METRO Group with sales growth of 7.1% in the first half-year

- Group sales grow to €31.7 billion
- Sales in Germany increase by 1.6% to €12.5 billion despite store disposals at Real
- International sales grow by 11.1% to €19.2 billion
- International share of sales exceeds 60% for the first time
- EBIT before special items increases by 10.2% to €482 Mio.
- Real Germany with successful start of marketing campaign – like-for-like sales grow by 5.0% in the second quarter
- Outlook confirmed for 2008

METRO Group continued its profitable growth in the first six months of 2008. Group sales increased by 7.1% to €31.7 billion. For the first time, METRO Group’s international share of sales exceeded 60%. Sales in the second quarter grew by 6.9% to €16.1 billion.

"Overall METRO Group has achieved a successful first half-year. We managed to continue our strong growth in an increasing difficult economic environment. Again the most important value and growth drivers have been Metro Cash & Carry as well as Media Markt and Saturn. But also Real shows improvements", said Dr. Eckhard Cordes, CEO of METRO Group. "The initiated measures show first results. Real is becoming more attractive for customers again."

In Germany, sales increased by 1.6% to €12.5 billion in the first half-year of 2008 (second quarter 2008: +2.3% to €6.2 billion). This sales growth was achieved despite the further streamlining of Real’s store base as planned. Adjusted for the disposals at Real, sales even grew by 3.0%. Thus, the positive development already seen in the first quarter accelerated in the second quarter.

Conversely, the Adler fashion stores showed an overall weak development in a very difficult textile market environment. Against this backdrop, the Management Board of METRO Group resolved to accelerate the disposal of Adler. In this context, Adler group has been devalued on the basis of a revised plan.

International sales grew by 11.1% to €19.2 billion in the first half-year 2008 (second quarter 2008: +10.1% to €9.8 billion). Sales in Western Europe (excluding Germany) grew by 4.1% to €9.8 billion. Business in Eastern Europe continued to develop dynamically. In the first half-year sales grew notably by 20.0% to €8.3 billion. Also sales in Asia/Africa increased significantly by 15.8% to €1.0 billion. Adjusted for currency effects, sales increased by 22.7%. Thereby, all countries showed like-for-like growth, also in the second quarter 2008.

Adjusted for special items, earnings before interest, tax, depreciation and amortisation (EBITDA) in the first half-year 2008 grew to €1,140 million. This corresponds to an increase of 7.2% compared to the same period in 2007. With special items, EBITDA reached €874 million in the first half-year 2008 following €1,063 million in the same period prior year (second quarter 2008: €396 million following €621 million in the second quarter of 2007). This included €203 million expenses resulting from the announced, and in the second quarter resolved, streamlining of Real’s German store base (Real: €-223 million; Other Companies/Consolidation: €+20 million). In addition, non-cash effective expenses in the segment Other Companies/Consolidation negatively affected EBITDA by €63 million due to Adler’s revaluation.

EBIT in the first half-year 2008 amounted to €482 million, adjusted for special items. This corresponds to an increase of 10.2% compared to prior year. With special items, METRO Group’s EBIT decreased to €-130 million following €437 million in the first half-year 2007 (second quarter 2008: €-282 million following €303 million in the second quarter 2007). This included €237 million expenses resulting from the streamlining of Real’s store base. Of which, €224 million are attributed to Real and €13 million to the segment Other Companies/Consolidation. In addition, EBIT in this segment was negatively affected by non-cash effective expenses resulting from Adler’s revaluation to the amount of €375 million. Of which, €312 million result from the full goodwill impairment and €63 million from other expenses.

EBT amounted to €-361 million following €222 million in the first half-year 2007. EPS from continuing operations was €-0.76 after €0.33 in the first half-year 2007. Adjusted for the aforementioned special items, as well as the impact of Adler’s revaluation on the tax rate, EPS increased by 12.1% to €0.37.

METRO Group’s capital expenditure in the first half-year 2008 amounted to €818 million following €694 million in the first half-year 2007. In the first half-year 2008, 37 stores were opened – thereof 20 in the second quarter 2008.

Metro Cash & Carry with double-digit growth in Eastern Europe and Asia/Africa

Sales at Metro Cash & Carry grew by 6.1% to €15.7 billion in the first half-year 2008. Sales in Germany declined slightly in the first half-year 2008. Whereby, the increase in food sales could not fully compensate the declining non-food business, seen especially in the second quarter.

Sales in Western Europe in the first half-year 2008 increased by 0.6% to €6.0 billion. Like-for-like sales were on prior year’s level. While sales in the United Kingdom and Portugal in particular continued to decline, France and The Netherlands showed again satisfactory growth rates.

Sales in Eastern Europe in the first half-year 2008 rose significantly by 14.4% to €6.0 billion. Like-for-like sales growth amounted to 9.3%. Among others, Poland, Czech Republic, Russia and Ukraine showed above-average growth rates.

Sales in Asia/Africa in the first half-year 2008 increased significantly by 14.6% to €0.9 billion. All Asian countries, except for Japan, showed double-digit like-for-like growth rates in local currency. The international share of sales increased from 81.6% to 82.8%.

EBIT developed slightly better than sales and grew by 6.9% to €410 million. In the first half-year 2008 capital expenditure for international expansion and for the modernisation of the store network amounted to €329 million (first half-year  2007: €256 million). The store network was enlarged by eight stores.

Real Germany with strong like-for-like sales growth

In the first half-year 2008 sales at Real increased by 6.3% to €5.6 billion. Like-for-like sales rose by 6.5% year-on-year. Sales in Germany in the first half-year 2008 amounted to €4.2 billion and were on prior year’s level. This sales level was achieved despite 25 stores having been sold on respectively closed down in the past twelve months. The new marketing campaign with the slogan "Einmal hin. Alles drin." (Just one store – you won’t need more) was launched in April. Like-for-like sales in the second quarter grew significantly by 5.0%. A higher average sales per customer as well as a further increase in customer frequency contributed to the positive business development. In the first half-year of 2008 Real recorded 1.7 million additional customer visits.

"Real finally is getting back on the right track. The new marketing campaign had a good start", said Cordes. "The significantly increased customer frequency shows that we improved our appeal to customers. At the same time we are working with high pressure on the optimisation of our store network as well as on the improvement of processes and costs. In addition Real will offer its customers a broader range of private labels in autumn 2008. In future, up to 25% of the total food sales is expected to be achieved with private labels.

The business in Eastern Europe continued its very successful development in the first half-year 2008. Sales grew by 33.5% to €1.3 billion. The international share of sales grew notably from 19.1% to 24.0%.

Adjusted for special items, Real’s EBIT was €-61 million in the first half-year. With special items, EBIT amounted to €-285 million in the first half-year 2008 following €-89 million prior year. This development reflects price positioning measures as well as expenses resulting from the marketing campaign. In the second quarter, the price measures were compensated by positive volume effects.

Capital expenditure in the first half-year 2008 totalled €118 million following €150 million in the first half-year 2007.

Media Markt and Saturn with double-digit earnings and sales growth

In the first half-year 2008, sales at Media Markt and Saturn increased by 12.1% to €8.4 billion. Like-for-like sales declined slightly by 0.8%.

Sales in Germany increased by 7.4% to €3.9 billion in the first half-year 2008. Especially the development in the second quarter was excellent, with like-for-like sales growing by 4.6%, and also reflected successful advertising measures.

Sales growth in Western Europe in the first half-year 2008 increased by 10.8% to €3.6 billion. Particularly sales in The Netherlands, Belgium and Sweden showed a very positive development. The declining like-for-like sales development mainly resulted from the difficult economic environment in Spain and Italy.

In Eastern Europe sales in the first half-year 2008 increased by 43.1% to €1.0 billion. Especially Poland and Russia reported a very satisfactory sales development. The international share of sales increased from 52.3% to 54.4%.

EBIT increased by 11.3% to €137 million. Capital expenditure in the store network amounted to €148 million in the first half-year 2008 following €132 million in the first half-year 2007. The store network was enlarged by 19 stores.

Galeria Kaufhof with further improved earnings

Sales at Galeria Kaufhof in the first half-year 2008 declined by 2.0% to €1.6 billion. In Germany, Galeria Kaufhof was unable to avoid the effects of a declining textile market, especially in the second quarter. Like-for-like sales decreased by 2.2%. Sales in Belgium in the first half-year grew by 1.4% to €151 million. The international share of sales grew from 9.3% to 9.7%.

Galeria Kaufhof further improved its earnings. EBIT reached €-50 million after €-52 million in the first half-year 2007. Among the driving elements were the further execution of the trading-up strategy as well as the more efficient deployment of resources.

Capital expenditure in the store network was €40 million in the first half-year 2008 following €31 million prior year. On 7 May 2008, Galeria Kaufhof opened the fifth store of its "World Class Shopping" format in the Mönckebergstraße in Hamburg. With new lifestyle, new brands and new design, the system and concepts leader in the German department store sector underlines its leading role.

Outlook confirmed for 2008

METRO Group plans to rigorously continue its profitable growth course. Based on assessments of future economic developments, sector trends and the development of the sales divisions, the company projects a positive business development in 2008.

METRO Group projects sales growth of more than 6% for the Group during the current financial year 2008. To this end, the Group plans to open about 40 new Metro Cash & Carry stores per year, more than 70 Media Markt and Saturn stores as well as around 15 Real hypermarkets. Unchanged, EBIT before special items is expected to increase by 6-8%. Expenses resulting from the announced streamlining of Real Germany’s store network as well as expenses due to Adler’s revaluation are not included therein.

METRO Group’s investments are likely to exceed the prior-year’s level.

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