On December 15 the French retailer issued a memorandum stating that it may seek a new owner for its supermarket chain Big C in Vietnam, as the company plans to strengthen its financial flexibility by selling assets in the country, as well as Thailand and Colombia.

In 2016 Casino Group is expected to enact what it calls a ‘deleveraging plan’ of more than two billion euros (US$2.2 billion), mainly through real estate transactions and the disposal of non-core assets, according to the memo.

The French group currently owns 10 retail brands across the globe, with a concentration in Asia. The Big C brand is used for the supermarket chain in Vietnam and Thailand.

In multiple annual reports, Casino Group has assessed Vietnam as a market with high potential for growth in the future, once the economic slowdown is over and consumption begins to grow again.

However, given the minor contribution of Big C Vietnam and the small market size, especially compared to neighboring country Thailand, the chain is now on the priority list to change hands.

The contribution of Big C Vietnam in 2014 was just over one percent of the French parent company’s total revenue, much smaller than Big C Thailand during the same period.

In 2014, revenue from the Asian operations of Casino Group reached 3.5 billion euros ($3.83 billion), accounting for seven percent of the total turnover of Casino Group. Breaking it down further, 98 percent of this figure was contributed by Big C Thailand, and less than two percent by Big C Vietnam.

The revenue of Big C Vietnam last year was about $546 million, a seven percent year-on-year increase, according to data published by Retail Asia magazine using statistics compiled by London-based market research firm Euromonitor.

In the first six months of this year, Big C Vietnam recorded a total turnover of 312 million euros ($340.66 million), up 26 percent over the same period last year, higher than the group's total average growth rate in Asia, which was around 23 percent.

Size that matters

The revenue of the French retailer grossed from the Asian market is also small compared to other markets worldwide.

Revenue from Asia accounted for less than 10 percent of its total global sales in the first six months, reaching more than 2 billion euros ($2.12 billion), 98 percent of which was generated by Big C Thailand, according to the group’s financial reports.

In particular, revenues generated in Thailand in the first half of 2015 were 1.8 billion euros ($1.97 billion), nearly six times the earnings of Vietnam with 312 million euros ($341.46 million), a big gap between the two Southeast Asian neighbors that has been stable for the last five years.

In terms of networks, through 2014, Big C Thailand had 123 large stores (Big C Supercenter, Extra, and Jumbo), 37 Big C markets, 324 Mini Big C convenience stores and 152 drug stores.

Meanwhile, Big C Vietnam has 32 supermarkets and 10 convenience stores.

In addition, the number of employees working at Big C Thailand was more than 26,600, three times the number of employees in Vietnam.

In particular, Big C Supercenter Public Co. Ltd., the firm established to run Big C Thailand, was already listed on the stock exchange with a market capitalization of nearly 4.3 billion euros ($4.7 billion).

On December 15, when Casino Group issued the memo in a document submitted to the Stock Exchange of Thailand, Big C Supercenter Public outlined its growth strategy next year, in which the emphasis will be on continuing to expand its network.

In 2015, the company has opened 108 new stores, including two hypermarkets, and continues overhauling its supply chain. In 2016, it will keep enhancing its performance plan with the opening of six hypermarkets, three Big C Markets and 75 Mini Big C convenience stores.

In addition, the global e-commerce segment, though newly developed, is yielding positive results with revenue equal to that of the Asian retail market.

The sale of the Vietnam business could raise 750 million euros ($813.86 million), while setting up real estate investment trusts in Thailand and Colombia could net 550 million euros ($596.8 million) and 200 million euros ($216.98 million), respectively, Bloomberg reported on December 16, citing Bruno Monteyne, an analyst at Sanford C. Bernstein.

The decision is consistent with what Casino Group shared in the memo, stating that the sale of Asian assets is a strategic move to help the French group focus on its core markets such as France with 18.8 billion euros ($20.57 billion) (38.76 percent) and Latin American with 22.6 billion euros ($24.73 billion) (46.6 percent).

Casino Group, which is active in many other areas including e-commerce, finance and real estate, was founded in 1898 and is now one of the world's leading retailers, with total assets of over 42 billion euros ($45.97 billion) at the end of June 2015.

Tuoi Tre News - December 23, 2015