Good evening, everyone. This is Alexandre Bompard, and I'm very pleased to be with you today to say a few words to introduce this call. After these few words, I will leave you with Pierre-Jean for the presentation of Carrefour Group's first half numbers. As you know, it has now been six weeks since I've taken over as CEO of Carrefour. Since then, I started visiting stores, logistic centers and e-commerce sites. I met the top executive of the Group, and I organized detailed business reviews of all of our operations. This allows me to start gaining a deep understanding of the Group, its culture and to learn more about its people, which is of extreme importance for me. I will continue this work in the coming weeks, notably by visiting the countries in which Carrefour is present. I've also have started working on constituting my management team and on the transformation plan of the Group. Six weeks is a short amount of time but it's enough time to confirm my initial impression that Carrefour is a great company with tremendous potential to further improve its performance. That's why I accepted with great enthusiasm the position that was offered to me. Carrefour has many strong assets. I will not list all of them, but let me name a few

the leading competitive position of Carrefour in its key markets; the strong expertise of the Carrefour teams, notably in food; its unparalleled multi-format model that allows us to address a broad range of customer needs in food but also in nonfood; a recognized brand that stands for quality; a commitment to sustainable business practices; and last but not least, a sound financial structure. I'm working on leveraging on these extraordinary assets to transform the Group. Needless to say that Carrefour also faces a number of challenges, which I already identified. Let me start with the need to accelerate the digital transformation of the Group. The frontiers between online and offline are indeed positively growing in all of our countries and in all our businesses as illustrated by the recent acceleration of partnerships between brick and mortars and e-commerce players. In such a context, Carrefour needs to accelerate the digital transformation and become truly omni-channel in order to compete in the new retail landscape. We also need to breathe new life into our hypermarkets, notably in France. The hypermarket has been the leading format in most of our markets over the past decades. However, it needs to be reshaped on the rapid changing customer behavior and to the ongoing switch to online of our businesses. To win in the new retail landscape, I mentioned earlier we also have to raise our profitability and our cash flow generation to leave us closer to our competitors in order to improve our return on capital -- on invested capital. We also need to work on simplifying our organization on processes to gain an agility and flexibility. This is particularly the case for the countries in which we are facing a difficult macroeconomic environment like Argentina, but efforts have to be made at each level and in each country of the Group. Last but not least, we will not address these challenges without making our teams work together towards a common goal in order to fully leverage on the fantastic strength of the Group to increase the synergies and sharing best practices between our countries and within each of our countries between our businesses and formats. I know that addressing these challenges is an extraordinarily difficult task, but be assured that I and all Carrefour teams will be focusing relentlessly on addressing these challenges in the months ahead in order to increase Carrefour's operational performance in the short and medium term and unleash Carrefour's potential to meet the market's expectation. We will have, of course, the opportunity to come back to the market in greater detail by the end of the year. For now, I'm going to leave the call and ask Pierre-Jean to present to you Carrefour Group's first half results which, as you will see, emphasize the need to rapidly address the challenges I just mentioned. Thank you for your attention, and I look forward to our exchanges. Pierre-Jean, the floor is yours.

Thank you, Alexander. I am Pierre-Jean Sivignon, the CFO of Carrefour. I'm joined on this call by our Investor Relations team that is Mathilde, Anne-Sophie, Louis, and Alexander. Let us start on Slide number 3 with the key highlights of our first half performance. We posted solid sales growth of plus 6.2% this half and 2.1% on a like-for-like basis with net sales of €38.5 billion. This reflects continued expansion with 352 openings in the half, mainly geared towards convenience formats as well as the integration of 31 Eroski hypermarkets in Spain and 86 Billa supermarkets in Romania. This half provides another evidence of the continued rollout of our multi-format model. Our profitability decreased in the half, with EBITDA reaching €1.43 billion, down 1.2% at current exchange rates and 7% at constant exchange rates. The recurring income, recurring operating income is down 12.1% at current exchange rate and 21.5% at constant exchange rate, reaching €621 million. This represents, respectively, an EBITDA margin of 3.7% and a recurring operating margin of 1.6%. This growth in recurring operating income mainly reflects two key factors

first of all, a 70-basis point growth in recurring operating income in France, reflecting a strongly competitive and promotional market and greater losses at our ex-DIA stores compared to H1 2016. Secondly, higher losses in Argentina where the economic recovery is slower than expected. At the same time, we saw, firstly, a pause in the improvement of profitability in other European countries linked in particular to the nonrecurring impact of the integration of our acquisitions; secondly, a continuing solid performance in Brazil, notwithstanding a recent change in regulation on consumer credit that impacted our financial solutions activities. Our retail and cash & carry activities continue to show margin growth. Thirdly, a return to recurring operating income profitability in Asia, reflecting cost reductions in China and continued solid performance in Taiwan. Our free cash flow, excluding cargo and exceptional items, in the half stands at minus €2.59 billion due to short-term variation of our working capital requirements. Finally, let me highlight two post closing transactions. Firstly, we successfully completed the IPO of our Brazilian operations on July 20, raising BRL5 billion in the largest Brazilian IPO since July 2013. Carrefour remains a big majority shareholder in Brazil largest food retailer with a stake of 71.8%. Also in July, our commercial real estate subsidiary, Carmila, successfully raised €629 million to finance its development. Let's now turn to Slide number 5, the details of sales growth in H1. Reported first half sales reached €38.5 billion, up 6.2%. On a like-for-like basis, excluding calendar and petrol, sales were up 2.1% in the half. When adding the 0.5% impact of store openings, organic sales for the first six months were up 2.6%. This half was marked by an unfavorable 0.6% calendar effect. Overall sales growth in the first half that includes acquisitions, favorable foreign exchange and petrol impacts reached a strong 6.2%. On Slide 6, you see that our H1 revenue increased built on several years of continued organic sales growth since 2012. Over that period, our compound annual growth rate is a solid 2.6%. On Slide 7, we look at our gross margin from recurring operations. As you can see on the slide, gross margin in value increased by 1.9% at constant exchange rates to over €8.8 billion, as a percentage of net sales, gross margin from recurring operations was down 34 basis points down to 22.9 percentage points. Half of this comes from the shift in our mix between formats, notably the increased contribution of our cash & carry business, in a context that remains strongly promotional in several of our markets. Moving to Slide number 8, we observe that operating costs were controlled this half. As a percentage of net sales, operating costs were down six basis points to 17.9%. Operating costs were down in France. They were stable in Europe, offsetting the inflation of cost in Latin America. On Slide number 9, we turn to our asset cost in the half. They were up seven basis points as a percentage of net sales, reflecting the investments we made over the previous years, both in stores renovation as well as in IT infrastructure. Let's now turn to our performance that is to say this time by geography, starting with slide on France, which is Slide number 10. Net sales in our domestic market at €17.3 billion were up 0.7% and 1.3% on a like-for-like basis, excluding petrol and calendar. This is notable performance given that it occurred in a slow consumption market, which was both highly competitive as well as increasingly promotional. This half, recurring operating income stood at €199 million, down 36.1%. Expressed as a percentage of net sales, recurring operating income margin fell by 70 basis points. The drop in profitability reflected the tough environment I described previously as well as greater losses at ex-DIA stores compared to the first half of 2016. We have also invested locally in prices starting in late Q2, as I mentioned during the Q2 sales call. Finally, we increased our efforts in terms of digital transformation which comes with cost. On Slide number 11, we moved to other European countries where we continue to see strong sales growth, up 6.2% in total and up 6% at constant exchange rates. Our like-for-like sales in the regions were up 2.2%. Recurring operating income at €149 million was down 10 basis points as a percentage of net sales to 1.5%. This half in a market which was more promotional in several countries, our margin reflect the integration of the Eroski hypermarkets in Spain and Billa supermarkets in Romania, both acquired in the second half of 2016. The semester also saw an increase in digital expenses. We are currently investing in this region to maintain its growth potential in the years to come. Let's turn on Slide number 12 to Latin America, where Carrefour continues to register very strong sales growth. This half -- our net sales in the region were up 25.1% at current exchange rates and up 9.4% at constant exchange rates. Like-for-like growth was also strong at plus 7.3%. As you know, when we released our Q2 sales in early July, we did not provide detailed information on the rest of the world region as we were in a quiet period ahead of our Carrefour Brasil's IPO. So let me take this opportunity today to give you a bit more color on our Latin American and Asian sales. You will find the full details in the appendices of the press release. Firstly, in Brazil, second quarter gross sales stood at €3.64 billion, up 23.2% and up 9.5% at constant exchange rates. This is a notable performance given that we are operating in an environment marked by a sharply lower food inflation, down from double digits to low single digits and still continuing to decline, as we speak. Our sales growth was balanced between like-for-like growth of plus 4.5% and expansion, leading to a total organic growth ex-petrol, ex-calendar of plus 9.4%. During the second quarter, Argentina posted 14.9% like-for-like growth in an environment marked by inflation levels above 20%. This reflects the second consecutive year of declining volumes of food consumption in an economy which has still not rebounded from that perspective. Recurring operating income, which stood at €293 million, rose by 7.5% on a reported basis but was down 15.5% at constant exchange rates. This reflects the evolution of the Brazilian real and of the Argentinian peso over the period. Recurring operating income margin was down 60 basis points in the period to 3.6%. This drop reflects, first of all, in Brazil the change in consumer credit regulations as well as startup costs linked to the launch of our Atacadão credit card in our cash & carry stores. Both impacted the profitability of our financial solutions activity, while profitability of our retail and cash & carry operations continued to remain solid in the half. Secondly, in Argentina, higher costs in a consumption environment that continues to be very challenging as previously described. Moving on to Slide number 13 where we look at our performance in Asia. As I just did for Latin America, let me provide more details on second quarter Asian gross sales performance. In China, firstly, the second quarter gross sales stood at €1.04 billion, down 8% at current exchange rates and 5.9% at constant exchange rates. Like-for-like sales were down 6.6%. We continued the repositioning of our model in that country as well as our action plans. Taiwan posted a 10th consecutive quarter of like-for-like growth at plus 0.6%. We continue to see the benefit of our ongoing store renovation program as well those of the rollouts of our multi-format model. With our next opening, we will reach the symbolic mark of 100 stores in that country. Net sales in the region stood at 3.5 -- excuse me, €3.1 billion, down 2.9% in total and down 4.3%, both at constant exchange rates and on a like-for-like basis. This half was marked by an improvement in profitability in the region, underscoring positive effects of the initiatives that we have been implementing to improve performance in China, notably cost reductions. It also included the benefits of the continued profit growth in Taiwan. Recurring operating income was a positive €12 million, reversing a loss of €7 million in the same period of last year. As a result, recurring operating margin was a positive 0.4%, growing by 60 basis points. Let's now move to Slide number 14 where we take a look at the Group income statement. Adjusted net income group share stood at €154 million, down from €235 million during the same period last year. Nonrecurring income was an outflow of €150 million this half. This takes into account reorganization costs in France resulting from the supply chain Caravelle project as well as our program to improve efficiency in our supply chain -- excuse me, Caravelle, which is our program to improve our efficiency in our supply chain as well as in Spain with the acquisition of Eroski hypermarkets. Our net financial expense is stable compared to last year at €247 million. Lastly, our income tax expense was down to €89 million from €101 million in the first half of 2016 with an effective tax rate of 37.5% in the half. On Slide 15, we take a look at our investments in the first half. Capital expenditures are down year-on-year in H1. They stand at €904 million, excluding the Cargo project, and this €904 million compare to €968 million during the same period of last year. By nature, the share of investments in remodeling and maintenance was reduced compared to 2016 through the benefit of investments in IT and expansions. By region, France accounted for 41% of CapEx versus 47% in the full year 2016, partly due to the completion of the DIA transformation program. Latin America and Europe roughly represents 1/3 and 1/4, respectively. On Slide number 16, we now turn to free cash flow. Free cash flow from continuing operations, excluding exceptional items, was an outflow of €2.6 billion versus €2.1 billion during the same period of 2016. This results from slightly lower gross cash flow and a variation of approximately €500 million in working capital requirements. This includes several items, which covers a temporary increase in inventories as well as continued impact of the reduction of the shopping cart inventory in China. The Group aims at generating a 26 -- 2017 free cash flow at the same level as the one of 2016. Slide number 17 presents our net debt in the half which, at the end of the period, stood at slightly over €7.7 billion, up from €7.37 billion in the first half 2016. This rise mostly reflects lower free cash flow, as explained earlier, and is, of course, the debt balance ahead of the cash proceeds of our IPO in Brazil. Keep in mind that our net debt is highly seasonal, maintaining our BBB+ credit rating is part of our financial discipline. On Slide number 17 -- I should say Slide number 18, we continue to see this year a strong take-up for our dividend paid in shares. 71.3% of our shareholders opted for this form of payment, representing supplementary resources for the company of €372 million. Please note that the cash portion of the dividend will be paid out in the second half this year while it was paid out last year in the first half. On Slide number 19, we look at our debt repayment schedule and credit rating. Over the half, we redeemed €250 million in bonds. And on June 14, we issued $500 million in non-dilutive cash settled convertible bonds swapped in euros with a maturity of six years at a zero coupon. Our debt maturity now stands at 3.9 years and our credit rating is maintained at BBB+. Finally, on Slide 20, we turn to the outlook for full year 2017. Firstly, we now expect group sales to grow by 2% to 4% at constant exchange rates. Second, our 2017 results will be impacted by the performance recorded in H1, which I just detailed, and by an operating environment that we expect to remain difficult in the second half in some countries. As a result, at current exchange rates, the evolution of our full year 2017 recurring operating income versus 2016 should be roughly in line with the evolution we saw in the first half of 2017. This is due to several items

firstly, the DIA losses that will remain flat year-on-year; secondly, the market that will continue to be promotional and highly competitive in France; thirdly, the slower-than-expected recovery in Argentina; fourthly, a year of investment in Europe in digital transformation as well as an integration of newly acquired businesses. This aims, as mentioned, at maintaining this region's growth potential for the years to come. Thirdly, Carrefour will strengthen its financial discipline with CapEx between €2.2 billion and €2.3 billion for the year, excluding the project Cargo Property. This compares to an initial forecast of €2.4 billion. The Group aims at maintaining free cash flow in 2017 at around the same level as in 2016, i.e., around €1 billion. Net debt at the end of 2017 will improve versus 2016. That concludes my review of the first half of 2017. As Alexandre Bompard said, we have a lot on our plate and are fully focused on addressing the challenges that we have identified and on improving performance. I thank you for your attention. I will be now happy to answer your questions. Let me remind you that we will begin with the questions from the analysts, and then we will take some questions from the journalists.

[Operation Instructions] We have a first question from Mr. Maxime Mallet from Deutsche Bank. Sir, please go ahead.

I have a few actually. The first one is with regards to the guidance here you gave on ROI. I just want to confirm that it means you're expecting EBIT for the full year at about €2.07 billion. The second one is with regards to the 70 basis point pressure in France. I wonder if you can give us some color and the speed between the pressure coming from price investments, also coming from DIA and coming from the promo investments. And my third question is with regard to this price investment, how much did you lower prices on average, and what kind of gap do you have versus Leclerc? And I have just one last one. It's on minorities and the minority interest. Do you have any idea post Brazilian IPO where you expect minorities to land for the full year? And if not, [indiscernible] that the pro forma minority for 2016 were about €270 million. Is that for you a fair assumption?

Okay. So firstly, on the rough guidance, I think on the ROI, well, the understanding of the elements we give to you, yes, your calculation, I think, is indeed about correct. On your second question which relates to France, I think that basically the elements, which explains the margins in France are indeed -- firstly, I would like to say a few words on the market, which indeed was sluggish in terms of overall consumption. The first quarter actually was in negative territory in terms of food market, a little bit better in the second part of the semester but all in all, I would say, was a slow market, sluggish market. Now in that context, whole industry was highly competitive and promotional. And clearly, this is having an impact on our profitability given the investments that we decided to make in that territory. The second element, which obviously impact France, is indeed the DIA losses where we were basically at the same level for 20 -- for the first half of 2016 as basically the first half of last year. This first semester was expected to be the higher semester in terms of losses because as you probably remember, we integrated 200 stores in the second half of 2016, so the difficult period for the stores is always the first six months post conversion of the banner, but this being said, we would have expected despite this particular first half seasonal impact to have some improvement there. The third element indeed is an investment in prices. This investment in prices, I won't really give you too many details because I would consider as -- that as competitive information. But that investment took place in the latter part of the semester on both, by the way, hypers and supers. And I would say the last element, which had an impact on France in that first half, was an increase of our digital expenses, which is part of the digital transformation of the country, and that indeed certainly had an impact. I will add one more element, which I think you will not see so much in the EBITDA, but you will see in the EBIT is that France, of course, has incurred an increase of the amortization of its asset base, which reflects the investment cycle we've just incurred in the course of the last couple of years. So you will see that when you compare the performance between basically operating income and the EBITDA, you will see that there is in relative terms, a better performance of the latter versus the other. I think your last question was related to the minority investment. On that particular one, I will leave it because there were quite a few moving parts in that particular one, indeed reflecting, among other things, the new holding of our Brazilian business, so I will leave it to a separate call with the team. I think that's probably a better way to do that, right?

Next question from Mr. Cedric Lecasble from Raymond James. Sir, please go ahead.

I have three actually -- the first one on your sales guidance. You actually had a Q2 which was quite solid in terms of top line performance. What are the drivers behind the kind of trimmed forecast for the full year? That would be the first question. The second one would be on DIA. Can we have an idea of the incremental losses just to understand the dynamics of the half year of the incremental losses, and you expect a similar performance for the whole year so you expect an improvement in the second half? Maybe you can help us a little bit with the dynamics in H1 and H2. And the last question is related to the digital investments and the profitability in other Europe. It's maybe the biggest surprise today, the poor profitability in H1 in Europe ex France. And maybe you can help us understand the impact of these investments or what else weighed on profitability out of France in Europe?

Okay. First question relates to the guidance on the revenue. I think yes, the 325, which will transform into 224, I think there is one essential reason for that which is the very sharp drop of food inflation in Brazil. I think for those of you who follows, and I assume all of you who follows Brazil, food inflation on raw materials a year ago was in the, let's say, 13% to 15% range. And in the last six months, it -- the decrease actually started more than six months ago but has been quite severe in the last six months, and we are now down to very low single-digit when at times, it's even negative territory. So given the weight in the mix, I will say the essence of these reductions come specifically from Brazil. Your second question was related to DIA. Let me give you a little bit of flavor on DIA. The acquisition of DIA stores, as you know, allows Carrefour to accelerate its convenient deployment in France, and that's very much true in two key regions for us, which are Paris and the Southeast of France, which are two very wealthy parts of France. So this integration is a very large transformational project, as you know. And it's actually taking more time that we initially planned. The optimal model in that particular size of store is a franchised one, specifically in France. And we are gradually implementing that transition towards that specific franchise model, but we're doing it at a slower pace than we had initially foreseen. The like-for-like trend of the stores transformed for more than 12 months, which is 289 stores at the end of June '17. That like-for-like is constantly and sequentially improving since the third quarter of 2016. And I think I mentioned in a previous call that, that particular like-for-like had turned positive since the beginning of 2017. So this transformation is, of course, something that is obviously taking all our attention, and we will continue to update you on this. Now in terms of the phasing between semesters, as I mentioned, for transformed stores, the peak of the losses comes in the period, which is immediately following the banner conversion, which is followed by a gradual leveling up of those losses in the following quarters. So as I mentioned, H1 came right after a half that included 200 stores being converted. So for the year now, what we think for DIA is that our loss should be around €150 million. And in terms of impact between H1 to H1, I think I will basically not quantify that particular amount at this particular point. Your next question was related to digital investments. I think that as far as Europe is concerned, we have basically enjoyed quite a ride of growth. And if you look at the Q2 sales and if you look as well at the first half plus 6.1%, plus 2.2% of like-for-like, so these has included very dynamic growth in Italy, in Poland, Romania, a little bit more modest in Spain and Belgium. So the issue for us is absolutely to maintain this potential because if you compare those numbers two or three years ago, you will see that both in terms of growth as well as in terms of profitability, we've gone quite a long way. And we felt that this year, we needed to re-increase in that portfolio to maintain the potential of growth in terms of sales as well as in terms of profit. And that's what we've done. I think to be specific on digital investment, that's specifically related to Spain. For those of you who've come to Spain as part of analyst visits, or those of you who were present at the Investor Day, which took place two months ago, you could see that we have quite a number of IT initiatives in Spain related in particular to efficiency of promotions announced. And the money we are talking about is specifically funding this type of initiative in Spain but not particularly in Spain. The other elements, which obviously had an impact in Europe in the first half and probably which will happen for the complete year is indeed the integration of the two acquisitions we've made, one which is Billa in Romania where we are changing the system there and absolutely moving all those supermarkets to our system. And that is being done as we speak because we initially embarked the acquisition, which is previous system, and we are currently moving obviously the whole business to our own Carrefour systems. And as far as Eroski, there, we basically put all the stores, which is now 29 new hypers, mixed hypers, around 500,000 square meters each joining our fleet. They are basically joining our own logistics systems. But in terms of integration, we obviously increased their assortments on food. We create very much an appropriate nonfood offering. And we start from scratch, something which was not existing in those stores, which is financial services, which is a very successful business for us in Spain. So all the above, of course, requires in the first year of integration, not only integration cost but obviously, the scaling up of revenue in order to reach appropriate level, and that's essentially what's happening this year in Europe and explain what we've called in the opening speech proposed in the progress of post profitability and revenue in that particular territory.

Pierre-Jean, if I may, of all these factors in Europe, is there one factor especially which weighs much more than the others?

Sorry, can you say that again? I -- please repeat your question. Just want to make sure I got it.

Yes, sure. Of all these factors hurting profitability in Europe, is there one specific factor that had a much tougher impact than the others?

I would say no because none of them is really sig -- maybe yes, probably integration cost because scaling up Eroski certainly -- if I had to say one because I think you're probably relating to the impact in absolute euros, I will say probably the scaling up of the Eroski acquisition, that's probably the one.

Next question from Mr. Arnaud Joly from Societe Generale. Sir, please go ahead.

I have three questions. The first one in France with your hypermarkets, as they continue to be sensitive to Leclerc's pricing policy. So to make it simple, well, it looks like it's more aggressive, as you lose some market share. So do you know which part of your customers are volatile and sensitive to Leclerc pricing policy? Is it 20%, 30%? Just to have a flavor in mind. The second question, I wanted to come back on losses at DIA. If you can give us some flavor regarding the performance of the Carrefour Foods Contact Marché stores because I think that these are the more at-risk new concept, and do you plan to close some stores in the coming 12 months? And one question, sorry to come back on Spain and the integration of Eroski hypermarkets, which weighed on margins in the first half, are you seeing more difficulties to integrate these stores or -- I mean is it consistent with what you initially planned?

Okay. Arnaud, I think I will start with the last one. No, I think Eroski is quite promising. We have absolute confidence in there. We basically not only we are seeing in the top line, I mean not only we, but you are seeing in the top line. You can see on our Spanish revenue the difference between the like-for-like and the total growth so you can see that despite the gradual integration of those stores progressively as the half advanced during the first half of 2017, you could see that there was a good difference between like-for-like and total growth. So you can see that right there, there is a momentum. So no, I think we are absolutely very, very comfortable with Eroski acquisition. We are, as I said, introducing one of our most profitable business models in that country, which is consumer credit in a customer base which didn't have it. And I should add one more very important element, which I think we alluded to in previous calls. In a country where we hold about 10% market share, this acquisition is opening to us a presence of in 20 midsized cities in which there was no presence at all of any Carrefour banner until this acquisition. So I think when we talk about Spain and Europe in the quarters to come, you will have plenty of evidence that this acquisition is absolutely doing very well. On losses of DIA and no, I will not comment between formats. Why? Because we are -- I think it's more -- the conclusion we are reaching, and I was as explicit as I could in one of the two previous questions on that subject, I think we feel that as far as assortments are concerned, of course, you know the various profile and the various assortments we have decided to go on for the last now, a bit more than two years. We think that the distinction, the difference will come more between the way we manage our stores, as I said. We obviously still want to keep some integrated stores, but we see that clearly having in the mix an increasing portion of stores managed in a franchised way is the way to go But in the industry, I know that takes a bit of time because you need to find the right people to do that and you need as well to transfer a store, which is already in a cruising level. So that's why we want to do it right and this is why I said in the introduction that we believe that this will take and this is actually taking a little bit more time than what we initially foresaw. Now in terms of closing more stores, we will see as it goes. I certainly can't comment on that at this particular point, and we will do what's necessary in the coming quarters but no decision and certainly no evidence of this at this particular point in time. On your last question -- yes, sorry.

Just on the -- or, to ask it a bit differently. On Contact Marché, are you still happy with this concept?

Well, Contact Marché, as I said, we have some which -- it's the earliest, I should say, sorry, the ones on which we have the lowest amount of feedback because, as you know, we largely started converting the markets, i.e., the shorter market format. So on the Contact, we -- this is the one in the mix for which we have less feedback. So point number one. And point number two, as I just said, the distinction -- if you wanted to do a quantitative, in terms of performance, distinction between what works good and what works less good with the -- along the line I just described. So certainly, I would not stigmatize the Contact Marché as part of this explanation.

Okay. I just meant the distinction because they seem to be located in more challenging catchment area.

Yes, but -- well, you know the industry, Arnaud, a proximity store works with the customer base, which is very close around them, the store. And after some time, and it's not immediate because it's almost an intuitive personal kind of relationship with your customer base, you know, at some point what your customer base requires. So I think it's a bit early to conclude. So totally, on one specific banner, what's right, what's not right. I think it's -- I think we have some, as I said, which works, some which works less good as I just explained. But I will repeat that this is the particular ones for which we have the least amount of time to analyze backward what has taken place. Your last question was related to the French market. I think I will not comment publicly. Of course, we do analyze because we have increasingly more and more data on the French market, which as you know very well, as I said in my introduction, as far as the dry grocery is concerned, it has been slow in the first half even though we saw a little bit of improvement in the latter part of Q2, but at the same time, as I mentioned, the market has been obviously increasingly promotional. So we accumulate data. We obviously, as I said, in the introduction comments, I would -- we will basically, and we have started investing in prices, and we've done it on a local-for-local basis, precisely reflecting the places where we felt that it was needed. Because as you know, our pricing is not national, so we try to do that on a local-for-local basis in order to be as efficient as possible. And talking between customer classes and else, I will prefer not to do that because I would consider that as competitive information.

Next question from Mr. Edouard Aubin from Morgan Stanley. Sir, please go ahead.

I have just two questions. The first one is on Argentina, which I think you mentioned as one of the five -- four or five key reasons why your trading profit is going to be down this year. If you could elaborate a bit more as to why you're losing money in that country because there have been discussions about the economy improving there. And number two on CapEx. I think, in the past, you used to indicate that to lower your CapEx below €2.4 billion would be clearly difficult. So what has changed in terms of your ability to give, again, at €2.2 billion to €2.3 billion?

Yes. To Argentina, I think it's correct to say that in Argentina, basically two lines of the street. The government there took very drastic measures. You remember that, that was about 20 months ago. The measures, which were taken for those of you who do not necessarily know the details of Argentina, a lot of them impacted directly consumers. There was some mark-to-market of the cost of public transportation, some mark-to-market of -- as well, the cost of utilities. And all of that, of course, having a direct impact on the purchasing capabilities of our customer, down, of course, to dry grocery and food. So those measures were taken 20 months ago. Now it is absolutely correct to say that some elements of the economy, some sign of recovery are repeated lately in some sectors. Those sectors would be agriculture, transportation, energy. Now, if you look at food consumption, which of course is what is of paramount importance for us, we are on the second year of negative volumes. I mean, if you look at volumes in Argentina last year, we are probably down 5% as an average, especially on the second part of the year. But if you look now at the first half of this year, we have another 5% to 7% reduction. So essentially, we are now on the second year-on-year reduction of volume in food consumption, which is absolutely drastic because that is a thing at a time where inflations have caused, and in our case, that would be essentially salaries, has been last year around 40%, this year probably around 20-plus percent. So we are exactly waiting for the recovery of consumptions which is expected sometime this year. Actually, we were expecting it and the economists were expecting it earlier in the year. I said in the introduction that it has been slower than expected. So we now expect it later in the year. The good news is that we see evidence that it's coming. But the reality of it is that, as we speak, volumes of food consumption are still coming down. At the same time, we are in the middle of the squeeze with salaries going up. So that explains what happens, of course, on the bottom line which was the essence of your question. Your second question was related to CapEx. Yes, I think we -- yes, we were two-point -- we guided you on 2.4. We said the 2.4 -- the 2.3, 2.4 was the normative level. But at the same time, of course, we consider cash flows, of course, as absolutely essential. So in order to come up with a free cash flow, excluding exceptional, which is as close as possible to the one of last year, we've decided to make a bit of a special effort on CapEx. So there is -- that's as much as I can tell you on this particular one.

But -- so shouldn't we be worried that you're starting to under-invest in your store network?

No, I -- well, you -- no, I don't think you can say that. We have been quite open, quite consistent in doing this. We've given you the mix. If you look at the mix, and you have it I think in the presentation, you can see that, that mix, and I think I said it in my opening comments that mix has changed. There is less remodeling. There is less, obviously, catching up of the past. There is more money in digital transformation as well as in expansion in order to continue to grow the Group. So you will continue to see, obviously, the management of that mix and this allocation between countries. But I don't think you can say that, and that's definitely not our intention.

Next question from Andrew Gwynn from Exane. Sir, please go ahead.

Two questions, if I can. So just firstly on the guidance. You, obviously, seem to be guiding a percentage change which implies, obviously, given the bigger profit base in the second half that from €85 million full in the first half profitability, perhaps we could see €185 million in the second half, i.e., a step-up of about €100 million. So what else is happening? You've obviously flagged the incremental price investments in France. What else are we missing? Or, we've just been a bit too literal and you did say roughly. And then the second question, I suppose actually, the weak profit is a sort of long list of negatives really, maybe individually not that big but accumulatively, not ideal. When do you think those negatives reverse out? Thinking about DIA, for instance, DIA, we were expecting profitability to improve this year and obviously, now it's guided -- losses guided approximately flat, multichannel as well, maybe is that something that could reverse out next year? Or should we be waiting a little bit longer for some of these elements to reverse out?

Okay. I think on the guidance, I was as explicit as I could be. I think one of your peers just made the math literally on the phone, and I confirmed the math. So not much I can add. I think you said in your question that indeed the -- in due proportion, there is, of course, a bigger portion -- a much larger portion, I should even say, of earnings which comes in the second half, which probably explains in due proportions what's happening. So I can't -- the reason I just outlined, there is not much more I can give to you to that list, which, indeed, is certainly not ideal but that's certainly a list which we are working on and will continue to work on. But there is not much more I can give you on that particular territory. Basically, in terms -- one thing though, I think you should keep in your mind -- and I'm sure, you are keeping in your mind, even though we have focused and continue to focus this communication on EBIT or what we call in our jargon, the ROC, the operating income, I just want to draw your attention on the fact that in terms of EBITDA or ROCDA, the variation, obviously, is of a significantly smaller nature simply because, of course, the EBIT reflects as well at least for a couple of years, while the things normalize the investments that we've made, the catch-up investment that we've made in the last couple of years, right? So I'm sure that when you will be comparing the -- when you'll do your math and project these ROCDA or EBITDA versus consensus, you will see that there, the difference, is obviously much smaller. Now I'll let you, obviously, discuss first -- discuss that with the team when you are -- obviously, follow our calls. Your second question I think was related to DIA. No, I'm not going to guide you on the DIA losses beside the fact that, of course, as I said, we have given you now the numbers so that you know what we are talking about. I gave you pretty much where we are focusing our attention, which is essentially, not only on, obviously, the assortments, which we'll continue to adapt but as well on the management model which is something I detailed and I won't come back to. I think our intention is obviously to continue to improve this. We are absolutely convinced that having those stores, even though they come at a high cost, are essential for us in a country where having, obviously, smaller stores as an average closer to customers and on top of that, in two types of platforms which are essential from that perspective. We absolutely consider that longer term that is absolutely crucial. I want to repeat as well that in terms of timing between semesters, do keep in mind that in the first half, the losses we've incurred are indeed a reflection of the first six months following the transformation of 200 stores in the latter part of last year of 2016.

I'm sorry, an optimistic question but is 2017 the low point for profit?

I am not -- we don't guide on these kinds of things, and I will not do it for the Group, and I won't do it either for DIA. But I think you realize that obviously, we are fully focused on improving the performance as well, of course, as addressing the changes which are in motion currently in the sector. So I think no change from what we've done there in the past, which is we won't give a guidance. But of course, it's -- as I'm sure you will fully appreciate, we are totally focused on making those conversions in terms of management model.

Yes, I was thinking more in terms of the Group, but you answered that as well.

Next question from Sreedhar Mahamkali from Macquarie. Sir, please go ahead.

Can I just follow-up, Pierre-Jean, to Andrew's question? Maybe I'll have another go and probably, we'll see if you can give a bit more color. Just specifically on the phasing first half, second half. Clearly, Andrew's point obviously is -- it's pointing to a significantly bigger decline in the second half when actually, theoretically, the DIA losses should be narrowing. Integration costs in Spain probably should be coming off. Is there an acceleration in your multichannel costs in the second half implied within this what clearly is a significant profit warning? And that's the first question. And second one, again, in kind of related areas. Just to sort of press you a little bit on it. To what extent are these digital investments, multiyear investments, i.e., we shouldn't be thinking there in the back half?

Sreedhar, we -- sorry, I didn't -- on the second part, you talked this -- you talked about Europe. Was it Europe? Or was that...

Yes. Yes, well, the digital investments that came about in Europe and in France, to what extent should we be thinking these are multiyear investments? Have you actually given any sense of magnitude what these investments are? What level these are? And then last one really is the €150 million nonrecurring costs. Can you give us a sense how they split between France Caravelle and Spain Eroski? I've been trying to understand to what extent the integration costs have actually hit the P&L, as in, in ROI. And what are these items that are sitting in this €150 million? How you've actually split them? For some bit of detail on...

Okay. Sreedhar, on your first question, I think I tried to answer it a few questions ago, which is essentially, the drop which you've calculated for the second half is largely a reflection of the size of the profit in relative terms. I think to go through that, I think I'll suggest you basically do it by zone when you discuss with the team. I think that's probably a better way to do it and a more efficient way to do it. On the -- your second question relates to the digital expenditures. I think if you go back again to all the information we gave during the Investor Day, which was essentially related to multichannel or omni-channel approach and how we use digital and big data to conduct the transformation of the Group from that perspective, you add a certain number of clear case studies illustrating basically where we invest money. Additionally, one is through the creation of data routers in countries in order to have increasingly specific data related to the consumer behaviors almost customer by customer. That's one -- so knowing better your customer in order, obviously, to be much better at doing your business. And the second thing is additionally creating solutions in order to improve the model itself. And one of the initiatives we are working on, and we discussed that in several calls, and we are doing this in a couple of countries and that includes, of course, Europe because the intensity of promotions in Europe, it's not, of course, as acute as in France. But we've seen an increase of the promotional context as well in other Europe. So one of the key elements there is come up, for instance, with algorithms which helps you to make your promotions more efficient. So I would -- those are obviously not huge numbers, but they basically explain some of the differences for Europe, they do as well for France. Are they multiyear? I don't think so. Now before quantifying them and saying more, I think we need to give it a bit of time, in particular, to our new boss, who comes from that industry to add his input and probably come back to you guys at the next point of communication where certainly, there will be comments on that particular subject. Your last question was on the one-off costs. Yes, the one-off costs is essentially made of the integration cost of Spain. There is as well some integration cost related to Romania. And of course, we have some cost, which basically are related to the supply chain projects, Caravelle. So those three combined make the essence of the €150 million that you are talking about. If you want more flavor and details, again, I suggest that you talk to the team. I think that you have as well some elements in the brochure, which has been filed with the stock market authorities, which we call the Document de Référence, which you can find some information there as well, which has been filed in both French and English languages.

And, Pierre-Jean, in terms of ROI, what went into with -- from integration cost, are you able to split that out?

Yes, well -- the -- when -- yes, when -- what I call integration cost is, for instance, when you -- what stays in ROI it would be -- I will give you a very good example, when you need to create from scratch an activity around financial services which is ongoing part of our business for the established fleet of stores. In those cities where we have opened 20 of those Eroski stores or we have reopened, I should say, basically, those costs would be very much operating costs, right? So those would be the costs I'm referring to. The other thing is we are creating, basically, a perimeter which relates to nonfood, which was essentially non-covered by the previous owner of those stores and the -- basically, the cost which we incur until the scaling up of the revenue base in those stores, that's of course, part as well of operating. Those would be two examples of costs which are clearly included in operating. At the same time, you obviously write-off some of the assets, you basically lay off some people. And those kind of costs would be treated as part of the nonrecurring expenses which is part of the €150 million you just mentioned.

So in terms of ROI, would you say these are tens of millions, low tens of millions? Or in terms of...

You can't quantify. I think what I can tell you is most definitely, Eroski will be accretive next year. I think that's the best answer I can give to you.

Next question from Mr. Daniel Ekstein from UBS. Sir, please go ahead.

I've got three questions. In terms of the price repositioning that is ongoing, is this something that can be achieved in a couple of months? Or should we be thinking about this as a rolling program perhaps over several quarters? Secondly, tax. The effective tax rate was 37.5% in the first half of this year which was up quite a bit year-over-year. Should we be expecting a similar tax rate for the full year? And then third question is on working capital. You said free cash flow was held back by a temporary increase in inventories but if we go back to the full-year results, you said you were holding more inventories around the holiday season, particularly around Chinese New Year to optimize sales and I was expecting that to unwind during the first half of this year. So could you explain why we didn't see this?

Okay. Price repositioning, again, we -- I won't probably talk about that because as you know -- because we're talking France here, we have 50% to 60% of the market share, which is, basically, occupied by independent competitors who don't have to communicate via the markets and, obviously, follow very closely what we do. So what I've said is we have started -- reinvested. We have, obviously, some scenario of what we would invest for the year. But I -- as I -- I gave you one element, which basically relates to the fact that it will be done on a local-for-local basis because as you know, pricing in France for dry grocery is not national. It's much more a local-for-local pricing strategy. That's the norm in that specific country. But telling you more than that publicly, I would consider that as competitive information. On the tax element, basically there as you know, the first half effective tax rate is quite often not very meaningful because as that is normally calculated on -- I would say, file a tax return, which comes, of course, much closer, if not at the beginning of the following year. It's indeed a bit higher than the first half of last year but we would expect that the total year should be along the lines of last year, I think, but probably south, somewhat south of the 37% that we've experienced in the first half. Working cap, yes, you're right. For -- well, depending when the so-called Chinese New Year occurs, there are years where you end up with a high inventory at the end of December, the year before or not. Sometimes the Chinese New Year is in January. Sometimes it's late in February. But in this particular case, what -- as far as inventory is concerned, I will flag, again, Spain. We had to increase our inventory for -- essentially, to bring new inventory in the 30 stores that we have reopened in Spain, which didn't have much volume of inventory in the -- of revenue in the first half. So that inventory is there so the revenue needs now to scale up in order to make the equation of our industry, which, of course, is completely driven by negative working cap on the back of revenue. So we need to let that formula now work in Spain. That's for Spain. As far as China, I did mention in previous calls that one of the funding of our working cap was the shopping cards that has been there in China for quite some time. But year after year, as we've discussed in previous calls, the amounts of shopping cards, which we basically we sell as part of our business model, has come down as part of the new trends related to shopping cards, related to tax constraints as well as to consumer behavior. All those reasons have actually brought down the volume of shopping cards we said and accordingly, the funding, the cash funding we get from the sales of those cards ahead of them being used in the stores, so that amount of free funding in our working cap is continuing to come down. So I think that's the key elements which relates to this working cap consumption. We expect that a good chunk of that will reverse in the second part of the year, as I mentioned in the previous question.

Next question from Mr. Bruno Monteyne from Bernstein. Sir, please go ahead.

In France, 18 months ago on these calls, we started talking about price as being an issue. If you look at Carrefour's promise today in France, can you say that the issue is much broader and that Carrefour France has lost touch on what consumers really want? And I mean in that of range service quality on top of price? And has it also really lost control of its operation given how all the acquisitions in France and in other countries keep adding in costs in terms of depreciation, exceptional cost in ROC. So would it be fair to say that it's gone from price to losing touch with consumers and losing control of operations?

Okay. I think the -- I don't think the price positioning has significantly deteriorated. I think the -- it probably has worsened by up to a point, right? I think what has changed, and we've discussed that in France in previous calls, is that the model of one of our key competitors has changed and it's now combining everyday low price and promotions. I think the market in France has become more promotional. We've discussed that in -- we have adapted to that and currently are adapting to this. It does require, obviously, investing some money, but it does require as well, certainly, an increased understanding of your customer base and chores in order to spend promotional money in a more efficient manner, which comes to questions that we've had in -- earlier in this conference on the nature of spendings in digital expenses. So I think that -- and you should do that. I think we will start seeing, obviously, an improvement of things. We still, and I mentioned that already two times, we do believe though that on a local-for-local basis, at times, we need to invest in prices. I already commented on that and we will do that. And last but not least, of course, we not only need to combine more efficient promotion and investment in prices. We need as well to have the right assortment in stores because what we see is that some product categories clearly outperform others and that does require as well, clearly, efficiency in assortments. Have we lost control on the back of acquisition? I'll leave it to you to make those comments. I do appreciate that the results of S1 are not good. I think we've said at the beginning of those call that we will be focusing -- we have made inventory of those challenges. We will be focusing on them and we will have the opportunity to come back to you on those subjects by year-end.

If I can go a bit back on the first part of the question, I mean Carrefour has always had some price premium in the market versus price leaders but consumers clearly felt that on the range, quality service, store environment, they got something they really liked. When I look at some of the compass surveys on the range satisfaction and other things, it doesn't seem like consumers really feel they're getting materially better deals on quality range, service and store environment. Is your data showing something differently internally that you're on the right track there? Or is it really there that you ought to focus to warrant your price premium rather than just cutting your prices?

I think the way we look at it and the information we have internally do not show that there is a deterioration of the perception of the value they get from basically all the elements you mentioned. What has changed though is that -- and I said that already a couple of times, is the market has become more promotional. And one of the elements of our model until, I would say, probably a year ago, 1.5 years ago was to combine all what you described plus promotions. And our key competitors were not as promotional as we are in that -- as we were. And the point we have to address is that now, the market has, in large, become more promotional and as I've just said, that's what we need to address. We need to come up with a more efficient way to do promotions as well as maintain all what has made the differentiation of Carrefour, which is the list you've just outlined in the early part of your question.

And can I just add a second question on China? You're showing an improvement in profit based on the cost savings you've done, but looking at the like-for-like in China, the second quarter was worse than the first quarter. So your profit recovery is not a volume-led recovery by customers coming back. Doesn't that typically bode badly for the recovery story that's based on cost cutting rather than first driving customer traffic back into your stores?

Well, I think we -- you -- if you look carefully at the China, you will see that the like-for-like has improved gradually. It's been modest in the last two quarters. But the reality of it is that there has been some gradual improvement of the like-for-like trend. It's probably -- it has been probably more significant in food versus nonfood. At the same time, we have increased -- even though from a very low base, we have increased our Internet through play portion of the mix in terms of food sales. And what we are doing in China is we are doing investments definitely for the medium term. One of the key things we've discussed in previous calls about what we've done in malls, in stores as well as in our cost base, which indeed has been reduced as we have explained in previous calls but at the same time, we've done something quite essential, which is to install six logistics centers. We've done that over the last two years. The utilization of those logistic centers has been increasing rapidly, which puts us in a position where we can do two things. We have much more latitude to modernize and update on an as-needed basis the format of our stores, including, in particular, opening convenience stores; and at the same time, it enables us to embark into pure play Internet on food given that we now have our own logistics. So I think in China, yes, we have reduced costs but we've done much more than that. And I think that we take some pride in not easy semester to show that in that part of the world or combined earnings between Taiwan and China have gone back to the positive direction after three years of work.

And as part of your business review, the Group business review, are you considering strategic options for China of the nature of disclosure or closure or the e-commerce partnership we've talked about in the past?

We've constantly worked on that. We continue to work on that, and as -- obviously, as you would expect from a company of our size and, obviously, we would certainly not comment on it publicly.

Next question from David McCarthy from HSBC. Sir, please go ahead.

A couple of broad questions, very broad questions. There was comments made at the start on reshaping French hypermarkets. I just wondered, is this a reference to a financial reshaping or a physical reshaping? In other words, is the company looking to just re-engineer the cost structure? Or is there some repurposing of space going on? And then secondly, there was also a reference to the accelerating the digital frontier in creating a true omni-channel retailer. And I just wondered, does this include expanding into grocery home delivery? And do you believe that grocery home delivery can either be significantly profitable on either a marginal or fully costed basis?

Okay. I think those are two questions really of a strategic nature. There are three -- the first two, definitely, are very -- two very crucial questions. I think the third one is yes, we believe we can make money in grocery as long as you operate from stores which are close to your customer base, right? So I think one of our convictions is that when you have stores close to your customer base, there is definitely a way to make this business profitable. And we already have a business which does exactly that even though small-scale, which is called Ooshop in France, which does operate on a profitable basis. So to your last question, we think the answer is yes. Now on the first two questions, which are of a more strategic nature, I think Alexandre Bompard did allude to those two points in his opening speech, and I think you'll -- after five weeks or six weeks in the company, you need to give him a little bit of time. He said in his speech that he would come back to you by the end of the year on those elements, and I think we need to give him the time he referred to in his opening speech.

Last question from Mr. Andrew Porteous from HSBC. Sir, please go ahead.

Pierre-Jean, just one from me for the moment, well, you've made some investments in the first half clearly and -- well, late in Q2, but if you look at some of the market share data SIMS, that would suggest that there has been very little consumer response to those. Could you perhaps talk about what you've seen at -- where you've made those investments from consumers? Have you seen traffic improve or average basket improve?

Yes, so price investments, again, difficult to comment on that because

a, because as I said, I would consider that as competitive to talk in many details. But specifically, I also said that the price investments, as far as France is concerned, were made very late in the semester. So I think it's difficult to comment on that. I think it's a point, certainly, we'll be able to comment more on the back of the second semester numbers because by then, I think we'll have probably more mileage and more feedback from the French market from that particular perspective.

But you've had a few market share updates since then, and it still appears that your market share is soft to me. Is it perhaps you probably need to do more in France?

No, but too small and too -- as I said, too small and to conclude anything, right? There are many more pieces in motion, and I wouldn't take the risk to comment and link, as I said, given the -- how recently those investments were made.

Okay. And then thinking about your full year guidance. Does that include -- does that assume a continuation of simply the investments you've made in the first half and obviously, the ones you've made late in Q2? Or is there room in there for further investments on top of that?

No, it's on the back of the scenario we see, and we feel it's needed for the second half. Of course, we've made assumptions, as you would do. But yes, that's on the back of what we feel is necessary the way we see the market today.

So there's no incremental investment in there beyond what you've done today then?

No, I have not said that. It's -- as I've said, again, I won't say more for the reason I commented on given that on this call, you have 60% of our competitors listening carefully to what's going to be our pricing strategy in France. So for that reason, I will leave it at that. But I did not say that we would not invest more.

That's very helpful. Thank you.

Okay. I thank you very much for your time. And again, I leave it to you to contact the team to answer any questions you might have in addition to the one you've already asked. Thank you very much, and goodbye.

Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.