Retail giant Carrefour struggles in China, France

France's biggest retailer Carrefour reported lower profits on Thursday as it struggled in China and in its French home market where cut-throat competition weighed on margins.

Its 2016 operating performance improved in the rest of Europe and in Latin America, but not enough to prevent net profit from falling 24 percent to 746 million euros ($785 million).

One-off tax changes were to blame for much of the fall, but stripped of exceptional items net earnings were still down 7.4 percent, the retailer said in a statement.

Net profit on ordinary operations fell 3.8 percent, in the ballpark of analyst expectations.

In Asia, ongoing operations produced a loss of 58 million euros, compared to a profit of 13 million the previous year, mostly due to weakness in China. Carrefour said it is looking to revamp its business model in that market.

Carrefour's performance in its French home market, meanwhile, suffered from weak consumer spending and massive competitive pressures from rivals slashing prices to gain market share. Profit on operations fell 13.4 percent in France.

Investors were disappointed in Carrefour's French performance, giving the results a "lukewarm reception", analysts at Bryan Garnier said in a note.

Carrefour's shares dropped more than four percent to 21.76 euros in early business in Paris.

The company's French results translated "a worsening in the competitive environment for French hypers", Bryan Garnier said.

But a dynamic Spanish market and rising margins in Italy and Poland helped the rest of its European businesses stack up a 25.5 percent rise in profits on operations.

Latin America also did well overall, weathering an ongoing recession in Brazil, Carrefour said.

Despite the year's mixed picture, the retailer said it had emerged from 2016 "a stronger company". It expects to expand this year, both in its store operation and online businesses, it said.

burs/jh/hmw