METRO GROUP boasts significant earnings increase

3 May 2011

  • First quarter sales at prior-year level despite late Easter; according to preliminary figures, sales grew by 1,0% during the period from January to April
  • EBIT before special items up 6.6% to € 145 million (Q1 2010: € 136 million)
  • CEO Dr Eckhard Cordes: "We significantly increased our earnings despite the late Easter business. This attests to our strengthened earning power".
  • Takeover of Redcoon boosts online business of Media Saturn
  • Galeria Kaufhof launches Wanderzeit store concept

METRO GROUP significantly raised its earnings during the first quarter 2011. Operating earnings (EBIT) before special items climbed by 6.6% to € 145 million. With around € 15.5 billion, sales came in at the prior-year level - despite the complete shift of the Easter business into the second quarter. "We again strengthened our earnings performance", said Dr Eckhard Cordes, Chairman of the Management Board of METRO AG. "This was achieved despite the late Easter business and thus also attests to our stronger earning power. With a view to the first four months of the year we have again already outperformed the year-earlier sales. This tells us: we continue on a profitable growth course".

During the first quarter 2011, METRO GROUP generated sales of € 15.5 billion (Q1 2010: € 15.5 billion). The first quarter was strongly influenced by the shift of the important Easter business. While last year’s first quarter benefitted from an early Easter season, the Easter business in 2011 completely shifted into the second quarter. Especially the sales trend in Germany was affected by the late Easter. First quarter sales receded by 2.6% to € 6.0 billion. Adjusted for store disposals, however, sales only gave in by 1.3%. International sales generated during the first quarter rose by 1.7% to € 9.5 billion. Here, too, the shift of the Easter business could be felt in the sales trend in Western and Eastern Europe. The international share of sales rose from 60.1% to 61.1%. In Western Europe, sales dropped by 1.9% to € 4.8 billion. Sales in Eastern Europe grew by 2.5% to € 3.8 billion. In the region Asia/Africa, sales again climbed significantly by 22.5% to € 0.9 billion.

During the first quarter 2011, EBIT before special items rose appreciably by 6.6% to € 145 million (Q1 2010: € 136 million). This rise is attributable to cost savings and also to productivity gains in the framework of Shape 2012. After accounting for special items, EBIT rose by € 25 million to € 142 million € (Q1 2010: € 117 million).

Adjusted for special items, earnings before taxes came in at € 25 million (Q1 2010: € 23 million). Including special items, earnings before taxes rose to € 22 million (Q1 2010: € 4 million).

The net profit for the period before special items climbed to € 16 million (Q1 2010: € 15 million). Also including special items the net profit for the period improved significantly from € 3 million to € 14 million. The net profit for the period attributable to the shareholders of METRO AG (including special items) amounted to € -3 million following € -16 million in the year-earlier period.

The earnings per share adjusted for special items climbed from € -0.01 to € 0.00. Including special items the earnings per share improved from € -0.05 to € -0.01.

METRO GROUP Q1 2010
(in € bn)
Q1 2011
(in € bn)
Change Change in
local currency
Sales 15.5 15.5 0.0% -0.6%
Germany 6.2 6.0 -2.6% -2.6%
Western Europe
(excl. Germany)
4.9 4.8 -1.9% -2.8%
Eastern Europe 3.7 3.8 2.5% 1.7%
Asia/Africa 0.7 0.9 22.5% 19.4%
EBIT
(before special items)
136 million 145 million 6.6%  

Compared to the close of the year the equity ratio rose appreciably from 18.4% to 20.5%. Compared against 31 March 2010, the net debt was up by € 0.5 billion coming in at € 7.2 billion.

METRO GROUP continued its international expansion. In the first quarter, a total amount of € 211 million (Q1 2010: € 192 million) was invested and nine stores were opened. For financial year 2011, METRO GROUP plans investments of € 2.2 billion and the opening of more than 110 new locations.

Outlook

Both, the political changes in Northern Africa and also the consequences of the natural disaster in Japan might still impact the global economy. Assuming a general economic recovery and a moderate price hike, especially with regard to energy and raw materials, METRO GROUP continues to anticipate a sales growth of more than 4% (adjusted for portfolio changes) for 2011. Moreover, METRO GROUP expects to e able to generate an EBIT growth before special items of around 10% during the current year. The scope of the earnings rise will strongly depend on the further improvement of the overall economic situation and the possibility to compensate price increases on the procurement side.

Development of the business segments

Metro Cash & Carry raises sales and earnings

Sales of Metro Cash & Carry rose by 1.1% to € 7.0 billion during the first quarter 2011. Compared with year-earlier quarter the sales growth was affected by the divestment of seven locations and the market exit in Morocco. Moreover, the shift of the Easter business appreciably affected the sales trend in many countries. This could to some extent be compensated by the continued dynamic growth in Asia. The share of own-brand sales climbed distinctly to 14.4% (Q1 2010: 12.2%). Furthermore, the positive trend in the delivery business continued. In total, delivery sales of € 325 million could be generated (Q1 2010: € 230 million).

Sales in Germany dipped 5.6% to € 1.1 billion during the first quarter 2011. Among other reasons, this drop in sales was caused by the divestment of seven locations. Like-for-like, sales receded by 2.1%. The low-margin business with tobacco products and telephone cards was further reduced. Net of these product categories like-for-like sales climbed by 0.2% despite the late Easter.

The share of international sales climbed from 82.6% to 83.7% during the first quarter 2011. Sales in Western Europe went down 1.8% to € 2.6 billion. Here, too, the lacking Easter business weighed on sales. In France, however, like-for-like sales staged a very gratifying development; here, sales climbed appreciably despite the Easter shift.

In Eastern Europe sales grew by 2.9% to € 2.5 billion. While the sales trend in Romania continued to be impacted by the difficult general economic situation in this country, like-for-like sales in Russia climbed by a double-digit percentage.

Sales in Asia/Africa shot up 19.0% to € 0.8 billion. In all Asian countries the growth rate was in the double-digit range. The dramatic civil unrest in Egypt in late January affected the two Makro wholesale stores in Cairo. While one location was already reopened in February, the second location needs to be rebuilt after a fire. The catastrophe in Japan merely led to a short closure of the Metro Cash & Carry stores which are all located in the Greater Tokyo Area and only suffered minor damages. Metro Cash & Carry cooperated intensively with the suppliers to ensure the supply of merchandise. Moreover, an emergency aid for the affected population in Japan was organised with support from the wholesale stores in other Asian countries.

EBIT before special items surged 21.7% to € 31 million during the first quarter 2011. In this context, the earnings improvement is largely attributable to cost savings in the framework of shape 2012, but also to measures taken to enhance productivity. Also including special items, EBIT climbed appreciably to € 27 million (Q1 2010: € 15 million).

Metro Cash & Carry Q1 2010
(in € bn)
Q1 2011
(in € bn)
Change Change in
local currency
Sales 7.0 7.0 1.1% 0.4%
Germany 1.2 1.1 -5.6% -5.6%
Western Europe
(excl. Germany)
2.6 2.6 -1.8% -2.1%
Eastern Europe 2.5 2.5 2.9% 1.8%
Asia/Africa 0.6 0.8 19.0% 15.7%
EBIT
(before special items)
25 million 31 million 21.7%  

Real raises earnings despite Easter shift

Real's sales dropped by 3.5% to € 2.6 billion during the first quarter 2011. This drop in sales is largely attributable to the shift of the Easter business. In Germany, sales receded by 4.1% to € 1.9 billion on account of both, the divestment of 15 locations compared to the year-earlier quarter and the Easter shift. Like-for-like, sales fell by 2.3%. The share of own-brand products in food sales reached 16.5% (Q1 2010: 16.4%). Sales in Eastern Europe declined 1.8% to € 0.7 billion during the first quarter 2011. Here, too, the Easter shift weighed on sales.

EBIT before special items improved by € 1 million to € -23 million (Q1 2010: € -24 million). Including special items, EBIT climbed by € 5 million to € -21 million (Q1 2010: € -26 million). The sales-related drop in earnings in Germany was more than compensated by a significantly improved development of earnings in Eastern Europe.

Real Q1 2010
(in € bn)
Q1 2011
(in € bn)
Change Change in local
currency
Sales 2.7 2.6 -3.5% -3.6%
Germany 2.0 1.9 -4.1% -4.1%
Eastern Europe 0.7 0.7 -1.8% -2.0%
EBIT
(before special items)
-24 million -23 million 4.1%  

Media Saturn boosts e-commerce with takeover of Redcoon

Sales of Media Markt and Saturn rose by 0.8% to € 5.0 billion during the first quarter 2011. In Germany, sales climbed by 1.8% to € 2.3 billion. Following the consumption restraint in December owed to poor weather conditions, sales in January benefitted from a strong rise in customer demand. Moreover, sales impulses resulted from the successful start of the advertising campaign on the occasion of Saturn's 50th anniversary. Demand in the first quarter 2011 focused especially on energy-saving household appliances and tablet computers. In Western Europe, sales receded by 2.3%. In France, sales declined appreciably as a consequence of the business divestment. The difficult economic environment as well as the high prior-year basis also resulted in a decline in sales in Spain and Portugal. By contrast, sales in the Netherlands improved significantly. The sales trend in this country also benefitted from the successful Internet business. In Italy, online sales grew by almost 15%. In Eastern Europe, sales climbed by 6.5%. Sales in Russia grew by more than one third. Meanwhile, sales in Greece, Poland and Hungary dropped. Many consumers continued to refrain from major purchases. In Asia, the second Media Markt store in Shanghai with a sales floor of some 4,600 square meters was opened in February 2011. The customer feedback continues to develop very positively.

EBIT before special items came in at € 66 million (Q1 2010: € 81 million). Including special items, EBIT amounted to € 65 million (Q1 2010: € 78 million). In addition to the sales-related drop in earnings in Western Europe also start-up losses in China weighed on earnings.

On 30 March 2011, Media Saturn announced the acquisition of a 90% stake in Redcoon, one of the leading online retailers of consumer electronics. Redcoon operates in ten European countries and offers around 24,000 products. Sales in financial year 2010/2011 amounted to € 402 million. The acquisition is subject to approval by the antitrust authorities. With the takeover of Redcoon, the multi-channel strategy of Media Markt and Saturn is supplemented with a pure Internet player which will be operated as an independent brand.

Media Markt and Saturn Q1 2010
(in € bn)
Q1 2011
(in € bn)
Change Change in local
currency
Sales 4.9 5.0 0.8% 0.0%
Germany 2.2 2.3 1.8% 1.8%
Western Europe
(excl. Germany)
2.2 2.1 -2.3% -3.9%
Eastern Europe 0.5 0.6 6.5% 5.7%
Asia/Africa - 18 million    
EBIT
(before special items)
81 million 66 million -18.2%  

Galeria Kaufhof launches Wanderzeit concept

Sales of Galeria Kaufhof receded by 4.7% to € 0.8 billion during the first quarter 2011. Like-for-like, sales dropped by 3.9%. In Germany, sales slumped by 5.8% to € 0.7 billion mainly owing to the Easter shift. Like-for-like, sales came in 4.8% lower. In March, the Galeria Kaufhof subsidiary Sportarena launched two pilot outlets of its new store concept Wanderzeit. On a sales floor of around 500 square meters, customers are offered an attractive range of equipment and clothing around the topic of hiking. In Western Europe, sales improved by 4.8% to € 0.1 billion. Here, business benefitted from a positive development of textiles sales. Like-for-like, sales climbed by 4.4%.

Due to the shift of the Easter business, EBIT dropped to € -27 million during the first quarter 2011. Special items were not reported. Three locations were opened in the first quarter 2011: one Sportarena and two Wanderzeit stores.

Galeria Kaufhof Q1 2010
(in € bn)
Q1 2011
(in € bn)
Change
Sales 0.8 0.8 -4.7%
Germany 0.7 0.7 -5.8%
Western Europe 0.1 0.1 4.8%
EBIT -19 million -27 million -43.2%

METRO Group Asset Management

The Real Estate segment comprises all real estate assets of METRO GROUP as well as all real estate-related services. As at 31 March 2011, 693 locations were owned by METRO GROUP (31 December 2010: 688). The earnings result mainly from rental income paid by the METRO GROUP sales divisions. EBIT before special items receded slightly to € 136 million (Q1 2010: € 138 million). After accounting for special items, EBIT rose to € 139 million (Q1 2010: € 138 million). Here, it must be considered that a real estate portfolio in Italy and the business operations in Morocco were divested in the fourth quarter 2010. This rental income is now missing.

METRO GROUP is one of the largest and most international retailing companies. In 2010 the Group reached sales of around € 67 billion. The company has a headcount of over 283,000 employees and operates more than 2,100 stores in 33 countries. The Group's performance is based on the strength of its sales brands which operate independently in their respective market segment: Metro/Makro Cash & Carry – the international leader in self-service wholesale, Real hypermarkets, Media Markt and Saturn – European market leader in consumer electronics retailing, and Galeria Kaufhof department stores.