Carrefour Group and British Airways ? Financial Analysis

Résumé du document

The Carrefour story begun in the South of Paris during the 1960s. For the first time in history, different kinds of products gathered in the same place and were self-service distributed. Due to its success, the Group began to expand to foreign countries. First in Europe, then in emerging countries where growing potential was high. Today, Carrefour is implanted in 31 countries through a network of 15,134 stores employing 490,000 people. the Group has recorded a 86.9 billion turnover in 2008, with an increase of 5.9% compared to 2007. The mission of the Group is to be the price leader all over the world, by offering competitive prices and attractive discounts. Carrefour is namely recognized as the supermarket offering the best loyalty card advantages for the third consecutive year in France. British Airways is a public limited Company, founded in 1974 by the Labor Government. This airline company is based in Waterside (UK) and planes take off mainly from the London Heathrow hub. The principal activity of the company consists of air carriage of passengers, goods and mails to 148 airports in the world. The company is member of the One-world alliance and shares codes with 10 other companies. In 2009, the airline carried 33 million passengers due to a 245 planes fleet. In 2008, Easyjet dethroned BA by transporting 44.5 million persons; for the first time of its history, BA was not any more the biggest carrier of the United kingdom.

Extraits

[...] However, the situation of British Airways is more alarming. The airlines companies incur huge debts: for BA for Jet Blue and a record of for US Airways (what means that equity is negative)26. Fleets and infrastructures are financed by long terms debts (core business resources), and short term debts finance less profitable activities such as catering, fleets maintenance (accessory resources required by the core business activity). The current ratio of BA comes only to what means that the short term debt is two times bigger than the current assets. [...]

[...] Ratio analysis and comparisons Liquidity and efficiency: This ratio is a way to calculate in what extend the current assets could serve to refund the short term debts. At first sight, both ratios seem to be bad (inferior to the European average). But for the case of Carrefour, a ratio of 0.70 is quite normal because of the basis of the mass-market distribution business model (lots of suppliers receivables). In this activity, suppliers are paid within 45 or 60 days whereas customers pay immediately what they buy. In fact, these companies use their suppliers receivables (short term debts) to finance their current assets. [...]

[...] To maintain the quality, the Group have set up a track back system for foodstuffs and a team composed of 1000 persons control every day the purchasing chain. Regarding the environment issues, Carrefour tries to improve its electricity consumption and envisages to reduce it by 20% (in 2020). Furthermore, the company has reduced by half the distribution of polluting plastic bags thanks to reusable bags (between 2004 and 2007). Finally, the “International Foundation Carrefour” struggles against the social exclusion and helps countries in case of act of God. [...]

[...] Furthermore, the group is able to make its assets profitable, by producing 2.82 for invested in the assets (versus $ 4.16 for the leader Wall Mart, 2.78 )28. Carrefour's assets are so more profitable than the ones of its American competitor, but produce less money. On the other hand, the British giant is seriously in danger. Each time that a ticket is sold (or that merchandise are carried), the company lost money: the company lost 4.2 pound when £100 pound are generated in turnover (versus 3.39 for air France, 3.05 )29. [...]

[...] Carrefour of its labor force, what damages the brand image (e.g. French employee suit the company in court, because they are paid under the minimum wage) F.C., 18/11/2009, commerce en ligne ne connait pas la crise Ivan Letessier, 13/10/2009, Leclerc-Carrefour : la guerre des prix fait rage 7 Mel Assous, 7/02/2009, “Consommation - La grande distribution parie sur les mini-markets 8 G. Puech, 12/10/2009, Le président de Carrefour ne voit pas de signes de reprise” 9 N.A., 11/06/2009, prix des produits de grande consommation "premiers prix" toujours en hausse” balance sheet Claire Gatinois, 16/10/2009, se retirant de Russie, Carrefour suscite des interrogations sur sa stratégie” 12 N.A., 18/11/2009, “Rennes: des salariés de Carrefour attaquent leur employeur aux prud'hommes” Carrefour - Financial Statements Analysis Income statement : CARREFOUR GROUP Comparative Income Statements & Trend Amounts in Millions Except Per Share Data 31/12/2008 Total Income Cost of Merchandise Sold Gross Profit Operating Expenses Depreciation, Amortization & Provisions Non recurring Income and Expenses Earnings Before Income Taxes Financial Income Income Before Taxes Income Taxe Net Income From Recurring Operations Total Net Income Basic Earnings Per Share Weighted-Average Number of Common Shares Outstanding Diluted Earnings Per Share Percent 100,0% - 31/12/ (64 609) (13 673) 723) (526) (807) Percent 100,0% - Var. [...]