Metro Group reports sharp profit decline in 2012

Germany-based Metro Group has reported a sharp decline in net profit by 86.3% to EUR101 million (USD130 million) for the full year ended 31 December 2012. The retailer saw a double-digit decline in EBIT (before special items) across all its formats with the exception of Galeria Kaufhof and real estate. Metro Group’s net sales was slightly up by 1.2% to EUR66.7 billion (USD85.7 billion) supported by revenue growth in its Metro Cash& Carry and Media-Saturn stores.

Metro Group’s revenue in local currency grew by 0.8%. Adjusted for the disposals of Makro UK and Saturn France, sales rose by 2.3%. EBIT before special items came in below the prior year, falling by 16.7% to EUR1.9 billion (USD2.4 billion). The net profit for the period before special items decreased by 26.7% to EUR717 million (USD921 million) and was adjusted for special items to the amount of EUR615 million (USD790 million). Including special items, net profit for the period plummeted by 86.3% to EUR101 million (USD130 million).

At the same time, the company improved its operating cash flow by 11.9% to EUR2.3 billion (USD 3.0billion) and reduced its net debt by 20.4% to EUR3.2 billion (USD4.1 billion). "The continued challenging consumer environment in many European countries resulting from the sovereign debt crisis again impacted business development at Metro Group in 2012," said Olaf Koch, Chairman of the Management Board of Metro AG.

In Germany, sales rose 0.6% to EUR25.6 billion (USD32.9 billion). International sales rose by 1.6%. In Western Europe, sales fell by 4.3% to EUR19.8 billion (USD25.4 billion). One particular reason for this – apart from the ongoing economic situation in southern Europe – was the divestment of Makro Cash & Carry in the UK. Adjusted for these portfolio effects, sales in Western Europe only receded by 2.2%. Sales in Eastern Europe, by contrast, grew appreciably by 4.8% to EUR17.8 billion (USD22.9 billion). Very dynamic growth was reported in the region Asia/Africa. Here, sales climbed significantly by 26.2% to EUR3.5 billion (USD4.5 billion). With these results, the share of sales of this region in 2012 for the first time surpassed 5% of the total sales of Metro Group.

Sales of Metro Cash & Carry in financial year 2012 grew by 1.7% to EUR31.6 billion (USD39.8 billion). Russia, China and Turkey, in particular, contributed to this positive trend. Like-for-like sales improved by 0.2%. The sales growth was appreciably impaired by the market exit from the UK. Adjusted for this portfolio change, sales grew by 3.2%. In Germany, sales declined by 3.3% to EUR5.0 billion (USD6.4 billion), while like-for-like sales growth was down 0.7%. This is mainly attributable to the optimisation of the store portfolio which entailed 10 store closures in Q4 2011, and a weaker non-food business.

EBIT before special items dropped by 17.5% to EUR947 million (USD1.2 million). Including special items, EBIT reached EUR684 million (USD879 million). Higher expansion costs and price investments had a negative effect on EBIT. Metro Cash & Carry was represented in 29 countries with a total of 743 stores by the end of 2012.

Sales at Real hypermarkets were down 0.1% to EUR11.0 billion (USD14.1 billion), while like-for-like sales growth was up 0.1%. EBIT before special items declined by 23.6% to EUR102 million (USD131 million). Including special items, EBIT reached EUR25 million (USD32 million). In Germany, sales came in slightly above the previous year level despite store divestments and climbed by 0.1% to EUR8.1 billion (USD10.4 billion), while like-for-like sales grew by 1.0%. At the close of 2012, Real operated 421 hypermarkets in six countries.

Media-Saturn reported sales rose by 1.8% to EUR21.0 billion (USD27 billion) in spite of the continued difficult macroeconomic conditions. Adjusted for the divestment of business activities in France in the 2011 fiscal year, sales even rose by 2.9%. The growth of Media-Saturn was also supported by the acquisition of Redcoon. EBIT before special items declined sharply by 39.7% to EUR326 million (USD419 million). Including special items, EBIT came in at EUR235 million (USD302 million). This decline is mainly attributable to investments into prices and balance sheet provisions in the range of EUR95 million (USD122 million) for the discontinuation of Media Markt's business activities in China. Media-Saturn was operating 942 consumer electronics stores in 16 countries by the end of 2012.

Sales at Galeria Kaufhof declined by 0.9 % to EUR3.1 billion (USD4.0 billion), while like-for-like sales growth declined by 0.6 %. The conversion of Galeria Kaufhof's consumer electronics departments was completed in all German department stores in 2012. The company succeeded in more than doubling online sales to EUR25 million (USD32 million). EBIT before special items amounted to EUR136 million (USD175 million), up 12.4%.

The real estate segment of Metro Group generated EBIT before special items of EUR652 million (USD838 million), up 1.4%.

Planet Retail