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METRO Group Stepping Up Sales Forecast for 2003

31.07.2003

METRO Group Stepping Up Sales Forecast for 2003

Duesseldorf, July 31, 2003 – In the first half of fiscal 2003, the METRO Group lifted its sales revenues from the prior-year period by 4.5 percent (currency-adjusted: 6.3 percent) to € 24.95bn. Earnings before interest and taxes on income (EBIT) rose from € 175,9m to € 233.7m.

The satisfactory course of business in the first three months of the year continued in the second quarter. In this period METRO Group succeeded in boosting sales revenues by 7.6 percent, or 6.3 percent when taking account of currency effects. Despite appreciably increased capital expenditures, EBIT climbed by 16.4 percent to € 211.5m.
 
"We are favorably positioned and are successful in our business in spite of the ongoing difficult general economic situation" said Dr. Hans-Joachim Körber, Chairman and CEO of METRO AG. "This motivates us to raise our sales revenues forecast from around 5 percent to at least 5.5 percent growth, currency-adjusted. Moreover, we presume that the increase in earnings per share will be in the upper range of the forecast corridor of 6 to 10 percent in fiscal year 2003. We are confident that the positive course of business will continue in the coming months."

In Germany, sales revenues in the first half year rose by 3.7 percent to € 13.40bn. In the international business, they climbed by 5.4 to € 11.54bn (9,5 percent, currency-adjusted). Consequently, the international share in the total sales revenues climbed to 46.3 percent in the first six month, after 45.9 percent in fiscal 2002. Earnings before interest, taxes, depreciation and amortization (EBITDA) of € 868.2m exceeded the year-earlier reference mark by 9 percent. Hence the METRO Group has again borne evidence to its high operating performance capability. Earnings per share significantly improved within the first six months of the current year, from € 0.01 to € 0.06.
The METRO Group extended its sales network to 2,328 outlets worldwide. In the past quarter, 18 new stores were opened, 14 of them relating to the sales divisions Metro Cash & Carry and Media Markt/Saturn.

Quarterly Report Q2/H1 2003 here...

Metro Cash & Carry: growth in sales accelerated further
In the first half of fiscal 2003, Metro Cash & Carry increased sales revenues by 5.2 percent compared with the previous year, to € 11.75bn. This sales division achieved especially noteworthy increases in the second quarter. During that period, the sales volume of Metro Cash & Carry grew by 8.3 percent to € 6.25bn. Net of negative currency effects, the actual growth rate was 10.7 percent. In Germany, the increase in sales revenues was 12.6 percent and like-for-like sales rose by 3.6 percent although the catering business as a key customer industry of Metro Cash & Carry registered losses in sales of almost 8 percent in the current year. In Western Europe, the sales rose by 3.9 percent in the second quarter. In Eastern Europe, sales were lifted by 15.3 percent or, currency-adjusted, 19.8 percent. The new Metro Cash & Carry stores in Russia and Croatia in particular attained strong growth in sales revenues.

In the first half year, EBIT climbed by 17.4 percent to € 216.7 million. This means that Metro Cash & Carry once more added to its great earnings strength. At the same time, the capital expenditure volume was expanded compared with the prior-year reference period, from € 282.4m to € 414.5m. Capital was spent on the modernization of the sales network, the purchase of three stores in Germany and the international expansion. In Russia alone, three new stores were opened.

Real: further market shares won
The Real hypermarket stores succeeded in continuing their positive course of business in the first half of 2003. The further strengthened their market leadership position in Germany. Overall, Real’s sales revenues climbed by 0.4 percent in the first six months of the current year, to €3.95bn. This increase was substantially fostered by the ongoing positive trend in the non-food sector. In the second quarter, growth in sales revenues in Germany even reached 4.8 percent in Germany and 8.9 percent abroad (Poland and Turkey).

The hypermarket stores improved their results significantly. In the first half year, EBIT boosted from € 8.8m to € 20.4m, despite an increase in capital expenditures from € 40.2m in the prior-year reference period, to € 115.7m. These figures testify to the success of the continuous, customer-focussed optimization of Real’s sales concept. In addition, the outstanding acceptance of the customer loyalty program "Payback" enhanced the development of the sales division towards a successful retail brand.

 Extra: slight improvement in sales revenues
Following a drop in sales revenues in the first three months of the year, in the second quarter Extra succeeded in lifting sales revenues by 1.3 percent or, like-for-like, 1.9 percent as a result of comprehensive restructuring and sales promoting initiatives. On a period-to-period basis, the minus in sales in 2003 is 1.2 percent compared with the previous year.

Despite important investment projects and increased capital expenditure for restructuring the sales division, EBIT in the first half year only remained slightly below the prior-year level, at € -34.4m. Capital was spent on the modernization of the sales network, the prize positioning and the adaptation of another four stores to the Extra marketing concept. Within the scope of the restructuring program, three stores were closed and five converted into franchise outlets. Moreover, in the second quarter Extra started a streamlining program for its administrative functions.

Media Markt/Saturn: gratifying growth at home and abroad
The consumer electronics centers of Media Markt and Saturn continued the successful development of their business of the past years in the first half of 2003 and expanded their Europe-wide market leadership position. Compared with the previous year’s reference period, the sales division succeeded in raising sales revenues by 9.9 percent to € 4.50bn. In Germany, Media Markt/Saturn achieved a plus in sales of 3.9 percent whereas the electronics industry in Germany as a whole registered a shrinking sales volume in the first six months of the current year. In Western Europe, the sales volume grew by 23.1 percent and in Eastern Europe by 4.7 percent. The foreign share of the consumer electronics centers increased from 35.9 to 39.4 percent.

EBIT of the sales division improved by 10.4 percent to € 48.2m despite an ongoing high level of capital expenditure on the expansion of the location network in and outside Germany. The number of stores rose from 386 to 401 in the first half year.

Praktiker: positive course of business continued in Germany
The Praktiker home improvement and DIY centers boosted sales revenues by 14.1 percent in the first six months of 2003 compared with the prior-year period, to € 1.48bn. In Germany, sales increased by 15.1 percent, like-for-like sales rose by 17.1 percent. After a strong first quarter 2003 sales also rose on a high level in the second quarter: They improved by 7,4 percent without repetition of the anniversary campaign. Praktiker thus continued the positive course of business of the last quarter of the past year and succeeded in winning significant market shares. In Eastern Europe, sales revenues in the first half of the year 200 rose by 12.3 percent.

EBIT improved in line with the positive sales development in the first half of the year 2003, from € -8.2m to € 2.8m.

Kaufhof: sales increased by extended business hours
In the first half of 2003, sales revenues at Kaufhof Warenhaus AG fell by 1.2 percent to € 1.73bn compared with the prior-year reference period. At this level, the sales division proved to be better than its competitors. In Germany, the sales volume decreased by 1.5 percent to € 1.61bn. Following a restrained course of the Easter business, the extension of the business hours prompted appreciable growth in sales. In Belgium, the department stores of the sales division lifted sales by 2.5 percent in the first half year of 2003, to € 115.7m. The already converted Galeria Inno department stores continued to post above-average results.

Consistent cost optimization contributed to an increase in earnings at Kaufhof. The sales division improved EBIT from the first half of 2002 by 12.4 percent, to € -38.4m.

Outlook
In the second half year 2003, too, the METRO Group will pursue its strategy of sustainable profitable growth. Based on the satisfactory course of its business in the first half year, the company is lifting its sales revenues forecast for the full fiscal year 2003 from around 5 percent to at least 5.5 percent growth before currency effects. The increase in earnings per share will presumably be in the upper range of the forecast corridor of 6 to 10 percent.

The international expansion as well as further optimization of the sales concepts are being advanced consistently. In the year 2003, the METRO Group continues to focus on the expansion of its strong position in the domestic and international markets.

Quarterly Report Q2/H1 2003 here...

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