pdf (5.4 MB) - Metro Group

© METRO AG 2008 

Field Trip 2008 

Metro Cash & Carry 

St. Petersburg 

19 / 20 June 2008 

Frans Muller 

Member of Management Board METRO AG 

CEO Metro Cash & Carry


Disclaimer 

This presentation contains forward-looking statements which are based on certain expectations and 

assumptions at the time of publication of this presentation and are subject to risks and uncertainties that 

could cause actual results to differ materially from those expressed in these materials. Many of the risks and 

uncertainties relate to factors that are beyond METRO Group’s ability to control or estimate precisely, such 

as future market and economic conditions, the behaviour of other market participants, the achievement of 

anticipated synergies and the actions of government regulators. Readers are cautioned not to place undue 

reliance on these forward-looking statements, which apply only as at the date of this presentation. METRO 

Group does not undertake any obligation to publicly release any revisions to these forward-looking 

statements which reflect events or circumstances after the date of these materials. 

This presentation merely serves the purpose of providing information. It neither represents an offer for sale 

nor for subscription of securities in any country including the USA. This presentation does not include an 

official offer of shares; an offering circular will not be published. 

This presentation is not allowed to be reproduced, distributed or published without prior agreement of 

METRO Group. 

1


Introduction 

Frans W.H. Muller 

Member of the Management Board METRO AG 

Nationality: Dutch 

Since 2008 CEO METRO Cash & Carry 

Since 2006 Member of the Management Board METRO AG 

2005-2008 CEO METRO Group Buying 

2002-2005 Member of the Executive Board of 

Directors, METRO Cash & Carry International 

1997-2002 Operations Director / Managing Director 

Makro Cash & Carry Netherlands 

1988-1997 Different senior management positions at KLM 

Cargo 

2


Metro Cash & Carry with Strong 

Top and Bottom Line Performance 

Leading global Cash & Carry wholesaler 

Matchless international expansion: international 

share of sales above 80% 

619 stores in 29 countries worldwide 

Growth focus in Russia, Ukraine and Asia 

Explore expansion potential in new countries 

Around 40 new store openings p.a. 

c. 6% p.a. medium-term sales growth targeted 

High operating RoCE (>20%) due to 

capital efficient model 

€ million 2007 2006 Change 

Sales 31,698 29,907 6.0% 

EBIT 1,243 1,111 11.9% 

EBIT margin 3.9% 3.7% - 

Operating RoCE 23.2% 21.7% - 

3


Dedicated Approaches for Different Markets Secure 

Long-Term Success 

Market 

Emerging 

Growing / 

Maturing 

Saturating 

Approach Regions 

Toolbox 

Generic 

Differentiated 

Focused 

Asia/Africa 

Eastern Europe 

Germany/ 

Western 

Europe 

Formats 

Branding 

Private Labels 

Destination 

Categories 

Customer 

services 

Back-end 

solutions 

etc. 

4


Unique Exposure to Growth Markets 

Countries 

Stores 

as at 31 March 2008 

Sales 2007 

in € million 

Share of 

sales 

1 9 13 6 

Germany Western 

Europe 

123 

Classic 57 / Junior 3 / Eco 63 

257 


Eastern 

Europe 

180 


Asia/Africa 

59 

Junior 56 / Eco 3 

5,671 (-0.5%) 12,682 (+0.4%) 11,702 (+15.2%) 1,643 (+15.9%) 

18% 40% 37% 5% 

5


Metro Cash & Carry is the Leading 

Player in Eastern Europe 

Turkey 

1990 Metro C&C 11 

1998 Real 11 

2007 Media/Saturn 4 

Greece 

1992 Makro C&C 9 


Hungary 



Poland 

1994 Makro C&C 27 

1997 Real 50 


Romania 


2006 Real 14 

Czech Republic 

1997 Makro C&C 12 

Bulgaria 


Slovakia 


Croatia 


Russia 


2005 Real 11 


Ukraine 


Moldova 


Serbia 


As at 31 March 2008 

6


Why Metro Cash & Carry is Welcome in Eastern Europe and 

Russia? 

Customers 

Local 

economy 

Authorities 

Employees 

Efficient supply chain management reduces prices for consumers 

Setting breakthrough standards in food safety and quality assurance 

Direct procurement and low wastage rates improve revenues 

of local farmers 

Up to 90% of goods locally sourced 

Making small local retailers and restaurants more competitive 

Reliable tax payer and transparent partner 

Creating a modern supply chain and efficient distribution 

infrastructure to support growing economies 

Traffic decongestion through one-stop-shopping, parking area and 

modern goods receiving facilities 

Employment of several hundred local employees for each store 

High investments in education and training 

7


Critical Success Factors in Eastern Europe & Russia 

Utilising first-mover advantage 

Securing real estate early on and at reasonable prices 

Offering Metro’s quality standards at competitive prices 

Supporting small businesses 

Serving a growing HoReCa sector 

Business model is highly capital efficient 

High level of management expertise 

8


Retail Sales Growth in Eastern Europe Surpasses GDP Growth 

in real terms 

GDP 2008e growth 

GDP growth 

2004 - 2007 (CAGR) 

Retail sales growth 

2008e 

Retail sales growth 

2004 - 2007 (CAGR) 

Source: FERI, IMF as of May 2008 

Germany 

1.4% 

2.0% 

2.4% 

0.0% 

Bulgaria 

5.8% 

6.2% 

11.2% 

14.2% 

Croatia 

4.8% 

4.9% 

3.8% 

3.4% 

Czech 

Republic 

4.9% 

6.4% 

9.3% 

Greece 

3.2% 

4.0% 

2.2% 

6.1% 4.4% 

Hungary 

2.3% 

3.1% 

-0.5% 

3.1% 

Moldova 

7.0% 

4.8% 

- 

6.5% 

Poland 

5.4% 

5.5% 

5.2% 

9.1% 

Romania 

5.5% 

5.9% 

13.0% 

Russia 

7.1% 

7.3% 

14.8% 

Serbia 

5.7% 

6.5% 

- 

Slovakia 

7.4% 

8.5% 

8.4% 

Turkey 

4.2% 

6.6% 

2.9% 

16.4% 13.5% - 7.4% 4.9% 

Ukraine 

6.2% 

6.0% 

9.3% 

17.0% 

9


In Eastern Europe Metro Cash & Carry Sales Almost Tripled in 

Seven Years... 

Sales 

in € million 

4,463 

5,055 

5,717 

CAGR > 14% 

6,205 

7,251 

8,837 

10,160 

11,702 

2000 2001 2002 2003 2004 2005 2006 2007 

2,433 

15% 

2,807 

Q1 2007 Q1 2008 

No. of stores 64 76 88 99 115 137 161 177 161 180 

10


... and Russia Remains One of the Most Attractive Markets 

in the World 

*GRDI: Global Retail Development Index 

* 

11


Metro Cash & Carry in Russia – Blueprint for Successful 

Expansion 

1999 feasibility study 

2001 market entry 

2003 break-even with 7 stores 

2007 first store opened in Sibiria 

Average sales area: 

c.8,200 sqm (Junior format) 

Capex per store incl. real estate: 

c.€20 million 

Sales 2007 / number of stores (year-end): 

> €65 million 

More than 10 million registered 

cardholders 

12


Geography, Climate and Bureaucracy are 

Major Challenges in Russia 

Climatic challenges 

- Min. temperature: – 50°C 

- Max. temperature: + 30°C 

Geographical challenges 

- 11 time zones 

- Moscow to Novosibirsk: 3,300 km 

Fragmented supply chains 

Significant differences between national and 

regional legislation 

Legislation requires a complex system for 

document management: 

- Certificates of origin and quality for all goods 

- Excerpts of customs declaration for imported 

goods 

13


2 

High Expansion Speed 

Expansion Russland, kommt noch 

3 

9 

2 

2 

RUSSIA 

# Stores 

40 

Q1 2008 

14


Russia Became Metro Cash & Carry’s #1 Country 

Within Eastern Europe After Only 5 Years 

3,000 

2,500 

2,000 

1,500 

1,000 

500 

- 

No. of stores 

40 

287 

510 

CAGR c.100% 

893 

1,453 

2,031 

2,548 

2001 2002 2003 2004 2005 2006 2007 

2 3 7 14 22 31 39 

Sales in € million Lfl-sales in € / sqm 

10000.0 

9000.0 

8000.0 

7000.0 

6000.0 

5000.0 

4000.0 

3000.0 

2000.0 

1000.0 

0.0 

27% 

Q1 2007 Q1 2008 

31 40 

15


Clear Focus on Destination Categories and Core Demand 

Customers... 

Sales by Category Customer Break down 

Household 4% 

Textiles 4% 

Office & media 

10% 

Beverages and 

tobacco 19% 

Non food - other 

10% 

Dry 24% 

Fresh 29% 

Services 19% 

Institution 

Industry 

CBU 37% 

38% 

HoReCa 5% 

2007 total Russian sales 2007 buying customers Russia 

Traders 39% 

16


... Also Reflected in Advertising 

17


Strong Market Position in a Growing Market 

Organised retail 

market shares 2007 

*Other Include: 

OK 

Ramstore 

MosMart 

ALPI 

Paterson 

Vester 

Holiday Classic 

Karusel 

Kirovskiy 

Monetka 

Other 

Other* 57% 

X5 Retail 10% Metro Cash & 

Carry 7% 

Magnit 7% 

Auchan 5% 

Lenta 3% 

Yunilend Holding 3% 

THKopeika 3% 

Sed'moi Kontinent 3% 

GC Victoria 2% 

Source: Ros Business Consulting 

18


Key Learnings in Russia and 

Other Eastern European Countries: 

Customers & Markets 

Managing shorter development cycles 

Demand for high frequency of innovation 

(assortment, merchandising techniques, 

remodelings etc.) 

Do not underestimate market size and buying 

power 

Openness for private labels and imported 

goods 

19




People 

High level of education, but no retailing / 

wholesaling-specific know-how 

High investment in staff training to 

understand wholesale business concept 

Challenge to retain employees 

Making jobs interesting through: 

- challenging tasks 

- appropriate compensation 

- national / international perspectives 

20




Operations 

High expansion speed important 

Building up efficient supply chain, quality 

assurance and logistics 

Supporting partners along the value chain 

(preparing for audits, re-engineering 

production, education etc.) 

Be transparent and compliant 

21


Key Messages 

Dedicated approaches for different 

markets secure long-term success 

Metro Cash & Carry is leading player in 

Eastern Europe with unique exposure 

In Eastern Europe Metro Cash & Carry 

almost tripled sales in seven years 

Russia remains one of the most attractive 

markets in the world 

Russia became Metro Cash & Carry’s #1 

country within Eastern Europe after only 

five years 

Solid sales and earnings development to 

continue 

22


Field Trip 2008 

Appendix


St. Petersburg [Санкт–Петербург] – Northern Area 

24


St. Petersburg [Санкт–Петербург] – Southern Area 

25


Metro Cash & Carry St. Petersburg III: 

Basic Data at a Glance 

Total capex: around €24 million 

Net sales area: 8,797 sqm 

No. of parking spaces: 700 

Opened: 31/05/2005 

Opening hours: 24/7 

Number of checkouts: 29 

Sales 2007: €60.1 million 

Food sales: 70%; Non-Food sales: 30% 

Number of Food articles: around 16,000 

Number of Non-food articles: around 13,000 

Locally sourced products: >20% (St. Petersburg region) 

26


Metro Cash & Carry St. Petersburg III 

27


Metro Cash & Carry Key Data 

Financials (€ million) 2002 2003 2004 2005 2006 2007 

Sales 23,972 25,093 26,442 28,087 29,907 31,698 

Change yoy in % 5.5% 4.7% 5.4% 6.2% 6.5% 6.0% 

Change yoy in % - l-f-l (€) 0.6% -1.1% 0.9% 1.5% 2.2% 2.6% 

Change yoy in % - pre-currency 6.4% 7.7% 5.6% 4.4% 6.2% 5.7% 

EBITDA 1,078 

1,200 1,280 1,377 1,510*** 1,631 

Change yoy in % 10.9% 11.2% 6.7% 7.6% 9.6% 8.0% 

EBITDA margin 4.5% 4.8% 4.8% 4.9% 5.0% 5.1% 

EBIT* 805 904 963 1,013 

1,111*** 1,243 

Change yoy in % 12.4% 12.3% 6.5% 5.1% 9.7% 11.9% 

EBIT margin 3.4% 3.6% 3.6% 3.6% 3.7% 3.9% 

Nopat 694 696 752 820 899 1,005 

Operating Capital Employed** 2,706 2,743 3,142 4,122 4,148 4,334 

Operating RoCE 25.6% 25.4% 23.9% 19.9% 21.7% 23.2% 

Capex 750 737 619 900 880 859 

* until 2003: EBITA 

** excl. historical goodwill 

2003 reduction of WACC from 7.3% to 6.5% 

Operating Statistics 2002 2003 2004 2005 2006 2007 

Number of stores 437 475 504 544 584 615 

Selling space (1,000 sqm) 3,423 3,725 3,952 4,218 4,507 4,875 

Change yoy in % 7.5% 8.8% 6.1% 6.7% 6.9% 8.2% 

Average store size (sqm) 7,832 7,841 7,841 7,754 7,717 7,927 

Sales/Øsqm (€) 7,259 7,021 6,889 6,876 6,856 6,757 

Sales (€ million) 

35,000 

30,000 

25,000 

20,000 

15,000 

10,000 

5,000 

Asia / Africa 

5% 

Sales and EBITDA margin 

Ø +5.7% p.a. 

2002 2003 2004 2005 2006 2007 

Sales EBITDA margin 

2007 regional sales breakdown 

Germany 

18% 

Eastern Europe 

37% 

5.5% 

5.0% 

4.5% 

4.0% 

3.5% 

3.0% 

2.5% 

2.0% 

Western Europe 

40% 

28


Contact 

METRO Group 

Investor Relations 

Schlueterstrasse 1 

40235 Duesseldorf 

Germany 

Tel.: +49 (0)211 68 86 1936 

Fax: +49 (0)211 68 86 3759 

Email: investorrelations@metro.de 

Internet: www.metrogroup.de 

29

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