Metro Group sees H1 and Q2 sales declines
Metro Group has posted a drop in net sales of 2.3% to EUR30.8 billion (USD40.6 billion) for the first half of its current financial year ended 30 June. It also saw a return to profitability on a very low level, helped by the sale of Real in Central & Eastern Europe (CEE). In local currency, sales were down 1.9%. Adjusted for already implemented portfolio changes including Makro Cash & Carry in the UK, the CEE Real hypermarket business and Media Markt China, sales increased slightly by 0.1% and 0.5% in local currency.
For the second quarter of 2013, sales decreased by 3.6% to EUR15.3 billion (USD20.2 billion). This is, in particular, attributable to earlier Easter business, according to Metro Group. Moreover, in the year-earlier period, Media-Saturn in particular benefited considerably from the UEFA Euro 2012 tournament. Adjusted for the already implemented and announced portfolio changes, sales slipped 0.5%. Sales of all banners dropped in H1 and Q2, with the exception of Media-Saturn, which generated a slight sales increase of 0.9% in H1.
"The disposable income and purchasing power of our customers in nearly all European countries were still burdened by austerity measures," said Metro Group CEO Olaf Koch, "Nevertheless, we continued to significantly strengthen our balance sheet and achieved positive overall business development. This is also one of the reasons why we remain convinced we can fulfil our sales and earnings guidance for the remainder of 2013."
For most Metro Group banners, EBIT before special items fell in H1 and Q2. Galeria Kaufhof bucked the trend by showing increased EBIT for both periods. On the group level, EBIT after special items for the first half of the year rose considerably by 477% to EUR364 million (USD479.6 million). However, this figure only corresponds to a still slender EBIT margin of 1.2%, and includes positive special items to the amount of EUR74 million (USD97.5 million).
These special items mainly comprise positive effects from the sale of Real in CEE. They were offset by costs arising from the insolvency of former subsidiary Praktiker and its associated companies. EBIT before special items dropped 5.5% to EUR290 million (USD382.1 million). For Q2, EBIT after special items increased 409.9% to EUR362 million (USD477 million), whereas EBIT before special items dropped by 12.4% to EUR276 million (USD363.7 million). Both declines were due to the sales development as well as price investments, especially at Media-Saturn, and adverse effects from strikes, particularly at Real in Germany, according to the company.
For H1, the net profit to the shareholders of Metro AG improved significantly to EUR17 million (USD22.4 million) compared with a net loss of EUR98 million (USD125.9 million) in the previous period. In Q2, by contrast, net profit rose to EUR33 million (USD43.5 million) against a net loss of EUR181 million (USD232.6 million) in the previous period.
Metro Group continued to implement the customer-centric realignment of the company, such as the expansion of its online and delivery business as well as the changes relating to structures, processes and portfolio. Accordingly, delivery sales rose 19.2% to EUR1.3 billion (USD1.7 billion) in H1 2013 and in Q2 by 21.8% to EUR0.7 billion (USD0.9 billion). Online sales climbed 72% in H1 and 88.5% in Q2. However, it has to be remembered that both delivery sales and online sale increases are coming from a relatively low base. The share of private label sales increased noticeably to 11.6% in H1 2013 and 12.1% in Q2.
As far as the outlook is concerned, Metro Group confirmed sales and earnings guidance for the short financial year 2013 (1 January-30 September 2013). It expects – in spite of continuing difficult business conditions – to generate moderate growth in sales (adjusted for portfolio changes). Earnings trends in the abbreviated 2013 financial year will be impacted by the economic situation.
As a result, Metro Group will continue to closely focus in 2013 and in future years on efficient structures and strict cost management. The company expects EBIT before special items to increase compared to the level achieved in the corresponding period of the previous year, that being EUR706 million (USD930.3 million). This projection is based on an assumption of higher income from the sale of real estate assets compared to the prior-year period. Operating earnings are expected to fall short of the levels of the first nine months of 2012, due to a lack of major sporting events taking place during the period.
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