Germany’s Metro Group announced record earnings in 2010, with all banners contributing to this growth.

Germany’s Metro Group announced record earnings in 2010, with all banners contributing to this growth.

EBIT before special items soared by 19.3% to E2.42bn (£2.1bn). Sales rose 2.6% (0.9% in local currency) to E67.3bn (£57.7bn). The rise in earnings was partly aided by the ongoing impact of the retailer’s Shape 2012 programme, which was launched in 2009 to ensure profitable growth in the long term.

According to Metro Group, Shape’s contribution to earnings since its launch climbed to E527m (£452m). However, the intended potential for profit improvements by 2012 and beyond amounts to E1.5bn (£1.3bn), which means that the amount accumulated so far has reached only 35% of the target.

International markets, which account for almost two-thirds of group sales, are still a major growth driver. The company is focusing on international expansion largely in developing markets across Central and Eastern Europe, as well as Asia and Africa where there is still much potential for expansion, rather than on growth in mature Western European markets where most of its formats have reached saturation level. International sales were up by 5.4% in 2010.

Last year, Metro Group opened 100 new stores - of which 38 were Metro Cash & Carry, two were Real stores and 60 were opened under the Media Markt and Saturn banners - in 25 countries, bringing the total store number to 2,131 in 2010.

Also last year, Metro Cash & Carry completed its market entry into Egypt, Media Markt launched in China and Saturn opened its first store in Russia.

Two new markets are planned for 2012. Metro Cash & Carry will enter Indonesia, with reports indicating that the retailer is planning at least 20 stores in Bandung, Jakarta, Surabaya, Central Java, Bali, and Sumatra. The second new market entry will be Norway. Metro Group will open its first Media Markt store there, but has not given details on the number of planned stores.

Looking forwards, Metro Group is expecting sales growth of more than 6% annually in the coming year. However, for 2011 - assuming an overall economic recovery and moderate price increases, in particular in the fields of energy and raw materials - sales are anticipated to grow by more than 4% when adjusted for portfolio changes.

Natalie Berg, global research director, Planet Retail. For more information contact us on:

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