Big stores pay off for Metro
economic conditions in its home market last year to post a 4 per
cent increase in sales - driven mainly by its larger store formats
such as cash & carry warehouses and the Real hypermarket chain,
writes Chris Jones.
Turnover reached €53.6 billion in 2003, Metro said in a statement this week, adding that growth would have been 5.7 per cent if not for the negative currency effect from its operations in China, the UK, Poland, Russia and Turkey.
Despite the ongoing pressure from currency movements, Metro pursued its internationalisation programme in 2003, lifting international sales by 6.1 per cent (or 10 per cent at constant exchange rates). Sales outside Germany now account for 47.2 per cent of total turnover.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) also improved during the year, growing by 8.2 per cent to €2.61 billion, while net profit grew by 13.8 per cent to €571 million, with operating efficiencies more than offsetting the additional costs incurred by the group as a result of the sale of its Divaco unit during the year.
Metro Cash & Carry, the most internationally oriented sales division, continued to be the main driver of growth, with sales by 4.7 per cent to € 25.1 billion in 2003, almost half the group total. Excluding currency effects - which hit this unit more than most because of its international spread - turnover was 7.7 per cent higher.
But even in Germany, where food retailers have struggled over the last year as a result of the recession, Metro Cash & Carry performed well, lifting sales by 6.7 per cent to €5.9 billion and allowing it to raise profits by nearly 13 per cent despite increased expansion costs.The group's Real hypermarket chain also performed well, despite tough conditions, lifting German sales by 0.9 per cent to €7.4 billion, a good performance in a market where almost all the growth in the last 12 months has come from the discount store sector. As a result of the weak zloty, sales at Real's Polish stores were just 0.1 per cent higher, however, reaching €8.2 billion. Profits rose by a healthy 9.2 per cent to €160.5 million.
Metro's smaller food stores fared less well, however, with sales at the Extra supermarket unit dropping 2.2 per cent to €2.8 billion, mainly as a result of store disposals. However, even on a like-for-like basis, sales were below the prior year level, albeit by just 0.9 per cent, with lower levels of consumer spending and increased competition from discounters suggested as the principal reason for the poor performance.
As a result of the poor performance, Extra's losses deepened year-on-year, falling from €47.2 million to €75.7 million.
