- EBIT before special items in line with expectations (€2,372 million; -1.8%); sales declined by 0.8% to €66.7 billion
- Stable dividend of €1.35 per ordinary share proposed
- Group strategy: stronger like-for-like growth targeted; Metro Cash & Carry with new management structure
- Outlook 2012: sales growth expected, earnings to roughly match prior year's result
- Change of financial year from 1 October to 30 September as from 2013 proposed
METRO GROUP stood its ground well in financial year 2011, which was strongly impaired by extraordinary economic developments. Group sales declined slightly by 0.8% to reach €66.7 billion, but in local currency only by 0.2%. In particular, the sovereign debt crisis, high unemployment rates and austerity programmes in many European countries led to a buying restraint on the part of consumers. EBIT before special items reached €2,372 million (-1.8%) and was thus in line with expectations. "The macroeconomic conditions in many countries have worsened noticeably compared to 2010. This notwithstanding, we succeeded in maintaining group sales and EBIT before special items almost at the same levels as last year", said Olaf Koch, CEO of METRO AG. Therefore, a dividend at the unchanged high level of €1.35 per ordinary share will be proposed to the Annual General Meeting.
The newly formed Management Board in addition also presented its strategic priorities for METRO GROUP. "We achieved our cost saving targets with Shape 2012, but still see a lot of potential with regard to productivity gains", said Koch. "What we need to do now is to raise our relevance as a retailer for the customer. We need to further sharpen our performance profile and invest into new competencies and service offers". With this move, the productivity of the sales divisions is to be raised further also after the efficiency and value enhancing programme Shape 2012 runs out at the end of the year. To this effect, besides continued growth by expansion the Group wants to strengthen its like-for-like sales growth, in particular.
For the implementation of the strategic priorities, special attention will be given to the two sales divisions with the highest sales and earnings levels: Metro Cash & Carry and Media-Saturn. Metro Cash & Carry has already reorganised its management structure. The formerly separate Business Units "Europe & MENA" as well as "Asia, CIS & New Markets" were merged under the lead of Frans Muller, Member of the Management Board of METRO AG. At the same time, the regional responsibilities were reassigned. Muller will assume direct responsibility for the core countries China, France, Germany, Italy, Poland, Russia, Spain and Turkey, in which Metro Cash & Carry generates around two thirds of its sales. The other 22 Metro Cash & Carry countries will be managed by three regional management teams.
In addition, the Management Board and the Supervisory Board will propose to the Annual General Meeting on 23 May 2012 to change the financial year of METRO GROUP, which is presently equivalent to the calendar year. Starting from 2013, the new financial year is to run from 1 October to 30 September. Accordingly, the company will have a stub financial year for the period from 1 January 2013 to 30 September 2013. As a result of this change, the important Christmas business is to be unburdened by year-end closing activities such as inventory counts or forecasting work for the upcoming financial year. In addition, this change is to bring about a higher planning quality for the overall year already during the first quarter.
Overview Financial Year 2011 - Sales
In financial year 2011, METRO GROUP sales decreased by 0.8% to €66.7 billion. Here, in addition to the exchange rate trend also the disappointing Christmas business could be felt. In local currency, sales almost reached the high prior-year level (-0.2%). In Germany, sales declined by 1.0% to €25.9 billion and were affected by store disposals at Metro Cash & Carry and Real. In the international business, sales went down by 0.7% to €40.8 billion; in local currency, by contrast, sales climbed by 0.4%. The international share of sales rose slightly from 61.1% to 61.2%. In Western Europe, sales receded by 3.1% to €20.9 billion (in local currency: -3.6%). Here, the sales development was impaired by the divestment of the business activities of Media-Saturn in France. In Eastern Europe, sales went up by 0.4% to €16.9 billion (in local currency: +3.3%). In Asia/Africa, sales continued to grow very dynamically despite the divestment of Metro Cash & Carry Morocco, climbing 11.2% to €3.0 billion (in local currency +14.3%).
Earnings and dividend
EBIT before special items decreased by €43 million to €2,372 million (-1.8%). The net profit for the period before special items went down €160 million to €979 million. After subtracting the non-controlling interests, the remaining net profit for the period before special items distributable to the shareholders of METRO AG stood at €859 million (prior year: €1,019 million).
The Management Board and the Supervisory Board propose to the Annual General Meeting on 23 May 2012 an unchanged high dividend of €1.35 per ordinary share and of €1.485 per preferred share.
Key Financial Data 20111)
The persistently difficult economic situation and the slowing price increases will most likely have a negative impact on sales in 2012. On the other hand, all sales divisions are taking a number of steps designed to boost sales. For this reason, we foresee an increase in sales in 2012. We expect a continuation of this positive sales trend in 2013 on the back of an economic recovery.
In 2012, the earnings development will be dampened by the continuing difficult economic situation. In 2012, METRO GROUP will continue to invest in its competitiveness. This will include both productivity steps from the Shape 2012 programme and targeted price investments. In addition, we intend to lay a foundation from which we can accelerate our expansion activities, an effort that will also create additional costs. We nonetheless expect EBIT before special items to roughly match the previous year's result (EBIT 2011 before special items: €2,372 million). It should be noted, though, that a forecast issued at this time includes an element of risk in light of the problems described above and the uncertain economic situation. Like sales, we expect earnings to pick up in 2013.
Development Sales Divisions
Metro Cash & Carry
Sales of Metro Cash & Carry in financial year 2011 rose by 0.2% to €31.2 billion (in local currency: +1.4%). Whereby, the market exit from Morocco impaired the sales growth. Delivery sales were able to continue their strong growth and reached around €1.6 billion. Also the share of sales with own brand products grew strongly and came in at 15.7% in 2011 - a 2.4 percentage point increase year on year. The share of international sales of Metro Cash & Carry rose again from 82.9% to 83.5%. In Germany, sales decreased by 2.8% to €5.2 billion mainly due to store disposals and divestments. Like-for-like, however, sales grew slightly by 0.1%.
EBIT before special items went up 4.0% to €1,148 million. This rise in earnings is in particular attributable to margin improvements in the context of Shape 2012. Here, the higher share of own brand products in total sales had a positive effect on the margin development.
2011 sales of Real decreased by 2.3% to €11.2 billion (in local currency: -1.4%) also due to store disposals. Especially the persistently difficult non-food business and the disappointing Christmas business weighed on the sales development. Like-for-like sales declined by only 0.8%. In Germany, sales receded by 1.6% to €8.3 billion in 2011 due to store disposals. Like-for-like sales remained on prior year's level. EBIT before special items in-creased by €2 million to €134 million.
Media-Saturn confirmed their leading market position in Europe also in 2011. Sales in the full year 2011 declined by 0.9% to €20.6 billion due to the difficult macroeconomic situation as well as the divestment of the French Saturn stores. The internet retailer Redcoon, which was consolidated in the third quarter, contributed to sales development. In 2011, online sales including those of Redcoon amounted to €348 million. In Germany, sales rose by 2.0% in the year 2011 supported by the acquisition of Redcoon. The new price strategy of Media Markt, which was well received by customers, and also the successful start of www.saturn.de on 10 October 2011 contributed to this increase.
EBIT before special items dropped €83 million to €542 million. This decline also reflects the higher operational costs for the market entry into China and for growing the online business. Including special items, Media-Saturn's EBIT amounted to €493 million following €492 million one year earlier.
2011 sales of Galeria Kaufhof dropped 3.7% to €3.4 billion year on year. The unseasonable weather conditions impaired the sale of seasonal items. In addition, Galeria Kaufhof started phasing out the low-margin media product range in order to allocate the sales space to more profitable department store product categories, such as leather goods, shoes and accessories. EBIT before special items decreased by €17 million to €121 million.
The real estate subsidiary of METRO GROUP generated €643 million EBIT before special items, a decline of €55 million that is due largely to lower earnings from active portfolio management as well as to lower net rental income due to asset disposals.
Key financial data Q41)