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METRO Group: Successful start into 2008

29.04.2008

METRO Group: Successful start into 2008

METRO Group started with strong sales and EBIT growth in into the financial year 2008. Group sales increased by 7.3% to €15.6 billion in the first quarter. Against the tough comparatives – the first quarter in 2007 was the strongest growing quarter last year – the sales development was on the whole satisfactory.

"METRO Group started successfully into 2008. The three growth drivers Metro Cash & Carry, Media Markt and Saturn as well as Real contributed significantly to the good business development", said Dr. Eckhard Cordes, CEO of METRO Group.

In Germany, sales increased by 0.9% to €6.3 billion. Considering the store disposals at Real, organic sales growth was significantly higher. Taking into account the tough comparative basis and the very early Easter business, the sales development was satisfactory in a generally stable economic environment.

In the international business – the growth engine of METRO Group – sales in the first quarter grew by 12.1% to €9.3 billion. Thus, the high growth dynamics continued undiminished. The international share of sales reached 59.8% after 57.2% last year.

In Western Europe (excluding Germany) sales grew by 4.8% to €4.8 billion in the first quarter. Sales in Eastern Europe continued to grow significantly by 21.6% to €3.9 billion during the same period. Also sales in Asia/Africa increased by 17.2% to €0.6 billion. Due to the strong appreciation of the Euro, significant currency rate effects were reported. Adjusted for these currency effects, sales increased significantly higher by 24.0%.

METRO Group’s EBITDA reached €478 million in the first quarter following €442 million in the first quarter 2007. EBIT grew by 13.8% to €152 million.

EBT reached €28 million after €30 million in the first quarter 2007. Earnings per share (EPS) from continuing operations was €-0.01.

METRO Group’s capital expenditure in the first quarter amounted to €345 million following €279 million in the first quarter 2007. The store network was further extended by 17 new store openings, of which ten were opened by Media Markt and Saturn.

Metro Cash & Carry with significant increase in earnings
Sales at Metro Cash & Carry grew by 7.0% to €7.5 billion in the first quarter compared to the same period last year. Like-for-like sales grew by 4.6%. In Germany sales rose by 0.8% to €1.3 billion in the first quarter. Like-for-like sales increased by 0.2%.

Sales in Western Europe increased by 1.4% to €2.8 billion and were above prior year’s level. Also, like-for-like sales grew, namely by 0.8%. Especially in The Netherlands and France, sales increased significantly. In Eastern Europe sales rose significantly by 15.4% to €2.8 billion. Like-for-like sales growth amounted to 10.6%. The high-revenue countries Russia, Ukraine and Turkey showed clear double-digit sales growth rates. Sales in Asia/Africa increased significantly by 14.2% to €0.5 billion. The international share of sales increased from 81.5% to 82.5%.

Due to the outstanding like-for-like sales development, EBIT grew faster than sales by 10.7% to €113 million. In the first quarter capital expenditure for expansion as well as for the modernisation of the store network amounted to €135 million after €90 million in the first quarter 2007. The store network was enlarged by four stores. In Germany, Greece, Poland and Russia one Metro Cash & Carry store each was opened.

Real in Germany again with like-for-like sales growth
Real’s sales increased in the first quarter by 5.9% to €2.8 billion. Like-for-like sales rose significantly by 6.4%. In Germany sales declined by 0.8% to €2.1 billion. This relates to the streamlining of the store network compared with the same period last year. The operational business continued to stabilise with like-for-like sales growth of 3.7%.

As part of the restructuring programme Real worked on the new marketing campaign, which was launched on 28th of April. Real now strengthens its appeal for customers with the new catchy claim “Einmal hin – alles drin" (Just one store - you won’t need more). "But this is only one module. Our restructuring programme for Real is comprehensive. In order to achieve the turnaround, we are working on three strategic components: Increasing of Real’s brand equity, optimising the store network and right-sizing the processes and costs. We defined numerous measures for each of these components, which we will systematically implement in the coming months", said Cordes.

The selective expansion in Eastern Europe continued very successfully. Sales grew by 36.0% to €0.6 billion. Also like-for-like sales increased significantly by 15.4%. Therewith, Real in Eastern Europe impressively highlights its role as growth driver. The international share of sales grew notably further from 18.2% to 23.4%.

EBIT improved by €5 million to €-40 million and reflects, besides the like-for-like sales development, measures initiated for price positioning in Germany. Capital expenditure amounted to €50 million in total, following €76 million in the first quarter 2007.

Media Markt and Saturn once again accelerated growth in Eastern Europe
Media Markt and Saturn increased sales in the first quarter 2008 by 10.5% to €4.4 billion. This development was achieved despite two trading days less across many countries in Europe. The market position in Germany was further enlarged. Sales grew by 4.0% year-on-year and reached €2.0 billion.

Sales growth in Western Europe was double-digit, namely 10.7%, totalling €1.9 billion in sales. Almost all countries generated sales growth. Like-for-like sales declined by 4.4% also due to tough comparatives. All in all, Media Markt and Saturn increased its market share in all countries, also in those facing challenging market conditions, thanks to its successful business concept.

In Eastern Europe sales increased very dynamically by 47.0% to €0.5 billion. Especially in Russia, sales growth rates were high. The international share of sales further in-creased significantly from 51.7% to 54.5%.

Taking into account less intense marketing activities, EBIT grew broadly in line with sales growth by 8.7% to €75 million. Capital expenditure in the store network amounted to €74 million after €53 million in the first quarter 2007. The store network was enlarged by six stores. The expansion focussed once again on the international business.

Galeria Kaufhof with further earning improvement
Sales at Galeria Kaufhof in the first quarter decreased by 1.3% to €800 million. In Germany, like-for-like sales declined by 1.1% to €722 million. While like-for-like sales grew in January and February, sales in March suffered from missing trading days as well as from lower textile sales due to the unusually cold weather.

In Belgium, the development continued benignly. Sales increased by 3.0% to €77 million. The international share of sales grew from 9.3% to 9.7% year-on-year.

EBIT improved by 5.3% to €-21 million despite the decline in sales. The unchanged strict cost management and implementation of the trading-up strategy contributed to this. Capital expenditure in the store network was €16 million after €12 million in the first quarter 2007.

Outlook
METRO Group plans to continue its profitable growth course in the financial year 2008. On assessments of future economic developments, sector trends and the development of our sales divisions, the company projects a positive business development.

METRO Group projects sales growth of more than 6% for the Group during the current financial year 2008. To this end, the Group plans to open about 40 new Metro Cash & Carry stores per year, more than 70 Media Markt and Saturn stores as well as around 15 Real hypermarkets. EBIT before special items is expected to increase by 6-8%. Potential expenses resulting from the announced streamlining of Real Germany’s store network are not included therein.

METRO Group’s investments are likely to exceed the prior-year’s level.

Quarterly Financial Report Q1 2008 pdf (232 KB) 

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