METRO GROUP starts into financial year 2013 with improved earnings

2 May 2013

  • EBIT before special items rose to €14 million
  • Sales adjusted for portfolio changes up by 0.7%
  • Sales in Germany improved by 1.0%
  • Sales from the delivery business at METRO Cash & Carry increased by around 16%
  • Online sales of Media-Saturn grew by more than 60%
  • Net working capital improved by €226 million, operating cash flow climbed by €89 million
  • Sales and earnings outlook for stub financial year 2013 confirmed

Despite a persisting economic downturn in many European countries METRO GROUP started into the new financial year with improved earnings. EBIT before special items came in at €14 million up from €-8 million in the year-earlier quarter. This increase is in particular due to the earnings improvement at Media-Saturn, Real and the segment Other. Adjusted for portfolio changes (MAKRO Cash & Carry UK, Real Eastern Europe and Media Markt China), sales grew by 0.7%. "In many countries, our customers' purchasing power has been affected by the economic downturn and the related government austerity measures. However, we managed to improve our earnings and maintain our sales at a stable level year-on-year," said Olaf Koch, Chairman of the Management Board of METRO AG. "This shows that the changes we initiated on a broad front are gaining further traction. This is particularly apparent when looking at the development in our home market Germany where we again saw a rise in like-for-like sales." 

METRO GROUP generated €15.5 billion in sales from January to March 2013 (Q1 2012: €15.6 billion). This corresponds to a slight decrease of 0.9% (in local currency: -0.7%), which is also due to three trading days less as compared to the year-earlier period. Adjusted for the already implemented and announced portfolio changes (MAKRO Cash & Carry in the United Kingdom, Real Eastern Europe and Media Markt China), sales rose by 0.7%. Also in the first quarter 2013, METRO GROUP consistently continued implementing the measures aimed at a customer-centric realignment of the company. At METRO Cash & Carry, sales from the delivery business climbed significantly by 15.9% and reached €586 million (Q1 2012: €504 million). Also the online business continued to grow dynamically: at Media-Saturn, online sales grew by 60.6% to €281 million thereby for the first time reaching a share of over 5% in total sales of Media-Saturn. Galeria Kaufhof more than doubled its online sales compared to the prior-year quarter. 

Sales and earnings development of METRO GROUP

In Germany, sales of METRO GROUP rose by 1.0% to €6.1 billion euro in the first quarter 2013. The negative effect on sales resulting from three trading days less as well as the unseasonable weather was overcompensated, also by the earlier Easter business. Real, Media-Saturn and Galeria Kaufhof achieved a like-for-like sales growth. 

International sales dropped by 2.2% to €9.4 billion (in local currency: -1.8%) during the period from January to March 2013. Adjusted for portfolio changes, sales rose 0.4%. The international share of total sales went down from 61.4% to 60.6%. 

In Western Europe (excluding Germany), Q1 2013 sales dropped by 6.6% to €4.4 billion (in local currency: -6.6%). Adjusted for the divestment of MAKRO Cash & Carry in the United Kingdom, sales only receded by 2.5%. This is attributable to the continued challenging macroeconomic conditions. Sales in Eastern Europe rose by 0.3% to €4.0 billion during the period from January to March 2013. In local currency, sales increased by 0.7%. In the region Asia/Africa, Q1 2013 sales grew distinctly by 9.3% to €1.0 billion. In local currency, sales even grew by 11.6%. Here, the shutdown of the Media Markt operations in China in early March 2013 has to be taken into account. 

METRO GROUP Q1 2012
(€ billion)
Q1 2013
(€ billion)
Change (€) Change in local currency
Sales 15.6 15.5 -0.9% -0.7%
Germany 6.0 6.1 1.0% 1.0%
Western Europe (excl. Germany) 4.7 4.4 -6.6% -6.6%
Eastern Europe 4.0 4.0 0.3% 0.7%
Asia/Africa 1.0 1.0 9.3% 11.6%

During the first quarter 2013, EBIT in Q1 increased to €1 million (Q1 2012: €-8 million). In Q1 2013, special items amounted to €13 million (Q1 2012: €0 million) and impacted EBIT negatively. EBIT before special items correspondingly amounted to €14 million (Q1 2012: €-8 million). This increase is due to the earnings improvement at Real, Media-Saturn and the segment Other. Conversely, earnings at METRO Cash & Carry as well as in the Real Estate segment decreased. Earnings before tax (EBT) in Q1 2013 was €-125 million (Q1 2012: €-130 million). Adjusted for special items, EBT improved to €-109 million (Q1 2012: €-130 million). The net result for the period attributable to the shareholders of METRO AG improved significantly from €-80 million to €-16 million during the first quarter 2013. This improvement is primarily due to the accounted-for tax income of €109 million, which increased year-on-year due to the application of the integral approach (Q1 2012: €51 million). The earnings per share improved to €-0.05 following €-0.24 in Q1 2012. Before special items, the earnings per share rose from €-0.24 to €-0.01. 

The operating cash flow generated in the first quarter 2013 was up on the year-earlier quarter: during the period from January to March 2013, the company reported an outflow from operating activities of €2.8 billion (Q1 2012: €2.9 billion). This reflects the seasonal increase in net working capital. However, this increase was less than in Q1 2012: the net working capital improved by €226 million. The net debt improved significantly by €0.9 billion from €7.4 billion to €6.5 billion as compared to 31 March 2012. 

Earnings of METRO GROUP (€ million) Q1 20121 Q1 2013
EBIT before special items -8 14
Earnings before tax (EBT) before special items -130 -109
Net result for the period before special items -79 -3
Net result for the period attributable to the shareholders of METRO AG before special items -80 -4
Earnings per share before special items in € -0.24 -0.01
EBIT -8 1
Earnings before tax (EBT) -130 -125
Net result for the period -79 -16
Net result for the period attributable to the shareholders of METRO AG -80 -16
Earnings per share -0.24 -0.05

1 Adjustment resulted from the adoption of the revised IAS 19 

Outlook

For the short financial year 2013 (1 January to 30 September 2013), METRO GROUP expects – in spite of the continuing difficult business conditions – to generate moderate growth in sales (adjusted for the previously described portfolio changes). Earnings trends in the abbreviated financial year 2013 will be impacted by the uncertain economic situation. As a result, METRO GROUP will continue to closely focus in 2013 and future years on efficient structures and strict cost management. In the short financial year 2013, METRO GROUP expects EBIT before special items to increase compared to the level achieved in the corresponding period of the previous year (€706 million). This projection is based on the assumption of higher income from the sale of real estate assets compared to the year-earlier period. Due also to the lack of major sports events, operating earnings are expected to fall short of the level of the first 9 months of 2012. 

Metro Cash & Carry

Sales of METRO Cash & Carry generated during the period from January to March 2013 dropped by 2.8% to €7.1 billion (in local currency: -2.3%). Adjusted for the divestment of MAKRO Cash & Carry in the United Kingdom, sales came in almost at the prior-year level. In Germany, Q1 2013 sales dropped by 4.0% to €1.1 billion against a high comparable basis. Here, sales were impacted by three trading days less as compared to the prior-year period. Especially the non-food business declined. In addition, in the framework of the ongoing transformation process also the advertising strategy was adjusted to a more target-group specific customer address. In the transition phase, the advertising expenses were temporarily reduced and thus burdened the development of sales. Sales in Western Europe decreased by 9.9% to €2.3 billion in Q1 2013. Adjusted for the sale of MAKRO Cash & Carry in the United Kingdom, sales declined by just 2.3%. In Q1 2013, sales in Eastern Europe declined slightly compared with the high prior year base to €2.6 billion. However, sales in local currency increased by 0.3%. Sales in Asia/Africa increased by 11.3% to €1.0 billion from January to March 2013 (in local currency: +13.8%). 

EBIT of METRO Cash & Carry declined from €-25 million to €-30 million in Q1 2013. This figure includes positive special items. EBIT before special items decreased from €-25 million to €-31 million. A large proportion of the sales-related decline in earnings was compensated by cost savings and efficiency-enhancing measures as well as by the lapsed loss generated by the business in the United Kingdom. 

Metro Cash & Carry Q1 2012 (€ billion) Q1 2013 (€ billion) Change (€) Change in local currency
Sales 7.3 7.1 -2.8% -2.3%
Germany 1.1 1.1 -4.0% -4.0%
Western Europe (excl. Germany) 2.6 2.3 -9.9% -9.8%
Eastern Europe 2.7 2.6 -0.3% 0.3%
Asia/Africa 0.9 1.0 11.3% 13.8%
EBIT before special items -25 million1 -31 million -6 million  

1 Adjustment resulted from the adoption of the revised IAS 19 

Real

In Q1 2013, sales at Real decreased by 0.9% to €2.6 billion (in local currency: -1.0%). Adjusted for the disposal of the Eastern European operations (excluding Turkey), sales development was positive. 

In Germany, sales in Q1 2013 grew by 0.5% to €2.0 billion. Like-for-like sales even increased by 1.5%. A gratifyingly positive Easter business development also managed to overcompensate for the negative effect from the three missing trading days. 

In Q1 2013, sales in Eastern Europe decreased by 4.9% to €0.7 billion (in local currency: -5.1%). The impending sale of Real Eastern Europe (excluding Turkey) had an impact on the sales development. Real Ukraine was the first country to be disposed of in mid-March. Since 1 March 2013, Real Ukraine is no longer included in the consolidated financial statements of METRO GROUP. Following the approval from the antitrust authorities, the last condition precedent for the sale of the Real business in Russia was fulfilled, so that the sale was closed on 25 April 2013. The disposals of Real in Romania and Poland will be conducted during the course of the year, subject to the approval from the relevant antitrust authorities. 

EBIT was €-23 million (Q1 2012: €-23 million). This figure includes special items to the amount of €16 million. EBIT before special items increased considerably to €-7 million (Q1 2012: €-23 million). The EBIT improvement is also due to the effects from the disclosure of Real Eastern Europe (excluding Turkey) as a disposal group in accordance with IFRS 5. 

Real Q1 2012 (€ billion) Q1 2013 (€ billion) Change (€) Change in local currency
Sales 2.7 2.6 -0.9% -1.0%
Germany 2.0 2.0 0.5% 0.5%
Eastern Europe 0.7 0.7 -4.9% -5.1%
EBIT before special items -23 million -7 million +16 million  

Media-Saturn

Although the overall market remained difficult in Q1 2013, sales at Media-Saturn rose by 2.0% to €5.1 billion (in local currency: +2.0%). The positive development continued in Germany. In Q1 2013, sales grew significantly by 5.1% to €2.4 billion and further market share was gained. Like-for-like sales also increased by a notable 3.4%. The dynamic growth in online sales also contributed to this development. Customers continued to show great demand for the multichannel offer, which was further enlarged to more than 11,000 products. The in-store pickup rate for products purchased online remained above 40%. Also in Western Europe, the online platforms reported significant sales growth. Sales in Western Europe declined by 2.6% in Q1 2013 (in local currency: -2.7%). In Eastern Europe, sales in Q1 2013 increased significantly by 8.9% to €0.7 billion (in local currency: +8.9%) due to expansion. Sales in Asia decreased due to the closure of the pilot stores in China at the beginning of March. 

EBIT rose from €-20 million to €-13 million. Positive special items amounted to €1 million. EBIT before special items therefore increased from €-20 million to €-14 million. 

Media-Saturn Q1 2012 (€ billion) Q1 2013(€ billion) Change (€) Change in local currency
Sales 5.0 5.1 2.0% 2.0%
Germany 2.3 2.4 5.1% 5.1%
Western Europe (excl. Germany) 2.1 2.0 -2.6% -2.7%
Eastern Europe 0.6 0.7 8.9% 8.9%
Asia (China) 35 million 21 million -14 million  
EBIT before special items -20 million -14 million +6 million  

Galeria Kaufhof

Sales in Q1 2013 at Galeria Kaufhof decreased by 1.5% to €0.7 billion due to store closures in the previous year. However, like-for-like sales rose by 0.9% year-on-year. Although the long period of cold weather led to a slump in sales in the overall textile market, Galeria Kaufhof was able to overcompensate for this effect, as well as for the missing trading days, also with good Easter trading. In Germany, sales at Galeria Kaufhof declined by 1.5% to €0.6 billion from January to March 2013. This was due to the store closures in the previous year. Like-for-like sales, however, rose by 1.1% and profited also from the Easter business. Galeria Kaufhof gained additional market shares in the steeply declining overall textile market. 

EBIT was €-23 million (Q1 2012: €-24 million). As no special items were recorded in either the previous year's quarter or the reporting quarter, EBIT before special items also improved from €-24 million to €-23 million. 

Galeria Kaufhof Q1 2012 (€ billion) Q1 2013 (€ billion) Change (€)
Sales 705 695 -1.5%
Germany 659 649 -1.5%
Western Europe 47 45 -2.4%
EBIT before special items -24 million -23 million +1 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 2013, METRO GROUP owned 625 locations (31 December 2012: 620). 

Earnings of the Real Estate segment mainly constitute rental income paid by METRO GROUP's divisions. EBIT was €125 million compared to €136 million in Q1 2012. EBIT before special items also amounted to €125 million.

METRO GROUP is one of the largest and most international retailing companies. In 2012 the Group reached sales of around €67 billion. The company has a headcount of more than 280,000 employees and operates around 2,200 stores in 32 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.