, we put our e-mail on the website of Carrefour, saying to customers, if you have any suggestion, complaint, note to make to the management, just you can reach us. Of course, there are call centers, but what if sometime the customer is not satisfied.

They can reach us because we are now in the -- below the pyramid. Also, every week, we go with the Executive Committee to visit one region in France to meet all our store directors.

We consider our stores like a unique store. We treat every store like a unique store.

So last Saturday, we were in Lin in the north of France. And yesterday, we were in normal region and we meet store managers.

And all the Executive Committee, we go to them to listen to how we can help, all together, serving our customers. And the 555, which is based on the Trust 5 points, then the service, 5 points and the experience 5 points.

All of this help us today to address the customer satisfaction. And the customers say it.

As Alexandre mentioned, and the NPS -- the NPS last year grew by 17 points in hypermarket, 18 in supermarket and 17 points also in drive. So we are in the right way and now we need to continue accelerating.

Matthieu, on the improvement of profitability of food e-commerce.

Yes, you're right. Cedric, from 2020, onwards, food e-commerce contributes and will contribute to the increase in our profitability.

If we just come back a few years, we set e-commerce -- food e-commerce as a priority as part of our strategic plan. And we announced at the time, a EUR 2.8 billion investment to digitalize Carrefour.

What did we do? We invested heavily, notably into fulfillment centers in order to improve the quality, the speed of our fulfilling online orders and also improve our capacity in order to fulfill and serve more customers online.

What has 2020 changed? First, it has confirmed our initial direction.

Food e-commerce is essential to doing food retail business. It has tremendously accelerated.

We've posted a 70% increase in food e-commerce activity. On the economic model, with the investments we've done for 3 years, it is more fixed cost.

Hence, when we have more volumes, we have more profit after variable cost and more EBITDA. I think 2020 confirms that e-commerce is a growth opportunity for us.

It will help us in our growth model in the future and it will also contribute to the improvement of our profitability with this new economic model.

I have three questions. The first one, to come back on the [indiscernible], which can be a bit confusing for investor because they believe that well, top management could be -- could have been ready to accept the deal at a low price.

So Alexandre, two questions, do you see any significant potential of value creation based on fundamentals in the coming years? And what's your view on the group's ability to further expand and transform its business model on a stand-alone basis?

And two other quick questions on CapEx and the planned increase in the coming 2 years. Where will the increase come from?

Would it be higher investment in IT and online or store revamping? And the last one for Rami.

I mean, a good progress in Q4. Have you started to regain new customers?

Or have you started to increase the loyalty of your existing customers just to have a better view of the improved momentum?

Thank you, Arnaud. A few words, and I would say a few facts on the [indiscernible] approach.

As you know, the facts are the following. [indiscernible] approaches us with an exploratory offer at the beginning of January, with the price of entry of negotiation with -- of EUR 20.

They are credible. They have resources, and they have the ambition.

They had this ambition to create a world leader with Carrefour at the center of this world leader. Our responsibility -- my responsibility, of course, was to explore this offer, to understand this offer, to analyze, if all the conditions, if all the guarantees for all the stakeholders, shareholders, employers, partners, friends, were fulfilled.

Then, there was the intervention of the government. At the moment where the terms of a project were not on the table because we were entering into this phase of negotiation.

As you understand, it puts an end to this episode and now we are back as we were before. We were going well just before this offer.

As you've seen with these results, we are very well after the -- this episode. And my conviction, and I think it's the conviction of the team and the results prove that and the commitments prove the level of confidence we have on the model is that we have a huge capabilities to create value, to transform the model, to accelerate the model.

And it's not related -- the performance is not related with the COVID. The performance is sustainable.

They are linked to these capabilities we have to grasp this obsession of the customer satisfaction, the 555 of Rami and all the CEO in all the countries. The fact to be capable to increase by 20 -- by 12% and 16% in France, this customer satisfaction, this NPS is a huge sign that we are back.

Thanks to that, we increased our market share and thanks to the improvement of the market share, of course, the like-for-like is increasing. And thanks to that, under the level of financial discipline we have on the cost, we are capable to transform that into profitability and financial capabilities and free cash flow.

So we are highly confident in the fact to continue to accelerate this moment, and we are at a turning point in our history because we have seized all the consumer trends, and we are now capable, thanks to this approach, this customer satisfaction, to transform and to accelerate. So I would say, for myself and for my colleagues, and for all the teams, the level of confidence we have about the capability to create value in the future is very high.

On the CapEx, in fact, we are just back to a normative CapEx. Last year, it was EUR 1.2 billion, but it was related to the fact that due to the pandemic, we have less expansion.

For example, for Atacadão. We have less projects on IT, for example, because during March, April, we have to slow down all that.

But we are back to the normative level of CapEx between EUR 1.5 billion and between EUR 1.7 billion. With Matthieu, we told you since the beginning that we think that it is the good level, the good normative level, both to build this global -- this model but in the meantime, be selective, be very capable to grasp this level of CapEx and will continue this year to invest in the digital transformation in the acceleration of expansion, particularly proximity store on cash and carry, to maintain the level of standards of our stores.

Rami, one additional word?

Yes. Thank you for the question.

So about the regain customer and loyalty. I would like to say both.

The 555, which is the 3 comments about trust. Trust, make us to protect our current customers.

Service, it makes -- it let the customer to buy any additional product they want because of the best service we provide. And then experience, to bring more customers.

If we look at the last quarter, you mentioned, Arnaud, is both of them. So we gained in traffic and also more products, more units in the basket and in the trolley.

So both of them. So we ensure the basics and as well as reaching the offer.

I take 3 examples, for example, for the offer that we did in this quarter. So the regional product and local product, we opened to reference in regional product from all regions in France with easy referencing of local suppliers.

And then you have, for example, the international product. So also, we put these items in some stores and as well as entry level products.

So all of this enhanced the traffic and also increase the basket together.

[Interpreted] I have three coming from the same topic. The first thing, you just presented results now.

It is very good. And we have another 2 years before the end of the plan.

If we take a distance as regards to figures of Carrefour today and regarding certain targets that you increased. What are the challenges, Alexandre, for the deadline, I mean, for the time left until the end of the plan, what are your priorities?

And where are you not totally satisfied about what you -- regarding where you stand? And if in 2022, you're exactly where you want to for Carrefour, what -- where will you go from there.

Would you like -- we can see that Mr. Rami is taking more and more position.

Can we consider that is your trump card?

[Interpreted] Okay. Well, thank you very much for this question.

I will answer in French because you asked this in French. Now what I told the teams, this year counts double to me.

I mean, this is a year where we are trying to get closer to this deadline, 2022. And therefore, we really need to reach the targets -- the financial targets to reach the operational targets that we had set because it's the teams credibility as the project -- the project's credibility, which is at stake and to be successful in this transformation.

But it is a year because, of course, I didn't decide that 2022 is -- I mean, we need to go until 2022 without changing anything. We must speed things up.

And this is why we used this word because this is the reality. This is where we stand.

This is a turning point. This year is truly a telling point.

It counts double because it is -- its a milestone. We are showing -- we are giving visibility to investors and to the market, and we are proving our confidence and trust.

And we did this as we take new indicators. When you increase the NPS indicator, when we set the initial target, it was extremely ambitious.

At the time in 2018, we had increased very, very little, and we were wondering how we could reach it. In fact, we managed to reach it plus 12.16 and we decided to speed up with plus 30 points.

And our capacity to increase this NPS to be at the right level in terms of increase, but in a relative share compared with our competitors because we're not alone in the world. We must be at a right level.

We need to be a leader in all our geographies. If we want this customers and this approach to transform into market share.

That's extremely important. The fact that we're capable.

And the fact that we launched this plan of EUR 2 billion. And I remember, I mean, Carrefour already announced plan and they never held their promises.

We committed to 2. We did 3, and we are announcing an extra 2.4, which means we had announced an increase in EUR 2 billion in 2018, before 2022.

We were then because we are going to reach this, we've got to reach EUR 5.4 billion in cost savings by 2022. And so this is the momentum.

And we are can now give this visibility, which is so important for investors. I understand that this sector generate skepticism, worries, concern, digital transformation, we have global players such as Amazon, there's a very strong competition, it's very intense competition.

So I understand these worries and concerned. But now ammo, we've got it under control, and we can provide visibility as regards to our financial performance.

The fact that we can save for cash, I generate every year, EUR 1 billion in free cash flow is extremely important. As regards to our capacity, the company's capacity, to imagine the future, to pay shareholders, to carry on working for our investor debt, investing, doing M&A.

So we are accelerating. This is a turning point.

This is a year where we are accelerating, and this is why it counts twice. And your second question is very important.

I mean, I consider -- I always considered in my function that my responsibility. My main responsibility was to generate a generation of managers to put the best in every position.

And I consider this is my job. And therefore, I am very happy and proud to see these generations of managers emerge.

Rami is a wonderful manager. He filled out extremely difficult missions in different continent, and he's now in charge of France, and he's been doing an awful lot of work over the last few months, and we've seen things change.

I have excellent managers in other geographies in Spain, Alexandre Bompard, of course, Noel in Brazil. I cannot mention them all, but I have a team of country managers, which is in charge.

They are customer focused. They believe in it.

They do not believe that Carrefour is in the right position and therefore, we all very much motivated. And therefore, the group team, all those around them and all the others who work on a daily basis with us and with whom we we've built a team with different talents, with different profile, different origins, which works well together.

And this is my biggest satisfaction, and it is the token for our future success.

I've got three as well, please. Probably first one for Alexandre.

Alexandre, you talked about, pretty much, I think it was your word, certainty in terms of lasting sales growth and profitability. And also, it comes from Matthieu, Rami, all point to very strong conviction, you turn content France -- important France market.

And clearly, we're seeing second half French margin was also comfortably strongest it's been in a few years. But just trying to understand your ambition in terms of growing the profitable growth that you referred to, you don't have to go too long back in history when you make Carrefour France more than EUR 1 billion of operating profit.

You're clearly talking to profitable growth. How should we think about by the time the plan has ended Carrefour 2022, should France restore its contribution to the overall group back to where it was just a few years ago?

Just paint a picture at the end of the strategy, what it should look like, please in terms of French profitability or profit relative contribution to the group, whichever way you choose to answer the question. So that's the first one.

Second one, perhaps I think to Matthieu, in terms of capital allocation framework, which is quite helpful. Thanks for sharing that.

Maybe just to probe you a little bit, how do you strike a balance between what might be a fairly modest bolt-on acquisition versus going to your step 5, launching a modest buyback to sort of add to your dividend policy. How do you strike that balance?

And last one, again, I think also for Matthieu. Financial services, can you give us a sense of contribution from this area in France?

In Europe, we clearly get a pretty good idea in terms of Lat Am or how should we think about the impact, clearly, significant impact in the second half, it seems in Europe? Can you help us a little bit into how we should think about 2021, please?

Thank you for your questions. So if I understand well, the question is where I see France in our model on the potential of France in the future.

You're absolutely right. We need a strong France to give the full potential of the group.

I gave this conviction since my arrival. It's not possible for this group to be in a good shape, to be the leader.

If France is not profitable, if France doesn't grow, if France doesn't have a positive market share, doesn't have a good level of customer satisfaction and so on. The conviction I have is that we are on the goodwill.

We are on the goodwill. And it is structural.

It's not related to the buoyant market last year with COVID. Of course, it was a positive element in terms of growth.

But it's more structural than that. First, because a certain number of trends that contributes to the performance of France last year would continue this year.

You know them, of course, the underlying trends, such as digital, it will continue. Organic, it will continue.

Home consumption would not disappear in a day. As you know, we were out of -- with home office.

So it will continue to be at a good level. But more than that, we have a good momentum.

We have the capability to grasp. It was the first quarter for years where all our formats, all our store in their formats, they increased their market share.

Proximity was superior to market share. Supermarket also.

And hypermarket was superior to market share of hypermarket. And it's the best market share in the half semester that we've known for years and years.

So we have this capability now to grasp growth. You know this model by heart.

If you are capable to deliver the level of cost savings on which we are engaged and with Matthieu, we are obsessed with that. And if you are capable through to customer satisfaction, market share on like-for-like to grow, you have a profitable model.

If you have a profitable model, France would -- the contribution of France in our model would grow. And I'm dreaming about a real competition between my main country, between Brazil, between France, between Spain, they are all France, but I know that they compete for having the best contribution to the profitability of Carrefour.

And I know that France has an enormous potential in front of us. So I'm highly confident for the role of Carrefour France in the group model.

Matthieu?

Yes, on your second question, Sreedhar, on capital allocation. So we've set this capital allocation policy.

The order obviously matters. So first, we want to develop the company in line with our objectives, then pay dividend and in third comes M&A.

We've also set, I think, quite clear conditions for entering into bolt-on M&A. It needs to be bolt-on in our existing geographies to complement our existing presence, easy to integrate, good price, acquisition price, and having a good potential for synergies and value creation.

So we really want to stick to a strong discipline in this M&A strategy. If we have excess for that, excess cash generation, and if our rating becomes very solid and in excess of the targets, solid investment-grade rating, we have set in a capital allocation policy, we're very open to potential share buybacks.

So we're not announcing a share buyback today. We're setting a policy, and we're going to keep developing.

On financial services. So I think it's important to understand the dynamics of the year between H1 and H2 to understand what's the outlook and perspective for 2021.

So as I said in my comments. We had a decrease in net banking income, and we also increased the provision for the cost of risk.

H1, we started to have a decrease in net banking income. But it was only over a few months.

We started to have customer reduce their appetite to consumer credit. We also started from March, April onwards to tighten to the conditions to grant credit in order to avoid the future risk.

So we had a partial effect in H1 of the reduction of net banking income. Obviously, in H2, the trend continued, and we have a full semester effect.

In terms of risk, most of the risk that we accounted for was booked in H1, with only marginal complement in provision in H2 as there is no sign of worsening of the credit quality at the end of 2020 versus the numbers we had on the table in June, July when we closed H1. So I think it's very important.

There is no worsening of the quality of the portfolio at the end of the year. In terms of credit production, what do we see in terms of trend?

We see that there is good credit production. You saw that in the Brazilian release last night.

So credit production remains down in Europe. It is a public market data, but it grows quite strongly in Brazil.

So credit production is now positive. Brazil overcoming European negative trend.

So at the end of the year, the credit portfolio stabilized and it is now growing again. So along 2021, that's going to fuel a better dynamic on net banking income.

Matthieu, can I have a quick follow-up, if you don't mind? Just in terms of the -- striking a balance between bolt-on and a potential buyback, if you don't mind.

What I'm trying to understand is there was an offer pretty much very preliminary on that I fully accept, EUR 20 of shares or EUR 15 today. And in the allocation framework, we've got share buybacks at EUR 5.

I'm just trying to reconcile the 2, when you've got the cash flow targets out there already. Does it -- I mean, do you reassess it every quarter, every 6 months?

At what share price do you think bolt-ons are less accretive to investors than buying back stock?

Well, yes, we will reassess that very regularly. Also, obviously, assessing the opportunities available in the market for acquisitions.

We've proven in 2020 that there were a high number of opportunities that we were able to seize them at good financial conditions. So it's really work in progress.

And so we will reassess the situation very regularly.

I actually have two. The first one is with respect to hypermarket in France performance in 2020.

Any comments that you can actually make with respect to underlying operating profit performance? And the second question is with respect to your private label strategy.

Impressive growth in the penetration in France. But just wondering to reach your target that you said for 2022, is its new SKUs launched?

Or is it price momentum? Or is it more segmentation within the private label strategy?

Any comments would be helpful.

I'm sorry, it's very difficult to hear you and [Foreign Language].

[Foreign Language] performance [Foreign Language] profitability on France [Foreign Language].

Private label [Foreign Language].

[Interpreted] The second question is what is driving the private label segmentation.

So [Foreign Language] France. So as you know, we don't give you any details of the profitability of the hypermarket in France, but something very important this year is the fact that due to the good performance, the fact that we gained market share, the fact that we have been capable in Q4 to increase the growth of market share by 3.8%, I think, the profitability of the hypermarket has improved compared to what it was before and compared to 219 and quite steady.

So it was a -- it is a very positive trend. On the private label, you're right, it's at the core of the transformation since the beginning.

It's at the core of the full transition fall. We are all obsessed with the fact to be capable to put our private label at the center of the model.

We have developed so many products. We have changed the way it is presented in our stores.

We reached this performance of 29%. So we are on the good world.

We are capable to have premium private label, but also a new entrants' assortments on simply. So we have all the capabilities between premium and entrants price.

So we work very, very strongly on that. We have good teams in terms of capabilities to develop new assortments, to think about marketing about that, to work in the stores for improving the performance of the private label.

There's a strong competition on private label with our competitors, as you know. But we are on the good world.

Be capable in such a year to increase by 2 points, the penetration is very positive. It proves that we are on the good world.

We will reach our objective -- the objective we fixed at the beginning of the plan.

[Interpreted] Very quick question, quite a symbolic question. Do you know what the second figure of the -- for the fourth quarter in France is?

No, seriously. I mean to come on the growth of supermarkets, [indiscernible], I understand that we will not get the rock for the ROI, sorry, for hypermarkets in 2020.

So my question is, how long will the hypermarket still need you to be positive in terms of recurring operating income? I guess this is a very important point.

And then the second question concerning consumption and the various changes that we see the trends in consumption that we see with the new small supermarkets that are growing up here and now, popping up here and there. And obviously, stealing market share from your -- taking away market shares from you.

So what do you need to do. Do you believe you need to do something about this?

[Interpreted] Right. Well, thank you very much, Olivier.

So we'll check the second figure after the 55. Well, I'm sorry to deceive you with regards the hypermarket, but then I can reassure you, so we'll do as fast as possible you will have seen that we are impatient to see hypermarkets perform and improve the performance.

And we hope that as soon as this year, we will be able to be back on track with regards to the objectives we've set ourselves. And with everything that we've put in place, namely the 555, but not early that, right?

We believe that this will allow us to just increase profitability, increase our growth. And so yes, so we are very motivated, and we are, let's say, very keen to make these changes occur as fast as possible.

Now these new formats, you often talk about them, and you're right. To be honest, what it strikes me, and this is not mentioned enough I believe, I mean, apart from you, right?

But I mean, we see so much diversity and this big dynamic in our industry. And I'm very proud, I must say, because I feel that my teams -- all my teams are very, let's say, careful and looking up for all these new trends, these new formats.

Not a week goes by without someone telling us, all right, when we've seen this format. Should we replicate?

Should we add something? Can we integrate it and so on?

So we've seen so many different actions, programs being developed, not necessarily further, but we see that some formats work quite well. The organic approach, which we are very, let's say, strongly into is quite interesting.

But we're considering many, many different opportunities because we believe that tomorrow, there is to be where Carrefour could play some kind of a role of moderator or, let's say, fit all these models' formats in one company, right? But we need to understand that these companies are entrepreneur-led companies, and we need to respect this.

And we need to perhaps invite -- encourage people to join us in our ecosystem in what I should call our Carrefour organics, right? Any other questions?

I will ask that question in English. You should not mind.

Just one thing on COVID on 2020. I just want to understand whether it has changed your view on the hypermarket overall.

So do you think that you potentially have to maintain most of the nonfood? What are you going to do by reducing space?

So any changes that COVID has been bringing going forward?

You're right. COVID was, of course, changed a certain number of trends -- accelerate a certain number of trends.

I evoke before digital, organic and so on. But also changed the role of the different format.

And concerning hypermarket, it's clear. And I think we had this discussion at this semester -- the first semester last year, at the end of the semester.

We told you, and it was not very clear because there was skepticism about this idea we had at this moment, that we thought it was a moment -- it creates a momentum for the hypermarket. These capabilities to have everything under the same roof, the one-stop shopping a good experience with the good level of social distancing, with the perfect respect of the sanitary rules is positive for the hypermarket.

And of course, you're right, particularly for the nonfood. We have done a tremendous job it was not so use to see in the last 2 years to come back to a good offers on nonfood.

We were good in a certain number of countries, in Spain, Brazil, but we were not at a good level in average, in particular in France. We have done a global job with global sourcing with massification of products, with capabilities to think what is the good products on nonfood and hypermarkets for our customers, and we are back with good offers.

And additionally, because of this crisis, new trends appear. The role of home office, the urban mobilities, kitchen and immediately all the teams react in all the countries to be capable on these nonfood trends to offer an answer to our customers.

And the combination of all that create what you see in our results, the fact that the nonfood performance is good in terms of the growth, but more important, it's good in terms of market share. And if you add that with difficulties of a certain number of specialized retailers, let's say, particularly in textile or something like that, it reinforced the potential we have.

That's why we have decided, we are extraordinarily pragmatic. So when we see all these elements in place, we decided to be very focused on the nonfood this year, capable to grasp all these opportunities.

And that's why we have these good trends. That's why in 2021, we have great ambitions on a certain number of categories on nonfood.

And it's not only the case in the countries such as Brazil and Spain on average that were the center of our offer before. That's widespread because you're right, it's a new role of the hypermarket and it's a new role on the new performance of nonfood inside the hypermarket.

Three quick questions for Rami, please. The first one, Rami, could you reassure us on the performance of the French hypermarket at the beginning of 2021?

You had a strong performance in 2020, but we have now the curfew at 6 p.m., whereby 50% of the Carrefour malls are being closed. So can you reassure us that you still performed well at the beginning of the year, would be my first question.

The second question, can you share with us what's your view on the hypermarket, post the improvement of the execution that you're doing? I'm thinking here a review on square meter.

And by the way, the target on square meters are not listed anymore at the end of the press release. So what's your view on potential cutting square meters in the French hypermarket and on lease management?

So no customers [indiscernible]. And my last question would be, could you share with us the online sales for France because it's your biggest, biggest weight.

I suspect it may be something like EUR 1.4 billion. So could you confirm?

And what's your target for online sales in France for 2021?

Rami?

Okay. Thank you very much for your question.

So hypermarket as well for other format, but hypermarket, as you know, as Alexandre has just mentioned, are very important to France. And the -- we can see the trend of hypermarket improving among the figures that Matthieu has presented.

So is a day-to-day improvement, is continuous improvement. The story in hypermarket is a day-to-day improvement.

So the methodology and the mindset and the focus are clear for this year. And personally, I'm very confident because we see the first result in last year.

And my mandate from Alexandre is to accelerate, putting this methodology in the center of our mindset, which is the 555 to gain the trust of the customer, to serve the customer and to have the best in-store experience. So I'm very confident about the positive -- continuous positive trend of hypermarket.

I can tell you that today, it's better than yesterday. Tomorrow is going to be better than today because every day is with the training of the team, enhancing all the key items of the strategy.

Regarding the -- your point about the square meters. For example, we listen to our customers and customer asked me to put some chairs in hypermarket, and we put chair in the hypermarket.

When customer asked me to reduce hypermarket. We reduced hypermarket.

Let's remember that a lot has been done over the last years. The main fundamentals are done.

And now, we are an acceleration time, acceleration period, keeping in mind what the guidance of our customers and taking into account the general context that we're leaving. Your third point about the online.

We are gaining market share, as Alexandre mentioned, on online. We are improving our NPS by 17 points over the last year.

So we are in a very good trend, and we are happy to satisfy our customers with our online drive and home delivery services.

Thank you, Rami. Perhaps, Fabienne, just to come back to your question about the indicator of square meters.

You've seen it has been suspended in our release. We are very, very pragmatic.

And you imagine, and you know by heart, retail, how much our teams have had us complexity to manage last year with sanitary measures, change of recommendations, opening hours and then nonfood, nonessential, not possible to send and so on and so on and so. Many, many changes.

And the priority for us, and the priority for Rami was, okay, we have to serve the best, our customers. We have to give them the more comfort we can in this moment because it is the key.

The only key for our customers that have many, many complexities in everything is that in our stores, things are simple, they have their habits, and we don't want to modify all that. And that's why last year, with all this level of complexity, with the extraordinary commitments of our team to deal with the sanitary decisions and so on, we decide not to suspend this criterion because it was not the key priority.

Adding with that, that we see the potential of the nonfood. And as you know, we are very pragmatic, and we decide to suspend that, accelerate on the nonfood and not create any disturbing changes, both our teams and for the customers.

I propose a very, very, very last question...

Did I get it right that the performance of the Carrefour hypermarkets are not impacted by the closure of the malls, but seeing the momentum was still good despite the closure of the mall that was ordered by the government?

I think, Fabienne, and I say sometimes read comments because we've been indeed in 2020 and again, in the first month of 2021 through a number of changes in terms of rules, constraints. I think what the numbers show, and in particularly, these Q4 numbers, we've gone through lockdown and we've had the closure of some nonfood categories and you see the numbers today.

I think it's another proof of the resilience of the model, of the fantastic commitment and adaptability of our teams in France, in the stores and in other geographies in order to deliver a sustainable, resilient performance. So our performance is here, and it's not just new constraints that changed the fundamentals that we are putting into the business.

Thank you, Matthieu. I propose a very, very, very last question, if someone has one.

[Interpreted] Yes, so I'll come back to Fabienne Caron's question. Can we have a clear answer with regards to your objective of reducing the 350,000 square meters of hyper in the group.

I think the objective has been suspended, but I guess that -- the reduction is not enough. Hyper seems to be back on track of a good trend.

So does it make sense to reduce the size? Now then the second question, you talked about technical acquisitions.

Where are we with regards to development of super cool? We see that purchasing power is going to be a very important point to take into account.

And then the third question I have as regard with a -- has to do with the negotiations. What do you do with this -- namely at the international level?

[Interpreted] Okay. I'm going to answer this very briefly.

Now the objective, as it's been said, has been suspended, either we've changed the targets, we've modified them or we suspended them, right? Once again, in 2020, in 2021, with so many changes to manage, I mean, [indiscernible] mentioned the curfew at 1800 and all these other measures.

So we decided that we will not make life even more complex for our teams. Situation is so difficult already.

And we don't want to make life more complicated for our customers either. So we decided to suspend this measure, taken into account also that we have a very good dynamic on nonfood, and we have a great team, optimistic extremely pragmatic.

And so just being in line with what our customers experience and with the support of our teams, we decided to suspend this indicator. Typical, you're right.

Great satisfaction for the team. We found the good format for our supermarkets, our discounts for markets.

It was easy. And we hadn't found a format in a long time, right, for one part of clients, a specific part of our clients.

Understanding what these discount supermarkets are about. They're very good in terms of price, but also quality with fresh products that are very good.

We've opened 6. We are very happy about the results.

We're very happy about their performance. Our ambition is to open up some more.

And we hope that we will find the right positioning for this discount supermarkets. In Romania, we're very good.

In Spain, we've also made a good progression. France, we have the right model.

So we are going to continue it. It's a great satisfaction project.

Now the last question. Commercial negotiations.

Obviously, this is the moment when we come to these negotiations, right? Listen, they are happening dominantly.

They're very positive, especially for farming and SMEs. We signed roughly 80% of our contracts with SMEs.

We've probably signed more since then. We still have disability because we want to, right now, to improve and to analyze the price of that number of raw materials.

We announced yesterday an agreement with dairy farms and their cooperatives. And so yes, we are continuing to valorize the prices of raw materials as much as we can.

Then we are discussing with certain number of multinational corporations. And so what we do, what we act negotiators.

Once again, I believe that when you negotiate with Coca-Cola or Red Bull, I don't have any specific advantage for them. When I look at their results, they seem to be quite good.

I don't feel that I'm putting the farming industry at risk when I negotiate with Coca-Cola. So our teams are doing their job quite well.

We have actually run in advance with the situation last year and 2 years ago. Things are happening quite well, very positive trend, a very positive context.

And I guess that we will be on track with what we have decided in the right time frame right. So thank you very much with this discussion.

We'll speak again to you very soon. I think we begin a roadshow with Matthieu.

We have first meetings with investors this afternoon at 2:00 or 4:00. And we'll meet all together, I think, for the H1, the 21st of April.

Thank you so much. Keep safe and it was a pleasure to have the discussion with all my colleagues.

Thank you.

Thank you.

Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]