In spite of Indonesia’s promising economic outlook and robust growth in retail businesses, German-based retail giant Metro Group has cancelled its expansion plans within Southeast Asia’s largest economy on the back of the company’s dismal financial performance
n spite of Indonesia’s promising economic outlook and robust growth in retail businesses, German-based retail giant Metro Group has cancelled its expansion plans within Southeast Asia’s largest economy on the back of the company’s dismal financial performance.
Faced with such a grim outlook, Metro Cash & Carry CEO Frans Muller, said that the retail group had decided to focus on improving its sales figures in existing markets and accelerating expansion in selected countries where it had developed a good business model.
“We still believe Indonesia has enormous potential as one of the fastest emerging markets in the world. However, after carefully observing economic challenges as a whole, we have to prioritize our investments,” Muller said in a press statement.
Metro Group’s business partner in Indonesia, investment company Sintesa Group, had also agreed to put expansion plans on hold, said Sintesa Group vice president of corporate development Yono Reksoprodjo.
“Basically, we regret the cancellation. But we are willing to accept their decision,” he said as quoted by Kontan.
The cancellation came almost a year after Metro Group’s July 2011 announcement that it would open its first Metro Cash & Carry outlet in Jakarta by 2012. The planned wholesale retail outlet was supposed to be the first of about 20 planned retail outlets in Indonesia.
The world’s fourth-largest retailer has decided to tighten its belt by cutting 200 million euros (US$261.6 million) from its capital expenditures to 1.8 billion euros, after it suffered a net loss of ¤82 million this quarter, a plunge from a ¤3 million loss a year earlier, as reported by Bloomberg.
The loss was attributed to heavy investments in its consumer electronics unit Media-Saturn, where it cut prices of electronic goods in a bid to win back shoppers, and higher expansion costs.
Indonesia’s retail market is one of the largest in Asia. The Indonesian Retailers Association (Aprindo) estimates that the country’s retail business will grow by about 15 percent this year to Rp 138 trillion ($15.04 billion). (han)
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