Fitch revises Metro AG’S outlook to negative

PARIS

Global rating agency Fitch has revised the Outlook on Metro AG’s (Metro) Longterm Issuer Default Rating (IDR) to Negative from Stable and affirmed the IDR and senior unsecured rating at ‘BBB’.

Global rating agency Fitch has also affirmed the unsecured rating of the notes issued by Metro Finance BV at ‘BBB’. These notes are guaranteed by Metro AG.

The Negative Outlook reflects the increased challenges faced by Metro in reducing leverage due to the weak consumer environment primarily in southern European countries and the group’s exposure to non-food retail activi- ties.

Global rating agency Fitch estimates that Metro’s exposure to Spain, Italy, Greece and Portugal represents about 12% of group’s sales and 25% in Eastern European countries.

Fitch expects that weak consumer demand will continue to weigh negatively on the group’s operating performance, as evidenced by the revised guidance for group EBIT before special items in FY12 at circa EUR2bn. As a result, Fitch expects Metro’s group lease-adjusted net debt/EBITDAR ratio to increase to about 3.5x in FY12 from 3.2x in FY11 which is high for the current ‘BBB’ rating level.

The ‘BBB’ rating continues to reflect Metro’s size and leading market share positions in many markets as well as its broad geographic diversification. However, the protracted weak consumer sentiment, intense price competition from food and non-food retailers and online retailers will continue to put pressure on the group’s performance and credit profile. Key challenges remain Metro’s capacity to improve like- for- like sales growth, improve profitability in its consumer electronics division Media Markt and Saturn and food retail division Real. In addition, Metro’s consumer electronics business still needs to roll out its internet platform and develop a successful multi- channel business.