Carrefour SA (CA.PA) 2016-03-13 Earnings Call Transcript

Well, good morning. We're only missing the Eskimos really for this introduction, but there are quite a few people who are late, but apparently there's a reason for that because the Dutch king will be there on the Champs Elysees which were blocked and that's much more important than our presentation I'm sure. So I'm surrounded by people you know, Pierre Jean Sivignon and Jerome Bedier, who are both delegate general directors of Carrefour and who will assist me and support me when it comes to managing this group, which is a very large group. So, Pierre-Jean as usual will be telling you about the financial results, and Jerome shall be focusing on extra-financial performance which he's been working on for a few years already. So the results of 2015 are quite good, I would say. There are no surprises. There might be a few challenges, and we'll talk about these. But without any further ado, I'd like to give the floor to my two colleagues and I shall maybe wrap up afterwards and qualify these results. But I would also like to say a few words about the future of our corporation and how we see the future, what strategy we should like to implement for the future. So without any further ado, I'd like to give the floor to Pierre Jean Sivignon.

Good morning, everybody and thank you for coming along this morning for the presentation of our annual results for 2015. I suggest we move on straightaway to the analysis of our accounts. In 2015, the Group once again recorded growth in its income. It has also has also been marked by a clear improvement in the management of free cash flow and by a reduction in our debt. Sales, excluding taxes, €76.9 billion, are up by 3% in organic terms and plus 5.5% excluding fuel at constant exchange rates. Our commercial margin and our EBITDA are also up compared to last year, both in terms of volume and in terms of percentage. Recurrent operating income, €2,445 million, is up 2.4% to constant current exchange rates and up 7% at constant exchange rates. Let me remind you that for France, this figure includes three special items: the integration of Dia, which as you know is a project which is going to create value in the midterm, the rise in taxes on sales service, this was an additional charge in 2015, it will remain applicable at the same level in 2016; and then there's the transfer to CARMILA of the rents of shopping malls that was done when that company was founded. So, adjusted for those three items, the recurrent operating income of the Group is up 11.5% at constant exchange rate. I'll come back in more details with this later. After we take into account the share of associates and joint ventures, the recurrent operating income is up by 7.2% at constant exchange rates. Adjusted for exceptional items, the adjusted net income Group share is up by 7.1% in 2015, at a level of €1.113 billion. And finally, Group debt amounts to €4,546 million on December 31, 2015. This is a drop of €408 million compared to the figure in December 2015. It's due very largely to the improvement in free cash flow excluding exceptional items which amounts to €951 million in 2015. Now let's have a look at these figures in more detail, beginning with sales. On slide number 4 you can see that in 2015 we recorded strong organic growth in sales, plus 3%. This growth is due to sales which are up on a like-for-like basis in our stores at 2.4%, but there's also a 0.6% contribution from our expansion. Acquisitions had a positive impact of plus 2.5%, chiefly this concerns Dia in France and Billa in Italy, so, overall, taking into account the impact of fuel prices and exchange rate impact, our sales amount to €76.9 billion, up by 3%. The Group has consistently recorded organic growth over all of the last four years. Average growth has been 2.5% over those four years. That means that the cumulative growth is now close to 11%. We have several driving forces which justify this growth, as I shall explain later. Let's move on now to the commercial margin. In 2015 this amounted to 23.4% of the sales excluding tax. The margin is up by 6.4% at constant exchange rates. That's a rise of 60 basis points if it's expressed in percentage of sales. The improvement of the commercial margin has benefited from the action plans which were implemented in all countries, combined with the increase in the volume of sales. The change is in line with that that was reported in the first half-year and can partly be explained by the drop in the percentage of fuel sales in our total sales. Let's move on now to Slide 7, analysis of our operating costs excluding cost of assets. The costs have increased by 6.1% at constant exchange rates during the year. As a percentage of sales excluding fuel, the increase is 20 basis points. So, overall, operating costs have been well-controlled. They have to take into account wage rises and energy cost increases in Latin America and Asia and also the impact of the Tascom sales service tax in France. The rise was compensated for by our efficiency plans in all the countries where we are present. Now, what about the cost of assets? These asset costs have increased essentially because of the increase in reserves set aside for depreciation. This is linked of course to the resumption in investment over the last three years. This reinvestment takes into account both the renovation of our assets and also continuing expansion. Now, what about the performance region by region? First of all, in France, for the third consecutive year in France, our organic sales excluding fuel has displayed a robust growth of more than 1%. In 2015 sales are up in all our formats. The commercial margin has held up well, thanks to the reduction in wastage and thanks to logistic gains, making it possible to maintain price competitiveness. Our recurrent operating income in France is now €1,191 million; that's an operating margin of 3.3%. Restated to take into account those three items previously mentioned, i.e. the integration of Dia, the rise in the Tascom tax, and the impact linked to the foundation of CARMILA, the pro forma ROI is up despite the fact that we are still in a very competitive environment with no inflation. So our pro forma operating margin is up by 10 basis points; it's now 3.7%. In the other countries in Europe, sales excluding tax is €19.7 billion. That's an organic rise of 1.2%. It's the first time in the last four years that our sales have gone up in this zone. All countries have recorded an improvement in their operating results. The commercial margin has increased in percentage terms. We have of course continued to pay close attention to our price positioning. And secondly, operating costs are under control both in terms of volume and in terms of percentage, and this is particularly true in the second half-year. So the recurrent operating income is €567 million, up by 33.4%. The operating margin has increased by 70 basis points to 2.9% of sales. In Spain and Italy, there has been a clear improvement in profitability. That reflects the acceleration of business in those two countries during the last quarters and also the impact of the various action plans that were implemented there. In Belgium, there has also been an improvement in profitability, thanks to a good control of costs. In Poland, the operating margin has improved slightly, in a very tough competitive environment. And finally, in Romania, we've recorded a good performance with growth in sales combined with stability of the operating margin at a very high level. Overall then, the trends in this zone confirm that it is now becoming a good additional source of growth for the Group both in terms of sales and in terms of income. As you can see on slide 11, our excellent performance in Latin America is continuing. The sales figures are up by 15.7% in organic terms excluding fuel and the recurrent operating income is up by 23.5% at constant exchange rates. The commercial margin is up, thanks to the growth in sales and the good performance of financial services in Brazil. Let me remind you that organic sales in Brazil are up by 13.5% excluding fuel for the year, despite the environment which as you know has become more difficult. In Argentina, organic sales are up by 23.3%. Furthermore, the operating costs reflect in particular an increase in energy costs in Brazil, wage inflation, but also of course our strong expansion in this zone. Overall then, the operating margin in Latin America is 4.9%. That is up by 20 basis points compared to 2014. We can say then that in Latin America our performance is once again very good, despite an already high baseline. However, we need to remain very vigilant about the changes in exchange rates, particularly concerning the Brazilian real. Its volatility has an impact on the Group's results. Over the last three years, the problems of exchange rates have had a negative impact on our recurrent operating income of more than €300 million. In Asia, the sales before tax at current exchange rates are up by 5.9% at €6.7 billion. On organic terms, sales have gone down by 9.5%. The recurrent operating income is €13 million. Despite the drop in sales, the commercial margin is holding up well. The rise in operating costs reflects the wage inflation. In China, in the context of an economic slowdown and rapid changes in modes of consumption, sales have gone down in organic terms by 12.6%. As you know, in this country we are going ahead with determination with our action plan to make it an engine for growth once again. We're working on our in-house organization our cost structure and also the integration of our logistics system. We closed 19 stores in 2015. That makes about 30 over the last two years. We are repositioning our business model and we are deploying a multi-format, multi-channel strategy with more convenience stores. Naturally these measures require time. They may lead to temporary problems in our business. But as has been shown by our recent reorganizations in Italy, in Spain and in Poland, we are strongly convinced that the implementation of this type of measure will bring fruit over time. And we are confident that the repositioning of our model will lead to a reinforcement of our medium-term position in China. In Taiwan, there has been growth in organic sales in 2015 for the first time in the last three years. The operating income is also up. This country has benefited from the acceleration of our multi-format strategy, illustrated by the development there of our network of supermarkets. 2015 has shown once again and in fact strengthened the good balance in the Group's portfolio, as you can see here on slide 13. The Carrefour Group is now moving ahead, thanks to several engines for growth, which encourages its growth. In the domestic market, we are improving our sales in a difficult environment. Europe is also improving. Its potential is illustrated by Spain and Italy in 2015, and that potential is genuine. And thirdly, all the emerging countries represent a new center for growth despite the slowdown in China. Performances in Latin America and Taiwan bear witness to this. Let's move on now to slide 14, the operating accounts. Let me remind you that we calculate two levels of recurrent operating income. The second takes into account the share of associates and joint ventures. This is in line with the recommendations of the French accounting standards authority. This share represents €44 million for the first half-year, compared to €37 million in the previous year. In 2015 we recorded non-recurrent charges of €257 million, principally due to the costs of reorganization and transformation in various countries particularly in China and in France, notably with the integration of Dia in France and the Caravelle project. In 2014 we recorded non-recurrent income of €149 million, principally due to capital gains on sales, the sales made when we set up CARMILA. Financial income has improved compared to 2014. It now amounts to minus €515 million. That reflects the drop in the cost of financial debt after of course the refinancing of redemptions at lower rates. Taxes amount to €597 million. That's an effective tax rate of 34.8%. Minority interests represent €143 million. The increase is due largely to the presence of a new minority holder in Brazil. Overall then, the adjusted net income Group share, that's to say the net result of continuing operations restated to take account of exceptional items amounts to €1.113 billion. That's up 7.1% compared to the previous year. Slide 16, here you can see the change in our investments both on a regional basis and also in terms of their nature. The Group is continuing to invest in the renovation of its various different formats to bring them up to standard. And this is accompanied by selective expansion. The overall then, investment amounts to €2.4 billion. This is overall in line with our plans and it is stable compared to 2014. In France, investment amounts to €1,078 million. That's slightly up compared to 2014. This investment takes into account the renovation and simplification of our information systems, but it also takes into account the transformation plan for the Dia stores and convenience stores. This is a plan which will be accelerated further in 2016. In Europe, investments are up and amount now to €579 million. In Brazil, there is still a strong expansion of Atacadao and convenience stores, while the renovation of our stores continues in hypermarkets and in supermarkets. Let me state once again that exchange rates have had a negative impact on our investment in Latin America. In Asia, we are continuing our multi-format development strategy, particularly with the opening of convenience stores in China and of supermarkets in Taiwan. The change in our model in China also involves renovation of stores and the finalization of the project for the integration of our logistic chain. Let's now have a look at these investments in terms of their nature. Expansion represented 22% of our investment in 2015. We opened 1,123 stores, 52 hypermarkets, 221 supermarkets, and 850 convenience stores. Elsewhere, 26% of the investment was devoted to the remodeling of our stores, which of course helps to enhance the value of our assets. Maintenance still represents 37% of our investment because we are continuing the rehabilitation program that began in 2012. That share is down compared to the previous year, and that trend will continue in the forthcoming financial periods. And finally, the share of investment devoted to our information systems has increased over this period and now amounts to 15%. That of course is reflected in the improvement of our systems and also in the rise of our omni-channel rollout. So, after a low point in 2012, Carrefour has progressively made up for its backlog and is now in line with the average for the sector. Thanks to its robust balance sheet, the Group now has capacity to invest in a consistent and controlled fashion. In 2016, total investment should amount to between €2.5 billion and €2.6 billion. Let's move on now to slide 18 for the analysis of our cash flow tables. Free cash flow amounts to €687 million. That's a significant rise compared to 2014. Excluding non-recurrent items and the discontinued activities, free cash flow amounts to almost €1 billion, and that too represents a clear improvement, it's up €287 million compared to the previous financial year. So this is explained by three main elements. First of all, and this I think is what you need to bear in mind, there's been this sharp improvement in our self-financing capacity up to €229 million; an improvement in the variations in working capital requirement of plus €62 million; and thirdly, favorable changes in the sources of fixed asset suppliers, €153 million, that's linked to the way we have phased our capital expenditure over the year. When we take into account these exceptional items, the free cash flow excluding exceptional items amounts to €951 million, and once again let me say that this is a clear improvement compared to 2014. Let's have a look now to debt, this is slide number 20. Net financial debt at the end of 2015 amounted to €4.5 billion. That's a drop of €408 million compared to the end of 2014. This reduction in our debt is due essentially to the generation of the free cash flow which I just mentioned. Secondly, it's due to the sale of part of our treasury shares in March 2015 that resulted in a cash inflow of €394 million, and then the sales of additional participation in our Brazilian subsidiary, sale to Peninsula which now holds 12%. This drop in debt was achieved taking into account the payment of the cash part of the dividend for 2014, on November 17, 2015, that gave rise to a cash-out of €390 million; and then some non-recurrent items, which, although they have fallen considerably to 2014, nevertheless represent a cash-out item of €309 million. Slide 21, analysis of our bond issues. In February 2015 there was a bond issuance of €750 million, with a maturity of 10.3 years and a coupon of 1.25%. This issuance, combined with those that we made in 2014, has made it possible to extend the average maturity of our bond debt, as you can see there on the side. The average maturity, this is a really important figure, has increased. It's now 4.4 years. And that of course reflects the regular improvement over the last two years. We should note that in June 2015, June 2015 was the maturity date for €644 million of bonds with a coupon of 5.375%. You can see these were important figures. The various refunding operations with more favorable coupons and this major maturity date in last June have made it possible to optimize our financial costs in 2015 as we've just seen. You can see then that Carrefour is continuing to improve its balance sheet and to strengthen its financial structure, and that represents a major plus point in the current environment. Let me remind you that in 2015 the three rating agencies updated the rating for the Group and all three now agree and they're rating Carrefour at BBB+. This puts an end to the split rating situation. Now what about the dividend? Slide 22. As you can see, the Board will suggest to the Annual General Meeting of shareholders on May 17 a dividend of €0.70 per share. That's a rise compared to the €0.68 of 2014. That corresponds once again to the distribution of exactly 45% of our adjusted net income Group share, and that's perfectly in line with the distribution policy that was announced and set up in 2012. Once again this year we proposed payment of the dividend in cash or in shares and payment will be made should be made normally on June 21, 2016. In conclusion then, in 2015, Carrefour has continued with its dynamic growth policy and posts a further improvement in its income. It has further improved its capacity to generate free cash flow. It strengthened its balance sheet by reducing its debt while continuing to invest. Our investment policy is consistent. You can note the effects of this today, notably in France, in Brazil, Spain and Italy. The repositioning in China, the integration of Dia, the omni channel rollout, these are all examples of investment which will give rise to still better growth in the future. Carrefour is now a strong Group with its strengths in food business and has refocused its portfolio in a relevant manner. We are in control of our property situation and our financial structure and we have a constant strategy. We are online and in 2016 we forecast investment of 2.5 to 2.6 billion. We paid close attention to free cash flow. And we shall continue to impose strict financial discipline, the aim of course being to maintain our BBB+ rating. Thank you very much for your attention. I'll now hand over to my colleague Jerome Bedier.

Ladies and gentlemen, our Corporation now wants to provide regular updates on its extra financial performance as it does for its financial results. This is a will that was expressed at the last annual meeting in June 2015. And so for these annual results, we would like to say that the Company should be seen as a whole. There is financial figures on the one hand and the societal impact of the company on the other hand. Carrefour is a major stakeholder in its industry and we would like to take on our responsibility when it comes to corporate social responsibility. We are the industry leader in that front and we're amongst the top companies in all countries where we are present. We're also aware of the fact that this responsibility, which should make us a stakeholder that pays attention to its environment, is at the same time a must when it comes to creating value to better serve our customers The CSR policy of Carrefour is in line with a mid and long term vision of our business and of the contribution of our Company to society. Quite simply, what we mean is doing a good job. This is a motto and you've known it for quite some time now. This vision is of course based on the own characteristics of the company being local, because, thanks to multi format, usage of new technologies and broader international experiments, all actions will be used to better serve the priorities that we have defined. The impact of CSR is also key when it comes to efficiency and when it comes to motivating the 380,000 workers, employees of our company. It helps foster and better mobilize partners, suppliers, local stakeholders, and all civil society representatives. I no need to dwell on the methods that we use to boost our CSR approach, they are, they were already described and they're based on international standards and benchmarks which are known and they are detailed in the useful indicators with the useful indicators in the documents of the company. Actions taken by Carrefour in 2015 are based on three priorities, the three pillars of our CSR anti wastage, biodiversity, and relationships with our partners. And those were recognized by those who look at these monitor these policies. And our ranking is 96-B on the CDP assessment, which means we're in top of we're ahead of other French groups in this particular sector. And we improved our ranking by seven points on the RobecoSAM DJSI assessment. We got the prize in France we got several prizes and awards in France and abroad, the ESSEC prize for responsible trade in France, the Good Energy Award in Italy, the Top 10 Sustainability of the Chamber of Commerce in Argentina, and another award by the Forbes Magazine, and the Best Energy Efficiency Program of the Year in Romania. Now, to highlight that this is really well, I would like to focus on two subjects that marked our performance in 2015. The commitment of Carrefour for climate and the fact that we really want to focus on agro ecology. Climate, as you know, was one of the key topics of 2015, with the COP21, and we're actively involved with other companies as part of the French business climate pledge and the UN initiative called Caring for Climate. As far as this is concerned, we officially committed ourselves to cutting by 40% our CO2 emissions in our stores by 2025 and by 70% by 2050. This target is based on a program of actions using all possible levers. First of all, Carrefour last autumn decided to voluntarily set a price for CO2 to include it in our investment calculations. Setting the price of carbon means you add to the initial cost of your technology the cost of CO2 that it will be releasing during its life. I would like to recall that Carrefour released 3.58 million tons of CO2 in 2015. Secondly, savings will be generalized in our stores, thanks to closed cold storage units using LED lighting, centralized meters, optimization of cold and hot streams in conformant -- in compliance with ISO 50001. Number three, innovative experiments will be multiplied, the creation of self-sufficient stores, the objective in terms of consumption is 250 kilowatt-hours per square meter, plus new methodologies to monitor our energy consumption. Plus corrective action will be implemented immediately. The share of renewable energies in our supplies will continue to increase. Carrefour will continue producing electricity directly on its sites. Also intermittent energy storage was tested and we would like to get our overall consumption by 2.5%, and by the way, it's 5.9 terawatt-hours in 2015. HFC gases are no longer used in our new facilities and it's been the case since 2015. They are replaced by CO2. We have 260 cold production units based on that technology in seven countries, including in areas where it is particularly hot. Last but not least, CO2 emissions coming from transport were cut by 14.3% for the past five years and will be cut by at least as much within the next 10 years. We should also like to focus increasingly on agro-ecology across the world and we'd like to focus on a more environmentally friendly agriculture. This -- or farming. This is at the heart of the food -- of our food business and this is in line with the needs of our customers. As for many other areas of CSR, agro-ecology is a source of -- is a very useful source of innovation. It is a powerful tool for progress and differentiation, which will help better and sustainably meet the needs of consumers. Carrefour has long been committed on these issues, which sometimes lead to challenging debates but always useful debates like on GMOs, something that we -- or GMOs that we do not want to have in our quality sourcing approach. Many issues behind this word agro-ecology. Cutting usage of pesticides and chemical fertilizers, integrated farming, circular economy, reduction of antibiotics, bio-controls, better valuation of wastes coming from crops, closer sources of supply and animal food -- feed. And Carrefour would like to offer new solutions as far as all of these topics are concerned. Selling quality products based on our quality sourcing approach for 168 such products in 10 countries. That increased by 6.1% on 2014 in 2015, thanks to the developments and thanks to the information we have provided to our customers on the characteristics of these products. Similarly, sales of organic food have increased by 21.5% in 2015, which certainly bears witness to the fact that our customers are interested in these products. As far as sustainable fishing is concerned, I mean our concerns are the same. We need to focus on the best practices, the most respectful practices for nature, and which can help foster biodiversity. We are the industry leader as far as this is concerned and we work with several organizations like the Marine Stewardship Council in order to better qualify the choices made by our Company. Last but not least, I would like to say a few words on small and medium-sized companies which work for us. Across the world, developing bonds and links with SMEs is a top priority. This is in line with the strong values of our Company. It helps strengthen the territorial presence of our multi-format system and it helps present a local offering and it helps differentiate products and innovates. In all countries, the local offering was increased. The number of local products in France is now -- we now have 60,000 local products. 5,000 SMEs account for 9% of our sales. In Belgium, in 2014, we launched a new project which meant that 680 local producers could provide products more than 7,000 products to the stores that were less than 40 kilometers away. SMEs also have their own specific action programs to streamline their administrative relationships with our Company to have better referencing to have involved SMEs on CSR actions, based on self-tests for instance. Actions were taken, action was taken when it comes to boosting exports, in particular for our three brands, Reflets de France, Terre d'Italia and Nuestra Tierra. We carry out these programs hand in hand with organizations representing SMEs or agricultural cooperatives. Carrefour shall continue developing specific solutions for SMEs which have very, which are very different from large international corporations which are also our suppliers. Now that was just a quick overview of our extra-financial performance for Carrefour in 2015. It is way too short of course and it is certainly not complete. The idea, however, was to show that our Company is fully committed and we certainly want to tackle all of these issues in a very professional way to do a good job fostering and nurturing dialogue with all stakeholders. Thank you very much.

Thank you very much, Jerome. Well, I believe that the number one development in the retail sector is that we want to have a smart approach. This is a rough environment and things are changing. And we are moving towards what I would refer to as being intangible. And this is precisely what Jerome just said. I mean he's been focusing on the CSR. And this is something that is currently being implemented throughout the Company and of course there might be reluctances here and there because it's not immediately profitable and people don't necessarily immediately see the advantages of that CSR approach, but he has my full support. And I'm convinced that different leaders of different countries of Carrefour know that we have to focus on these strategies, focused on society, on environment. All stakeholders know that there is a good reason for that. Our stores are showcases of our, of what we do, and we can't just focus on prices. As far as financial results are concerned, I think everything was said. We are there. This is the result of balances that we've been developing for quite some time, different formats which are balanced. There's a new balance in terms of financial ingredients. We have contained debt, kept at a very reasonable level. We have free cash flow. We still have CapEx capacity whenever necessary, expansion, remodeling, and at the same new IT and logistics systems. So I would say that the teams of Carrefour in 2015 spared no effort and I should like to welcome the investments of our shareholders, generally speaking, and also I should like to say that you have economic societal and environmental elements, which mean, which helped lead to these results and which is the result of a lot of work. As far as the profile, Company profile is concerned, because this is what matters at the end of the day, Carrefour, increasingly over the past few years, especially since we've been merging with Promodes, Carrefour has been developing and from a hypermarket, we are increasingly a multi-format corporation and we need to insist on that. This is key when it comes to today's societal changes and developments. And so this new step, the idea is to refocus the Group on more local stores, so, convenience stores. And this is something we certainly want to do, we have to do. It means it is a cultural change. It means that we have to be closer to Promodes. And also this is a fundamental strategic decision. And also at the same time, I believe that, I believe that different formats of our society need to meet different needs. Hypermarkets is where you should have as many products as possible, at the best possible prices, and there should be several regular events and seasonal offerings, because there is enough space to do that. At the same time, this is a true marketplace where you can sell fresh produce, with a huge array of products available. And this is at the heart of our DNA but this is also at the heart of our sales and profits because 70% of our sales come from that. So, 65% eight to ten years ago and things are still developing, and this is quite good. And hypermarkets indeed are culturally in the DNA of Carrefour, and that will remain in the future. At the same time, when we take, when we sold shopping malls to Klepierre a couple of years ago, that means that we can control our hypermarkets but also our surrounding environment. And this means that we can now focus on new service approach. And this is new, providing services, relationships, developing our ability to show empathy, et cetera. This is all going in the right direction. So this means that all formats are there. We have hypermarkets, the events prices, et cetera. Supermarkets are stores where you have a huge well, you have a lot of traffic, meeting regular food needs and generating higher profits from the same customers in the same places. Now these supermarkets of course mean that our customers are closer to us, closer to where they live. And in the future this means that we'll be able to consolidate our food market share which is key of course. But at the same time we can develop our local presence, small convenience stores, whether it be a city, in urban areas or contacts which we're currently developing and I'll be talking about that in a minute, via the acquisition of Dia or Bio, because we also want to focus on the development of organic food. Bon App', this is something also modernizing and that will be very successful, I believe. And this is the grocery world linked to the catering restaurant world. All of this is currently developing across the world. We do that not in spectacular way or at a spectacular pace but this is much -- this will work in the long term. So, hypermarkets have their role to play. Supermarkets have their role to play. Local convenience stores have a role to play. And the 101 is food. We are the number one food retailer in the world today. And I think that our geographical distribution, following the divestment we carried out a couple of years when we left countries where we had very limited opportunities and we couldn't be the market leader and we couldn't be multi-format without huge investments that would have been problematic for our financial health or balance. We now have a distribution between Asia, South America and Europe, which is quite relevant, even though emerging countries were -- everyone was saying that these were wonderful a couple of years ago, but these are less emerging these days, and everybody said that Europe was going to be facing a disaster. But indeed this is not quite the case and things are recovering. And all of these are very positive signals for the future of Carrefour, provided we can capitalize on these assets, hypermarkets, the food business, and as Jerome just said, and this is the case when it comes to CSR, this wonderful culture of affiliates, subsidiaries, because we had lost track at some point. I mean we need to invest in our industry, we need to recruit the right professionals still. In the long term we have to be the food leader, we have to have the best brand of product offering, we have to have a retailer brand that should be positioned centrally. We should have -- we should be very efficient when it comes to price/quality ratio. We need to be sober in our packaging and our marketing definitions. And last but not least, we need to focus on low-end products, free products. And this is something we are currently doing across the board wherever we think it is relevant. So we need to be the leader when it comes to food, multi-function, multi-format. And whenever possible, we need to be leaders when it comes to the price/quality ratio. The key asset of Carrefour today is that, facing the development of the internet, the food business will still be a major business in the future. No one can deliver a customer in their home than the local convenience stores, for distance reasons, for time reasons, and for the -- because of the quality of the product. Also you may order books and you do order books and you might sell books in the hypermarkets. We're the number one bookstore in France by the way. But as far as food is concerned, food will indeed help keep that social bond, link between consumers and their environment. The other day somebody asked me whether from home, sitting on your sofa, using your mobile phone or smartphone, whether you could actually order from anywhere all products at the best price. Yes, it is possible. How long? We might die before that, but I don't know. But I believe that physical trade will be profitable in the future, provided and that's the challenge because there are pressures in terms of efficiency because the digital world is very efficient because there is no contact between people and products, but we have to be humane in our approach. And this indeed is what we are doing at Carrefour. If we keep food in our DNA, then we will win the game. This is the physical strategy of Carrefour. We are a multiyear format corporation in almost all countries in the world, in France of course. Italy, things have been taking off the past three to four years, and Italy is currently emerging in terms of emergent in terms of results, thanks to great improvement of our food offering, Terre d'Italia, et cetera. And so we can show that we believe in local produce. Spain, following a tough and challenging economic environment, is also booming these days, thanks to its food offering. We'll talk about China later. China, despite trouble because of the transformation the country is actually going through, is leading a low cost manufacturing business and moving towards added value activities, focusing more on the environment. And at the same time, we they try to have domestic consumption pickup. And this means that the fresh produce in Carrefour in the fresh food offering in China is developing and expanding. It will take time but it is working. So we are multi format in China too because we have Easy, which is the word we chose locally for convenience local stores. We also developed, we also tried to sell over the internet, food over the internet. In Taiwan, very close to China, they are developing wonderfully, especially so because our local employees and leaders revived the quality food approach. EBIT increased by 10% to 12% and the average basket has also increased similarly. And so if we do, if we do focus on food, then this is the basis of our global development. This is the first stage, the first step and we need to consolidate the physical foundations of our business. You cannot change the rest. If we get closer to our consumers with physical local stores, we help cut the distance, we have customized services and this in turn means we can be we can help cut carbon emissions. And we talked about that earlier. This is the first stage, which means a consolidation of multi format. We've been talking about that for quite some time and so it people might think that it doesn't mean anything. But it's not quite the case. We have to be multi-channel. Now things need to be streamlined and simplified. This is easy to understand. First of all, we need to consolidate our different formats wherever possible. This is what we are currently doing in France, in Brazil. This is also the case with the phenomenal success of Atacadao. Then there is the efficient revamping of our hyper markets which helped to boost the brand name in Brazil. We are currently developing a network of supermarkets that we had taken over and that had been left aside for quite some time. And now we are launching convenience stores, quite successfully. No need to talk about Argentina, but still this is a forgotten country that was that had started a crazy race. But it's no longer just focusing on itself. This is a country that is opening up. We are multi format. We have local stores. We have a great network of supermarkets, hypermarkets. We have Maxi which is the equivalent of Atacadao and hypermarkets which are working doing really well. And so the Group as a whole is developing and multi format, this approach is consolidating or being consolidated. And our vision is increasingly understood by our employees and we now need to move on to the second step or second stage, which is to have a better IT base and to go digital. What do I mean by digitization? Digitization means that you need to get rid of internal partitions within the company so that all data should be available when needed by all operators of our company. You might call that the cloud of big data. But at the end of the day the idea is to have big storage units where people can actually find information using relevant apps. And this is the entire challenge really. When you develop such a database which is compiled based on multi format, then of course people from logistics, purchasing units, our marketing people should be able to work on these data, compiling data, gathering data, processing data. And indeed, this is we are making our company more transparent than it was, in the future especially internally. And this is a major change. Psychologically speaking it will be a breakthrough. It's not quite the case yet. We are sparing no efforts when it comes to doing that, but we've seen the first results. I personally visited one of our hypermarkets in the Greater Paris area and in two minutes, we had all -- we had access to all data in terms of sales per brand category and price. And this is something that made me really happy because I could tell that a Company like ours with great talents, great people, when we really want to modernize ourselves, whilst capitalizing on our key assets, then the results can be wonderful. And so we are going digital, which means we have to have a greater IT basis. It means at the same time that we have to increase the flow of transactions and of databases and this needs to be made on a resilient and robust basis. And at the same time we are giving our people mobile connection instruments and new channels to access those data. Well, you know what the tools or the handsets are. This one is actually great. This is the greatest step forward humanity has ever made I would say. And we need everyone to be able to use these handsets plus computers etc. So digitization will lead to internal transparency and will lead to the ability for our employees to find in a shared database the information they need. From a technological point of view, it's a major breakthrough because instead of providing them information, top down, they can look for information, search and based on that they can assemble and create something new. And this means we're entering a new world. Exploration will be key and this means that people will have the ability to explore because exploring is what we do on a daily basis. We look here and there, a bit behind hedges, behind trees, beyond borders, etc. and we need to find this pleasure for exploration. And at the same time we need to be able to learn. So exploration, learning, these are key elements. And from a cultural point of view, these are wonderful elements. If we manage to do that and we will, it will be great. We'll manage because people are smart, smarter than we think and that's the only thing they are waiting for. They want to learn, they want to develop and put this at the service of the company they work for. And then the last point, exploring, learning, means setting out on an adventure. Yes, an adventure. But an adventure for whom? An adventure for us. In fact, if we do this in a disciplined way, if we fix a few limits, if we accept balances, if we accept the idea that independence and personal development is something that is stronger and more explicit when it leads to an association, a combination of skills towards a common end, towards the end of the Company in the direction fixed by the Group. If we can do that, I can say that everything is there to be able to make a success of this. So stage one, consolidation of the physical assets. Stage two, working on the IT, on a reinforced basis. And stage three, we go for it, all this without too much haste. Digitization is not a religion; it's a means like any other. It's more modern, more effective, it's faster. It's more stunning as it were and we can bring together an unprecedented quantity of data. But we don't need to rush ahead. We need to do things in the proper order. That's particularly true for a company of our size. We are not under pressure, pressure coming from the very considerable investments that are required for this business. But of course, investment expects a rapid payback and that means that everybody is under pressure. But I say we need to do this, but we need to do this cautiously, deliberately and without excessive haste. So that's what I believe in for Carrefour and I'm convinced that all this is now underway. We took some time to develop these ideas. They needed to be developed in a precise way. We had to do that so as not to be arrogant. We needed to remain modest because we have many challenges ahead of us. But all this is now underway. We are building something new, but we're building for the medium term. And so our investors, our shareholders, whom we respect, need to understand that in their own interests, we need to go ahead with the caution that I've indicated and taking the time that is required. Haste will only lead to disaster. And when you look at the extraordinary tidal wave of data which is going to engulf us tomorrow, then you can see that it's important to be able to filter all this to focus on the essential. And above all, we should not forget that if we bring together tangible elements, digital efforts, IT, plus our physical stores, it is nevertheless the people who finally make the difference. Robotization is possible in a certain number of types of industry. It helps to reduce physical labor. It makes it possible to perform repetitive tasks which can have a disruptive impact. But apart from that I think that robotization has no role to play. Our business remains very much a human business and so this is the major challenge for us in our Company. This challenge means looking ahead to the development and the training of our management teams because if we're present in 20, 30, 40 countries, it's obvious that managing from Paris, from Boulogne is no longer possible. Henceforth, we are working in a global business where the issues at stake in terms of image, in terms of corporate responsibility, in terms of environmental issues, but also in terms of tax issues, economic issues, social issues, are all enormous. So it's important that we should raise the level of understanding of our management staff. That I think is the major task that lies ahead of us. And if we pay close attention to this and if, here again, we come back to the policy which the Group has implemented for some years past now, which involves getting people to work together with a hierarchy based on the combination between two levels, so that we never lose contact. So that development is always mutual. So that investment and information can circulate without being too centralized. If we can do that, I think we've done everything. So that's how I see Carrefour tomorrow. And I'd like to add that some old skills which were abandoned are now coming back into focus. Property for example, property is coming back at high speed. I think that these are lines of business which can help us to create value. But I want to avoid some ambiguities which have been created around Carmila, particularly concerning the ability of our Company to maintain its share price. Property is essential for retail and will remain essential I believe. We are now professionalizing our approach here and it will create value. This will enable us to retain control of all the items involved. This will enable us to dynamize the management of our assets, which had become somewhat inactive. But it will also enable us to bring the various retailers who are in our shopping malls along with us. We can get them involved in our communication, in our databases, in our event organizations and so on. Let's not forget the back office. The back office is often overlooked, but it remains essential for us. Purchases, logistics, all these types of business are difficult and very often they have to work under pressure. But they remain extremely important. They're absolutely fundamental to us. In fact, they can't be replaced. People are essential here. Reflection of ideas, thinking, the quality of those ideas, that's something that you can't replace by computers. Computers, IT can help us; they can bring great advantages. But human judgment, human discernment, services and the neural connections that are essential between the back office and the stores, all these are essential. So once again, a major human issue for the future, but of course if we don't have major issues to face up to, then what's left in life? So let's face up to these challenges and these will give us great satisfaction. So we're looking ahead to Carrefour which will remain a world leader based on food retailing, in which fresh produce will remain essential to generate traffic. The representation of major brands of course will be a competitive advantage. The positioning of our own brands in the central situation will help us to rebalance the situation. We need to pay attention to entry level products, so as not to be overtaken by hard discounters who of course claim that they sell French products, whether that's true or not. And then of course we need to maintain physical proximity with the customer. This is absolutely essential if we are to face up to the attempts by some people to encourage deliveries to the home. So that's where we are. A well-balanced investment portfolio and I think that the rating that was mentioned and which is well deserved needs to be maintained. That's absolutely essential. I think that today our shareholder base has been enriched. It's become somewhat more exotic, let's say, with the arrival of a Brazilian operator in our capital structure. They represent 12% of holding in our Brazilian affiliate, but of course Carrefour holds the rest. I want to stress that fact. But this operator is also a shareholder in the capital of the Company as a whole. There's also the Moulin family that has joined us. They've been in this business for a long time, in a complementary line of business. They understand general retailing and they understand premium formats because they've done a brilliant job of developing convenience concepts on the basis of Monoprix. All this is very satisfactory so new shareholders, a new type of dynamism in commercial terms, stability, a good balance in financial terms. Professional and human management which I believe is excellent and which we are going to continue to promote in the future. That is where we are today. So 2015, 2015 was an adequate year, a very sufficient year I would say, which I think met market expectations. There were no major surprises. I hope that I've been able to shed some light for you on the future, which I think is a very promising future. And I'm very happy to be accompanied here throughout 2015, which had some negative points for some of us. But nevertheless we've seen that the Company remains very robust and fully turned towards its future. Thank you. That's what I wanted to say. And now if there are any questions, we shall try to give you an answer. The gentleman here. Would you please introduce yourself when you put your question? Mrs. Caron, somebody who has also undergone a transformation. Please go ahead. I'm sorry we can't hear the question. That's better.

Good morning, Mr. Plassat.

Good morning. No indiscreet question, no novellas please.

No.

Now I would like you to explain or to account for this exceptional level of performance in South America, especially in Brazil in a challenging environment where there's a recession. And also could you please say a few words about the forecasts in terms of the sales in Brazil for this year? It's still going through that crisis. And last but not least, investments in Brazil. Are they going to be kept at the same level this year?

Now when it comes to the acquisition of the DIA stores, I have no regrets. DIA stores in France, no regrets what so ever. A network of 800 stores will take time to convert. I just want you to understand that. I mean conversion of the assortments, training our staff, investing in the different stores, logistics conversion, IT conversion, et cetera. You don't do that overnight. And so the end of the program is 2017. Currently we've converted 120, if I'm not mistaken, because it took off slowly. But things are gaining momentum, 40 to 50 each week now. Secondly, we lose market shares on DIA because we're closing down shops. The competition directorate forced us to sell 50 or 60 and for DIA overall, we'll be closing down 130, 140 stores. So at the end of the day, and one year down the road, because this is a company we took over in December 2015, we started integrating it in January. There are social steps -- 2014 of course I meant. There are social labor relation steps also. So we're just one year down the road really. And we have to be careful and we have -- sorry, we have to stay put because you can't go in the retail business. This is a big project, 800 shops. We're not talking about a small project, it's a huge project. So yes, we're happy. That's answer number one. Answer number two is that these stores will be split between different banners or brands of the Group and the contact. This is something new which does make sense. A mid-sized store with more service than is available in a city store and supermarkets for some of them. So if you want to compare the sales, then you have to wait for one year, until after the stores have been converted, because you have the transformation of the offering, of the customers, of the staff, of the stores themselves. So we paid that -- we paid -- for this business, we paid 30% of the sales, which is an acceptable ratio. We will be losing €55 million to €60 million each year for two years. That's going to be €120 million. We are reinvesting in the network and at the end of the day we will have an additional 650 stores for our local network. We will have stronger contacts and we will up and running for the next step. That's my answer, gentlemen. Brazil, financial products. Yes, substantial contribution. And we wouldn't have any financial products in Brazil if we had no stores. So financial activity or the financial business, its part of our business. It's in our bloodstream really. We need that. And we're currently considering developing these financial services in one of the branches in Brazil. Things are being finalized. And indeed we're very happy about the profitability of these financial products. And the reason why these financial products are working so well in Brazil because our company as a retailer certainly provides great conditions, credit terms for our customers which cannot be provided by banks. And the risk rate that you mentioned is perfectly controlled and monitored. And we have a partnering bank which is a banking partner which is very careful and the level of risk of our debt or different levels indicators is closely, very closely monitored. On Brazil, we've decided to slow down our commercial policy. In terms of risk management policy and provision management policy, Brazil is a highly regulated country. We work hand in hand with the leading bank in Brazil probably and we do whatever the supervisory authorities ask us to do because we're associated to a banker and at the same time, we're fully dependent on what the supervisory board or authority tells us in terms of provisions. But the commercial strategy will be adapted based on that. And the third element you need to bear in mind is that this is a business that is linked to the retail business. So in other words, we do know the people we lend money to because they are our customers. So we do have information on them and on their consumption background. And if you look at the levels per capita, it's very limited. Caravelle, well, we told you that Caravelle had landed, right. Caravelle never went off track. And the arrival of DIA in the Caravelle project certainly led to changes or slowdowns in the transformation, but things are still going on. And the idea is to turn our warehouses into multi-format warehouses because we used to have a network specialized for each format. And we expect extra ergonomics from Caravelle plus lower prices per kilometer travelled. And beyond Caravelle, there's another project. That's the Cargo project, whose idea is to develop a network of warehouses suited to the needs of Caravelle. So we're modernizing that in France. And this network of warehouses will lead to co-financing with real estate partners, the idea being to fully control it physically, but also to control costs. I hope I answered your question. Caravelle is a wonderful airplane, 300 kilometers could be run between the moment you would start the engine and the place where you could land so great resilience of this airplane, a great airplane. Thank you.

Well, this is a question I was asked many, many times. And this is in line with the fact that you want guidance. And I will not answer this question of course. But what resources do we have? First of all, let's face it, I can't do any -- I can't predict the future. But I don't quite know what's going to happen in all of the countries where we are present. There are ups and downs in all the countries, economic, monetary, etc. So if you are afraid we would withdraw from all these countries, of course we're not going to do that. Deflationary trends, to be honest, I don't think so. And I don't think it's going to play any major role in the years to come. I even believe that controlled and well-built inflation if it came back it would be a plus for all operators in our business, in our industry. Secondly, we have resources to generate results in Carrefour, stemming from what I mentioned earlier. We have optimized extraction of this positioning on the food business, so optimized logistics, optimized terms of payment with our partners, etc. We are good in terms of quality based on our network. We have our own brand, which is good, but which still can be improved. We should optimize our promotions, promotional policies, because, in other words, we basically work with a fire extinguisher, because he's a fireman. So we do work with an extinguisher, basically, a fire extinguisher. So we use that tool, that fire extinguisher when doing promotions. In other words, it's a very broad spray. And we would need to be a little more focused because the volumes are huge and we would need to review our promotion mechanisms, which are efficient, but quite obsolete. I know that we have professionals of these jobs sitting here to my left and they probably understand what I mean. In China, China, well, also there are great opportunities. I think the situation is going to be improving. Like I said before, I'm convinced that at the end of 2016, beginning of 2017 things are going to be picking up in China, same thing for Italy. We're on the right path. And I can tell that the guy in charge in Italy is fully -- fully agrees with me. And then France, which may have its lot of surprises because we have operational resources, because we have practical resources, which are untapped so far, and I believe there's nothing we should expect from a contraction of costs. I think that cost reduction today comes from CSR, controlling our spending, our energy spending, controlling losses because of shrinkage or misuse of products, etc., that all of this may lead to savings which are very sound for our society. And what I say for France certainly applies to other countries, like Italy, Brazil, other challenging countries. So we do have the ability to improve our results. Well, that's all I would say on guidance. What level of margin? Well, I'm sure you were talking about the ROC margin. Of course I'm not going to answer that question today. Mrs. Caron?

No. On Drive, you need to realize that the -- you need to look at their profitability. This is not proven. Just focus on their profitability first, because we want to have profitable growth, by the way, on Drive. Well, Drive of course will be taking advantage of digitization. This is quite obvious. It's taking time, but it's quite obvious. At the same time, we currently have an IT system for Drive which is appalling. And we're currently changing the platform, which will be renewed within the next two or three months. And there's nothing more I can do on that. I'm not a fan of Drive, by the way, let's face it. That being said, it would be ridiculous not to take advantage of Drive to actually increase our market share, provided it is -- it comes on top of what we already do, which is not the case for our competitors if you look at the number of solo-Drive outlets that were closed down since the model was launched with -- and this certainly shows that there were huge investments. And thank God we are focused on Drive which are backed to stores, for reasons I have explained before. DIA, well yes, we might be losing many in 2016. Could it be less than in 2015? I hope so. I hope so because there's a major part of the losses for DIA in 2015 that are linked to PLS, fresh produce practices, which are not adapted. And so when you do that on networks of 650 stores, then if you don't have the skills, the logistics is being set up, the increase of the volumes or the appreciation of the volumes to be ordered is not there, etc. Plus there were amortization effects in 2015 for the DIA transformation, tried and planned. But I'm very confident for DIA, but I don't call that DIA. I don't want to call that DIA. This is a competitor. It's not DIA. It's not the right name. And the last question, what was it?

China.

But hang on a minute, Mrs. Caron. When you can travel abroad without any risk, we will take you to China. I'm not sure you know China, but skilled and competent as you are. You can go with your neighbor. He will carry your suitcase, I'm sure. And if you want to see China, we'll take you to China because you need to see China. You need visit China. It's a huge transformation the country is going through. That's one thing. Then there is fierce competition linked to the unbridled development of the Internet. And this certainly has an impact on the non-food business and also partly on the food business, especially for import products. Now, our plan is very straightforward. Number one, we need to redefine this -- the different territories in this huge country where we had an obsolete approach. These territories need to be reorganized, based on logistical platforms that we didn't have, in the future, integrated logistics platforms. Third topic cutting our headcount, this is already the case. Jerome is in charge of China. And this is something we're currently doing. Number three, closing down the stores, the old stores, which we believe that, based on their location, would never be profitable. We closed down 15 of them, if I'm not mistaken. Number four, we need to have a more dynamic sales policy. All of this we are currently doing. There will be a new COO, Chief Operating Officer, which is something we've never had at Carrefour, somebody who is just in charge of operations while other people take care of the rest. And so we have an old guy from Carrefour who's been working at Carrefour for 30-odd years. He had already been to China. He used to be in Taiwan. And he took over. I think he's doing a great job. We reformed/revamped the financial team. We have a new CFO. We have a new Director for Human Resources, et cetera. So all of this is being implementing calmly with a new -- based on a new reformed or new, changed division with key shared objectives. But of course, it takes time. It's a big business, but it's a great business. We're very good in food safety. We're very good when it comes to fresh produce, et cetera. You are very operational in your approach, madam. So we have two level stores. There is a food level and a non-food level. And if food is at the heart of our business, we need to ensure that people have quicker access to the food business -- to the food department and this is something we need to do. And plus we need free space to boost our shopping malls because we are the operators of our shopping malls. And we need to include takeout and restaurants in our shopping malls. So we need to cut the surface area dedicated to the stores, focusing on the shopping mall, et cetera. It takes time, but it will be rewarding in the long term. In Spain, it was challenging, but it worked. Same thing in Italy, same thing in France. Honestly, four years ago the situation wasn't all that brilliant in France, but I think things are improving. So China, there might be surprises. And indeed macroeconomic commentators on China, people who praised China four or five years ago and who are no longer, who no longer praise China are now saying that there might be hope or light at the end of the tunnel. And I believe that China is going to be recovering and is going to be back soon. China cannot be replaced anyway. And they will find their own resources, and we have to be there.

In terms of EBIT, do you think that 2016 will really be the low point?

Oh yes. Absolutely. The answer to that question, the low point, my answer is yes.

So we shouldn't be afraid of more losses, piling up a big crater of losses in 2016?

No. It would be a problem, wouldn't it, if we all went down the crater? Particularly since Jerome is involved in China. You can see his eyes. They narrow to slits when he thinks about China. But concerning China, I think that we need to have intermediate meetings to inform one and other about the situation there. The gentleman over there, you, sir.

The next question is over the phone from Sreedhar Mahamkali, Macquarie.

Thank you very much, madam, monsieur, madam. Thank you very much, ladies and gentlemen. It's really because it's you, because at 12:15 people will be dropping with hypoglycemia.

It's a reasonable loss.

Let me say this, if there was a big figure, a big problem concerning China, we would tell you about it. Yes, we're making an operating loss. It was in the figures there. No, I said earlier that, the end of 2016, we believe that there would be a turnaround in China that would become fully effective in 2017. That's all. Thank you very much. And please note that, along with Aucham, we are the last Western retailers to -- yes, maybe my definition of the west is not the same as yours. But let's say that at the same level of operational quality. We have a geographical presence because we have 240 stores, don't we? That's not negligible. We are embarking on this substantial change. That will take time, but I have confidence in it otherwise we wouldn't be doing it. Just one thing, the return on capital employed in China is one of the best in the whole of the Company because we developed with a very small capital base, so there's no pressure there. We simply have to continue to move ahead. It's an enormous country with a very large population. And since we lay stress on food, obviously you can see where this will take us.

Thank you very much. Thank you, ladies and gentlemen. We've overrun our time slightly. Thank you very much for your attention. Thank you for coming along to this meeting. And I wish you all a very good day and we hope that we have managed to reassure you and that we have reinforced your confidence in the Carrefour group. I hope to see you again soon. Thank you very much.

Three questions, with your permission. The first question concerns the criteria for the management of your price positioning and the efforts you make in terms of promotions in France. What are the criteria that you adopt here? How do the market share indications that we've been given accompany this? They perhaps harm your shareholding, your share price. And what about the generation of traffic? What are the trends in terms of traffic in the different formats? Can you explain how you manage on a weekly or monthly basis all these elements? Or even on an hourly basis how do you manage your price positioning and your promotions? That's the first question. The second question concerns Carmila. Can you please help us, guide us in terms of the major aggregates? Can you talk about the mechanism for the creation of value? Can you update us concerning Carmila? Can you talk about what you expect to hope for here? And the third question, the last question. There have been some comments over the last few weeks, in the United States and also in Europe concerning deflationary pressures in some market segments. Because of the effects induced by the drop in some commodity prices, some raw materials prices have gone down very sharply. So can you update us concerning the situation here? Are you afraid of these deflationary pressures in some markets or some segments, particularly in Europe?

Thank you very much. Concerning the indicators, the promotions, price indices, market shares, 0.1 per week, minus 0.7 in the month, plus 0.2 with DIA, without DIA and so on, I want to give you a very clear answer. We follow all this, we look at all this, but it's not that that is the driving force behind our strategy. So if you're an analyst or an investor, I suggest that you do the same thing. Don't take this very short-term view based on the indices. All that is perhaps valid for television or cinema, but it's not valid for retail. Second point, Carrefour, in France, Carrefour is no doubt the company which is most involved in promotions. Over the last year or year and a half, we can see that the fact that Carrefour has come back into this game, with more effective price policies and with stronger advertising. And with some comparisons with our competitors, we've seen that this has enabled us to come into contact with something that we'd lost sight of. The competitors, the competitive area, of course our competitors have reacted, they've moved. There was Leader Price and people like that who've come back into this game of promotions in a way that was not familiar. It's obvious that you can't do everything at the same time in theory. So if you have low price positioning, it's difficult to be the price leader everywhere. We were perhaps excessively dependent on promotions. We had mechanisms which were very individualized and very strongly targeted and we too are going to have to change. But that's true of everyone in this business. And it's not in terms of indices which give you variations of 0.1% per week that we are going to be guided. And the people who draw up these indices work for manufacturers or for other competitors, besides ourselves and often they work in services where we are not present. Okay, that's the answer I would give you to that question. We are going to continue to do our job and we shan't let ourselves be dragged into the competition by some other of our colleagues who act rather like bulls in the bullring. So that's what I can say concerning that question. We are not going to give anything away in terms of price, but we are not going to allow ourselves to be guided simply by short term indices. Now you talked about deflationary pressures. Well, we already detected, we already feel these pressures. Deflation in mass market food prices, so that represents something like 2% in 2015, between 1.5% and 2%. And this deflation is due indeed to the fact that there is strong competition between operators. We have to accept this. You also talked about the drop in commodity prices which has been very marked. That's true for these periods too. That's not always a problem for a retailer. It can be an advantage in competitive terms. And from this point of view I believe that the deflation of raw materials I think has probably touched bottom. You can't go on deflating forever. And this deflation was sometimes linked to meteorological factors and sometimes it was based on pure speculation. So I don't think it will last. Of course one always needs to beware of deflation. One must avoid organizing it oneself. But I think that reason always takes over at the right moment. And you've noted one point and maybe I can anticipate some questions here. You've noted that Carrefour, like many of its competitors, has been the object of investigations by the competitive authorities. They've looked at our purchasing methods. And it's obvious that in a very aggressive environment where producers are very much in competition with one other, retailers are also at war with one other in price terms. So the number of square meters is continuing to increase, demand is not increasing so sharply and it's obvious therefore that there will be strained relationships between us. And that whatever we do in terms of these relations, regulation I'm talking here particularly for France, where we have a very complex regulatory situation which is not always in favor of merchants. Even though merchants may sometimes help producers to escape from frontiers, people tend to believe that our life is easy. So we have been the object of investigations. Obviously we're going to defend our purchasers who'll defend our company. We do that and at the same time we're saying that regulation is not always objective or legitimate, but nevertheless we have to respect it. When two people are involved in a transaction, one buys, the other sells. How can you ensure the continuity of a relationship when one insists on rises that the other cannot accept? That's the only question. That's the basic question. And I believe that everybody has understood that in order to avoid the deflation that you mentioned earlier, as something that might slowdown the ability of companies to generate profit, we need to get together around the table to reach an agreement. So no, I'm not afraid of deflation at the present time. Carmila, creation of value. Concerning Carmila, there's been a lot of talk, a lot of speculation. This is very legitimate. Bankers in particular have made a great deal of fuss. There's been talk of the capital involved and the debt involved. Now Carmila is an excellent asset. It was launched when 2014. We are lucky enough to have with us the head of Carmila, who is of course involved in a possible IPO. There have been some indicators. There are always clues to the possibility of an operation of this type. But nevertheless this can have a positive impact for all of us. It's an excellent business. The aim as I've said before is to remain in control of our property assets, not to neglect them or to lead them leave them to the influence of other factors. We also want to create value overtime because these are assets which we can develop in terms of greater profitability. We can enlarge the offering, we can improve the level of quality and also we can make a difference in this way with our main competitors. Let me add that Carmila is a business which manages sales services, which are outside the scope of the major players. The major players tend to focus on a certain number of major regional and national centers. So we are in a good niche here. It's one that can promote the development of value because there is less competition here from other players in the property field. I don't know whether you agree with me there. So I believe that, yes Carmila will give rise to some good surprises some positive surprises. And of course, we have involved some financial and property investors here and therefore it's not impossible that some of them will look for liquidity. This is something that is certainly not impossible. The question is to find the right moment and the right value. It's -- as for the other points I mentioned earlier, no haste. More haste, less speed. I think that it was during our last meeting that we mentioned the possibility of an IPO in Brazil. Well, the possibility of the IPO in Brazil remains, but for the moment it's not desirable because the conditions are not right. It's not urgent, there's no pressure. So we and our local partner will await the right moment. But all this is potential that we still have in hand. I hope that answers your question about property. And our friend Mr. Ehrmann through Carmila is supported by other people who manage what we call Carrefour Property where we focus more on the property of our own stores. But it's these two organizations together, which bring together and create value for us. Okay, thank you for your questions. The lady here. From the magazine, Challenges. Three questions. Three, not five. Why do you say five? Well, because the last one sounded like five. The first question then concerns the marketplace, Rue de Commerce. Can you talk about this activity? You've talked about digitalization in house. Can you talk about other external possibilities for digitalization? Secondly, what are the possibilities for the opening of new stores, particularly Carrefour Bio stores and stores in airports? And thirdly, the rise in the holding of the Moulin family. You've suggested that there might be a further increase in that holding. Oh the Moulin family. Right, yes. And will this have an impact on strategy, concerning the Galleries Lafayette stores or the Carrefour stores? Ah, now you've opened up a new field of exploration for us. I'd like to thank you for that. The Moulin family, they've announced their arrival quite properly. They now have a holding of more than 10% of the capital. As I said earlier, the Moulin family is a family which has strong historic links with the retail business in France. They've been very successful and we are delighted to have them with us. Now is the Moulin family going to increase its holding in the capital of Carrefour? I think I've read in your own magazine that you met with the family. Maybe you should put the question to them. I can't answer for them. If they want to increase their holding in the capital they would obviously be welcome. And the Moulin family, like others who are shareholders of our Company what's important for the Company itself, is that they should be good shareholders, that's all. And so far we have every reason to believe that they will be excellent shareholders for Carrefour. The other question, opening of organic food stores and the Rue du Commerce marketplace. Those are the three questions, are they not? Okay, organic stores we don't have very many. We shall have many more. We are testing the format. Let me remind you that Carrefour is the leading seller of organic produce in France, by a long, long way. People aren't aware of this. But we need to say it so that other people don't say it for us because very regularly, people steal our good ideas and we've tended to have been rather too backward in coming forward and talking about our ideas. Our position in organic produce is an exceptional one and we're going to talk about this. So in this field, Pierre Jean Sivignon and Jerome Bedier reminded us earlier that we're in double-digit growth here. We're almost over 20%. So why not imagine that we can make use of a multi-format, multi-channel strategy in organic sales, organic produce too? You know that in the future there will be opportunities for growth in convenience stores. This is linked to the fact that there will be a drop in the presence of convenience stores at other sectors which are going to group together because of digitalization. So I think that the prospects for organic produce are good, both in convenience stores and in digital sales. Now, moving on from that to talk about the marketplace. The marketplace Rue du Commerce is a laboratory. We've purchased a laboratory and I think that it's a good quality laboratory because in Rue du Commerce you have the marketplace aspect. That is to say, it's a site which allows other operators with product ranges that are complementary to ours, they can sell their products through this marketplace. And that's important for us because it gives us a broader understanding of supply and demand in sectors where we are not necessarily present or relevant. Secondly, in the long run, this will lead to a better coverage of our transport and logistic costs. And thirdly, this will enable us to implement the Click and Collect strategy which is a strategy that we shall pursue. It will enable customer to choose the time and place where they will find their purchases available. So much then for Rue du Commerce and along with Rue du Commerce, there are other things which are not so visible, but which are already present. We acquired a small site for animal foods. We have a site for the sale of wine. In Rue du Commerce there is a dedicated site for the customization of computers, which does a remarkable job. So around Rue du Commerce, we are organizing our own portal, Carrefour.fr which will give access to all this. This portal is already operational. It's being modernized, it's being made much more user-friendly and Rue du Commerce will be part of that structure. We shall add other specific sites. All this is work in progress. You will find this work in progress, is that right? Even Jerome Bedier I think can understand my English accent. But globally speaking, we are in this phase of construction. We are working in a very pragmatic, empirical way and all this will create a whole. And we'll add travel to this too. You know that we have a travel agency in France which creates 300 million in sales. That's a substantial figure in this line of business. All that is being digitized too and we believe that in that way we shall be able to double the volume of sales in travel. And we have other networks too. We have the car rental network which is being set up progressively. And to everyone's surprise, this works very well, particularly for utility vehicles. We have another site which is being developed for the sale of tickets for shows and concerts. All this is being set up, but it's not being done in a very flamboyant way. But little by little all this is being built up, all this is coming together. All that will add up to something I think really significant. So, so much then for Rue du Commerce, it's a laboratory culturally for our Company. It's something new. What we want to avoid is a situation where Rue du Commerce would be immediately invaded by the barbarians from our traditional networks. We need to protect it. We are professionalizing our digital approach. We are recruiting people from other competitive sites. In Rue du Commerce, we've recruited somebody, a woman of excellent quality who is familiar with Carrefour and who was involved in another company which had a digital site. All this is working very well. I'm very optimistic. There must be what 400 million, 400 million and some in terms of sales. This is far from negligible. And for us this is the best way of going a bit more quickly in that direction and with a little less risk. And at the same time we can find a group of professional managers which is absolutely incomparable. It wasn't in itself an enormous success. It was the attempt made by [Mr. Talavera] I think or Taravella, I always get the consonants the wrong way around. But he believed that alongside his activity with supermarkets, he could offer a digital service to customers. That was an attempt that was made and we are happy that we were able to take this over and plug it into our own business and transform it. Okay. Brazil. I don't speak Portuguese yet.

Well, thank you.

Thank you for your questions. Well, the reasons why we're doing better in Brazil is because we were doing really bad, and it's a miracle because we could be dead by now. But it's the case in Brazil we're doing well, better than we were. There was a lack of investments that lasted for several years. There were management disruptions and the local answers were quite far from what we should have done. However, we were lucky enough to buy Atacadao. So you can do good things and bad things. It was the same people, but still they took over Atacadao and that helped find this level of trust that we needed in this country. Now there are political problems or challenges in this country. There are economic challenges in this country of course because there is a lack of infrastructure and that's always the number one weakness of the country. And at the same time, there's a more general problem when it comes to education, which means that there aren't that many people that have access to new technologies in particular. Now against that backdrop, we are food retailers and in Brazil indeed we do focus on food, which is not always the case. And so we managed to focus on our core business. To monitor the growth of Atacadao, people who were given substantial resources to keep opening stores and we don't regret that. And we let Atacadao have freedom of action. That model, business model is quite different from that of Carrefour. It's very regional. It's very much focused on commodities, with a great ability of making great profits, if you can take seize the opportunities based on commodities. This is a mixed model for B2B but also for families, private consumers in other words. So there are many, many assets. This is a hybrid business model, which suddenly has become quite modern. But the level of competitiveness is very high, first of all. So that's at the heart of the pick-up in Brazil, or recovery in Brazil. We also want -- we also decided to invest in hypermarkets which had been quite poor and we still need to upgrade and update those hypermarkets. We have three years to do that. We have with the deflation of the non-food business getting close to zero, it was much easier to pick up of course. But we will be re-launching non -- the non-food business based on identified needs for the families. Last but not least, we want to have local stores. And this is very successful. This is the recipe for success in Brazil. At the same time, if I may I would like to add that in Brazil, there are competitors who are doing less well than they were in the past. There are several of these competitors. But that's life you know. You can't always be doing well. There might be moments when the other guys are doing well which was the case in the past and you're not doing well. So this is the situation in Brazil. And Carrefour has a name in Brazil. It's a very strong name. And Carrefour was a pioneer in Brazil. It was the pioneer of modern retail in Brazil. Now I know that historically, people will say, historians do they write history or their history I don't quite know. But in any case, Carrefour has a great name in Brazil and I believe that galvanizing, reinvesting in the multi-format policy was key. And this is what we are doing. So we love Brazil. And indeed in Brazil we have a wonderful ambassador whom we hope will recover soon enough, who is Mr. Pele. Pele doesn't mean much to you because he's too old and you didn't know him personally I'm sure. But in France he is a myth, he is an icon, the greatest football player ever for people of my generation. And so there are reasons for that. And Carrefour is doing very well these days. That's it, madam.

Thank you. We have a question of the telephone line from John Kershaw. Your line is now open.

Yes, good morning, guys. Hopefully you can hear me and I'll speak slowly because I know my accent is difficult to understand. First of all, perhaps just talk to the broader profit outlook, if you can, lots of change but an uncertain economic backdrop out there. So has the business still got lots of energy to grow profit or is it getting harder into 2016? Secondly, lots of comment again subjectively online. But can you talk more specifically how you will address online grocery, particularly in France? Leclerc with over 2.3 billion of online sales; I hazard to guess 300 million for yourself. So how do you play catch up there? And finally, just on data more broadly. When do you think you will have a single view of the consumer so you can use the data more powerfully?

Well, I would say that the hearing conditions were not optimal, but I'll try to answer your questions. Should I answer that in English or in French? Does the gentleman have access to the translation? He does. Well, thank you very much for your question and indeed this is a question that focuses mostly on digital and on the web and on the levers for profit for 2016. That's the first point I believe. And the second point was what about sales for food or food sales in France. 3 billion were mentioned by one of our competitors. That's the second. So these are the two topics. So anyway, on the food question, home deliveries, that's the only question or drive maybe. I think I've answered that question already by explaining the strategy of Carrefour. The idea would be to have stores as close as possible to catchment areas to cut the distances between stores and where people live. That's all I need to say. If this is not understood I can't do more. That's the only thing I can do. That's the first thing. Secondly, if fresh produce is a key component of food which is my belief, then obviously the fresh will be better served when it is based in small warehouses, which I shall call convenience stores, local stores. And when you think you can deliver food and nonfood at the same time, you are wrong. This is quite clear cut as a statement and there is no single site that can actually do great when doing home deliveries especially in the fresh sector. So this is my answer to that question. This is my answer, the fresh is fresh. The fresh is fresh, the fresh is local, the fresh is professional and this means that you have very limited room for maneuver for stores that need to be as close as possible to the customers. The first question, improvement levers to improve our profitability. Well, these levers stem from a strategy that we're currently developing. We want to be the number one in organic food. We want to be the number one operator of national brands. We want to focus on the fresh and that will be providing added value based on differentiation and on quality sourcing. And at the same time there are countries where there was a huge price pressure because of competition and maybe that can be less tense or could be softened in the future. Logistics will at the end of the day produce or lead to better results. It's already the case by the way. There are other countries where we're facing challenges like China and these countries will be coming out of their problems and challenges. And I believe that the results will be felt at the end of 2016 or beginning of 2017 as far as China is concerned. So this is a reason for hope. Also there is hope when it comes to Italy. The bottom line in Italy might be improving. There are countries like Romania which are consolidating. These countries haven't quite produced all of what they could produce. So that's our daily life really, business as usual. And all of this should be done across the board and this must be in line with society and what people want. Anyone else?

Francois Halconruy, Morgan Stanley. Two questions on France. One on DIA, one on Caravelle and one on Brazil. France, DIA. I understood your reservation on the market share. But with DIA, you're losing market share and if I understand well, you're losing market shares based on the converted shops or on the shops to be converted.

No, no, no. Hang on a minute. Hang on a minute. This is wrong, this is a misinterpretation. I have to interrupt you I'm afraid.

Now with the benefit of hindsight maybe, could you tell us whether you're happy with this acquisition of DIA and that there is no mismatch between the DIA network and your network, your portfolio of brands? In other words, are you still happy with DIAs outside of Paris and can they be converted to the Carrefour format? That's the first question on DIA. And on Caravelle, could you give us more details? I know that this is a project that was put in the background back in 2014. Now how many warehouses did you convert last year and how many will you be converting this year? That's for Caravelle. And last question on Brazil. On Brazil, just a few words on the performance of your financial services. This is a large contribution in your EBIT and so how can you control the default risk? And do you believe this will be performing as well in 2016?

Xavier Le Mene, Bank of America Merrill Lynch. Good morning, gentlemen. On 2016, we saw the objectives for the long term, but there are still price pressures and deflationary pressures. What are the margin pressures that we could expect for 2016? Plus the consensus for EBIT is at 2.58 billion. Are you comfortable with that level for 2016? And second question still on margins. You mentioned Italy, China, the recovery, there's the recovery of Europe etc. So what could be a standardized margin or normal margin once you've met all your objectives?

Fabienne Caron, on China, DIA and on Drive. China, the way you've talked about China, should we think that we haven't quite reached a low in terms of EBIT losses? You lost 30 million to 35 million in EBIT in 2015. Does that mean that because you expect a recovery in 2016, the low point of profitability will be met or reached in 2016? Secondly, will we have similar losses in 2015 and 2016 or could we hope for lower losses in 2016? And then number three, 300 million turnover in Drive, sales in Drive? And what are your objectives for Drive? Do you want to do as well as your competitors, these 3 billion or 4 billion?

Ivan Letessier from Le Figaro. Two questions. The first concerns your own brands. You seem to be determined to re-launch the distributors' own brands and the entry level brands. How do you intend to do this and how do you intend to make money on this? Because you've already brought down the prices of a lot of national brands, so how are you going to create margins for your distributors' own brands and the entry level products without putting too much pressure on your suppliers? And the second question, concerning digitalization. The third stage you say is to go for it, but these are your words I'm using.

Did I say that? No, no, no. Now you're using words I said plug into it. I said plug you heard hit. No, no. Don't take this personally. I said we needed to plug into the new possibilities.

Well, anyway, how long will it be before you can do something concrete in terms of ecommerce for food, particularly at the level of your convenience stores because one of your competitors has a large number of convenience stores and an Internet site and has already launched a plugged in solution?

Yes, but he's already done this. It's already there in his figures. We still have to do this. First of all, let me answer your question. No, I never said we were going to become aggressive. I said we needed to go for it, we needed to plug into these new possibilities. That's my idea. Our own brands then, the idea here is to be more attentive to them, to pay more attention and pay better attention to them. They're not bad, but they could be made better. Secondly, we want to evolve things. We want to suppressively do away with the name Carrefour. We want to replace this with the logo because Carrefour is one of the few French brands which has a logo which is very closely associated with its identity. Our name is rather long, in graphic terms. When you use this name many, many times you have the impression that you see nothing but Carrefour in the shelves. And this is even truer than in the convenience stores than in the hypermarkets because there's less space. So we're going to make use of the Carrefour logo on our own brand products. And finally, we're going to restructure the quality controls at every level, including the fundamental qualities of the product in terms of taste and quality because this is a place that Carrefour cannot leave to anybody else. We are the legitimate leaders here. Now, concerning our entry level products, these we did neglect at onetime and that gave rise to an opening, which the hard discounters took advantage of. You don't remember the Poudre Libre campaign maybe. But we need to do what we've done recently, which is to look back over our institutional advertising campaigns over the last, what 15 to 20 years? And when we did this we saw that Carrefour wasn't where it is today just by chance. Before us, there were many people who'd thought about this before us. Carrefour had got into the habit of making use of a manifesto advertising which said something, which had meaning. But for entry level products there was the Poudre Libre, which at the time was a magnificent campaign. We need to do something like that again. Now, you're saying or you're suggesting that we don't make much money with national brands and you say that if you're going to put pressure on your entry level products you're going to make even less money. But if that's the situation, we're not doing a proper job. We should do something else immediately. We need in fact to pool our resources. No, no, no, let me reassure you, we are going to make money if we ensure that our products are good, can be seen, can be sold. All this will make a positive contribution to our income. You seem to have the idea that we're not making money through retailing. That's not true. We do make some. Yes, you make some. Well, okay, it's not enough. Let's agree on that. We can agree on that, that's for sure. We can always do better. And I indeed hope that everything that we are doing here and elsewhere will bear fruit. You're comparing the situation of the Company today with what it was a few years ago. You can see what progress we have made, thanks to the people involved. There's no comparison. So good work, hard work always pays off. That's not something which is news for you. You too work hard.

Matthew Maley from Deutsche Bank. I had a couple more questions. The first concerns the Caravelle project, which you mentioned, and the Cargo project. I want to know if you can say something about the timing and the development of the network or warehouses. And secondly, the distribution of investment, you've defined an envelope for 2016, but what about the geographical distribution compared to 2015 and also the importance that there is different types of investment in 2016 compared to 2015? Okay. Cargo. Mr. [Herman], cargo is a fraction of Caravelle. It's the property part of Caravelle. Caravelle is still in flight. Our aim is to achieve the rollout, mostly in 2018 because that's when we shall be handing over most of the warehouses. So Cargo involved these warehouses. We began in January, so between now and 2018 we shall be delivering these warehouses. Yes, obviously it takes time. Mr. Deutsche Bank, all I can say is it takes time and that's the way it is. But all this is hardware after all. Your other question now, should I answer? He doesn't want me to answer your question. But you must have seen this. That's no doubt the reason you're asking this question. For 2015, we've given you an analysis which is both in terms of geography and in terms of the nature of the investment because we know that all this is important. It's important that you should realize that what we're saying about the transition towards the omni-channel approach, which is going ahead, slowly but surely, you must be shown that all this is reality. So we've said that 15% of our CapEx is being devoted to IT systems and the onmi-channel approach. But concerning guidance, we can give you an envelope. We can give you guidance in those terms. Is there going to be an upheaval? No. Is there going to be a continuity in our CapEx policy? Well, if you look at what's happened over the last four years, we gave you guidance and we've stuck very closely to that. Where we need to be vigilant maybe, and somebody asked this question about Brazil, is that investment in Brazil sometimes need to be corrected because of exchange rate variations. Sometimes there are changes in the sum, but you need to take into account the exchange rate impact because that can change the figures in euros. So you need to look at them in the local currency rather than in euros. It's not a question of abandoning investment, it's simply a question of a change in the exchange rate. I'm the person who's going to carry Mrs. Caron's luggage for her. This is an honor for you. And I take it as such. Accompanying Mrs. Caron is of course an honor. But more seriously, you have two breakaway hypermarkets, one in Belgium, one in Italy. So what can you say about that? What can you tell us about these stores, which are fundamentally different from the traditional hypermarkets you exploit? And the second question, once again concerning hypermarkets, if you look five or seven years ahead, in what way will the Carrefour hypermarket be different? You've said that the hypermarket represented 50% of your sales, so I can't imagine that you don't have some views to share with us about the future of the hypermarket. Well, concerning the Mons and the Carugate hypermarkets, Mons, I've only seen it in photos and films. And I've listened to what people have said about it. I've listened to the people who transformed it. I'm going to visit Belgium in a month's time I think. Why didn't I go earlier? Well, because the Belgians said -- don't come, don't come, don't come yet. Now, if they've said that, there must have been a good reason. Why not? Well, because the car park wasn't accessible because Ikea was installing just next door, because it was an enormous building site, because the conditions were not comfortable. So I've left them time. I shall go there in a month. I've seen what's been done, but I shall be delighted to see it with my own eyes. It's very different from Carugate. Carugate, yes, I went there. First of all, what I want to say about those two stores is that a company like Carrefour has to work on pilot projects like this. It's obligatory. It's all part of our serendipity. You do things because you feel that they're going to be useful. You give people a certain amount of freedom. Obviously you control costs in a reasonable way and maybe you'll arrive somewhere you never expected to reach. I think it's essential to be able to modernize the hypermarket. Have you been to Carugate? Well, you'd have seen a very clear strengthening of our focus on fresh produce. We've added a restaurant and service zone, which is not yet complete, but which is intended to be a transition between the store itself and the mall. You'll have seen new materials. I'm thinking of the tiling in particular. Perhaps these are some of the biggest tiles you can find in Europe today, all this in materials and colors which are completely new. You'd have seen a redistribution of the non-food layout. The non-food sector was not particularly important in Europe, in Italy, up 'til then, but the Italians have been working on this. You would have seen that people had exploited the Terre d'Italia range. There's a checkout system with a new ergonomic system, so a lot of new things. Lighting, very different from what we've used so far. Signage, information given to the customer in the store, outside the store, all that is different too, so Carrefour obviously has to move -- has to go elsewhere, and that's what we're doing. What's my vision of the hypermarket in the future? Well, stores which are bigger stores, but even closer to the customer today because urban development is going to continue, is going to continue to surround them. Secondly, the function, restaurants and takeaway outlets, this will become more important, more effective than it is today. And that's why we need shopping malls under our own control, because there's a link between the store and the shopping mall which doesn't yet exist to an adequate degree. No doubt there will be a click-and-collect zone, which will be much better organized, much more effective, much more rapid. There will be more services. You know that in our hypermarkets today we have little, small service areas with hairdressers, for example, something which would have been unthinkable a few years ago, but they are developing in a very remarkable way with very low prices. Jerome I think tried them out. He came back looking no worse than when he emerges from his normal hairdresser. He also bought a suit. How much did you pay? €50, it was a promotion, €50 for the suit. And we immediately went to see the mayor of the town and the mayor himself commented on Jerome's very elegant suit, as if he'd paid €600 for it, so multiservice more orientation towards takeaway, better links between the shopping mall and the store, more modern materials. In terms of digitization, the arrival in our malls and our stores of digital screens with animation, communication, advertising, something that is more lively and more modern and of course, an effective car park. That's going to remain essential. And I'm convinced that between then and now we shall have created value through the better control of our property assets because I'm sure there are many places where, progressively, we can introduce housing. That's my own vision. And for Mr. [Herman], who's here with us, I'd like to add that I would like to see something that he's refused so far. And that is medical centers, bringing together a certain number of medical specialties, because if you have a car park, good access, good shopping facilities around, it's obvious that in medium-sized towns, instead of going elsewhere to see the dermatologist, the pediatrician or whatever in half a dozen different places, if we had a pool of medical services available there perhaps a dentist too. Why not? All these are my visions for the future. We could talk at great length about this because we're looking ahead into the future. But I believe that the hypermarket is going to remain a very important locality for modern distribution. Thank you very much. I think we've come to an end there.

Yes. Hi. Good morning. Thanks for taking the questions. Two questions, please. Firstly, free cash flow. I remember last year in your outlook and priorities you guided for an increase in free cash flow, but this year your outlook, maybe I'm just reading too much into the words here. But your outlook says you're only focusing on it. Can you clarify if this means you're not looking for an increase in free cash flow in 2016? That's the first question. Secondly, are you able to confirm DIA's or legacy DIA stores' operational loss in 2015 was around 60 million and you expect a smaller loss in 2016? And finally, can you give us an idea if Italy was actually profitable for the full year 2015? Thank you very much.

Can you repeat the third one? I didn't get the third one.

Speak better than me. Yes.

Okay. We won't guide you on 2016 cash flow, for one simple reason, we don't guide you on EBIT and on cash -- and on EBITDA. Since you have the CapEx, if we guide you on, obviously, cash flow we will actually implicitly guide you on the ROC. So I think there is consistency into this and that's why we won't guide you. The one thing we've said, we've guided you on the CapEx and we've said that cash flow would remain a constant point of focus. On DIA, what we've said earlier in this call is this. Yes, there will be a loss, and it should be about the same level in 2016 versus 2015. I think that's what we've said. And your last question was on Italy. No, we have not confirmed that Italy was breaking even in 2015. We've said that it has improved in 2015 versus 2014. And you've certainly understood, even though we didn't say it, that 2016 should be certainly yet another improvement and definitely very much close to breakeven.

I wanted a confirmation concerning China. You're making operating losses in China. What's the sum involved? How much money are you losing in China?

But can't you give me a figure?