* Strategy informed by early career at Daimler, Permira
* Booming e-commerce shaking up retail
* Shareholders claim need for more retail expertise
* CEO's contract expires in 2015, says he enjoys job
By Emma Thomasson and Matthias Inverardi
FRANKFURT, March 25 (Reuters) - Technology entrepreneur, merger manager and turnaround expert, Olaf Koch believes he has enough experience of big challenges to steer Europe's fourth-biggest retailer Metro through its next one: e-commerce.
In so doing, the tall 43-year-old chief executive aims to return the group to revenue growth and clean up its balance sheet to improve a credit rating that was cut to just above junk territory in 2012 at the height of the euro zone debt crisis.
But Koch may have a fight on his hands.
A recent report suggested that Metro's biggest shareholder, family-owned conglomerate Haniel, threatened not to extend his contract past 2015 because of a difference over strategy - while other investors contend the former finance chief does not know enough about retail operations to help the sprawling group, present in 32 countries with some 2,200 outlets, counter weak consumer confidence and growing online competition.
Koch himself, whose imposing, shaven-headed appearance sits at odds with his soft voice and easy manner, believes he has the wherewithal to meet that challenge.
"The core element in retail is change. Whoever doesn't keep up with the speed of change will have big difficulties," he says during an interview at the Reuters office in Frankfurt.
Koch, 43, started his career in 1994 at German auto maker Daimler, founded his own technology consulting firm in 1996, and then came back to Daimler just after its ultimately ill-fated merger with Chrysler in 1998 - a tie-up prompted by overcapacity in the industry similar to that being suffered by retailers now as trade shifts online.
He worked as a senior manager for Daimler's "corporate war room" on the integration of the German and U.S. carmakers and was then promoted in 2002 to board member with responsibility for finance and strategy at Mercedes.
After moving to private equity firm Permira in 2007, Koch got his first taste of the retail trade as board member at Hugo Boss, helping launch a turnaround plan after Permira bought a majority stake in the German fashion house. He joined Metro two years later in 2009 as chief financial officer.
Koch took over as CEO in January 2012 after Metro was plunged into a leadership crisis when his predecessor and mentor Eckhard Cordes - with whom he worked at Daimler - lost support.
"I have learnt that change is opportunity and not a threat," Koch says.
E-commerce is forecast to grow 25 percent in Germany this year, more than compensating for a 1 percent drop in store trade, and making it a vital channel for Metro.
The group's consumer electronics firm, Media-Saturn - Europe's biggest - only launched online sales two years ago but is already on track to make 10 percent of sales from e-commerce by 2015.
That is still low compared to rivals like Dixons and Darty, but it's a base from which to take on new challengers like newly-listed domestic appliance e-tailer AO World, which is eyeing the German market.
Koch said Media-Saturn can trump pure online players by capitalising on its store network, noting that 44 percent of customers who buy online pick up in the store.
"We are still rather at the beginning of the (Metro group's overall) transformation, perhaps 20 to 25 percent. There is still another 75 percent to go. I believe that we can achieve this potential," he said.
Not everyone agrees with this strategy, however.
Some of Metro's shareholders want to see Koch taking bolder measures such as selling off more of the group in order to raise cash and invest in new markets.
Metro was forced to deny a report in January that Haniel had threatened not to extend Koch's contract - which runs until Sept. 13, 2015 - unless he agreed to a breakup of the group.
Since then Koch has had to delay the stock market listing of a quarter of its Russian cash-and-carry wholesale operation - which had been expected to fetch at least 1 billion euros ($1.38 billion) - owing to market turmoil over the Ukraine crisis.
Metro has also tried in vain for years to sell off its Kaufhof department stores and Real hypermarkets divisions in Germany to focus on cash-and-carry and consumer electronics, which have better expansion prospects in growth markets.
Koch strongly disagrees with that strategy - "Breaking it up would be value-destroying" - and also says it is not important to get Metro back into Germany's main blue-chip stock index, because that could prompt thinking more aimed at boosting the short-term share price than long-term profits.
Some investors see the numbers expert as too focused on finance and not enough on operational performance. Others blame him for Metro losing its title as Germany's biggest retailer to the Schwarz group that owns discounter chain Lidl.
"Metro does not only need finance experts but also retailers at the top," Ingo Speich, portfolio manager at shareholder Union Investment, told last month's annual general meeting, asking for "more creativity and entrepreneurial spirit."
In response, Koch says he's going to keep at it.
"You can see that I have a long-term interest in the company from the fact that I keep buying shares," he says. "I enjoy the job a lot." (Editing by Sophie Walker)