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METRO Group: Good Start into the Year 2003

30.04.2003

METRO Group: Good Start into the Year 2003

Düsseldorf, April 30, 2003 – In the first three months of the current fiscal year, the METRO Group achieved total sales revenues of € 12.13 bn. Currency-adjusted, the revenue volume rose by 5.0 percent compared to the first quarter 2002; regarding the currency effects, the increase in revenue amounted to 2.7 percent. In this connection the deferral of the hot-selling Easter season to the second quarter of 2003 should be considered. Earnings before interest and taxes on income (EBIT) climbed from € -5.9 million by € 28.1 million to € 22.2 million. This result was achieved despite the 55-percent increase in capital expenditure on internationalization to € 424.8 million and the ongoing optimization of the sales network. “With this positive course of business, the METRO Group started well into the year 2003. The METRO Group demonstrates strength in a difficult trade environment,” said Dr. Hans-Joachim Körber, Chairman and CEO of the METRO Group. “Our sales divisions succeeded in distinctly expanding their market position overall. We confirm our target to increase sales revenues before currency effects by around 5 percent and earnings per share, by 6 to 10 percent”.
In Germany, sales revenues of the METRO Group in the first quarter 2003 rose by 3.3 percent to € 6.69 bn. Outside Germany, they climbed 1.9 percent to € 5.45 bn. Net of negative currency effects, especially in Eastern Europe, the growth rate in international business was 6.7 percent.
Earnings before interest, taxes and depreciation/amortization (EBITDA) in the first three months of the year attained € 336.2 million, which is 8.2 percent up from the reference value of the previous year. With this result, the METRO Group has again attested to its high operating performance capability and successfully countered the general negative trend of the industry.
The METRO Group has extended its sales network to 2,317 locations worldwide. In the first quarter, 17 new stores were opened and 10 locations divested within the scope of the consistently pursued optimization of the sales network. The focus of expansion was on the especially hot-selling and profitable sales divisions Metro Cash & Carry and Media Markt/Saturn which opened a total of 14 new stores.

Metro Cash & Carry reports continued positive course of business
The Metro Cash & Carry sales division boosted sales revenues compared to the prior-year period by 1.8 percent to € 5.50 bn. The sales trend was influenced by negative currency effects especially in Eastern Europe. Sales in those countries went up 1.9 percent, net of currency effects by 12.9 percent. An especially gratifying course of business was reported by Metro Cash & Carry mainly in the stores in Russia and in Croatia which were only opened in 2002. With respect to the operating side, the division testified to a positive development, at a currency-adjusted increase in sales revenues by 5.5 percent. This is especially noteworthy because the figures relating to the Easter business are only recorded in the second quarter.
EBIT were raised by 19.9 percent to € 41.4 million; Metro Cash & Carry thus once again demonstrated its high earnings potential. At the same time, the capital expenditure volume was doubled, compared to the reference period of the preceding year, to € 255.7 million. The division invested in international expansion, modernization of its sales network and the acquisition of three stores in Germany.

Real wins further market shares
The Real hypermarket stores succeeded in continuing their positive course of business in the first quarter 2003 and expanded their market-leadership position in Germany. All in all, Real’s sales revenues in the first three months of the current year decreased by 3.8 percent to € 1.91 bn or, adjusted by currency effects in Poland and Turkey, by 1.7 percent. In Germany, sales revenues only declined by 0.9 percent despite the fact that the Easter business was not included in the figures. This means that Real did better than its competitors.
At a satisfactory gross profit margin trend, the result of the hypermarket stores was distinctly increased. EBIT improved in the first quarter 2003 from € -12.2 million to € -7.8 million. This improvement was achieved in spite of increased capital expenditure by € 25.2 million to € 42.9 million in comparison with the previous year. Thanks to consistent optimization of the sales network and the high acceptance of the customer loyalty program “Payback” by the Real customers, the development of the sales division in the direction of a successful retail brand was advanced further.

Extra initiates comprehensive restructuring
Sales revenues of the Extra stores in the first three months of the year receded by 3.7 percent to € 680.9 million compared to the previous year. Making allowance for the deferral of the Easter business to the second quarter, Extra consequently took a virtually steady course.
EBIT, of € -19.5 million, was slightly above the prior-year level despite higher capital expenditure and increased expenses for restructuring the sales division.
The implementation of the announced drastic restructuring actions at Extra was initiated in the first quarter. In the first three months of the current fiscal year, Extra divested eight locations. Four stores are now continued by franchisees and two by Real. Another two stores were closed. In the course of the year, the sales division will part with further stores. The administration of the sales division is currently being subject to strict streamlining measures. Among other actions, individual functions are now partly or totally integrated with the Real division. The complete package of actions will lead to a distinctly improved earnings situation at Extra in the medium term.

Strong growth of Media Markt/Saturn at home and abroad
The consumer electronic centers of Media Markt and Saturn continued the satisfactory course of business of the past years in the first quarter of 2003 and expanded their Europe-wide market leadership. Sales revenues of the sales division were lifted by 11.3 percent to € 2.35 bn compared to the prior-year period. Whereas the complete electronics industry in Germany registered a recession in sales in the first three months of the current year, Media Markt/Saturn achieved a clear plus in sales of 7.0 percent in Germany. In Western Europe the sales volume grew by 22.2 percent; in Spain, sales revenues even doubled. In Eastern Europe the currency-adjusted sales increased by 10.7 percent. Making allowance for the strong foreign-exchange effects, it fell by 0.6 percent down from the prior-year level. The foreign share of the electronic stores increased from 35.6 to 38.1 percent.
The EBIT of the sales division improved by 9.5 percent to € 29.3 million despite continued high capital expenditure on the expansion of the domestic and foreign sales network.

Praktiker continues positive economic trend
Compared with the prior-year period, the Praktiker home improvement and DIY censters succeeded in boosting sales revenues substantially, by 22.4 percent to € 705.9 million. In Germany, sales revenues even rose by 26.9 percent. Praktiker thus continued the positive trend of the past years and won further market shares through its aggressive price campaigns. The one-week anniversary campaign “25 Years Praktiker” in March 2003 proved to be a big success. In Eastern Europe the course of business was influenced by currency effects: sales revenues in that region climbed by 5.8 percent, though net of the mentioned influences, by 15.9 percent.
In spite of comprehensive price cutting measures, EBIT improved from € -25.4 million to € -17.4 million. At the same time, Praktiker raised its capital expenditure from € 5.7 million to € 7.4 million.

Kaufhof achieves marked improvement in earnings
Sales revenues of Kaufhof Warenhaus AG in the first quarter of the year 2003 receded by 1.7 percent compared to the reference period of the previous year. This means that the sales division did better than its competitors.
In Germany, the sales volume decreased by 1.9 percent or, like-for-like by 2.7 percent, to € 834.7 million. Although the course of business was positive overall in January and February, developments in March were characterized by the deferral of the Easter season business.
In Belgium the department stores of the sales division lifted sales by 1.3 percent to € 60.1 million. The locations having changed over to the Galeria concept reported a much better course of business than those stores which do not yet work on the basis of the successful Galeria merchandizing concept because they have not yet been revamped.
In view of its strong cost orientation, Kaufhof has attained a distinct increase in earnings. The sales division improved EBIT in the first quarter 2003 from € -7.3 million to € -5.1 million. This was achieved in spite of the higher capital expenditure volume which was increased from € 23.9 million to € 27.5 million compared to the previous year.

Outlook
In the current fiscal year, the METRO Group is continuing on the path of profitable growth. The Group confirms its targets to boost in the current fiscal year Group sales revenues before currency effects by around 5 percent and earnings per share by 6 to 10 percent.
The international expansion as well as further optimization of the sales concepts are being advanced consistently. The METRO Group will make best efforts to further expand its strong position in the domestic and foreign markets in the year 2003.

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