Metro sees overseas sales boom while Germany lags

Metro saw overseas business reach a new record of 53.4 per cent of sales in 2005 as eastern European and Asia operations boomed while those in Germany declined. Two-thirds of profits now come from abroad.

A year ago, 49 per cent of sales were outside Germany.

The world’s third largest retailer said on Wednesday 2005 sales were up 4.2 per cent to €55.7bn - stripping out the Praktiker do-it-yourself business, which is no longer part of the group.

The floating off of Praktiker and sale of related sites brought in €840m of cash proceeds for Metro.

Earnings per share after write downs rose 6.5 per cent to €2.47, hitting the company’s revised target. The dividend was maintained at €1.02.

For 2006, Metro aims for sales growth of 4-6 per cent with EPS improvement of 5-8 per cent but assumes business in Germany will stabilise.

In 2005, sales in Germany fell 2.2 per cent to €25.9bn and earnings before interest and taxes slumped 28.4 per cent to €535m, largely due to a decline in the Real division’s food retailing. Real sales in Germany fell 9.5 per cent or 4 per cent on a like-for-like basis, 156 shops having been closed. The company is facing intense pressure from low cost retailers.

Kaufhof department stores, which mainly operate in Germany, also saw sales slip but cost cutting ensured a healthy 21.8 per cent rise in operating profits to €69.2m.

Success abroad is justifying the decision taken several years ago to diversify geographically. Eastern European sales grew by 20 per cent and operating profits by 30 per cent in the year. Double digit growth was also recorded in Asian operations.

Shares gained 0.5 per cent to €44.66 in morning trade.

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