UPDATE: GERMANY: Metro management shake-up to streamline business

Metro Group is to integrate the management structure of its Metro AG holding company and Metro Cash & Carry units in order to drive growth in new markets and reduce costs.

The food retailer said that the move, part of its Shape 2012 initiative, would streamline its corporate structure with the merger of management and administrative functions at its holding company and wholesale divisions.

Metro has targeted savings of EUR1.5bn by 2012 through the cost cutting plan and the company has indicated that it believes a large proportion of this can be achieved through cuts at Metro Cash & Carry.

As part of the restructuring, Metro will also split its international wholesale operations into two units – one for Europe, Middle East and North Africa and one for Asia and new markets.

Metro Cash & Carry's two new business units will be headed up by Joël Saveuse, who will be in charge of operations in Europe/MENA, and Frans Muller, who will be responsible for Asia and new markets.

Both Saveuse and Muller are members of Metro's management board, the composition of which is expected to remain unchanged.

Saveuse will remain in charge of hypermarket chain Real in addition to his new cash-and-carry role.

“The new corporate structure reflects the central role that Metro Cash & Carry has to the group,” a spokesperson for the company confirmed.

It is hoped that the reorganisation along regional lines will also allow Metro Cash & Carry to increase its focus on local market conditions, taking into account the different requirements of regional consumers, the spokesperson added.

The focal areas for the business unit Europe/MENA mainly comprise the turnaround in Germany, the extension of private labels and the further development of the delivery service, the company said.

Meanwhile, the Asia and new markets business will focus on the acceleration of international expansion in the medium term, as well improvement in the capital efficiency of new store openings.

"Shape got to a very good start in 2009 and already contributed EUR208m to EBIT in its first year," said Eckhard Cordes, chief executive of Metro Group.

“Having concentrated, in the first phase, especially on cost savings, we are now focusing in particular on productivity gains. Thereby, Metro Cash & Carry, as one of the group’s growth drivers, assumes a key position. The new structure enables us to implement the kicked-off change processes in the most optimal way."

The announcement comes on the same day that Metro announced a 7% drop in net income, which fell to EUR519m in fiscal 2009.