Press

METRO Group with distanct improvement of results at home and abroad

24.03.2004

METRO Group with distanct improvement of results at home and abroad

• Sales rose by 4.0 percent to € 53.6 billion,
adjusted for currency effects by 5.7 percent
• METRO Group’s EBIT improved by 13.1 percent to € 1.32 billion
• Earnings per share grew by 12.0 percent to € 1.52
• Full cover of capital cost for the first time

METRO Group’s strategy of profitable growth and consistent internationalization was again crowned by success in 2003. Group sales rose by 4.0 percent to € 53.6 billion, adjusted for currency effects by 5.7 percent. METRO Group sales abroad increased by 6.1 percent, pre currency by 10.0 percent. Despite the strong Euro the foreign share in total sales rose from 46.3 to 47.2 percent. Earnings before interest, taxes, depreciation and amortization (EBITDA) improved by 8.2 percent to € 2.61 billion. Earnings before interest and taxes (EBIT) climbed by 13.1 percent to € 1.32 billion during the year under review. 56 percent of the consolidated EBIT were achieved outside of Germany.

"Despite the difficult overall situation 2003 was a good year for the METRO Group. We have managed to overcome the negative trend of our industry in many areas, including Germany," said the CEO of METRO Group, Dr. Hans-Joachim Körber, at the presentation of the annual accounts.

METRO Group’s net profit grew distinctly by 13.8 percent to € 571 million. Earnings per share stepped up by 12.0 percent from € 1.36 to € 1.52. "We have fully reached our objective of raising the earnings per share by 6 to 10 percent in fiscal 2003", said Körber. "This was achieved in spite of extraordinary expenses for the divestment of Divaco and therefore additionally documents the high operating performance of the METRO Group." Like in 2002, the proposed dividend is of € 1.02 per share of common stock and of € 1.122 per share of preferred stock.

Compared with the prior year, the Economic Value Added (EVA), the central benchmark for value-oriented corporate management, improved by € 213.2 million, of which € 88.3 million in operations. "METRO Group thus for the first time since the introduction of the EVA back in 1999 achieved full cover of its capital cost. This attests to the successfully implemented strategy of profitable growth of our company", said Körber.

Capital expenditure in 2003 stood at € 1.8 billion thereby reaching the high prior-year value. The group’s growth drivers, i.e. Metro Cash & Carry as well as Media Markt and Saturn, opened 91 new stores alone. In total, the group’s distribution network was extended to 2,370 locations in now 28 countries. On an annual average, the group had a staff of around 242,000. Translated into full-time equivalents, the headcount rose by around 7,000 to over 198,000.

Sales divisions win additional market shares
Metro Cash & Carry, the most internationally oriented sales division with the highest sales in the METRO Group, successfully continued its development of the past also in 2003. It stepped up sales by 4.7 percent to € 25.1 billion thereby achieving almost half of the group’s total sales. Negative currency effects incurred mainly in China, Great Britain, Poland, Russia and Turkey; net of these effects, the sales volume rose by 7.7 percent. In Germany, sales climbed 6.7 percent to € 5.9 billion. Metro Cash & Carry succeeded in once again distinctly increasing its profitability despite expansion-related start-up costs: EBIT improved by 12.8 percent to stand at € 799.6 million.

The Real hypermarkets succeeded in maintaining their prominent market position during the year 2003 in a difficult industry environment. Affected by significant currency effects in Poland, sales rose 0.1 percent to € 8.2 billion. In Germany, sales were up 0.9 percent to stand at € 7.4 billion. Real managed to substantially improve results for the fourth year in succession. EBIT increased 9.2 percent to reach € 160.5 million.

The Extra supermarkets achieved total sales of € 2.8 billion which is 2.2 percent below the prior-year level. This was attributable to the targeted optimization of its location portfolio, among others. On a like-for-like basis, sales only dropped by 0.9 percent. Overall, Extra’s sales were affected by the distinct purchasing restraint on the part of the consumers and a markedly increased competition in Germany. The number of Extra supermarkets receded from 491 to 466. The restructuring of the Extra sales division also affected earnings. Extra’s EBIT stood at € -75.7 million in 2003 following € -47.2 million in 2002.

Media Markt and Saturn succeeded in once again surpassing the high growth rates of the past years. Sales rose by 10.2 percent to € 10.6 billion. In Germany, Media Markt and Saturn achieved a plus in sales of 3.3 percent. Abroad, sales increased by as much as 22.1 percent to reach € 4.3 billion. The Media Markt and Saturn group thereby further consolidated its strong market position as the leading operator of consumer electronics centers in Europe in 2003 while the overall industry registered a distinct slump in sales both in Germany and in other Western European countries. The international share in total sales again rose appreciably, namely from 36.8 percent in 2002 to over 40 percent. EBIT grew even stronger than sales, i.e. by 23.2 percent to reach € 345.2 million.

In fiscal 2003, the Praktiker sales division continued its positive economic trend of the previous year in terms of both sales and earnings. In the year of their 25th anniversary, the home improvement and DIY centers achieved a plus in sales of 8.8 percent to reach € 2.8 billion on a reduced selling space. With this result, the sales division clearly outperformed its competitors. International sales rose by around 8.6 percent to € 628 million. Praktiker managed to improve EBIT by € 27.8 million to stand at € -13.8 million despite its aggressive price reduction campaign. This positive development is mainly attributable to the company’s consistent repositioning in Germany.

In a difficult industry environment Galeria Kaufhof achieved sales of € 3.8 billion which is 2.1 percent below the prior-year level. The department stores thus continued to develop better than their competitors. The Belgian Inno department stores contributed € 249 million to total sales and again showed a positive business trend. The department stores’ EBIT stood at € 94.1 million and was thus € 37.3 million short of the previous year’s figure. This was mainly attributable to a decline in sales resulting from the distinct purchasing restraint in Germany. Especially in downtown areas, this trend led to a fierce price competition that affected the earnings of the department store chain.