OREANDA-NEWS  On 07 November was announced, that METRO Group continued its solid growth course during the first nine months of the year 2008. In an increasingly challenging market environment the company was able to increase consolidated year-on-year sales by 7.1% to EUR  47.8 billion. The international share of sales grew to 61.2%. Third-quarter sales rose by 6.7% to EUR  16.3 billion.

"METRO Group showed strength in a difficult environment. During the past nine months our business has continued to grow strongly", said Dr. Eckhard Cordes, CEO of METRO Group.

METRO Group’s sales continued to rise also in Germany: Following an increase of 0.9% during the first quarter and of 2.3% during the second quarter, METRO Group achieved a plus of 2.4% during the third quarter – despite the continued streamlining of Real’s store portfolio. Overall, METRO Group sales in Germany during the first nine months grew by 2.0% to EUR  18.5 billion.

In its international operations, sales during the first three quarters rose by 10.6% to EUR  29.3 billion (Q3 2008: +9.5%). In Western Europe (excluding Germany), METRO Group increased sales by 3.4% to EUR  14.8 billion. Business in Eastern Europe continued to develop dynamically: during the first nine months, sales rose distinctly by 19.3% to EUR  12.9 billion. Sales also increased strongly in Asia/Africa: by 16.7% to EUR  1.6 billion. In particular the operations in China, India and Vietnam reported a positive development and a like-for-like sales growth also in the third quarter.

Adjusted for special items, the operating result (EBIT) for the first nine months 2008 rose to EUR  855 million. This corresponds to an increase of 11.0% over the year-earlier period. Including special items, EBIT declined to EUR  618 million compared to EUR  770 million for the same period last year. This figure includes one-time expenses in the amount of EUR  237 million incurred during the second quarter.

EBT for the first nine months came in at EUR  260 million compared to EUR  418 million one year earlier. Earnings per share from continuing operations before special items amounted to EUR  0.79 following EUR  0.68 for the same period last year.

Metro Cash & Carry with double-digit sales growth in Eastern Europe and Asia/Africa

During the first nine months of the year sales of Metro Cash & Carry rose by 6.0% to EUR  23.9 billion, like-for-like they increased by 3.2%. EBIT developed over-proportionally as compared to sales and rose by 6.7% to EUR  646 million. The store portfolio grew by 11 to 626 locations. Up to 30 new wholesale stores are scheduled to open during the fourth quarter.

In its international operations, Metro Cash & Carry again grew significantly. In Eastern Europe, sales during the first nine months of the year rose by 13.8% to EUR  9.3 billion. Like-for-like, the sales growth came in at 8.5%. Sales in Asia/Africa during the first nine months grew by 14.2% to EUR  1.4 billion (adjusted for exchange rate effects: +20.3%). Especially in China, Metro Cash & Carry recorded a highly positive development. Sales in Western Europe during the first nine months rose by 0.6% to EUR  9.1 billion (adjusted for exchange rate effects: +2.0%), like-for-like they came in slightly below the prior-year value due to negative currency effects. France again reported significant growth.

The international share of sales continued to grow from 82.0% to 83.0%. With these figures, the self-service wholesale division of METRO Group again backed its position as the international leader in its market segment.

However, business of Metro Cash & Carry in Germany developed moderately. The sales volume generated during the first nine months came in slightly above the prior-year value but declined by 0.8% on a like-for-like basis.

"The German wholesale business will be repositioned. We have resolved an extensive action programme to this effect", explained Cordes. "Our goal is to restore the success of Metro Cash & Carry in Germany again".

The programme comprises four elements: a stronger focus on the core customer groups (hotels, restaurants, caterers as well as traders), the corresponding adaptation of the assortment, the extension of the services portfolio (model shops, individual customer advice, test phase for delivery service) as well as the increase of productivity. In this context, Metro Cash & Carry Germany plans to cut several hundred jobs over the next few months. As far as possible, this is to be achieved through natural fluctuation.

Real Germany wins more customers and grows like-for-like sales

During the first nine months 2008, sales of Real rose by 7.1% to EUR  8.3 billion. Also like-for-like sales grew strongly. They increased by 6.7% year-on-year. In Germany, sales during the first nine months came in at EUR  6.3 billion which is slightly up from the same period last year – with a plus of 0.7%. This plus was achieved although a total of 11 Real hypermarkets during the past twelve months had been divested or closed. Like-for-like, sales during the first nine months thus grew by 4.5%.

In September, Real Germany launched its new private label strategy. In the food segment, the long-term target is to generate up to 25% of total sales with private label products. Until the end of the year around 1,000 articles sold under private labels of Real will be available in the shelves. The launch will be accompanied by extensive marketing measures.

The positive trend in like-for-like sales of Real Germany persisted for the fourth consecutive quarter. This trend was supported by higher average sales per customer, a concurrent rise in the number of customers and a higher customer frequency. In this context, the number of customer visits rose by nearly three million during the first nine months. Real also made progress in terms of customer satisfaction: according to the survey "Kundenmonitor Deutschland 2008" published by Munich-based Servicebarometer AG, Real was the only hypermarket operator in the sector showing a distinct improvement in terms of customer satisfaction.

"Real is developing very positively. Over the past few months we have succeeded in significantly gaining in customer appeal and customer satisfaction. We want to give further impetus to this positive trend with our new private labels", said Cordes.

Business in Eastern Europe continued to develop very positively during the first nine months. Sales rose by 32.6% to EUR  2.1 billion. The international share of sales increased distinctly from 19.9% to 24.7%.

Real’s EBIT improved during the first nine months – adjusted for special items it came in at EUR  -93 million following EUR  -149 million during the same period last year. Including special items, EBIT generated during the period from January to September 2008 stood at EUR  -317 million. This figure includes expenses in the amount of EUR  224 million incurred during the second quarter for the scheduled streamlining of the Real store portfolio. Third quarter EBIT stood at EUR  -32 million, following EUR  -60 million one year earlier: the quarterly loss was thus cut by almost half. At the end of the third quarter, the store portfolio of Real comprised 432 locations.

Media Markt and Saturn with sales and earnings growth

9M sales of Media Markt and Saturn were up by 10.0% to EUR  12.7 billion. Like-for-like, sales dropped by 1.7%. This is in particular attributable to the challenging market environment in Western Europe with a declining consumption trend.

In Germany, sales during the first nine months rose by 4.9% to EUR  5.7 billion. Following a good first half, the third quarter had to compare against a high prior-year basis: sales during the third quarter 2008 grew by 0.3% to EUR  1.9 billion while, like-for-like, they declined by 1.3%.

Sales generated in Western Europe during the period from January to September 2008 rose by 8.8% to EUR  5.5 billion. In a persistently challenging market, Media Markt and Saturn continued to aggressively expand their market position also during the third quarter: In this context, Media Markt and Saturn in Spain have in the meantime become the leader in a strongly declining market.

In Eastern Europe, a sales growth of 42.1% to EUR  1.5 billion was generated during the first nine months of 2008. The share of international sales rose from 52.6% to 54.8%.

EBIT during the first nine months 2008 rose by 2.5% to EUR  253 million. During the third quarter, EBIT came in at EUR  117 million (Q3 2007: EUR  125 million) against the background of declining like-for-like sales. The store portfolio was extended by 35 to 737 locations. Around 30 new stores are scheduled to open during the fourth quarter.

Galeria Kaufhof again improved its earnings

At Galeria Kaufhof, sales during the first nine months declined by 1.4% to EUR  2.4 billion. In Germany, Galeria Kaufhof could partly escape the continued downward trend in the textiles sector. Third quarter sales came in at the year-earlier Q3 level and declined by 0.7% like-for-like.

In Belgium, sales generated during the period from January to September rose by 1.4% to EUR  229 million. The share of international sales rose from 9.4% to 9.6%.

Galeria Kaufhof succeeded in further improving its earnings during the first nine months of the year. EBIT came in at EUR  -43 million following EUR  -48 million year-on-year. Galeria Kaufhof already achieved a positive EBIT of EUR  7 million during the third quarter (Q3 2007: EUR  4 million). Normally, department stores only generate positive earnings during the Christmas quarter.

"Galeria Kaufhof succeeded in improving its earnings for the eighth consecutive quarter. This positive trend shows how well the company is positioned. The consistent implementation of the trading-up strategy as well as the rigorous cost management are bearing fruit", said Cordes.

Outlook for 2008 remains achievable

METRO Group plans to consistently follow its profitable growth path. However, it is difficult to ascertain the impact of the global financial crisis on sales, procurement and financing. Nevertheless, we intend to further strengthen our position as one of the leading international retailers, also in future.

In the context of our strategy of profitable growth, 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, more than 70 Media Markt and Saturn stores as well as around 15 Real hypermarkets. On the base of prior year’s EBIT of EUR 2,078 million, the 2008 EBIT growth target before special items (6 to 8%) remains achievable. Expenses resulting from the streamlining of Real Germany’s store network are not included therein.

The financial figures of METRO Group were adjusted for the figures of the sales brand Extra and the Adler fashion stores; the prior-year figures were adjusted accordingly. Starting from the third quarter, the sales brand Extra and the Adler fashion stores are reported as discontinued operations. METRO Group divested the Extra supermarkets in January 2008. In the second quarter, the Management Board of METRO Group had resolved to accelerate the disposal of Adler. In this context, the Adler group has been devalued on the basis of a revised planning.