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METRO Group grows sales in first half-year

01.08.2007

METRO Group grows sales in first half-year

METRO Group continued on its successful growth path in the first six months of 2007. In year-on-year comparison, the company raised sales by 10.9 percent to €30.3bn. Net of the acquisitions of Wal-Mart Germany and Géant in Poland, sales rose 6.7 percent.

"The vigorous sales boost of almost 11 percent underlines the efficiency and dynamics of METRO Group. We will consistently continue on our successful growth path also in future", asserted Dr. Hans-Joachim Körber, Chairman of the Management Board and CEO of METRO Group. "Our strongest growth regions are still Eastern Europe and Asia, but in the challenging markets of Western Europe and in Germany we were also able to grow against the trend. Therefore, we confirm the outlook we gave for 2007."

Sales outside Germany rose by a total of 13.5 percent to €17.2bn. Net of the acquisition of Géant in Poland, international sales went up 11.8 percent. In Western Europe sales rose 6.1 percent. Above-average growth rates were achieved by METRO Group in Eastern Europe and Asia where it reached a plus in sales of 23.5 percent and 26.5 percent, respectively. The share of international sales increased in year-on-year comparison, from 55.5 percent to 56.8 percent. "Our international expansion again prompted sustainable growth impulses", Dr. Körber commented. "We will continue to consistently implement our successful internationalization strategy. Media Markt, for example, will open its first store in Turkey in the third quarter of 2007."

In Germany, sales climbed 7.6 percent to € 13.1bn in the first half of 2007. Although, as expected, business was slightly affected by the higher value-added tax, sales went slightly up by 0.3 percent even net of the acquisition of Wal-Mart Germany.

Earnings before interest, taxes, depreciation and amortization (EBITDA) of €1.052bn remained at the prior-year level. EBIT reached €419 million compared to €459 million in the first six months of 2006. As expected, the result was burdened by temporary expenses relating to the integration of acquisitions at Real. Adjusted for integration expenses at Real as well as for the change in earnings resulting form the active real estate portfolio management, EBIT was above prior year’s level. Earnings per share (EPS) from continuing operations amounted to €0.29 against €0.38 in the first half of 2006.

As per June 30, 2007, METRO Group operated a total of 2,390 outlets in 30 countries. In the first half of 2007, 31 locations were newly opened, thereof 16 in the second quarter.

Double-digit growth of Metro Cash & Carry in Eastern Europe and Asia

Metro Cash & Carry continued the positive trend of the first quarter and lifted sales in the first half of 2007 by 5.2 percent from the high prior-year level, to €14.8bn. The international share in sales rose to 81.6 percent.

This sales division again reported double-digit sales growth in Eastern Europe and Asia. In Eastern Europe, sales surged by 13.2 percent. Here again the high-revenue countries, Russia, Ukraine and Romania, contributed above-average growth rates. In Asia and Africa, sales also rose distinctly by 16.5 percent. All Asian countries registered double-digit growth rates.

In Western Europe, sales went up 0.4 percent. France and Spain continued to experience a highly gratifying course of business. In Germany, sales receded slightly by 1.1 percent, mainly as a consequence of the difficult situation prevailing for the hotel, restaurant and catering sector after the increase of the value-added tax.

EBIT of Metro Cash & Carry improved above average by 12.8 percent to €383 million. After opening a further Metro Cash & Carry store in Russia in the second quarter 2007, this sales division was represented at 586 locations in 28 countries.

Real completes on schedule restructuring of the stores taken over

Sales of the Real sales division were raised in the first half year by 26.9 percent to more than €6bn. The hypermarkets taken over from Wal-Mart Germany and Géant in Poland significantly contributed to this growth at €1.1bn. Adjusted for these acquisitions, the plus in sales was 2.8 percent.

Business in the first half year was outstandingly successful in Eastern Europe where sales were lifted by 84.4 percent. Even when disregarding the Géant takeover in Poland, an extraordinarily high growth rate of 37.8 percent was achieved in Eastern Europe. All Géant stores have meanwhile been converted to Real. The international share in sales rose to 16.6 percent.

In Germany, the comprehensive restructuring program of the newly acquired Wal-Mart stores was successfully completed on schedule effective June 30. A total of 69 former Wal-Mart locations will continue operations. In line with numerous reconstruction projects, certain stores had to be closed temporarily and their operation was hampered in the reconstruction phase. In parallel, the concept changes in the existing store network were advanced further. As of June 30, 25 stores had been converted to the new Real concept.

Real’s EBIT in the first half of 2007 amounted to €-108 million compared to €-34 million in the preceding year. The change mainly results from the one-off expenses for integrating the acquisitions made in the previous year. Moreover, the result includes increased charges ensuing from the stepped-up international expansion in Eastern Europe.

At the end of the first six months, the sales network comprised 690 locations, thereof 615 in Germany and 75 in Eastern Europe. In the first half year, three hypermarkets were opened in Russia and one in Romania.

Media Markt and Saturn with enhanced growth in all regions

Media Markt and Saturn continued their rapid growth in the first half of 2007 and boosted sales by 14.3 percent to almost € 7.5bn. Like-for-like, sales rose distinctly by 4.4 percent. With this highly successful course of business, the consumer electronics centers clearly exceeded the high prior-year mark which had benefited from the FIFA World Cup.

In Eastern Europe the consumer electronics centers achieved a plus in sales of 56.8 percent. The significant rise in sales in Poland contributed to this achievement in the same way as the gratifying course of business in Russia. In Western Europe, sales increased by 19 percent. Especially in Spain, Belgium and the Netherlands the dynamic business trend continued. In Germany, sales went up 5.1 percent in the first six months of the year despite the value-added tax raise. This means that further market shares were won.

In spite of higher start-up losses, EBIT rose by 6.5 percent in the new countries, Russia and Sweden, to €123 million. The sales network was extended by 23 locations to 641 stores in 14 countries in the first half of 2007. In the second quarter, Saturn opened its new flagship store boasting a selling space of around 10,000 square meters on six floors, at the Berlin "Europacenter".

Galeria Kaufhof improves earnings despite slight decrease in sales

In the first six months of the year, sales at the Galeria Kaufhof department stores slightly fell by 1.2 percent in comparison to a good prior-year level to €1.6bn. In Germany, business was affected by the increased value-added tax. In Belgium, again a very satisfactory development was reported. There, sales rose 8.3 percent.

Thanks to a higher gross margin and to unchanged, sharp cost orientation, EBIT improved to €-52 million against €-65 million in the respective half of the previous year. The sales network was extended by one location in Berlin. By contrast, a small-sized store was closed. In total, the sales network comprised 142 department stores, of which 127 are located in Germany and 15 in Belgium.

Outlook

METRO Group will continue on its profitable growth route in the second half of 2007. International expansion will be advanced consistently with a persistent focus on the growth markets in Eastern Europe and Asia.

Against the backdrop of the sound development experienced in the first half of the financial year, METRO Group confirms its outlook for the current year and expects, as before, an increase in sales of 8 to 9 percent including the acquisitions made in 2006. Moreover, a rise in EBIT of 6 to 8 percent is expected at (basis: €1.91bn).

Capital expenditure for the current 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 invest in the selective expansion of Real in Eastern Europe as well as in comprehensive concept conversions at the existing store network including the former Wal-Mart stores.

Half-Year Financial Report H1 2007 (217 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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