METRO GROUP sharply boosts like-for-like sales

31 July 2014

  • Like-for-like sales rise by 1.7% in Q3 2013/14; development 9M 2013/14 roughly at previous year's level
  • Like-for-like sales at METRO Cash & Carry, Real and Galeria Kaufhof increase substantially in Q3; Media-Saturn finishes at roughly the previous year's level
  • Reported sales fall by 2.7% in Q3 due to currency and portfolio effects
  • At €276 million, Q3 EBIT before special items matches the previous year's level
  • Earnings per share before special items amount to €0.32 (Q3 2012/13: €0.06)
  • Net debt improved by €0.5 billion as of 30 June 2014 compared with the previous year
  • Sales and earnings guidance confirmed for financial year 2013/14
  • The Supervisory Board of METRO AG endorses contract extension for Olaf Koch 

METRO GROUP increased its like-for-like sales by 1.7% during Q3 2013/14. "Our satisfying performance in like-for-like sales during Q3 demonstrates that the measures we have introduced and investments we have made in the successful future of our sales lines are increasingly paying off," said Olaf Koch, Chairman of the Management Board at METRO AG. "Particularly at METRO Cash & Carry and Real in our home market of Germany, we are increasingly seeing that our range of products and services, including those in the challenging non-food area, is gaining importance among customers." The positive results were also helped by the shift of the Easter business from March to April. Reported sales of METRO GROUP amounted to €14.9 billion in Q3 2013/14 (Q3 2012/13: €15.3 billion). As in previous quarters, this metric was impacted by negative currency and portfolio effects. This was also the case for EBIT before special items. However, at €276 million, it still remained at the previous year's level. METRO GROUP continues to expect that it will fulfil its sales and earnings guidance for financial year 2013/14.

Also in Q3 2013/14, the company's continuing work on new sales channels and formats, product ranges and expanded customer assistance and services paid off for the sales lines: METRO Cash & Carry increased delivery sales by another 4.5%. During 9M 2013/14, delivery sales reached €2.0 billion, a 10.1% increase compared with the previous year's period (in local currency: +15.0%). Online retail also remained dynamic: Media-Saturn generated online sales of €1.1 billion between October 2013 and June 2014. This amounts to around 7% of the sales line's total sales. At Galeria Kaufhof, sales produced by the online shops galeria.de and sportarena.de also remained very strong, jumping by more than 70% to €51 million in 9M 2013/14. The sales share of the Group's own brands stood at 12.1% in Q3 2013/14. During 9M 2013/14, the own-brand share rose from 11.2% in the previous year's period to 11.4%.

Furthermore the Personnel Committee of the Supervisory Board of METRO AG has recommended the Supervisory Board extend Olaf Koch's term as a Member of the Management Board for 3 additional years and reappoint him Chairman. The recommendation was unanimously endorsed by the Supervisory Board during its annual strategy meeting this year. The Supervisory Board confirmed its support of the entire Management Board and its corporate strategy.

Sales and earnings development at METRO GROUP

As a result of negative currency effects and the disposal of business units (Real Eastern Europe, MAKRO Cash & Carry Egypt and Media Markt China), METRO GROUP generated sales of €47.9 billion between October 2013 and June 2014, a drop of 4.4% compared with the previous year's level (9M 2012/13: €50.1 billion). Adjusted for currency and portfolio effects, METRO GROUP sales rose by 1.0%. In Q3, METRO GROUP also profited from the shift of the Easter business from March to April and generated a 1.7% increase in like-for-like sales. Due to currency and portfolio effects, Q3 sales came in at €14.9 billion, below the previous year's level (Q3 2012/13: €15.3 billion). Adjusted for these factors, however, sales climbed by 2.9%.  9M 2012/13²
(€ million)
METRO GROUP 9M 2012/13¹
(€ million)
9M 2013/14
(€ million)
 Change
(in €)
Change (in local currency) 
Sales 50,140 47,909  -4.4%  -2.0% 
Germany 19,691  19,473  -1.1%  -1.1% 
Western Europe
(excl. Germany)
14,529 14,458  -0.5%  -0.3% 
Eastern Europe 13,158 11,234  -14.6%   -7.1%
Asia/Africa
2,762 2,743  -0.7%  6.0% 
METRO GROUP Q3 2012/13¹
(€ million)
Q3 2013/14
(€ million)
 Change
(in €)
Change (in local currency) 
Sales 15,282 14,862 -2.7% 0.1%
Germany 5,799 5,966 2.9% 2.9%
Western Europe
(excl. Germany)
4,616 4,605 -0.2% -0.1%
Eastern Europe 4,025 3,454 -14.2% -5.3%
Asia/Africa
842 837 -0.6% 7.1%
¹ To enable better comparability following the change of the financial year, Q2 2013 is referred to in this press release as Q3 2012/13. The period 9M 2012/2013 consists of the former quarters Q4 2012 and Q1 2013 as well as Q2 2013. In addition, the previous year's figures have been adjusted to reflect the new segment structure.

In Germany, sales declined by 1.1% to €19.5 billion in 9M 2013/14. In Q3 2013/14, however, sales rose substantially by 2.9% to €6 billion. Sales generated by the company's international business fell by 6.6% to €28.4 billion during 9M 2013/14 as a result of currency and portfolio effects. Adjusted for these currency and portfolio effects, sales rose noticeably by 2.5%. The international share of sales decreased from 60.7% to 59.4%. Once again, exchange rate developments and portfolio adjustments made themselves felt in particular during Q3 2013/14, with international sales falling by 6.2% to €8.9 billion. Adjusted for these currency effects and portfolio changes, sales rose markedly by 2.9%. The international share of sales decreased from 62.1% to 59.9%. 
In Western Europe (excluding Germany), sales generated in 9M 2013/14 declined by 0.5% to €14.5 billion. In Q3 2013/14, sales declined slightly by 0.2% to €4.6 billion.

Sales in Eastern Europe decreased by 14.6% to €11.2 billion during 9M 2013/14. Measured in local currency, however, the decline was not nearly as steep at 7.1%. This decrease in sales was due to the disposal of Real in Russia, Romania, Poland and Ukraine. Adjusted for portfolio changes, sales in local currency increased considerably by 5.3%. In Q3 2013/14, sales decreased by 14.2% to €3.5 billion as a result of currency effects and portfolio adjustments. Sales in local currency dropped by 5.3%. Adjusted for portfolio changes, however, sales in local currency actually increased by 5.7%.

Sales in Asia/Africa fell by 0.7% to €2.7 billion in 9M 2013/14. However, sales in local currency increased by 6.0%. Adjusted for the closure of Media Markt China and MAKRO Cash & Carry Egypt, sales even rose by 7.4%. In Q3 2013/14, sales fell only marginally by 0.6%. Sales in local currency, however, rose steeply by 7.1%. Adjusted for portfolio changes, they even increased by 9.5%.

METRO GROUP EBIT amounted to €1,054 million in the period between October 2013 and June 2014 (9M 2012/13: €1,349 million). EBIT included special items of €255 million. This relates in particular to a non-cash impairment of goodwill at METRO Cash & Carry in the Netherlands. Moreover, amongst other things, restructuring and portfolio measures at METRO Cash & Carry, Media-Saturn and Real Germany were reported as a special item. By contrast, a special item resulting from the disposal of Real Eastern Europe had a positive effect. EBIT before special items totalled €1,309 million, compared with €1,563 million in the previous year's period. This decline was largely the result of reduced earnings from real estate transactions, the loss of earnings contributions from the sold Real Eastern Europe business and negative currency effects. Adjusted for these effects, EBIT before special items exceeded the previous year's figure.

In Q3 2013/14, EBIT stood at €193 million (Q3 2012/13: €362 million). At €276 million, EBIT before special items reached the previous year's level. It should also be noted that the earnings produced by Real Eastern Europe before its disposal are not included in these results and that exchange rate developments continued to have a negative impact. Adjusted for these effects, EBIT before special items climbed.

Earnings before taxes (EBT) in 9M 2013/14 decreased to €619 million (9M 2012/13: €876 million). Before special items, EBT amounted to €917 million (9M 2012/13: €1,130 million). Reported tax expenses of €459 million (9M 2012/13: €748 million) correspond to a group tax rate of 74.2% (9M 2012/13: 85.3%). Adjusted for the special items included in earnings before taxes, the group tax rate amounted to 44.8% (9M 2012/13: 50.2%).

Net profit for the period increased during 9M 2013/14, rising from €128 million to €160 million. The increase was due to the lower tax rate. Net profit for the period before special items came to €506 million (9M 2012/2013: €562 million). Net profit for the period attributable to shareholders of METRO AG before special items totalled €454 million (9M 2012/2013: €487 million).

Earnings per share in 9M 2013/14 jumped from €0.16 to €0.36. Adjusted for special items, earnings per share amounted to €1.39 (9M 2012/13: €1.49). In Q3 2013/14, earnings per share came to €-0.19 (Q3 2012/13: €0.10). Adjusted for special items, earnings per share in Q3 rose to €0.32 (Q3 2012/13: €0.06). 

Net debt of METRO GROUP amounted to €5.8 billion on 30 June 2014, a drop of €0.5 billion compared with the total on 30 June 2013.

Earnings of METRO GROUP (€ million) 9M 2012/13 9M 2013/14
EBIT before special items 1,563 1,309
Earnings before taxes (EBT) and special items
1,130 917
Net profit for the period before special items 562 506
Net profit for the period attributable to shareholders of METRO AG before special items 487 454
Earnings per share before special items in € 1.49 1.39
EBIT
1,349 1,054
Earnings before taxes (EBT)
876 619
Net profit for the period
128 160
Net profit for the period attributable to shareholders of METRO AG
52 119
Earnings per share in €
0.16 0.36
Earnings of METRO GROUP (€ million) Q3 2012/13 Q3 2013/14
EBIT before special items 276 276
Earnings before taxes (EBT) and special items
92 168
Net profit for the period before special items 1 95
Net profit for the period attributable to shareholders of METRO AG before special items 19 106
Earnings per share before special items in € 0.06 0.32
EBIT
362 193
Earnings before taxes (EBT)
141 78
Net profit for the period
15 -83
Net profit for the period attributable to shareholders of METRO AG
33 -63
Earnings per share in €
0.10 -0.19

Outlook 

For the financial year 2013/14, METRO GROUP expects to see a slight rise in overall sales in local currency - even though economic momentum will remain below average and adjusted for implemented and announced portfolio measures. In like-for-like sales, METRO GROUP expects to see a trend improvement following the previous year's level of -1.3% and a level of sales that will roughly equal the previous year's level.

In the financial year 2013/14, the earnings development will also be affected by the continued below-average economic growth. As a result, METRO GROUP will continue to closely focus on efficient structures and strict cost management in 2013/14.

The announced changes in the real estate strategy will impact earnings. Last year, EBIT before special items of €2,000 million contained income from real estate sales that exceeded typical levels. In addition, the comparative base is reduced by the contributions from portfolio changes. Adjusted for these effects totalling about €300 million, the comparative level from the previous year amounts to €1.7 billion. METRO GROUP remains on course to meet its target for EBIT before special items of around €1,750 million in the financial year 2013/14, provided that exchange rates remain constant. From today's point of view earnings will be burdened by negative currency effects in the high-double-digit € million range. Due to slow growth in the consumer electronics industry, METRO GROUP expects EBIT before special items at Media-Saturn will approximately match the previous year's level. METRO GROUP expects to be able to compensate for Media-Saturn's performance through higher earnings contributions from other segments.

METRO Cash & Carry

Like-for-like sales at METRO Cash & Carry rose by 1.2% in the period between October 2013 and June 2014. Total sales fell by 2.1% to €22.9 billion as a result of negative exchange rate developments. Measured in local currency, though, sales rose by 2.3% with food sales performing well. In the third quarter, sales trends were pleasing as like-for-like sales rose by 2.0%, propelled by the Easter shift.

In Germany, sales in 9M 2013/14 declined slightly, falling by 0.4% to €3.7 billion (like-for-like: -0.4%). In Q3, like-for-like sales jumped sharply by 3.1%. This rise was fuelled by growth in both food and non-food sales and underscored the success of the revamped product ranges.

Sales in Western Europe totalled €7.9 billion between October 2013 and June 2014, 0.7% below the previous year's level. In Q3 2013/14, sales fell by 0.3% to €2.7 billion. In Eastern Europe, sales in 9M 2013/14 declined by 5.0%. This was solely the result of negative currency effects. Sales measured in local currency increased markedly by 4.7%. Like-for-like sales also rose strongly, recording a 3.2% gain. In Q3, like-for-like sales even increased by 3.4%. Due to the ongoing instability and violent conflicts in the eastern part of Ukraine, business there performed very poorly. In Russia, like-for-like sales continued to climb in spite of the difficult political situation. The recovery continued in Poland, where like-for-like sales increased noticeably. Sales in Asia/Africa totalled €2.7 billion between October 2013 and June 2014, an increase of 1.3%. Exchange rates had a negative impact here as well. Measured in local currency, sales increased by 8.2%. Like-for-like sales also climbed sharply in virtually all countries in the region and rose by 4.7%. India performed well, recording double-digit like-for-like sales growth. In Q3 2013/14 sales growth continued. Like-for-like sales in India, China and Pakistan increased markedly.

EBIT at METRO Cash & Carry totalled €715 million between October 2013 and June 2014 (9M 2012/13: €916 million) and included special items of €148 million. They relate in particular to a non-cash impairment of goodwill at METRO Cash & Carry in the Netherlands. Moreover, amongst others, restructuring and portfolio measures in Western Europe were reported as a special item. EBIT before special items amounted to €864 million (9M 2012/13: €992 million). This decline was mainly the result of the lack of earnings from the real estate transaction in France in the previous year's period as well as negative currency effects. Adjusted for these effects, earnings improved. In Q3 2013/14, EBIT before special items totalled €281 million and fell below the previous year's figure (Q3 2012/13: €296 million). Negative currency effects also must be taken into account here. Adjusted for these effects, earnings exceeded the previous year's level.

METRO Cash & Carry
9M 2012/13
(€ million)
9M 2013/14
(€ million)
 Change
(in €)
Change (in local currency)  Like-for-like (in local currency) 
Sales 23,400 22,918 -2.1% 2.3% 1.2%
Germany 3,667 3,651 -0.4% -0.4% -0.4%
Western Europe
(excl. Germany)
7,968 7,916 -0.7% -0.7%

-0.1%
Eastern Europe 9,061 8,613 1.3% 8.2% 4.7%
Asia/Africa
2,703 2,739 1.3% 8.2% 4.7%
EBIT before special items 992 864 €-128 million
   
METRO Cash & Carry
Q3 2012/13
(€ million)
9M 2013/14
(€ million)
 Change
(in €)
Change (in local currency)  Like-for-like (in local currency) 
Sales 7,716 7,549 -2.2% 2.8% 2.0%
Germany 1,173 1,210 3.1% 3.1% 3.1%
Western Europe
(excl. Germany)
2,733 2,724 -0.3% -0.3% -0.6%
Eastern Europe 2,970 2,780 -6.4% 4.5% 3.4%
Asia/Africa
840 836 -0.5% 7.1% 4.5%
EBIT before special items 296 281 €-15 million
   

Media-Saturn 

Media-Saturn sales between October 2013 and June 2014 declined by 1.3% to €16.0 billion. In local currency terms, though, sales matched the previous year's level. Sales produced in Q3 2013/14 rose by 0.9%, boosted by the World Cup football championship. At -0.2%, like-for-like sales were roughly unchanged from the previous year's level.

In Germany, sales in 9M 2013/14 came to €7.5 billion (9M 2012/13: €7.6 billion). In like-for-like terms, sales were down by 2.8%. In Q3 2013/14, the trend improved considerably and sales rose by 1.2%. In like-for-like terms, sales declined by 0.8%. Although the World Cup football championship boosted sales in all relevant categories, the overall weak market continued to act as a drag on business. The lack of product innovations, strong competition and deflationary price developments continued to have a negative impact. Customers continued to respond very positively to Media-Saturn's multichannel offer. The online product range was expanded once again: At the end of June 2014, customers could select from more than 43,000 items at Mediamarkt.de and more than 37,000 at Saturn.de. With 40% the pick-up rate remained on high level.

In Western Europe, sales between October 2013 and June 2014 totalled €6.4 billion, a figure that hovered around the previous year's level. Measured in local currency, sales were slightly higher than the previous year's level. Like-for-like sales decreased by 0.5%. However, Media-Saturn captured additional market share in several countries. Q3 2013/14 sales also hovered around the previous year's level. Like-for-like sales decreased by 0.7%. This was mainly the result of a decline in sales in Sweden and Italy. By contrast, Spain, Belgium and Portugal performed very well.

In Eastern Europe, sales in 9M 2013/14 declined by 1.3% to €2.1 billion. This decline was solely due to negative currency effects as sales in local currency rose by 7.9%. In Q3 2013/14, sales trends improved substantially. In local currency terms, sales rose by 11.5%. Sales climbed in all countries. Double-digit growth rates were again generated in like-for-like sales in Hungary and Turkey.

Media-Saturn's EBIT in 9M 2013/14 totalled €168 million (9M 2012/13: €134 million). This figure includes special items of €37 million. The special items relate primarily to restructuring expenses in Germany. EBIT before special items amounted to €205 million (9M 2012/13: €224 million). The decrease was mainly due to the decline in sales. In Q3 2013/14, EBIT before special items totalled €-70 million, besting the prior-year quarter's figure by €24 million. This can be attributed largely to increased sales and improved cost structures.

Media-Saturn
9M 2012/13
(€ million)
9M 2013/14
(€ million)
 Change
(in €)
Change (in local currency)  Like-for-like (in local currency) 
Sales 16,257 16,045 -1.3% 0.0% -1.6%
Germany 7,613 7,498 -1.5% -1.5% -2.8%
Western Europe
(excl. Germany)
6,421 6,407 -0.2% 0.1% -0.5%
Eastern Europe 2,169 2,140 -1.3% 7.9% -0.6%
Asia
54 - - - -
EBIT before special items 224 205 €-19 million
   
Media-Saturn
Q3 2012/13
(€ million)
9M 2013/14
(€ million)
 Change
(in €)
Change (in local currency)  Like-for-like (in local currency) 
Sales 4,525 4,563 0.9% 2.1% -0.2%
Germany 2,086 2,110 1.2% 1.2% -0.8%
Western Europe
(excl. Germany)
1,842 1,842 -0.1% 0.3% -0.7%
Eastern Europe 596 661 2.6% 11.5% 3.5%
Asia
0 - - - -
EBIT before special items -84 -70 €+24 million

 

Real

As a result of the disposal of Real in Russia, Romania, Poland and Ukraine, sales in 9M 2013/14 decreased sharply by 19.0% to €6.6 billion (in local currency: -18.6%). Like-for-like sales fell by 1.1%. In Q3 2013/14, sales decreased by 13.0%. However, like-for-like sales rose by 5.1% on the back of the Easter business.

In Germany, sales in 9M 2013/14 declined by 1.6%. In like-for-like terms, sales fell by 1.3%. In Q3 2013/14, sales rose markedly by 4.7%. Like-for-like sales even increased by 5.1%. Beside the Easter business sales promotions and the success of the 30 upgraded stores contributed to this positive performance. Both the food and non-food business generated sharp increases in sales, even though the business environment remained highly competitive. The share of own brand sales at Real increased further in 9M 2013/14 from 16.1% to 16.2%. Sales in Eastern Europe fell sharply by 75.0% during 9M 2013/14. This was solely due to the disposal of Real in Russia, Romania, Poland and the Ukraine. Measured in like-for-like terms, sales increased by 3.1%. In Q3 2013/14, like-for-like sales climbed by 3.6%.

At the end of June 2014, METRO GROUP signed an agreement to divest the Real business in Turkey. By taking this step, Real is now fully concentrating on the successful development of its business in Germany. Following the conclusion of the review by Turkish antitrust authorities, the disposal of Real Turkey was successfully closed on 24 July 2014. The disposal of Real Turkey comprises the business of all 12 hypermarkets and the company headquarters.

Real's EBIT in 9M 2013/14 stood at €-3 million (9M 2012/13: €185 million). This included special items of €57 million relating in particular to the announced closure of hypermarkets in Germany. EBIT before special items amounted to €54 million after €133 million in the previous year's period. The considerable decline was largely due to the loss of earning contributions from the sold Real business in Eastern Europe. In Q3 2013/14, EBIT before special items came to €-3 million (Q3 2012/13: €6 million). This reflects the loss of earnings contributions from the sold Real business in Eastern Europe, price investments and the costs of remodelling additional hypermarkets in accordance with the concept of the successful store in Essen.

Real
9M 2012/13
(€ million)
9M 2013/14
(€ million)
 Change
(in €)
Change (in local currency)  Like-for-like (in local currency) 
Sales 8,104 6,561 -19.0% -18.6% -1.1%
Germany 6,176 6,079 -1.6% -1.6% -1.3%
Eastern Europe 1,927
482
-75.0%
-74.4% 3.1%
EBIT before special items 133 54 €-79 million
   
Real
Q3 2012/13
(€ million)
9M 2013/14
(€ million)
 Change
(in €)
Change (in local currency)  Like-for-like (in local currency) 
Sales 2,360 2,053 -13.0% -12.6% 5.1%
Germany 1,901 1,990 4.7% 4.7% 5.1%
Eastern Europe 459
63
-86.3%
-86.0%
3.6%
EBIT before special items 6 -3 €-9 million

 

Galeria Kaufhof 

Galeria Kaufhof sales in 9M 2013/14 increased by 0.3% to €2.4 billion. Like-for-like sales increased by 0.4%. In Q3 2013/14, like-for-like sales were propelled by the Easter business and even climbed by 2.2%. In Germany, Galeria Kaufhof sales in 9M 2013/14 stood at €2.2 billion, or 0.5% above the previous year's figure. Like-for-like sales also increased by 0.5%. In Q3 2013/14, like-for-like sales growth even amounted to 2.6%. In Western Europe, sales declined by 2.4% in 9M 2013/14 and by 2.9% in Q3 2013/14. This was largely the result of a slight decline in the Belgian textile market.

Galeria Kaufhof's EBIT in 9M 2013/14 stood at €179 million (9M 2012/13: €198 million). EBIT before special items also came in at €179 million (9M 2012/13: €213 million). The decline was primarily due to real estate transactions in the same period of the previous year. In Q3 2013/14, EBIT before special items amounted to €22 million and fell below the previous year's figure (Q3 2012/13: €26 million). The decline can mainly be attributed to expenditures for the company's online presence.

Galeria Kaufhof
9M 2012/13
(€ million)
9M 2013/14
(€ million)
 Change
(in €)
Like-for-like  
Sales 2,370 2,378 0.3% 0.4%
Germany 2,231 2,242 0.5% 0.5%
Eastern Europe 139 136 -2.4% -2.4%
EBIT before special items 213 179 €-34 million
 
Galeria Kaufhof
Q3 2012/13
(€ million)
9M 2013/14
(€ million)
 Change
(in €)
Like-for-like 
Sales 679 694 2.2% 2.2%
Germany 638 654 2.6% 2.6%
Eastern Europe 41 40 -2.9% -2.9%
EBIT before special items 26 22 €-4 million
 
METRO GROUP is one of the largest and most important international retailing companies. During the financial year 2012/13 (pro forma), it generated sales of about €66 billion. The company operates around 2,200 stores in 31 countries and has a headcount of around 250,000 employees. The performance of METRO GROUP is based on the strength of its sales brands that operate independently in their respective market segments: METRO/MAKRO Cash & Carry - the international leader in self-service wholesale – Media Markt and Saturn – the European market leader in consumer electronics retailing – Real hypermarkets and Galeria Kaufhof department stores.