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METRO Group boosts First Quarter sales by 12.1 percent to nearly € 15 billion

03.05.2007

METRO Group boosts First Quarter sales by 12.1 percent to nearly € 15 billion

METRO Group made a dynamic start into the year 2007. Compared against the same period last year the company boosted First Quarter sales by 12.1 percent to € 14.9 billion. Even net of the acquisitions of Wal-Mart Germany and Géant Poland sales rose distinctly by 7.8 percent.

"We are very satisfied with the development of our sales during the First Quarter. METRO Group laid a strong foundation for a successful fiscal year 2007," said Dr. Hans-Joachim Körber, Chairman of the Management Board and CEO of the METRO Group. "We distinctly stepped up sales in all regions. Again, we were particularly successful in our growth markets Asia and Eastern Europe, but business also developed positively in the challenging markets of Western Europe and in Germany – although consumer sentiment in our domestic market was marred by the increase in value added tax."

In Western Europe, sales climbed 7.8 percent in a highly competitive market. In Eastern Europe, METRO Group continued its dynamic growth course. All sales divisions operating in this region contributed to the significant sales plus of 22.6 percent. In Asia and Africa, sales soared by as much as
24.9 percent. Even with the acquisition of Wal-Mart Germany the share of international business in our sales still rose from 54.8 percent during the same period last year to now 55.8 percent.

In Germany, sales climbed 9.7 percent year-on-year despite the VAT hike. Even net of the acquisition of the local Wal-Mart activities we generated a 2.1 percent rise in domestic sales. Business developed positively, especially in March.

METRO Group’s earnings before interest, tax, depreciation and amortization (EBITDA) grew by 2.8 percent to € 434 million. EBIT came in at € 123 million following € 138 million in the First Quarter 2006. As expected, this figure includes expenses in the amount of around € 15 million relating to the integration of Wal-Mart Germany. Adjusted for these expenses, EBIT reached the prior-year level. Earnings per share (EPS) stood at € -0.03 following € 0.02 during the First Quarter 2006.

As at 31 March 2007, METRO Group operated a total of 2,388 locations in 30 countries. 15 new stores were opened during the First Quarter – ten of them by Media Markt and Saturn.

Metro Cash & Carry with substantial rise in earnings

Despite the high prior-year value, Metro Cash & Carry succeeded in raising sales by 5.1 percent to € 7.0 billion during the First Quarter 2007. Adjusted for currency effects sales grew by 5.6 percent. The share of international sales continued to climb and now stands at 81.5 percent.

Particularly strong growth was again achieved in Eastern Europe and Asia. These growth regions now account for far more than one third of the sales revenue generated by this sales division. In Eastern Europe, Metro Cash & Carry recorded a plus of 12.3 percent. In Asia and Africa, sales grew 15.7 percent. Business in China continued to develop very positively. Sales in Western Europe rose 0.6 percent while slightly dropping 0.4 percent in Germany.

EBIT of Metro Cash & Carry improved substantially growing 12.8 percent to € 102 million. The store network was extended by one location in China where Metro Cash & Carry now operates a total of 34 wholesale stores. Around 40 new wholesale stores are scheduled to open this year. At the end of the First Quarter, Metro Cash & Carry operated 585 locations in 28 countries.

Real with like-for-like sales growth in Germany

Sales of the Real sales division rose 29.1 percent to € 3.0 billion. Of this amount, € 578 million account for the Wal-Mart operations taken over in Germany and the former Géant hypermarkets in Poland. Adjusted for these acquisitions, sales increased 4.2 percent. Real thus continued the positive trend of the year 2006.

Real was again particularly successful with its international operations which generated an 81.9 percent sales growth. Even without the Géant operations taken over in Poland, Real distinctly boosted sales in Poland, Romania, Russia and Turkey by 35,1 percent. All 19 Géant hypermarkets taken over in Poland have been converted to Real during the First Quarter according to plan. The share of international business in total sales reported by this sales division rose from 11.3 to 15.9 percent.

Real also reported a like-for-like rise in sales in Germany. Despite the temporary closure of Real hypermarkets in the framework of conceptual conversion, like-for-like sales increased by 1.1 percent. At the end of the First Quarter the location portfolio included 15 concept stores as well as 33 former Wal-Mart hypermarkets that had already been converted to Real. Overall, these stores reported an above-average growth during the First Quarter.

The expenses for the integration of Wal-Mart Germany are reflected in the earnings reported by this sales division. EBIT stood at € -56 million following € -40 million during the same period last year. Adjusted for integration expenses in the range of around € 15 million, earnings reached the prior-year level. EBIT also contains increased expenses in the course of the enforced expansion in Eastern Europe.

At the close of the quarter under review the store portfolio included 700 locations: 627 in Germany and 73 abroad.

Media Markt and Saturn with strongest growth in last ten quarters

In the First Quarter 2007, the consumer electronics centers operated by Media Markt and Saturn generated the strongest growth since the Second Quarter 2004: Sales surged 17.1 percent to nearly € 4 billion. Media Markt and Saturn have thus continued the successful business trend of the past years and further extended their leading position on the European market. Internationalization was distinctly advanced: During the First Quarter 2007, the share of international business in total sales reported by this sales division rose from 47.6 to 51.6 percent.

All regions contributed to this highly successful development. Despite the VAT hike, sales in Germany climbed 7.9 percent. Like-for-like, the consumer electronics centers grew 3.3 percent and increased their market share. In Western Europe, sales rose by 22.9 percent. Business was especially gratifying in countries with high sales volumes, namely Spain, Italy and the Netherlands. In Eastern Europe, Media Markt and Saturn raised sales by 53.8 percent – which is by far the strongest growth in this region ever reported by the consumer electronics centers.

Despite high marketing expenses and the appreciably higher start-up costs in the new countries Russia and Sweden, EBIT climbed 7.4 percent to € 69 million. The store network was extended by ten locations to 631 stores in now 14 countries.

Kaufhof business gained momentum in the course of the First Quarter

First Quarter business of the Galeria Kaufhof department stores remained almost unchanged with sales dropping by 0.5 percent over the year-earlier period to € 810 million. Due to the VAT increase business in January was very sluggish and could not be compensated by the like-for-like growth generated in March. In Germany, sales receded by 1.2 percent while the Galeria Inno department stores in Belgium maintained their positive sales trend and generated a 6.1 percent growth in sales.

With an increased gross margin overall EBIT rose to € -23 million following € -26 million during the same period last year. The store network was extended by one location in Berlin and comprises 142 department stores in Germany and Belgium.

Outlook

METRO Group will continue its profitable growth course also during the rest of fiscal year 2007. International expansion is consistently pressed ahead, whereby the focus remains on the growth markets in Eastern Europe and Asia.

Against the backdrop of the good development of business in the First Quarter, METRO Group continues to expect a rise in sales of 8 to 9 percent for the current year – including the acquisitions made in 2006. Moreover, the company targets an EBIT increase of 6 to 8 percent (comparable basis € 1.91 billion). The volume of investments for the current fiscal year is anticipated to come in at around € 2.5 billion. These funds will primarily flow into the continued international expansion of the growth drivers Metro Cash & Carry as well as Media Markt and Saturn. In addition, METRO Group will also invest in the conversion of the former Wal-Mart stores to the Real concept and in the selective expansion of Real in Eastern Europe.

Quarterly Financial Report Q1 2007 (179 KB)

METRO Group is one of the most important international retailing companies. In 2006 the group reached sales of about € 60 billion. The company has a headcount of some 270,000 employees and operates about 2,400 outlets in 30 countries. The operating business is performed by the sales brands which operate independently in the market: Metro/Makro Cash & Carry – world market leader in cash & carry wholesale, Real hypermarkets and Extra supermarkets, Media Markt and Saturn – market leader in consumer electronics centers in Europe, and Galeria Kaufhof department stores.

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