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    CA   FR0000120172

CARREFOUR

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Real-time Euronext Paris  -  11:35 2022-12-05 am EST
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Nestle adapts as hoarding picks up in Asia, North Africa

09/21/2022 | 02:04am EST
FILE PHOTO: Jars of Nescafe Gold coffee by Nestle are pictured in the supermarket of Nestle headquarters in Vevey

LONDON/GDANSK/KAZAKHSTAN (Reuters) - Seyda Bal, who works at a bank in Istanbul, is so anxious about the rising price of groceries that she's lapsed into a pandemic-era habit: hoarding packaged goods like coffee and toilet paper.

"I buy a lot of basic foods such as oil, pasta, rice, tahini, molasses ... thinking that next month they will cost twice as much," Bal, 27, said.

Russia's invasion of Ukraine has propelled energy and grain prices to all-time highs, driving up the cost of packaged goods. That has been felt particularly acutely in parts of Asia and North Africa, where people spend a higher proportion of income on food and fuel than in the United States and Europe, prompting some shoppers to stockpile non-perishable items.

The trend hasn't gone unnoticed by Nestle, the world's biggest packaged food company and home to more than 2,000 brands including Cheerios, Nescafe and Maggi.

The Swiss group is adapting its product ranges in the region to "make them more meaningful to the consumer", and considering whether to make some products "more affordable", according to Karim Al Bitar, head of consumer research and market intelligence at Nestle's Middle East and North Africa (MENA) unit.

That could include increasing pack sizes and changing to less expensive ingredients.

"Nestle is seeing hoarding with bouillon, to an extent soups, coffee for sure," Al Bitar told Reuters.

Maggi products and Nescafe coffee sachets are among popular products for stockpiling, he added.

Nestle is working with local partners to overcome supply challenges and has so far managed to keep stock on shelves, the company said in an emailed statement.

The MENA region contributes over 4%, or 3.7 billion Swiss francs ($3.9 billion), to Nestle's annual sales. The region that includes Central Asia accounts for about 9%, or 8 billion francs.

STOCK UP, OR PAY MORE LATER

Shoppers are spending less on non-essentials such as electronics, clothes and household goods, while demand for packaged food and personal care items is up, said Hani Weiss, CEO of Majid Al Futtaim Retail, which runs more than 450 Carrefour stores in 16 countries in the Middle East, Africa and Asia.

"What does that tell us that people are concerned about? Stock availability," Weiss said, adding the retailer was seeing about 9.5% inflation on average, and particular pressure in countries such as Egypt, Kenya and Georgia.

Several countries in North Africa and Central Asia are suffering recurring shortages of basic necessities. Euromonitor International analyst Kamile Botyriute said people in Tunisia, Algeria, Libya and Morocco were having difficulty finding flour, sugar and baked goods. In August, some shops in Tunisia began rationing items to stop consumers from hoarding, Botyriute said.

"I have bought about 10 50-kilogram bags of flour and just as much of sugar," Eldar, 28, an entrepreneur based in Almaty, Kazakhstan said. "There are rumors that sugar shortages are expected and I wanted to have a stockpile."

In the same city, Ivan, 47, a furniture designer, said: "Prices may go up, the dollar (exchange rate) may go up. You start thinking: either I stock up now at current prices or I will have to pay more later."

BILLS, BILLS, BILLS

Inflation is rising at a faster pace in many Central Asian and North African countries than in North America or Europe, where consumer price growth in the 19 countries sharing the euro accelerated to 8.9% in July.

Turkey's annual inflation hit a 24-year high of 80% in August, while Egypt's accelerated to 13.6% in July. In many cases, weakening local currencies are adding to import costs.

"In Turkey, consumers are adjusting to the reality of extremely high inflation. Despite higher prices, we see consumer demand and market volumes holding up, due partly to pantry loading," Unilever CEO Alan Jope said in July. Sinem Ozel, 31, a marketing expert living in Istanbul, has been stocking up on items including oil, toilet paper, pasta, sugar, and dishwasher detergent. She used to spend around 300-400 Turkish liras ($16.71-$22.27) for one month's shopping but now spends the same amount in one week, and sometimes buys Nescafe's three-in-one 20% extra pack of instant coffee.

But not everyone can afford to hoard.

"We don't have the money to buy large quantities of stuff," Layla, a 60-year-old shopper said, standing in front of Lafayette Market in Tunis, Tunisia. "Most of the time we have to get a loan from relatives to complete the month."

($1 = 18.1455 liras)

($1 = 0.9643 Swiss francs)

(Reporting by Richa Naidu. Additional reporting by Mohamed Argoubi in Tunisia; Editing by Matt Scuffham and Mark Potter)

By Richa Naidu, Canan Sevgili and Olzhas Auyezov


ę Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / EURO (AUD/EUR) -1.16% 0.63787 Delayed Quote.0.89%
BRENT OIL -4.43% 83 Delayed Quote.10.28%
BRITISH POUND / EURO (GBP/EUR) -0.39% 1.1616 Delayed Quote.-2.03%
BRITISH POUND / US DOLLAR (GBP/USD) -0.88% 1.21869 Delayed Quote.-9.16%
CANADIAN DOLLAR / EURO (CAD/EUR) -0.55% 0.701415 Delayed Quote.1.18%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) -1.10% 0.7353 Delayed Quote.-6.18%
CARREFOUR -0.75% 16.62 Real-time Quote.3.97%
DOW JONES AFRICA TITANS 50 INDEX -0.44% 471.8 Real-time Quote.-11.69%
EURO / US DOLLAR (EUR/USD) -0.52% 1.0489 Delayed Quote.-7.30%
INDIAN RUPEE / EURO (INR/EUR) -0.26% 0.011634 Delayed Quote.-1.07%
INDIAN RUPEE / US DOLLAR (INR/USD) -0.59% 0.012212 Delayed Quote.-8.43%
NESTLÉ S.A. -1.50% 111.3 Delayed Quote.-11.33%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) -1.38% 0.6315 Delayed Quote.-6.26%
S&P AFRICA 40 INDEX -0.37% 155.43 Real-time Quote.-10.89%
UNILEVER PLC 0.02% 4179 Delayed Quote.5.89%
US DOLLAR / EURO (USD/EUR) 0.52% 0.95338 Delayed Quote.7.87%
US DOLLAR / TURKISH LIRA (USD/TRY) -0.12% 18.6161 Delayed Quote.39.91%
WTI -4.66% 77.354 Delayed Quote.6.45%
ZR (ZR) - CBE (ELECTRONIC)/C1 0.00% 17.635 End-of-day quote.20.54%
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Financials
Sales 2022 82 505 M 86 511 M 86 511 M
Net income 2022 1 224 M 1 283 M 1 283 M
Net Debt 2022 9 452 M 9 911 M 9 911 M
P/E ratio 2022 12,1x
Yield 2022 3,46%
Capitalization 12 891 M 13 517 M 13 517 M
EV / Sales 2022 0,27x
EV / Sales 2023 0,25x
Nbr of Employees 319 565
Free-Float 75,3%
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Mean consensus OUTPERFORM
Number of Analysts 16
Last Close Price 16,75 €
Average target price 19,60 €
Spread / Average Target 17,0%
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Managers and Directors
Alexandre Bompard Chairman & Chief Executive Officer
Matthieu Malige Chief Financial Officer
Miguel ┴ngel Gonzßlez Gisbert Global Chief Technology Officer
Charles Edelstenne Independent Director
Mathilde Lemoine Independent Director
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