Thierry Blandinières (Invivo) : Casino, plan de sauvetage validé - 26/02

I would say from the point of view of InVivo, yes, because we had other investment priorities, especially in malt. We had a billion euros to invest, so we had to choose, and malt was our priority. Then the state of Casino, I said on June 15 when we stopped, was difficult for us. We could see that the results were deteriorating rapidly, and finally the receivership happened, so it accelerated. It's good that the selected offer took over Casino, because it was important for the employees to restart the activity. But now all the supermarkets have been sold, there's not much left. So yes, for the employees, they will continue either at Intermarché or at Auchan. It's certain that the Casino group is now much smaller, but from the employees' point of view, it's still good news that the operation went very quickly.

Indeed, I discovered that when I returned. It's a bit sad, I think as a media and political circus. I believe the Prime Minister used those terms. So it's all a bit sad because ultimately many discussions had been held by the main unions beforehand, and we could have worked in a more peaceful manner on these negotiations and had a more normalized opening rather than entering a big debate that agitated many people and angered many people.

Well, let's say we also need to understand the anger of certain farmers. So I think the head of state, we have a Prime Minister who is aware, must mobilize and respond to the expectations of farmers as quickly as possible. That is the best way to continue a normalized democracy in France.

So after each sector will take its responsibilities. For the cereal sector, I think it would not be relevant because we are in a globalized market. I recall that one ton out of two produced in France is exported, so it's a non-issue for us. So we need to organize differently in the cereal sector; we cannot enter into these floor price negotiations. Okay, but on other, smaller farms, does it seem possible to have floor prices for some and not for others? It's a protected market, so maybe at the regional level, short circuits, there can be French cultural exceptions. But it will remain marginal for me, because we are in an open market, it doesn't make sense. If there is a floor price at some point, it will be too expensive or not expensive enough, and that will have consequences on imports. If we are less competitive because we have floor prices, imports will continue to increase in France and Europe, and that will disrupt French agriculture even more. So we must not make people dream with a floor price that is not the right solution.

It needs to be renegotiated. We will have to find an agreement because we need to be in international trade, in globalization. It's true that happy globalization is over, but the globalized economy exists. Perhaps we need to negotiate differently, create power dynamics. Let's organize ourselves in Europe to create power dynamics to better negotiate these international agreements and not suffer them. So I think unity is strength, we agree. So from there, we need to be together with the Germans, to unite with a truly competitive agricultural policy that is capable of exporting, taking market share, and competing with the big players. Okay, we see that's not the model that French farmers want right now; it's not that one. So I think there are several types of farmers. From what we hear, those who seem most affected, who were on the barricades on tractors in Paris, I understand. I also understand some farmers in small farms who need enough oxygen and cash flow to continue their activity. However, if we talk about cereal growers, you have a different approach to the market. So from there, it's not the same type of farmer, and it's not the same answers that need to be provided to the current crisis.

That's exactly it. That's why when we talk about a cliché solution like the floor price, it doesn't make sense because you see, we are talking about several agricultures. So now we need to look sector by sector and provide solutions to each sector. Each sector has its own problem. So we need to be custom, specific, and take into account the reality on the ground.

Then it depends on how it goes. When you look at it, it depends on the times. When prices rise, necessarily cereal growers earn more money. At the same time, they also have additional costs because I recall that fertilizers have risen, etc. But for all that, they had more. Now we are in a phenomenon where those who had more margin will have to assume the drop in prices, since we are now on cereal prices that have fallen below 200 euros, but the costs are still more or less there, so there is a considerable scissors effect ahead of them. If I take the S, in fact what happens? The tariffs were passed on: first transformation, second transformation, retail, consumer. So it reached 15% or 20% increase. Now there will be a reflux that will organize over 2 years gradually, but we will not go back to previous prices because you know wages have increased, costs have increased. So we are not back to previous prices. However, there will certainly be a gentle deflation that will occur by the end of the year.

But I don't see how at the European level we can ban these centers. Legally, frankly, I don't know. They have always existed, these European centers. They serve a lot to negotiate with big brands. So to negotiate with big international brands, especially American ones, they can bring a plus in negotiations to lower the price of Coca-Cola in France, for example. So we also need to see that as a positive effect. It's not the small farmer who will negotiate at the European level; that doesn't exist.

What we want in the first place is that the standards evolve, especially the Green Deal. Today it's a real issue with the Farm to Fork program, which is a program that is still a degrowth program. It objectively lowers our agriculture in its potential by 20% over the long term. So that's enormous. And the impact study was done by the Americans who said, 'Good news, we will be able to sell more in Europe.' That's no longer possible. We need to change the Green Deal. We need to always be in this logic of transition. It's not about returning to the agriculture of before, but finding a new agriculture. Produce more is essential to give hope to farmers. Politically, we need to say we must produce more, better, and sustainably. And that is possible. So the result: we'll see in 3 weeks, it seems it will be a bit complicated. We have the feeling that the resolution of this crisis is not for immediate. InVivo, you return from Australia, you made a big operation in December 2023, more than a billion euros, by buying the number 1 malt, United Malt, in Australia. At the same time, it's a moment when the prices are a bit complicated, no? For malt, yes. Also, beer consumption has slowed down a bit because with inflation, the big brewers, who are our main clients, are pulling back. So we don't have the mechanical growth of the time of the purchase, which was a year ago. However, when we talk with our clients, they still hope for a recovery of activity, certainly between June and September, to regain volumes and get back on a strong growth path globally. So we are delighted with this operation. It positions us, I recall, globally. We have a great platform now. We are in all the major countries to accompany our big brewer clients, but also distillers. We were in Scotland not long ago; we are the number one maltster for Scotch whisky. So it's very interesting that French people are in that position. A beautiful position, a profitable niche. So a real value creation project, especially for the valorization of the brewing barley sector, which represents French excellence. The rest of the activity in 2023, is the cereal activity? Actually, a question: regarding the cereal growers and the price of cereals, wheat, we ask a lot about Russian influence, which actually causes the drop in prices. Do you feel it? Is it a problem for you? There is a second parallel market organized via Dubai that is disconnected from the Chicago price. So Putin uses wheat as a geopolitical weapon, especially with African countries and the BRICS, and it destabilizes the market. Does that cause us problems? Indeed, we have to sell cheaper to export. So French wheat today is sold at a loss, you see. So that's also our mission; we do it at a loss because we need to export French wheat. Then we manage to do cross-subsidization within the group to have solid profitability at the end, but we are making the effort to maintain volumes and market share. So all that is to suffer the Russian wheat, which today is very powerful. I recall 70 million tons of exports to Africa and the Middle East. It's very difficult for us, especially Algeria, which was our main client, has switched partly to Russian wheat. So we have difficulties ahead to overcome.

We close on June 30. So we have posted good results, we'll see the landing on June 30. But the first half was rather good, but I am rather worried about the half ahead of us because, as I said, we have a scissors effect coming: costs have risen and prices are falling. So we will have to manage deflation, which is not an easy moment to manage in cereal trading.

Yes, but no, our bankers and financial partners are aligned. That is, we deliver our results and our financial covenants each time. We are financed by debt, so it's normal that we are as indebted as possible. Now we need to deliver our 5-year plan and we will deleverage.