By Dominique Vidalon

PARIS (Reuters) -Carrefour, which earlier this month ended talks over a possible tie-up with unlisted rival Auchan, said it remained on the offensive as it kept a guidance for 2021 net free cash flow “comfortably” above 1 billion euros.

Europe’s largest retailer also said revenue growth slowed in the third quarter, reflecting weaker sales in the core French market where a mandatory COVID-19 health pass hit business at its large out-of-town hypermarkets.

Carrefour, which also faced high year-ago comparables in the quarter, is confident, however, about closing 2021 “roughly in line with the current consensus” for recurring operating income, finance chief Matthieu Malige told analysts, when asked if he was comfortable with a 2.26 billion euro figure.

“With its robust balance sheet, and thanks to the commitment of its teams, Carrefour is attractive and on the offensive, for the benefit of its customers and its shareholders,” Chairman and CEO Alexandre Bompard said in a statement.

Earlier this month Carrefour and Auchan ended talks over a possible partnership, the second time this year Bompard’s plans to create a Gallic supermarket powerhouse have been frustrated.

Carrefour is in the midst of a five-year plan it launched in January 2018 to cut costs and boost e-commerce investment to improve profits and sales, as it seeks to tackle competition from online rivals such as Amazon and discounters like Lidl and unlisted retailer Leclerc.

Carrefour reappointed Bompard in May to lead for another three years. Bompard has said he is working on a new strategic plan and is conducting an asset review as part of the process.

NO NEED FOR TRANSFORMATIONAL M&A

Malige told analysts no decision had yet been taken on potential disposals.

On the acquisition front, Carrefour strategy’s had been constant: “We are taking initiatives exclusively on potential bolt-on M&A and with a focus on our three core markets, France, Spain and Brazil. And we don’t need any transformational M&A.”

“We are active in our various geographies to see if we have any further opportunities for bolt-on M&A,” he added.

Carrefour said sales reached 20.468 billion euros ($23.83 billion) in the third quarter, a like-for-like rise of 0.8% but a slowdown from 3.6% growth in the second quarter.

In France, where Bompard has made reviving flagging sales at hypermarket stores a priority, sales eased 0.3% following a 4.% rise in the second-quarter. French hypermarket sales alone fell 2.8% in the quarter after rising 4.3% in the second quarter.

The introduction in France from mid-August to end-September of a health pass that customers had to show in shopping malls with a surface area of more than 20,000 square metres (215,278 sq ft) hit business in the third quarter at the hypermarket stores. At end-September, Carrefour had no more stores affected by the pass, Malige said.

($1 = 0.8588 euros)

(Reporting by Dominique VidalonEditing by GV De Clercq, William Maclean and Gareth Jones)