Rewe profits jump 22% as international sales deliver

Sales increased 3.7 per cent to €45.1 billion (£36.7 billion) and pre-tax profit was up 22.2 per cent to €735.4 million (£581.5 million).

The German market accounted for 69.5 per cent of the retailer’s turnover, with its discount and full-range non-discount operations both showing growth.

Rewe said this was a result of format standardisation, with sales at full-range stores rising 3.4 per cent to €11.1 billion (£8.8 billion) – 2 per cent ahead of average German supermarket growth over the period.

But it was in international markets that the grocer posted its best performance. The discount operation flourished in eastern Europe, with sales up 15 per cent to €1.3 billion (£1.03 billion).

The full-range international business, which trades, among others, under the Billa, Merkur and Standa brands, grew by 10.1 per cent to €7.4 billion (£5.85 billion).

Planet Retail analyst Matthias Queck said: “Growth was not as big as it could have been, given that most of their foreign markets are in central and Eastern Europe.”

He added that Rewe’s growth overseas has been constrained in its home market by its co-operative structure of independent retailers, which are effectively acting as shareholders for the group.

“It is quite hard for the chief executive to persuade them [the German store owners] that opening stores in Russia, for instance, is a good idea,” said Queck. He added that international buying economies and higher profits in new markets would help Rewe continue its overseas expansion.

Last week, the EU said it had suspended its review of plans by Rewe’s Austrian unit to increase its stake in local rival ADEG from 24.9 per cent to 75 per cent.