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METRO Group maintains its growth course

22.03.2005

METRO Group maintains its growth course

The METRO Group continued its successful course of the past few years during fiscal year 2004. Group sales rose by 5.3 percent to € 56.4 bn. Adjusted for currency effects, sales growth amounted to 5.5 percent. Sales increased by 1.7 percent to € 28.8 bn. in Germany. The METRO Group thus continued to expand its market position in a deteriorating sectoral environment. At € 27.6 bn., the METRO Group's foreign sales were 9.2 percent higher than a year earlier. The foreign share of total group sales rose again during the year under review, from 47.2 percent to 49.0 percent.

"2004 was a successful year for the METRO Group. Defying the weak sectoral environment, we managed once again to substantially improve both our sales and earnings," said Dr. Hans-Joachim Körber, Chief Executive Officer of the METRO Group, at the company's annual business press conference. "We were generally successful even in Germany. In regional comparison, we generated the strongest growth in our eastern European business. But we also achieved substantial improvements on the Asian markets."

The METRO Group raised its earnings before interest, taxes, depreciation and amortization (EBITDA) by 13.9 percent to € 2.98 bn from the previous year, a marked improvement in earnings growth compared to fiscal year 2003. Operative earnings before goodwill amortization (EBITA) increased by 13.8 percent to € 1.81 bn. This was the result of positive earnings developments in the sales divisions, in particular in the eastern European markets. The consolidation of Asset Immobilienbeteiligungen GmbH & Co. KG (AIB) also had a positive effect on METRO Group EBITA. Group net profit reached € 933 mn, up 10.7 percent from the previous year.

Earnings per share before goodwill amortization rose to € 2.53 in the past fiscal year from € 2.35 in the previous year, an increase of 7.7 percent. Excluding one-time expenses for the sustained consolidation of the Extra portfolio of locations, earnings per share rose by 10.4 percent. "We have reached our goal of raising earnings per share by 6 percent to 10 percent. This underscores the strength of the METRO Group," said Körber.

As in the previous year, a dividend of € 1.02 per common share and € 1.122 per preferred share will be proposed.

The enterprise value of the METRO Group continued to rise in 2004. Economic value added (EVA) increased by € 114.2 mn to € 317.9 mn compared to the previous year. "The fact that the METRO Group has continuously improved this value since the introduction of EVA in 1999 highlights the success of our company's consistent strategy of profitable growth," said Körber.

With a volume of € 1.8 bn, group investments reached the previous year's high value. The expansion of Metro Cash & Carry and Media Markt and Saturn, which together opened up more than 100 new outlets in 2004, accounted for nearly half of this amount. With representations in 30 countries, the METRO Group is one of the world's most international trading and retailing groups.

Due mostly to the company's expansion, total assets rose by more than € 1.5 bn to € 28.1 bn. The equity ratio increased substantially from 16.4 percent to 17.6 percent during the year under review. This positive development is the result of increased earnings and the elimination of regular goodwill amortization. The group's net debt was reduced by € 536 mn to € 5.7 bn from € 6.2 bn as of the closing date.

Continued dynamic growth has also resulted in a substantial increase in employment. On a year's average, the group employed more than 250,000 people. This corresponds to an increase of about 10,000 employees compared to the previous year. The major share of new positions was created abroad, above all in the fast-growing markets of eastern Europe. Headcount in Germany was up by more than 300 on a full-time basis. The number of newly employed apprentices in Germany was also raised again in 2004, by about 5 percent to approximately 3,100. The company employed nearly 8,400 apprentices on average in Germany, yielding a continuously high training ratio of 7.6 percent.

Sales divisions: Metro Cash & Carry, Media Markt and Saturn remain growth drivers; Praktiker continues positive development

The Metro Cash & Carry sales division once again underscored its position as an important growth driver within the METRO Group. It raised its sales by 5.4 percent to € 26.4 bn. Foreign sales increased by 7.2 percent to € 20.6 bn. EBITA rose by 6.4 percent to € 962.2 mn. This increase in earnings was achieved despite expansion-related start-up losses. This growth once again highlights the strong profitability of Metro Cash & Carry and mirrors the positive operative business development of the sales division.

The Real sales division maintained its outstanding position in the German hypermarket segment as well as on the Polish and Turkish market during the past fiscal year. At € 8.2 bn, Real's total sales reached the year-earlier level. Business development at the sales division was marked by the continued heightening of competition on its domestic market. At the same time, Real achieved substantial sales growth abroad. At € 219.3 mn, EBITA was 9.3 percent lower than a year earlier. Earnings were affected by the integration of 16 outlets of the Extra sales division.

Sales of the Extra supermarkets reached a total volume of € 2.55 bn and were thus 8.2 percent lower than a year earlier. Like-for-like, sales declined by 2.8 percent. Aside from adverse economic and sector-specific factors, these figures mirror the impact of the company's continued rigorous restructuring. With effect from January 1, 2005, Extra also gave off 119 locations in eastern and southern Germany. Extra posted EBITA of € -80.8 mn, after € -63.2 mn in the previous year. This includes one-time expenses of € 30 mn for the divestment of locations.

Media Markt and Saturn made renewed strides on the past years' exceedingly successful growth path in 2004. Total sales rose by 15.6 percent to € 12.21 bn. Media Markt and Saturn achieved a 13.0 percent increase in sales to € 7.1 bn on the weak domestic market and thus markedly outperformed the rest of the sector. The foreign sales volume rose by 19.4 percent to € 5.1 bn. Earnings outgrew sales. The sales division raised EBITA by 25.3 percent to € 451.2 mn. This was achieved despite a renewed increase in investments related to the expansion of the sales network and high marketing and advertising outlays in Germany and abroad. The group opened up a total of 69 new outlets in 2004 – a company record.

With sales growth of 5.0 percent to € 2.95 bn, Praktiker continued the previous year's positive business development in fiscal year 2004. Praktiker raised its domestic sales by 3.0 percent to € 2.2 bn and further expanded its market share, thanks in particular to its aggressive pricing strategy and high assortment competence. The sales division improved its eastern European sales by 13.8 percent. For the first time, Praktiker generated nearly one-quarter of its sales outside of Germany during the past fiscal year. Earnings grew even faster than sales. EBITA improved to € 59.3 mn from € 23.0 mn in the previous year.

The Kaufhof department stores were particularly hard hit by the general consumer reticence and the strong price sensitivity among German shoppers. Sales decreased by 1.3 percent to € 3.8 bn. The 15 Belgian Inno department stores achieved a substantial increase in sales, by 3.2 percent to € 256.6 mn. Kaufhof Warenhaus AG posted a decline in EBITA to € 56.1 mn from € 99.5 mn in the previous year due to the sales decline and one-time expenses for the restructuring of the company's head office and its portfolio of locations. EBITA slightly exceeded the year-earlier value during the fourth quarter. Kaufhof's key strategic goal for the current fiscal year is to improve its earnings situation.

The Adler Modemärkte GmbH, Haibach (Adler fashion centers), will be included in the consolidated financial statement as of 1 January 2005 and completely consolidated. This has become necessary because of the revised form of the according accounting standards. Though the objective to divest the Adler fashion centers remains unaffected.

Service

• Brief overview of the METRO Group in fiscal year 2004 pdf (23 KB)
• Live-Broadcast Business Press Conference
• Press Materials
• Online Annual Report

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