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Little Short-Term Pain

14 March 2019 by jbchevrel

Casino (COFP) 5y CDS was standing among EUR HY retail underperformers today, as full year 2018 results were a bit of a mixed bag. Headline came in line, FCF came weak in France, along with liquidity, also weak, but a further asset disposal programme was announced. The French group retail EBIT (core business) was up +12% YoY, but FCF in France was once again weak. FCF post dividends and hybrid interest came -€165M due to large recurring one-offs (-€220M) and a working capital outflow (€133M). This was despite a drop in CAPEX (asset disposal €400M). That being said, today’s move can be seen as some king of consolidation. Indeed, the 5y CDS is coming from c640bp early 2019. We are now south of 430bp. This is as net debt fell to €2.7B from €3.7B. Liquidity has improved too. But not by that much. Despite the significant asset disposal (€1B in 2018), COFP cash position has only improved by €225M, now €2.1B. This is set to continue, as per guidance. COFP will increase its asset disposal target to €2.5B by Q120 (in total = €1B increase). Short-term issues have been pushed back for now, as COFP has €1.2B bond maturities in the next 12 months vs cash position €2.1B.