In a rather macroeconomic context, with strengthening world economy and improving investement conditions, large companies from the grocery retail sector have resumed growth. Although international trade has rebounded, an global productivity has picked up, a number of uncertainties and risks are still present, stemming from the U.K withdrawal from the European Union, the U.S decision to renegotiate the North American Free Trade Agreement, sanctions against Russia, rising geopolitical tensions and risk aversion.
Grocery hypermarkets have seen rising activity in recent years , despite multiple challenges and competition from emereging non-traditionnal players such as e-commerce. The current report examined the results of 40 large companies from the sector and showed that sales growth resumed in 2017, with a year-on-year increase of 5,1%, after a less positive period in 2015-2016. Gross profits of global retail companies rose significantly in 2017 (+5% year-on-year), while the EBITDA margin was maintained at around 6% of sales. In terms of net income, the sector is still profitable, although not at levels seen in 2012-2013; overall, the 40 analysed companies have realised a combined profit of $34,3 billion in 2017, lower than $46 billion in 2013.
The relative decrease in profitability xas partly due to rising competition and increase of marketing and administrative expenses , but also the result of expansions in less lucrative regions or segments still in development, such as hybrid retail businesses that combine on-line platforms with physical stores, which have not yet reached maturity and full financial potential.
However, with few exceptions, most of the companies are still profitable and enjoy increasinf cash flows, alloing them to meke investments and dincrease their market presence both through organic growth and mergers and acquisitions. The combined assets value of the 40 analyzed companies reached the highest level of $995 billion on 2017, an increase of more than 10% in two years, while the value of property and equipment rose by 7% in the same perdiod...