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French retailer Carrefour posted a drop in profits last year after three consecutive years of gains, reflecting a tough competitive environment in its home French market.

The world’s second-largest retailer by revenues said on Thursday recurring operating profit at group level dropped 3.2 per cent to €2.4bn, and was down 13.4 per cent to €1bn in its largest French market where there’s a “difficult competitive environment.”

Margins in France were down by 40 basis points to 2.9 per cent, reflecting costs tied to the integration of its loss-making Dia discount stores and increased promotional activity at French hypermarkets where competition with the rest of the sector is intense.

Georges Plassat, chief executive of Carrefour, said:

Carrefour emerges from 2016 a stronger company. The increase in sales, for the fifth consecutive year, attests to the relevance of our multiformat and omnichannel model, which is now a reality in all of our countries. In 2017, Carrefour will continue to expand in all its formats, stores and digital, to enhance its proximity to clients.

Globally like-for-like sales increased 2.7 per cent to €76.6bn during 2016. They were down 1.1 per cent in France to €35.9bn, but Europe as a whole grew 0.1 per cent to €56.0bn.

Like-for-like sales in emerging markets were up 9.8 per cent to €20.7bn as strong growth in Latin America (+16 per cent) offset a small loss in Asia (-3.6 per cent),

Digital sales in food and non-food were €1.2bn and Carrefour projects that this figure will triple to €4bn by 2020. Sales in organic products worldwide grew 32 per cent to €1bn, reflecting how customers are increasingly seeking healthier options.

Carrefour kept its 2016 dividend unchanged at 0.70 euros per share. The group said it is pressing ahead with plans to float its Brazilian division and Carmila shopping centres unit later this year, market conditions permitting.

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