Rewe Group Grows, Countering the Trend

Cologne, 01.07.04

Encouraging start to 2004 – Record turnover and profits in 2003

The Cologne-based Rewe Distribution Group has started out 2004 with encouraging growth in turnover. While the German federal office for statistics showed negative nominal turnover rates of one per cent in German retail trade, Rewe – as one of the leading German and European retailing and wholesaling companies – managed to increase its turnover proceeds markedly, countering the current trend. All of the company's businesses contributed to this growth.

"In our core businesses – the hotly contested food retail and wholesale trade – we are growing much better than the competition," said CEO Dr. E. Dieter Berninghaus at the presentation of the 2003 Annual Report on Thursday, July 1, in Cologne. The supermarkets, in which the group has made multi-million-euro investments to modernise both the own chain outlets (HL, miniMAL) and the network of independent Rewe retailers, are so far clearly ahead of comparable turnover figures from last year. Penny discount stores are growing at a double-digit rate, corrected for sales space, moving them ahead of their discount segment competitors who are suffering from falling growth rates, causing them to launch price wars against one another.

Turnover from Rewe Group's foreign activities in twelve European countries are making again an above-average contribution to quickening turnover growth. Rewe Touristik, the other core business of the Group, experienced turnover in the first four months of more than six per cent – markedly above last year's figures.

For the 2003 business year, the Annual Report not only shows a record turnover of 39.2 billion euros (+ 1.75 billion euros, or 4.7 per cent), it also shows one of the best operative results, which was around 400 million euros for the Group before taxes. Rewe's foreign activities contributed nearly half of these results. The proportion of foreign turnover in total Rewe food turnover increased to 29 per cent. Cash flow from current business activities reached 870 million euros in Germany and abroad for the companies within the Rewe Group. Of these, some 700 million euros were reinvested.

As for the anticipated industry outlook for 2004, the Rewe CEO was sceptical. "The general economic conditions in Germany do not leave much room for optimism at the moment," explained Berninghaus. "We can only hope that we will not need to bury our expectations for more growth that we felt at the beginning of the year before even slight improvements in the business cycle occur." Yet the CEO is still confident in Rewe Group. "We will exceed the turnover mark of 40 billion euros and continue to grow. We are not gambling on general growth in the economy to give us a boost, but instead are relying only on the strength of our own performance in all our European units," the CEO explained.

Rewe Annual Meeting sets the stage for the future

The CEO expects an additional boost from the most recent Rewe Annual Meeting in Baden-Baden. "We provided the Group with an exemplary system of corporate governance that meets European standards, we defined crystal-clear strategic and operative focal points for the future, and we returned with a very positive sense of having reinvigorated the whole company among our independent retailers and among our employees," CEO Berninghaus stated.

One part of the Group‘s new strategic orientation includes the "complete and exclusive" orientation to core businesses. This is, for one, the traditional foods business and the specialist stores in Germany and abroad. "Our central core business is and remains travel and tourism," noted CFO Gerd Bruse, who also leads the travel business at Rewe Touristik. The most important strategic objective remains that of increasing earning power – for all units in Germany and internationally.

With its supermarkets and hypermarkets, Rewe is striving to become the market leader in Germany. "To this end, our successful miniMAL concept in the own chain outlet system and our Rewe supermarkets run by independent Rewe retailers provide us with the best foundation," said Rewe Managing Board Member Josef Sanktjohanser, in charge of the full-range stores. Even in the hotly contested German discount segment, Rewe Group plans to become the undisputed number three with its successful Penny discount stores.

Aside from its offensive to expand its market position in Germany, Rewe intends to continue developing its business in twelve other European countries. "We want to grow profitably in all these countries, continuing to contribute a high proportion to the total results," said CEO Dr. E. Dieter Berninghaus – who is also in charge of foreign activities – explaining the strategic targets.

As for its purchasing activities, Rewe strives to achieve the leadership in efficiency. Rewe will make every effort to get the best prices from its suppliers, approaching industry with even greater self-assurance. The structural changes for this are already in place. "We will combine our purchasing power at the European level even more consistently and independent of the company or sales outlet type, implementing purchasing advantages for everyone in the future," announced COO Hans Schmitz. Private label products are to remain a core element of the product range strategy.

A leader in know-how in European retailing technology

Rewe claims the leadership in know-how for process management. Rewe Group already is the leader in terms of modern and efficient IT and logistics know-how among European retailers. The Rewe Managing Board also emphasises additional strategic focal points in corporate culture, which includes core elements of existential security, corporate responsibility, and openness. Overall, Rewe's strategic orientation is reflected in the new team-oriented leadership structure. "We see ourselves as a team of entrepreneurs" – the new credo of the Rewe Managing Board.

Contact

REWE GROUP-Corporate Communications
Tel.: 0221 - 149-1050
E-Mail: presse(at)rewe-group.com

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