Sales and earnings developments

Pursuant to IFRS, companies only fully recognise sales revenues and the cost of sale for sales of goods or services if they assume the essential transaction-related opportunities and risks. Transactions where this is not the case are defined as so-called commission transactions where sales revenues are recognised only in the amount of the commissions which the company receives in its role as an agent. In the 1st quarter of 2012, METRO GROUP adjusted its definition of commission transactions. As a result, a higher proportion of transactions are recognised as commission transactions. The resulting reduction of sales revenues has no effect on the income statement as the corresponding cost of sales is no longer recognised either. The aim of this change of reporting is to improve comparability with other retail companies, particularly in terms of EBIT margin. To ensure comparability, sales for the financial year 2011 were lowered by a total of €0.8 billion. This affects the Galeria Kaufhof sales line and the “others” segment, in particular.

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Development of Group sales

by sales line and region

 

 

 

 

 

 

 

 

 

Change in %

 

 

 

 

 

 

 

2011
€ million

2012
€ million

in €

Currency effects in percentage points

in local currencies

1

Adjustment of previous year (see chapter “Notes to the Group accounting principles and methods“)

METRO Cash & Carry

31,1211

31,636

1.7

1.0

0.7

Real

11,0321

11,017

–0.1

–0.2

0.1

Media-Saturn

20,604

20,970

1.8

0.3

1.5

Galeria Kaufhof

3,1191

3,092

–0.9

0.0

–0.9

Others

501

24

–51.5

0.0

–51.5

METRO GROUP

65,9261

66,739

1.2

0.4

0.8

thereof Germany

25,4691

25,630

0.6

0.0

0.6

thereof international

40,4571

41,108

1.6

0.8

0.8

Western Europe (excl. Germany)

20,6991

19,808

–4.3

0.5

–4.8

Eastern Europe

16,9461

17,752

4.8

0.0

4.8

Asia/Africa

2,8121

3,548

26.2

9.1

17.1

 

Group sales of METRO GROUP 2012
by region

Sales of METRO CASH & CARRY 2012 (pie chart)

In the financial year 2012, METRO GROUP’s sales increased by 1.2 percent to €66.7 billion (previous year: €65.9 billion). In local currencies, sales rose by 0.8 percent. Positive
developments at our sales divisions METRO Cash & Carry and Media-Saturn contributed to this strong result. Adjusted for the divestment of MAKRO Cash & Carry in the United Kingdom and the Media-Saturn sale in France, sales growth was as high as 2.3 percent.


Sales in Germany grew by 0.6 percent to €25.6 billion. International sales increased by 1.6 percent – despite the above-mentioned portfolio changes. In local currencies, sales outside of Germany grew by 0.8 percent. As a result, the international share of sales rose slightly from 61.4 percent to 61.6 percent. Sales in Western Europe declined by 4.3 percent to €19.8 billion (in local currencies: ‑4.8 percent). This was partly due to the difficult economic situation in Southern Europe and, in particular, to the divestment of MAKRO Cash & Carry in the United Kingdom. Adjusted for portfolio changes, sales in Western Europe fell by just 2.2 percent. Conversely, sales in Eastern Europe saw strong growth of 4.8 percent to €17.8 billion (in local currencies: +4.8 percent). Strong growth momentum was recorded in Asia/Africa. Sales in that region rose sharply by 26.2 percent to €3.5 billion (in local currencies: +17.1 percent). As a result, the region’s share of METRO GROUP sales exceeded the 5-percent mark for the first time in 2012.

At €1,391 million, METRO GROUP’s 2012 EBIT declined by 34.2 percent compared to the previous year. This figure includes special items totalling €585 million, including, in particular, restructuring expenditures, goodwill impairments and impairments in connection with the sale of MAKRO Cash & Carry in the United Kingdom as well as the termination of Media Markt’s Chinese business and effects from the sale of Real’s Eastern European business.

Special items include non-recurring transactions such as restructurings or changes to the Group portfolio. Reporting before special items better reflects the Company’s operating performance and thus renders the earnings presentation more meaningful.

An overview including the reconciliation of special items can be found in chapter "Balance sheet profit of METRO AG and profit appropriation".

METRO GROUP’s EBIT before special items declined by 16.7 percent to €1,976 million. This could be attributed mostly to the difficult market environment in Southern Europe and parts of Eastern Europe as well as price investments.

In Germany, EBIT declined by €53 million to €320 million; EBIT before special items rose by €18 million to €522 million. EBIT from METRO GROUP’s international operations fell short of the previous year’s level. In Western Europe (excluding Germany), EBIT fell by €423 million to €480 million; EBIT before special items amounted to €642 million. This corresponds to a decline of €314 million. In Eastern Europe, EBIT retreated from €855 million to €731 million; EBIT before special items declined by €78 million to €849 million. In Asia/Africa, EBIT fell by €116 million to €–144 million, due mostly to the operating losses at Media Markt in China. EBIT before special items in Asia/Africa fell by €17 million to €–42 million.

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Development of Group EBITDA/EBIT and EBITDA/EBIT of the sales lines

 

 

 

 

 

 

EBITDA1

 

EBIT1

 

 

 

 

 

 

€ million

2011

2012

2011

2012

1

Before special items

METRO Cash & Carry

1,408

1,198

1,148

947

Real

321

276

134

102

Media-Saturn

809

625

542

326

Galeria Kaufhof

219

240

121

136

Real Estate

994

1,035

643

652

Others

–77

–57

–197

–168

Consolidation

–23

–25

–19

–20

METRO GROUP

3,651

3,292

2,372

1,976

 

Sales and earnings developments of the sales lines

METRO Cash & Carry

Sales of METRO Cash & Carry rose by 1.7 percent (in local currencies: +0.7 percent) to €31.6 billion in 2012. Like-for-like sales increased by 0.2 percent. The exit from the UK market dampened sales growth; adjusted for this portfolio change, sales grew by 3.2 percent. The deliveries business continued to show dynamic growth, with sales in this business reaching €2.2 billion (previous year: €1.6 billion). The sales share of own-brand products also rose strongly to 16.7 percent in 2012 – an increase of 1 percentage point compared to the previous year.

In Germany, the decline in sales by 3.3 percent to €5.0 billion in the financial year 2012 was due mostly to the optimisation of the portfolio of locations, which comprised 10 closures during the 4th quarter of 2011, as well as to the weaker nonfood business. Like-for-like sales, however, fell by just 0.7 percent.

Sales of METRO Cash & Carry 2012
by region

Sales of Real 2012 (pie chart)

Sales growth in Western Europe (excluding Germany) was dampened by the sale of the wholesale business of MAKRO Cash & Carry in the United Kingdom, as well as the difficult economic environment in Southern Europe, which had a negative effect on nonfood sales, in particular. Sales declined by 5.5 percent to €11.2 billion (in local currencies: –6.0 percent). Adjusted for the sale of MAKRO Cash & Carry in the United Kingdom, sales retreated by 1.8 percent. Like-for-like sales fell by 2.3 percent.

Strong sales growth was recorded in Eastern Europe during the financial year, with particularly favourable developments in Russia. Sales in Eastern Europe grew sharply by 5.5 percent to €12.1 billion (in local currencies: +5.3 percent). Like-for-like sales rose by 1.7 percent.

The strong sales momentum in the Asia/Africa region continued in the financial year 2012. METRO Cash & Carry achieved double-digit growth in all countries in which it operates. In total, regional sales grew by 25.9 percent to €3.4 billion (in local currencies: +16.9 percent). Like-for-like sales increased by 5.6 percent. METRO Cash & Carry’s expansion in China is particularly noteworthy: the sales line opened 12 new stores in that country, more than ever in any other country in 1 year.

The international share of sales of METRO Cash & Carry rose from 83.5 percent to 84.3 percent.

METRO Cash & Carry’s EBIT declined by 34.0 percent to €684 million from €1,037 million. Aside from the exit from the UK market, goodwill impairments and restructuring expenditures dampened results. EBIT before special items fell by 17.5 percent to €947 million. This decline is partly due to the fact that METRO Cash & Carry has established new functions to add even more value for customers. These include a customer-oriented reorganisation of its assortment and an expansion of customer management and the deliveries business. Efficiency increases in other areas partly offset this effect. In addition, higher expansion costs and price investments had a negative effect on EBIT. Additional adverse effects resulted from weaker like-for-like sales in Southern Europe. With an EBIT margin before special items of 3.0 percent, METRO Cash & Carry generated a solid return in a challenging environment.

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Key figures METRO Cash & Carry 2012

in year-on-year comparison

 

 

 

 

 

 

 

 

 

 

Change in %

 

 

 

 

 

 

 

 

2011
€ million

2012
€ million

in €

Currency effects in percentage points

in local currencies

Like-for-like (local currencies

1

Adjustment of previous year (see chapter “Notes to the Group accounting principles and methods”)

2

Before special items

Sales

31,1211

31,636

1.7

1.0

0.7

0.2

Germany

5,1251

4,955

–3.3

0.0

–3.3

–0.7

Western Europe (excl. Germany)

11,805

11,153

–5.5

0.5

–6.0

–2.3

Eastern Europe

11,4851

12,120

5.5

0.2

5.3

1.7

Asia/Africa

2,706

3,407

25.9

9.0

16.9

5.6

EBITDA

1,4082

1,1982

–14.9

EBIT

1,1482

9472

–17.5

EBIT margin (%)

3.72

3.02

Locations (number)

728

743

2.1

Selling space (1,000 m2)

5,517

5,484

–0.6

 

As of 31 December 2012, METRO Cash & Carry operated 743 locations in 29 countries: 107 stores in Germany, 235 in Western Europe (excluding Germany), 284 in Eastern Europe and 117 in Asia/Africa.

Real

Sales of Real matched the year-earlier level of €11.0 billion in 2012 (in local currencies: +0.1 percent) although our sales line trimmed its store network. Like-for-like sales increased slightly by 0.1 percent.

Sales of Real 2012
by region

Sales of Media-Saturn 2012 (pie chart)

Despite these store divestments, sales in Germany slightly exceeded the year-earlier level, rising by 0.1 percent to €8.1 billion. Like-for-like sales grew by 1.0 percent. The positive sales trend of the first 9 months gained momentum in the final quarter thanks mostly to October’s “Real Deal” campaign, which saw the sales line offering a select product at an especially low price every day.

Sales in Eastern Europe fell by 0.9 percent to €2.9 billion in 2012. This decline was due to currency effects; in local currencies, sales increased by 0.1 percent. Like-for-like sales, however, declined by 2.3 percent. Sales were dampened by continued consumer reticence in Poland and Romania, in particular. The Eastern European nonfood business remained difficult and prevented better sales developments.

At the end of November 2012, Real’s Eastern European business (excluding Turkey) was sold to the French retail company Groupe Auchan. The sale is subject to the approval of the responsible antitrust authorities and is scheduled to be closed in 2013.

The international share of sales at Real declined marginally from 26.5 percent to 26.3 percent.

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Key figures Real 2012

in year-on-year comparison

 

 

 

 

 

 

 

 

 

 

Change in %

 

 

 

 

 

 

 

 

2011
€ million

2012
€ million

in €

Currency effects in percentage points

in local currencies

Like-for-like (local currencies

1

Adjustment of previous year (see chapter “Notes to the Group accounting principles and methods”)

2

Before special items

Sales

11,0321

11,017

–0.1

–0.2

0.1

0.1

Germany

8,1061

8,117

0.1

0.0

0.1

1.0

Eastern Europe

2,926

2,900

–0.9

–1.0

0.1

–2.3

EBITDA

3212

2762

–13.9

EBIT

1342

1022

–23.6

EBIT margin (%)

1.22

0.92

Locations (number)

426

421

–1.2

Selling space (1,000 m2)

3,082

3,043

–1.3

 

EBIT retreated by €69 million to €25 million due partly to negative effects related to the sale of the Eastern European business. EBIT before special items declined by €32 million to €102 million. EBIT fell short of the year-earlier level in Germany, reflecting the formation of reserves, including for onerous contracts. Conversely, the positive EBIT trend continued in Eastern Europe, with our sales line improving its results in Russia, in particular. Real generated an EBIT margin before special items of 0.9 percent.

At the end of 2012, Real’s network of locations comprised 421 hypermarkets in 6 countries: 312 in Germany and 109 in Eastern Europe.

Media-Saturn

Media-Saturn reaffirmed its leading market position in Europe in 2012. In spite of a persistently challenging economic environment, sales rose by 1.8 percent to €21.0 billion (in local currencies: +1.5 percent). Adjusted for the sale of the French business in 2011, sales increased by as much as 2.9 percent. Like-for-like sales, in turn, retreated by 1.9 percent. The acquisition of Redcoon also supported Media-Saturn’s sales growth. All in all, online sales increased to €0.8 billion, more than double the previous year’s level. In 2012, Media-Saturn generated about 4 percent of its sales on the Internet.

Sales of Media-Saturn 2012
by region

Sales of Galeria Kaufhof 2012 (pie chart)

Sales in Germany developed very favourably in the financial year 2012 and reached €9.6 billion. Like-for-like sales increased by 1.0 percent, the first increase since 2009. The positive sales trend over the year could be attributed to investments that have rendered Media-Saturn’s stationary business more attractive, as well as the systematic expansion of the sales line’s Internet presence and higher demand for consumer electronics during the UEFA EURO 2012 football championship. Despite a negative calendar effect in the 4th quarter – there were fewer business days in 2012 than in the previous year – business markedly picked up during the Christmas season. Media-Saturn continued to gain market share in 2012.

Sales in Western Europe (excluding Germany) declined by 2.8 percent to €8.5 billion in 2012 (in local currencies: –3.2 percent). This was due mostly to sales tax increases in the Netherlands and Spain, which had a distinctly negative effect on business developments. In addition, sales of Media-Saturn in France were no longer included in year-on-year figures for 2012. Adjusted for the divestment of the French consumer electronics stores, sales declined by just 0.2 percent.

Sales in Eastern Europe increased sharply by 7.8 percent in the financial year 2012 (in local currencies: +7.6 percent) to €2.7 billion. Like-for-like sales also grew by 0.4 percent compared to the previous year. Key Eastern European growth markets for Media-Saturn included Russia and Turkey.

Within Asia, the Media Markt sales line recorded sales of €132 million in China in 2012. As announced, the test phase for market entry in China ended in December 2012. Based on the sales line’s experience and business forecasts, the Management Board of METRO AG has decided to discontinue Media Markt’s Chinese operations and has made the necessary accounting provisions.

The international share of sales at Media-Saturn declined slightly from 55.0 percent to 54.1 percent.

Media-Saturn’s EBIT amounted to €235 million after €493 million in the previous year. This decline is largely due to price investments and accounting provisions totalling €95 million for the termination of business operations in China. More efficient cost structures had a positive effect. EBIT before special items declined to €326 million from €542 million. The EBIT margin before special items reached 1.6 percent in the reporting year.

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Key figures Media-Saturn 2012

in year-on-year comparison

 

 

 

 

 

 

 

 

 

 

Change in %

 

 

 

 

 

 

 

 

2011
€ million

2012
€ million

in €

Currency effects in percentage points

in local currencies

Like-for-like (local currencies

1

Before special items

Sales

20,604

20,970

1.8

0.3

1.5

–1.9

Germany

9,266

9,635

4.0

0.0

4.0

1.0

Western Europe (excl. Germany)

8,712

8,471

–2.8

0.4

–3.2

–5.7

Eastern Europe

2,534

2,731

7.8

0.2

7.6

0.4

Asia/Africa

92

132

43.5

14.2

29.3

–23.4

EBITDA

8091

6251

–22.7

EBIT

5421

3261

–39.7

EBIT margin (%)

2.61

1.61

Locations (number)

893

942

5.5

Selling space (1,000 m2)

2,880

3,035

5.4

 

At the end of 2012, the store network of Media-Saturn comprised 942 consumer electronics stores in 16 countries: 404 in Germany, 364 in Western Europe (excluding Germany), 167 in Eastern Europe and 7 in Asia.

Galeria Kaufhof

In the financial year 2012, sales of Galeria Kaufhof declined by 0.9 percent to €3.1 billion. Like-for-like sales fell slightly by 0.6 percent. Changes in the reporting of commission transactions caused a corresponding reduction in sales of Galeria Kaufhof during the reporting year and the previous year. Commission sales generated from commission transactions are based on an underlying transaction volume of €488 million (previous year: €470 million).

Sales of Galeria Kaufhof 2012
by region

Property locations (620 locations) (pie chart)

Galeria Kaufhof generated sales of €2.9 billion in Germany in 2012 – a decline of 1.0 percent compared to the previous year. Like-for-like sales retreated by 0.7 percent. During the reporting year, Galeria Kaufhof concluded the discontinuation of the consumer electronics and media departments that it had initiated in 2010. Our sales line now uses the freed-up space to present higher-margin assortments including fashion, accessories, sports articles and toys. The textile assortment recorded particularly positive developments during the financial year. All in all, Galeria Kaufhof gained additional market share. Transaction volumes from commission sales in Germany amounted to €230 million (previous year: €226 million).

Galeria Kaufhof also made further strides in the fast-growing online business. At the end of 2012, the product offering presented at www.galeria-kaufhof.de comprised about 50,000 items. Online sales more than doubled to €25 million compared to the previous year.

In Western Europe (excluding Germany), sales rose by 0.8 percent to €0.2 billion. Like-for-like sales also increased by 0.8 percent. Transaction volumes from commission sales in Western Europe (excluding Germany) amounted to €258 million (previous year: €244 million).

EBIT rose markedly to €136 million after €94 million in the previous year. The various measures taken to optimise the network of locations clearly paid off. At €136 million, EBIT before special items rose €15 million from the previous year’s level of €121 million. The EBIT margin improved to 4.4 percent.

At the end of 2012, Galeria Kaufhof operated 137 stores: 122 in Germany and 15 in Belgium.

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Key figures Galeria Kaufhof 2012

in year-on-year comparison

 

 

 

 

 

 

 

 

 

 

Change in %

 

 

 

 

 

 

 

 

2011
€ million

2012
€ million

in €

Currency effects in percentage points

in local currencies

Like-for-like (local currencies

1

Adjustment of previous year (see chapter “Notes to the Group accounting principles and methods”)

2

Before special items

Sales

3,1191

3,092

–0.9

0.0

–0.9

–0.6

Germany

2,9361

2,908

–1.0

0.0

–1.0

–0.7

Western Europe (excl. Germany)

1831

184

0.8

0.0

0.8

0.8

EBITDA

2192

240

9.4

EBIT

1212

136

12.4

EBIT margin (%)

3.91, 2

4.4

Locations (number)

140

137

–2.1

Selling space (1,000 m2)

1,475

1,441

–2.3

 

Real Estate

The Real Estate segment comprises all real estate assets owned by METRO GROUP as well as real estate-related services and contributes to our Company’s value creation. The aim is to safeguard and systematically increase the value of the Company’s real estate assets over the long term: through international expansion, active asset and portfolio management as well as optimised resource deployment.

As of 31 December 2012, METRO GROUP owned 620 locations (previous year: 687).

EBIT fell to €607 million from €639 million, a decline of €32 million that also resulted from the sale of MAKRO Cash & Carry in the United Kingdom. EBIT before special items increased by €9 million to €652 million. This figure also includes higher proceeds from portfolio transactions.

Property locations (620 locations)
by region

Group WACC before taxes (graphic)

Others

The “others” segment comprises, among others, METRO AG as the strategic management holding company of METRO GROUP, the procurement organisation in Hong Kong, which also operates on behalf of third parties, as well as logistics services. In 2012, sales of the “others” segment declined to €24 million (previous year: €50 million). Sales mostly comprised commissions from the Hong Kong procurement organisation’s third-party business as well as from logistics. As a result of lower order volumes from a number of major customers, sales fell short of the year-earlier figure.

EBIT totalled €–278 million in 2012 (previous year: €–217 million). This figure includes expenses for the discontinuation of a location of our logistics company METRO LOGISTICS, comprehensive outlays for restructuring measures at METRO AG’s Düsseldorf headquarters and one-time expenses related to the shareholder action in connection with the integration of ASKO and Deutsche SB-Kauf into METRO AG in 1996. All in all, special items in the “others” segment amounted to €109 million. EBIT before special items improved markedly to €–168 million from €–197 million.