.
- Metro Cash & Carry will press ahead with international expansion
- Real s head Joël Saveuse to be appointed to Management Board of METRO Group; Systematic restructuring started: turnaround within a set two-year timeframe
- Media Markt and Saturn will maintain high expansion speed: increase in strategic flexibility
- Galeria Kaufhof: Trading-up strategy continued; department store business no longer strategic part of portfolio
- Sales increase by 10.4% to €64.3 billion in 2007
- EBIT grows by 8.8% to €2.1 billion
- Net debt significantly reduced by €947 million
- Dividend increase of 5.4% to €1.18 proposed
- METRO Group expects to increase sales by more than 6% and EBIT before special items by 6 - 8% in 2008 - medium-term EBIT growth of more than 8% expected
METRO Group closed the financial year 2007 with strong sales and EBIT growth. Furthermore, Dr. Eckhard Cordes, CEO of METRO Group, presented the key points for the future strategic direction of METRO Group. "Our successful financials in 2007 build a strong foundation for the future value-creating growth strategy of METRO Group", said Cordes. "In the past weeks we have analysed METRO Group s situation in detail. On this basis we developed our strategy to sustainably increase METRO Group s profitability as our highest goal."
Metro Cash & Carry, the most important growth driver, will continue emphatically to further develop its business and internationalisation. "We will push our expansion in Eastern Europe and Asia forward and gain significant market shares in the markets of tomorrow", said Cordes. Moreover, METRO Group is currently exploring expansion possibilities in other countries. The introduction of new services ought to increase the division s productivity in the more developed markets in Western Europe. For example, the customer relationship management will be intensified and a general delivery alternative will be looked into.
In 2007, Real stabilised its sales development and is working hard to achieve the turnaround. To accelerate this process, Joël Saveuse, Chairman of Real s Management Board, will be appointed to the Management Board of METRO AG. Saveuse will be given a three-year contract. For the successful turnaround a two-year timeframe has been determined. Saveuse has set up a process organisation for this purpose. "The programme is well structured, the accountability clearly assigned and the project monitoring tools are in place", said Cordes.
The turnaround in Germany shall be achieved by the further implementation of the new marketing approach, a stronger emphasis on private labels, a higher competence in fresh food and further cost reductions. The new marketing approach will be supported by an advertising campaign. Furthermore, Real s store base in Germany includes around 40 substantially underperforming stores. These stores generated losses of 40 to 50 million Euros last year. Real s management will seek solutions for the futures of these stores and disposals cannot be ruled out. Real s successful expansion in Eastern Europe will be intensified with around 15 new store openings per year. In 2008, the market entry into the Ukraine is scheduled. Real, including the international business, aims to generate an EBIT margin between 2% and 3% in the medium-term.
Media Markt and Saturn s aggressive expansion strategy in recent years will be continued. "Media Markt and Saturn is beside Metro Cash & Carry the most important and successful growth driver of METRO Group", said Cordes. "In order to further generate above-average growth in a dynamic and competitive environment, it is essential to be able to react quickly and flexibly in every respect. We are preparing ourselves for that in the coming years." An enlarged services offer should increase the general appeal of the format further. In 2008, the expansion in Russia and Turkey will progress, and furthermore, the market entry into Luxembourg is planned.
In 2007, Galeria Kaufhof again significantly increased its profitability, especially thanks to the successful execution of the trading-up strategy. "Galeria Kaufhof is a successful company", said Cordes. "But it is not a strategic part of METRO Group. Against this background, we are in a comfortable position to examine all our alternatives without any time pressure."
Financial year 2007
In financial year 2007 METRO Group increased sales by 10.4% to €64.3 billion. The figures do not include the disposed Extra supermarkets which are accounted for as discontinued operations. Organically, i.e. excluding the acquisitions of Wal-Mart Germany and Géant in Poland, sales increased by 7.4%. Currency effects amounted to 0.2%.
The company significantly improved international sales by 13.6% to €38.0 billion. Excluding the acquisition of Géant hypermarkets in Poland, sales increased by 12.3%. The currency effects amounted to 0.4%. Therewith, METRO Group`s international business reached a new maximum value: The international share of sales reached nearly 60% following 57% in the prior year.
METRO Group s EBIT rose to €2.1 billion. Adjusted for Extra as well as for the one-off effects in 2006 from the repositioning of Real, including the acquisitions of Wal-Mart Germany and Géant Poland, EBIT increased by 8.8% in 2007.
Based on the solid results, Management Board and Supervisory Board propose the payment of an increased dividend of €1.18 per ordinary share for financial year 2007 to the Annual General Meeting on 16 May 2008. This corresponds to a 5.4% increase. The dividend per preferred share shall be increased to €1.298.
Metro Cash & Carry and Galeria Kaufhof reached above-average earnings growth. Media Markt and Saturn s EBIT grew despite higher start-up losses in the new countries Sweden, Turkey and Russia. Real s EBIT decreased year-onyear, mainly due to higher investments in the selective expansion in Eastern Europe, which are attributed to the high expansion speed in Romania and startup costs for the planned market entry into the Ukraine.
EBT grew slightly to €1,579 million. Income taxes totalling €568 million were above prior year s level and include one-off tax effects amounting to €68 million.
Excluding these special items, the tax rate of around 32% was on prior year s level.
Income from continuing operations reached €1,011 million and was below prior year s level due to negative currency effects in the net financial income and special tax items. After minorities, income from continuing operations amounted to €853 million. That calculates to earnings per share of €2.61. Adjusted for special tax items, earnings per share came in at €2.82, which corresponds to a 3.7% increase (adjusted 2006 EPS: €2.72).
METRO Group reduced its net debt significantly to €4.3 billion after €5.2 billion in the prior year. Net dept therewith decreased by €947 million. The equity ratio rose by 40 basis points to 19.2%.
Capital expenditure amounted to €2.2 billion. That is €0.8 billion below prior year s level. However, adjusted for acquisitions in 2006, capex increased by €0.2 billion.
Also METRO Group s Economic Value Added (EVA) improved significantly in 2007 and amounted to €538 million after €426 million the prior year. Metro Cash & Carry, Media Markt and Saturn as well as Kaufhof generated a significant increase in EVA over the previous year. Kaufhof delivered a positive EVA for the first time.
As a result of the METRO Group s dynamic expansion, the number of employees continued to rise. An average of about 281,000 people worked for the group in 2006. That is nearly 30,000 more than the previous year.
Divisional business developments:
Metro Cash & Carry with double-digit earnings growth
In financial year 2007 the Metro Cash & Carry sales division emphasised its role as important growth driver within the METRO Group. Sales increased by 6.0% to €31.7 billion. A total of 32 new stores were opened. In its international business, Metro Cash & Carry generated an increase of 8.5% in sales to €22.3 billion. Therewith, the international share of sales corresponds to more than 80%. EBIT rose double-digit by 11.9% to €1.243 million.
Real with strong growth in Eastern Europe
The Real sales division considerably increased its sales by 25.4% to €11.0 billion. The acquisition of Wal Mart in Germany and Géant in Polen contributed to this. Organically Real grew by 5.3%. These figures have already been adjusted for the disposal of Extra. Real opened 14 new markets in Eastern Europe in the past financial year. Sales in Eastern Europe increased significantly by 73.0% to €2.3 billion and accounted for 21% of overall sales.
Sales in Germany increased by 16.9% to €8.7 billion. The sales development in the domestic market stabilized also on a like-for-like basis. Due to high starting losses in Eastern Europe, EBIT amounted to - €16 million.
Media Markt and Saturn continue with strong growth on their successful course
Also in 2007 the consumer electronics retailer of Media-Saturn-Holding GmbH continued their business success of past years. Overall sales were increased by 13.0% to €17.1 billion. Also on the domestic market sales rose by 4.7% to
€8.0 billion. International sales increased by 16.4% to €7.5 billion in Western Europe (without Germany) and by 50.9% to €1.7 billion in Eastern Europe. In 2007 a record number of 84 new stores were opened, one of these the first Media Markt in Turkey. EBIT climbed by 4.5% to €614 million. The dynamics of the EBIT development achieved, in spite of the intense pace of expansion, are reflected in the solid earnings strength of Media Markt and Saturn.
Galeria Kaufhof with strong EBIT growth in the third consecutive year
In 2007 the department stores of Galeria Kaufhof delivered sales of €3.6 billion.That is 1.5% less than the prior year. Adjusted for effects due to the increase in VAT, sales were slightly above the previous year s value. Thanks to the forceful implementation of the trading-up strategy, EBIT rose by 31.3% to € 107 million.This stands for a high double-digit growth in the third consecutive year.
Outlook
Group sales in 2008 are expected to grow by more than 6%. METRO Group expects an EBIT increase (before special items) in 2008 between 6% and 8%.METRO Group s capex is estimated to exceed €2.2 billion. Metro Cash & Carry expects to open around 40 stores, Real c. 15 hypermarkets, and Media Markt and Saturn more than 70 stores per year.
"In the context of METRO Group s value-creating growth strategy, sales are expected to increase by more 6% per year in the medium-term and EBIT growth before special items by more than 8%", said Cordes.
Service:
A live broadcast of the speech delivered by the CEO will be available from 9:30 a.m. at www.metrogroup.de. This is also where you can download the Annual Report 2005 as well as the press release. In addition, you will find further details about the Annual Press Conference.
- Metro Cash & Carry will press ahead with international expansion
- Real s head Joël Saveuse to be appointed to Management Board of METRO Group; Systematic restructuring started: turnaround within a set two-year timeframe
- Media Markt and Saturn will maintain high expansion speed: increase in strategic flexibility
- Galeria Kaufhof: Trading-up strategy continued; department store business no longer strategic part of portfolio
- Sales increase by 10.4% to €64.3 billion in 2007
- EBIT grows by 8.8% to €2.1 billion
- Net debt significantly reduced by €947 million
- Dividend increase of 5.4% to €1.18 proposed
- METRO Group expects to increase sales by more than 6% and EBIT before special items by 6 - 8% in 2008 - medium-term EBIT growth of more than 8% expected
METRO Group closed the financial year 2007 with strong sales and EBIT growth. Furthermore, Dr. Eckhard Cordes, CEO of METRO Group, presented the key points for the future strategic direction of METRO Group. "Our successful financials in 2007 build a strong foundation for the future value-creating growth strategy of METRO Group", said Cordes. "In the past weeks we have analysed METRO Group s situation in detail. On this basis we developed our strategy to sustainably increase METRO Group s profitability as our highest goal."
Metro Cash & Carry, the most important growth driver, will continue emphatically to further develop its business and internationalisation. "We will push our expansion in Eastern Europe and Asia forward and gain significant market shares in the markets of tomorrow", said Cordes. Moreover, METRO Group is currently exploring expansion possibilities in other countries. The introduction of new services ought to increase the division s productivity in the more developed markets in Western Europe. For example, the customer relationship management will be intensified and a general delivery alternative will be looked into.
In 2007, Real stabilised its sales development and is working hard to achieve the turnaround. To accelerate this process, Joël Saveuse, Chairman of Real s Management Board, will be appointed to the Management Board of METRO AG. Saveuse will be given a three-year contract. For the successful turnaround a two-year timeframe has been determined. Saveuse has set up a process organisation for this purpose. "The programme is well structured, the accountability clearly assigned and the project monitoring tools are in place", said Cordes.
The turnaround in Germany shall be achieved by the further implementation of the new marketing approach, a stronger emphasis on private labels, a higher competence in fresh food and further cost reductions. The new marketing approach will be supported by an advertising campaign. Furthermore, Real s store base in Germany includes around 40 substantially underperforming stores. These stores generated losses of 40 to 50 million Euros last year. Real s management will seek solutions for the futures of these stores and disposals cannot be ruled out. Real s successful expansion in Eastern Europe will be intensified with around 15 new store openings per year. In 2008, the market entry into the Ukraine is scheduled. Real, including the international business, aims to generate an EBIT margin between 2% and 3% in the medium-term.
Media Markt and Saturn s aggressive expansion strategy in recent years will be continued. "Media Markt and Saturn is beside Metro Cash & Carry the most important and successful growth driver of METRO Group", said Cordes. "In order to further generate above-average growth in a dynamic and competitive environment, it is essential to be able to react quickly and flexibly in every respect. We are preparing ourselves for that in the coming years." An enlarged services offer should increase the general appeal of the format further. In 2008, the expansion in Russia and Turkey will progress, and furthermore, the market entry into Luxembourg is planned.
In 2007, Galeria Kaufhof again significantly increased its profitability, especially thanks to the successful execution of the trading-up strategy. "Galeria Kaufhof is a successful company", said Cordes. "But it is not a strategic part of METRO Group. Against this background, we are in a comfortable position to examine all our alternatives without any time pressure."
Financial year 2007
In financial year 2007 METRO Group increased sales by 10.4% to €64.3 billion. The figures do not include the disposed Extra supermarkets which are accounted for as discontinued operations. Organically, i.e. excluding the acquisitions of Wal-Mart Germany and Géant in Poland, sales increased by 7.4%. Currency effects amounted to 0.2%.
The company significantly improved international sales by 13.6% to €38.0 billion. Excluding the acquisition of Géant hypermarkets in Poland, sales increased by 12.3%. The currency effects amounted to 0.4%. Therewith, METRO Group`s international business reached a new maximum value: The international share of sales reached nearly 60% following 57% in the prior year.
METRO Group s EBIT rose to €2.1 billion. Adjusted for Extra as well as for the one-off effects in 2006 from the repositioning of Real, including the acquisitions of Wal-Mart Germany and Géant Poland, EBIT increased by 8.8% in 2007.
Based on the solid results, Management Board and Supervisory Board propose the payment of an increased dividend of €1.18 per ordinary share for financial year 2007 to the Annual General Meeting on 16 May 2008. This corresponds to a 5.4% increase. The dividend per preferred share shall be increased to €1.298.
Metro Cash & Carry and Galeria Kaufhof reached above-average earnings growth. Media Markt and Saturn s EBIT grew despite higher start-up losses in the new countries Sweden, Turkey and Russia. Real s EBIT decreased year-onyear, mainly due to higher investments in the selective expansion in Eastern Europe, which are attributed to the high expansion speed in Romania and startup costs for the planned market entry into the Ukraine.
EBT grew slightly to €1,579 million. Income taxes totalling €568 million were above prior year s level and include one-off tax effects amounting to €68 million.
Excluding these special items, the tax rate of around 32% was on prior year s level.
Income from continuing operations reached €1,011 million and was below prior year s level due to negative currency effects in the net financial income and special tax items. After minorities, income from continuing operations amounted to €853 million. That calculates to earnings per share of €2.61. Adjusted for special tax items, earnings per share came in at €2.82, which corresponds to a 3.7% increase (adjusted 2006 EPS: €2.72).
METRO Group reduced its net debt significantly to €4.3 billion after €5.2 billion in the prior year. Net dept therewith decreased by €947 million. The equity ratio rose by 40 basis points to 19.2%.
Capital expenditure amounted to €2.2 billion. That is €0.8 billion below prior year s level. However, adjusted for acquisitions in 2006, capex increased by €0.2 billion.
Also METRO Group s Economic Value Added (EVA) improved significantly in 2007 and amounted to €538 million after €426 million the prior year. Metro Cash & Carry, Media Markt and Saturn as well as Kaufhof generated a significant increase in EVA over the previous year. Kaufhof delivered a positive EVA for the first time.
As a result of the METRO Group s dynamic expansion, the number of employees continued to rise. An average of about 281,000 people worked for the group in 2006. That is nearly 30,000 more than the previous year.
Divisional business developments:
Metro Cash & Carry with double-digit earnings growth
In financial year 2007 the Metro Cash & Carry sales division emphasised its role as important growth driver within the METRO Group. Sales increased by 6.0% to €31.7 billion. A total of 32 new stores were opened. In its international business, Metro Cash & Carry generated an increase of 8.5% in sales to €22.3 billion. Therewith, the international share of sales corresponds to more than 80%. EBIT rose double-digit by 11.9% to €1.243 million.
Real with strong growth in Eastern Europe
The Real sales division considerably increased its sales by 25.4% to €11.0 billion. The acquisition of Wal Mart in Germany and Géant in Polen contributed to this. Organically Real grew by 5.3%. These figures have already been adjusted for the disposal of Extra. Real opened 14 new markets in Eastern Europe in the past financial year. Sales in Eastern Europe increased significantly by 73.0% to €2.3 billion and accounted for 21% of overall sales.
Sales in Germany increased by 16.9% to €8.7 billion. The sales development in the domestic market stabilized also on a like-for-like basis. Due to high starting losses in Eastern Europe, EBIT amounted to - €16 million.
Media Markt and Saturn continue with strong growth on their successful course
Also in 2007 the consumer electronics retailer of Media-Saturn-Holding GmbH continued their business success of past years. Overall sales were increased by 13.0% to €17.1 billion. Also on the domestic market sales rose by 4.7% to
€8.0 billion. International sales increased by 16.4% to €7.5 billion in Western Europe (without Germany) and by 50.9% to €1.7 billion in Eastern Europe. In 2007 a record number of 84 new stores were opened, one of these the first Media Markt in Turkey. EBIT climbed by 4.5% to €614 million. The dynamics of the EBIT development achieved, in spite of the intense pace of expansion, are reflected in the solid earnings strength of Media Markt and Saturn.
Galeria Kaufhof with strong EBIT growth in the third consecutive year
In 2007 the department stores of Galeria Kaufhof delivered sales of €3.6 billion.That is 1.5% less than the prior year. Adjusted for effects due to the increase in VAT, sales were slightly above the previous year s value. Thanks to the forceful implementation of the trading-up strategy, EBIT rose by 31.3% to € 107 million.This stands for a high double-digit growth in the third consecutive year.
Outlook
Group sales in 2008 are expected to grow by more than 6%. METRO Group expects an EBIT increase (before special items) in 2008 between 6% and 8%.METRO Group s capex is estimated to exceed €2.2 billion. Metro Cash & Carry expects to open around 40 stores, Real c. 15 hypermarkets, and Media Markt and Saturn more than 70 stores per year.
"In the context of METRO Group s value-creating growth strategy, sales are expected to increase by more 6% per year in the medium-term and EBIT growth before special items by more than 8%", said Cordes.
Service:
A live broadcast of the speech delivered by the CEO will be available from 9:30 a.m. at www.metrogroup.de. This is also where you can download the Annual Report 2005 as well as the press release. In addition, you will find further details about the Annual Press Conference.
