International supermarket group Carrefour achieved a sharp profit increase in the first half of the year, it reported on Thursday but the company's shares fell sharply.
Net profit rose 16.7 percent to 274 million euros ($367 million) and the current operating profit rose by 7.9 percent to 833 million euros.
This was achieved on a 1.7-percent fall in sales to 40.3 billion euros.
Carrefour said that activity had been particularly encouraging in France despite deflationary pressures and price-cutting in the supermarket sector.
Activity in Belgium and Spain had risen, but did less well in Italy.
Business in Latin America was undermined by unfavourable exchange rates, and in Asia operating profit had fallen by 15.2 percent to 83 million euros mainly because of "frugal consumption" in China, the group said.
Carrefour said that debt default by Argentina might have a "possible but manageable" effect on its activities, but also said it would reduce investment in the country.
Argentina and Brazil are the two countries in Latin America where the group has outlets but these activities represented only 3.0 percent of group sales and 2.0 percent of operating profit, chief executive Georges Plassat told a press conference.
At the end of last yar it had 521 outlets in the country, out of 10,105 worldwide.
Argentina was not in anything like the crisis it was in in 2001 and "it has resources," he said.
But the default might cause household consumption to fall particularly on non-food products, and Carrefour might have to reduce its prices to hold on to market share, he said.
Argentina was a "remarkable country" he said but "we are going to slow down our investments in the country so as not to endanger our cash position."
The price of shares in the group was down 4.81 percent to 25.82 euros in mid-day trading. The overall French market was down by 0.56 percent.
At brokers Global Equities, trader Xavier de Villepion, referring to jitters in European stock markets over the possible effects of sanctions on Russia, commented: "In a context where the market is worried, results would have to be much better for the shares to hold up."
In common with many French companies, Carrefour blamed much of the sluggish overall headline sales figure on unfavourable exchange rates.
If this factor were flattened out, sales rose by 4.9 percent which it said represented the best figure for internal growth for five years.
"In the first half, Carrefour achieved a very good performance. Both its results and profitability progressed," finance director Pierre-Jean Sivignon told a telephone press conference.
The group did not provide guidance for the year, although earlier this month it said that analysts' overall expectation of an operating profit of 2.38 billion euros for the year was "reasonable".