METRO GROUP with strong sales growth

3 May 2012

  • METRO GROUP sales increase by 2.2% (+2.6% in local currency)
  • EBIT at € -9 million impacted by investments into sales growth (Q1 2011: € 142 million)
  • Sales of Metro Cash & Carry rise significantly by 3.7%; like-for-like by 3.8% in Germany
  • Sales of Real Germany up 4.8% like-for-like
  • Online sales of Media-Saturn grow from € 19 million to € 166 million
  • More efficient headquarters planned; stronger capex prioritisation
  • 2012 guidance for sales and earnings confirmed

Against the backdrop of a persistently difficult economic environment METRO GROUP started the new financial year with a clear sales plus. All four sales divisions contributed to this. EBIT came in at € -9 million following € 142 million in the prior-year quarter. In addition to extensive price investments – especially at Media-Saturn – the result was impacted by higher expansion costs and expenses to improve customer value. "During the past few months we have invested massively into better prices and additional customer services. In many areas, our measures to improve like-for-like sales are already beginning to show the desired effects", said Olaf Koch, Chairman of the Management Board of METRO AG. "We expect that, based on the sales growth, our full year earnings will come in roughly at the prior year level". 

As already announced, Metro Cash & Carry started implementing a new management organisation to eliminate overlapping structures effective from 1 April 2012. "We now have to work on creating efficient and cost-oriented organisations also in the central administrative functions of METRO AG as well as in the areas of IT, Logistics, Real Estate and in further functions", said Koch. "Operational business and hence the customer must be at the focus of all our activities; this also applies for the downstream administrative functions worldwide, but in particular also in Düsseldorf". The Management Board of METRO AG in addition also resolved to no longer pursue the market entry of Metro Cash & Carry in Indonesia based on the strategic decision to first concentrate on like-for-like sales growth in the existing markets and accelerate the expansion in selected countries. In view of the challenging general economic conditions also the allocation of capex funds is to be prioritised more strongly. The capex budget for 2012 was adjusted to € 1.8 billion (formerly: € 2.0 billion). 

METRO GROUP increased sales in Q1 2012 by 2.2% to € 15.6 billion (Q1 2011: € 15.3 billion). In local currency, sales even came in 2.6% above the prior-year level. This positive development also benefitted from calendar effects. In Germany, sales grew by 1.6% to € 6.0 billion. Especially food sales showed a distinct growth. International sales rose by 2.6% to € 9.6 billion and were impacted by negative currency effects while in local currency international sales even climbed by 3.2%. In Western Europe, sales decreased by 1.2% to € 4.7 billion and were affected by the disposal of the Saturn stores in France one year earlier. Sales in Eastern Europe grew by 3.5% to € 4.0 billion (in local currency: +6.6%). In the region Asia/Africa, sales saw a marked rise of 21.3% to € 1.0 billion. 

Sales METRO GROUP
(€ billion)
Q1 2011 Q1 2012 Change Change in local currency
Sales 15.3 15.6 2.2% 2.6%
Germany 6.0 6.0 1.6% 1.6%
Western Europe (excl. Germany) 4.8 4.7 -1.2% -1.6%
Eastern Europe 3.8 4.0 3.5% 6.6%
Asia/Africa 0.8 1.0 21.3% 15.2%

In Q1 2012, EBIT dropped to € -9 million (Q1 2011: € 142 million). Earnings before taxes reached € -134 million (Q1 2011: € 22 million). The earnings per share came in at € -0.25 following € -0.01 in the first quarter 2011. 

Earnings METRO GROUP (€ million) Q1 2011 Q1 2012
EBIT 142 -9
Earnings before taxes 22 -134
Net profit for the period 14 -81
Profit attributable to shareholders of METRO AG -3 -82
Earnings per share in € -0.01 -0.25

Outlook

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 for 2012.  

METRO GROUP's strategy aims for sustainable growth in sales and earnings. 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 in 2012 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.  

Metro Cash & Carry

Sales at Metro Cash & Carry climbed considerably in the first quarter 2012 by 3.7% to € 7.3 billion (in local currency: +3.9%). This was in particularly due to dynamic developments in Eastern Europe and Asia. Like-for-like, sales improved by a noticeable 2.0% – especially in Germany and Asia. Besides productivity gains and a more attractive price profile, this was also attributable to positive calendar effects. Delivery sales continued to grow very dynamically and reached € 504 million (Q1 2011: € 325 million). The delivery business was successfully expanded in particular in the eight core countries (China, Germany, France, Italy, Poland, Russia, Spain and Turkey). Also the own brands business grew strongly; the share of own brand sales climbed significantly by 2.1 percentage points to 16.5% (Q1 2011: 14.4%). At Metro Cash & Carry Germany, sales grew by 0.9% to € 1.1 billion. The strong like-for-like sales growth of 3.8% more than offset the decline in sales resulting from the optimisation of the store network (Q4 2011: ten closures). 

EBIT in Q1 2012 decreased by € 53 million to € -26 million. This drop results from price investments, expenses for reorganisation as well as the development of further functions to improve customer value. The result was also impacted by higher expansion costs. The decline could in part be offset by the positive earnings effect from an improved like-for-like sales development. 

Metro Cash & Carry Q1 2011 (€ billion) Q1 2012 (€ billion) Change Change in local currency
Sales 7.0 7.3 3.7% 3.9%
Germany 1.1 1.1 0.9% 0.9%
Western Europe (excl. Germany) 2.6 2.6 -0.2% -0.4%
Eastern Europe 2.5 2.7 4.0% 6.5%
Asia/Africa 0.8 0.9 20.0% 14.0%
EBIT 27 million -26 million € -53 million  

Real

In Q1 2012, sales at Real rose by 2.3% to € 2.7 billion (in local currency: +3.5%) due also to positive calendar effects as well as a higher average ticket. In Germany, sales climbed significantly by 3.8% to € 2.0 billion (like-for-like: +4.8%). Consequently, Real outperformed the overall market. Also the Real online shop continued to grow dynamically; in Q1 2012, the number of orders more than doubled year-on-year. Sales in Eastern Europe decreased by 1.8% to € 0.7 billion. In local currency, however, sales climbed by 2.6%. 

EBIT amounted to € -23 million and was thus almost on par with the prior-year level of € -21 million. 

Real Q1 2011 (€ billion) Q1 2012 (€ billion) Change Change in local currency
Sales 2.6 2.7 2.3% 3.5%
Germany 1.9 2.0 3.8% 3.8%
Eastern Europe 0.7 0.7 -1.8% 2.6%
EBIT -21 million -23 million € -2 million  

Media-Saturn

In a persistently difficult overall market environment, sales at Media-Saturn rose by 0.4% to € 5.0 billion (in local currency: +0.5%) in the first quarter 2012. The sales development was impacted by the disposal of the Saturn stores in France one year earlier. Online sales continued to grow dynamically; thanks to the acquisition of Redcoon and the successful start of the German multichannel offerings of Media Markt and Saturn, online sales climbed from € 19 million to € 166 million. In Germany, sales grew by 0.5% to € 2.3 billion; like-for-like, sales dropped by 3.7%. Due to the withdrawal of extensive marketing activities at the beginning of the year, sales dove in January. This weak start to the year was offset in part in February and March thanks to a significant sales recovery. This was also due to the dynamic growth in the online business; online sales reached € 83 million. Also the measures initiated to sharpen the price profile are continuing to bear fruit. On 16 January 2012, Media Markt launched its online shop. Now the brands Media Markt, Saturn and Redcoon each have their own online retailing presence in Germany.  

EBIT fell to € -20 million (Q1 2011: € 65 million). In addition to the sales-related drop in earnings also the measures initiated to further sharpen the price profile as well as lower advertising subsidies weighed on the result. Add to this higher expansion costs (including in China) and costs to further expand the multichannel business. 

Media-Saturn Q1 2011 (€ billion) Q1 2012 (€ billion) Change Change in local currency
Sales 5.0 5.0 0.4% 0.5%
Germany 2.3 2.3 0.5% 0.5%
Western Europe (excl. Germany) 2.1 2.1 -2.6% -3.2%
Eastern Europe 0.6 0.6 8.1% 12.4%
Asia (China) 18 million 35 million 93.8% 78.1%
EBIT 65 million -20 million € -85 million  

Galeria Kaufhof

In Q1 2012, sales at Galeria Kaufhof climbed by 0.9% to € 0.7 billion. Following a slow start to the year due to weather conditions, sales developed very dynamically in the further course of the quarter. In particular the product categories women's wear, accessories and hardlines showed a gratifying development. The upgraded online shop which now also includes textiles enjoyed a growing popularity; sales doubled year-on-year. 

EBIT in Q1 2012 rose to € -24 million (Q1 2011: € -27 million) thanks to an improved sales development. 

Galeria Kaufhof Q1 2011 (€ billion) Q1 2012 (€ billion) Change
Sales 699 705 0.9%
Germany 653 659 0.8%
Western Europe 46 47 2.2%
EBIT -27 million -24 million € 3 million

Real Estate

The segment Real Estate comprises the real estate assets of METRO GROUP as well as real estate-related services. As per 31 March 2012, METRO GROUP owned 687 locations (31 December 2011: 687). 

Earnings of the Real Estate segment mainly constitute rental income paid by the sales divisions of METRO GROUP. EBIT reached € 136 million following € 139 million one year earlier. Lower rental income as a result of store disposals was offset by new store openings and rental increases from indexation. 

METRO GROUP is one of the largest and most international retailing companies. In 2011 the Group reached sales of around € 67 billion. The company has a headcount of some 280,000 employees and operates around 2,200 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.