31.07.2002
The Metro Group, Duesseldorf, increased its sales in the first half of 2002 by 3.4 per cent over the same period last year to 23.87 billion €. Corrected for currency fluctuations sales grew by 3.7 per cent. This result was achieved in spite of a macro-economic environment hostile to the retail trade and a general buying restraint among consumers, especially in Germany. Abroad group sales went up by almost 10 per cent to 10.95 billion € in the first half of the year 2002. The significant appreciation of the Euro above all in the second quarter caused negative currency effects most notably in Great Britain, Poland, Romania, Turkey and China and influenced sales growth abroad. The share of international sales continued to increase from 43.1 to 45.9 per cent.
The sales divisions of the Metro Group were able to maintain their strong market positions or even gain market shares both at home and in the international markets. The turnover of the sales divisions in the first half of 2002 increased by 3.7 per cent over the same period last year to 23.65 billion €. Media/Saturn in particular developed positively gaining substantial sales increases against the general market trend in the declining electronics market.
The EBITDA of the group amounting to 796.5 million € in the first half of 2002 almost matched the previous year’s level of 810.1 million €. Because of the restrained sales development in Germany the EBIT dropped in the same period to 175.9 million € after a total of 206.5 million € in the first six months of the year 2001.
On the occasion of the presentation of the business figures for the first six months of the year the Chairman and CEO of METRO AG; Dr. Hans-Joachim Körber said: Our corporate strategy has proved to be successful in spite of the difficult market environment especially in the second quarter. With our sales divisions we have gained additional market shares. For the current year we are expecting sales to grow by between 5.5 and 6 per cent. We are maintaining our profitability target of about 10 per cent growth in earnings per share for fiscal year 2002."
In the second quarter of 2002 sales at group level grew by 1.6 per cent to 12.06 billion €. Corrected for currency fluctuations the growth was 2.6 per cent. This rate of growth could be achieved even though declining producers’ prices for fresh produce in the second quarter were passed on to customers by the Metro Cash & Carry, Real and Extra sales divisions. What is more, in comparison with the same period last year the Easter business that is particularly important for the food trade was lost in the second quarter of 2002.
The total outlet chain of the group was expanded by 45 locations in the first six months of the year. The lion’s share was accounted for by Metro Cash & Carry and Media/Saturn. As at 30 June 2002 the Metro Group was represented at 2,294 locations worldwide.
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Metro Cash & Carry with consistently strong growth abroad
The biggest-selling and most international sales division in the Metro Group, Metro Cash & Carry, increased its sales in the first half of 2002 by 6.2 per cent over the first six months of the previous year to 11.18 billion €. Especially in the important growth regions of Eastern Europe and Asia the sales division reported substantial increases. In Eastern Europe sales in the first half of 2002 went up by almost 14.4 per cent, in the other countries outside Europe by 16.4 per cent. In Western Europe Metro Cash & Carry was able to attain a growth in sales of 4.6 per cent thus further increasing its market share. In Germany where the sales division generates 23.1 per cent of its total sales turnover in the first six months increased by 0.8 per cent.
Earnings developed particularly positively: Metro Cash & Carry improved the EBIT by 15.3 per cent to 184.6 million € in a year-on-year six month comparison despite high investments into international expansion. Internationalization was vigorously promoted in the first half of 2002 by opening six new stores abroad – among them the successful market entry in Vietnam. The share of international sales went up from 75.7 to about
77 per cent over the same period of the previous year. In Germany the outlet chain was further optimized in the second quarter of 2002 by the first consolidation of 25 previously acquired wholesale stores with effect from 01 May 2002. This means that Metro Cash & Carry is now represented in 23 countries with a total 415 stores. The sales division will consistently carry forward its internationalization strategy in the current fiscal year with its market entry in Japan.
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Real gains further market shares in a difficult market environment
Despite a 2.6 per cent drop in sales to 3.93 billion € Real was able to gain market shares in the first half of 2002, especially in its home market. In Germany the Real hypermarkets outperformed competitors in a difficult market with a sales decline of 2.3 per cent. The expansion of the market position has been achieved primarily by measures of concept optimization. The Payback customer card system as well as other marketing activities made major contributions to the further improvement of customer retention. The trend towards an increased demand for inexpensive proprietary brands is continuing. In addition, Real passed the declining producer prices for fresh produce like fruit and vegetable or meat on to its customers which had a negative effect on the turnover of the sales division. The sales decline of 5 per cent in Eastern Europe in comparison with the first half of 2001 is mainly due to the substantial appreciation of the Euro in relation to the currencies in Poland and Turkey.
The EBIT could be improved in the first six months of the current year by 2.8 per cent to 8.8 million €. As of 30 June 2002 the Real outlet chain consisted of 277 stores.
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Extra cannot escape the current market situation
With sales in the first half of the year 2002 dropping by 4.3 per cent to
1.4 billion € in comparison with the same period last year the Extra convenience stores were not able to escape the negative overall market situation. The causes of the generally declining business were a clearly noticeable buying restraint on the part of consumers and a high level of price sensitivity.
Compared with the same period last year the EBIT went down to -30.3 million €. The store network was further optimized in the first half of the year 2002 by opening three new stores and closing six outlets with smaller selling space.
Media/Saturn develops significantly better than competitors
The consumer electronics centers of the Media/Saturn sales division continued the successful development of the last few years clearly outpacing their competitors in the industry. In a generally declining market environment Media Markt and Saturn increased their sales in the first half of 2002 by 10.9 per cent to 4.10 billion €, in the second quarter of the current year even by as much as 16.7 per cent. In Germany where the decline of the industry amounted in total to almost -10 per cent and was thus particularly pronounced Media/Saturn was able to again generate a substantial sales increase. In the first six months of the year turnover in the home market went up by 4 per cent and in the second quarter by 11.1 per cent. Especially in the international markets Media/Saturn once again reported rapid growth with a sales increase of 20.5 per cent in Western Europe and 75.3 per cent in Eastern Europe in the first half of the year 2002. The share of international sales in total sales went up from 31.7 per cent to about 36 per cent over the same period of the previous year.
The EBIT of the consumer electronics centers remained almost at the level of the previous year’s period amounting to 43.6 million € in the first of 2002. Particularly in the first quarter of 2002 the substantially increased investments into the expansion of the national and the international outlet chains had a negative effect on earnings. Media/Saturn boosted its leading market position in Europe by maintaining a consistently high rate of expansion increasing its outlet chain in the first half of 2002 by 16 to a new total of 373 stores. This expansion is also reflected by the fact that the number of employees went up by more than 10 per cent to
24,737 staff.
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Praktiker improves sales development
Because of their good development abroad the Praktiker home improvement centers reached total sales of 1.3 billion € in the first half of the year 2002 thus almost matching the level of the same period last year. In Germany it was possible to regain market share in a persistently difficult market environment. Sales were above all stimulated by an aggressive pricing policy in the market that was reflected in a national price cutting campaign to which consumers responded very positively. In the Eastern European growth markets of Poland, Hungary and Greece sales increased by 30.4 per cent in comparison with the same period last year. The share of the foreign business in total sales went up from 16.2 per cent to 20.3 per cent over the same period of the previous year thus exceeding the 20 per cent mark for the first time.
Due to the investments in the price-oriented market position Praktiker reported a negative EBIT of -8.2 million € in the first half of 2002. From the international business, on the other hand, the sales division generated an almost balanced EBIT. In the course of the optimization of the store network four small selling space outlets in Germany were closed while three new stores were opened. Also, one home improvement center was added to the outlet chain in Hungary. At the end of the first half of the year 2002 Praktiker therefore operated 347 home improvement centers in Germany and abroad.
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Galeria Kaufhof stores outperform market development
The Kaufhof department stores with their concentration on a high quality up-market assortment were particularly affected by the buying restraint in Germany in the first half of the year 2002. With a total sales decline of
2 per cent to 1.75 billion € they could, however, maintain their market position in comparison with the previous year and clearly outperform competitors at the same time even though sales in Germany dropped by
5.7 per cent. With a decline in sales of 3.6 per cent in the second quarter of 2002 the Galeria locations in turn performed better than the remaining Kaufhof stores. The Belgian department stores of the sales division continued their successful development with a sales increase of 5.4 per cent in the same period.
Because of the drop in sales of the Kaufhof department stores the EBIT declined to -43.8 million € in the first half of 2002. However, some first successes already became apparent in consistent process optimization that will, however, not be reflected in the EBIT before the second half of the year. In the first six months of the year two additional department stores were converted to the Galeria concept in Germany and one was newly opened. In Belgium the first site was converted to a Galeria-Inno department store. As of 30 June 2002 the Kaufhof outlet chain consisted of a total of 149 stores.
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Outlook
For the current fiscal year the Metro Group confirms its objective of a 10 per cent increase in earnings per share. Allowing for currency fluctuations the group expects sales to grow by between 5.5 and 6 per cent.
Several factors will support the business development of the Metro Group: In the further course of the year 2002 METRO AG expects a normalization of consumer behavior in German retailing. In addition, the second half of the year 2002 has one more selling day over the same period last year. Positive repercussions on the overall group performance will also come from additional process optimization measures initiated in the sales divisions.
The Metro Group will continue to use its opportunities in the future to further strengthen the market positions of its sales divisions in a tense macroeconomic environment and against the background of a difficult market situation in retailing. The expansion especially of the high sales and high profit sales divisions Metro Cash & Carry and Media/Saturn as well as measures for concept and store optimization will be promoted with unchanged intensity and an investment volume of about 2 billion € in fiscal year 2002.
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