Casino - comment

As always, Casino’s Q1 release raises as many questions as it answers. Casino reported very weak Q1 sales, with EBITDA weaker, due to operational leverage. Even Monoprix and Franprix numbers disappoint, in the context of 10%+ food inflation in France. This has resulted in EBITDA for the quarter at €95m, versus €149m previous Q1 (ignoring property and GreenYellow).

The confusion arises from the debt figures quoted. Casino appears to have bought some bonds in the market but not cancelled them. This raises the question of why take this approach, as previously the Company has always cancelled the bonds. The impact of these plus the Quantrim bond buybacks appears too high with Casino stating the interest expense impact was €39m for the quarter and €47m for the full year. This does not correspond with the equivalent interest calculations. Without these buybacks, the headroom under the interest coverage calculation would be only c. €12m.

On liquidity, cash has reduced to €286m but the RCF was fully undrawn. However, Casino disclosed for the first time how much of the RCF was drawn during the quarter (average €1.65bn, maximum €1.95bn). Is this disclosure for the attention of the Term Loan B holders showing that there is unlikely to be sufficient capacity at the new merge entity for their debt to travel?