Transformation is showing effect: METRO GROUP with positive performance in 2013

12 December 2013

  • EBIT before special items rose to €728 million (9M 2012: €706 million)
  • Operating cash flow improved by more than €300 million
  • Net debt reduced by €2.3 billion
  • Outlook 2013/14: slight absolute sales growth adjusted for portfolio changes and currency effects, EBIT before special items markedly up from adjusted prior-year value

METRO GROUP closed its short financial year with a positive performance and has further strengthened relevant balance sheet figures: EBIT before special items came in at €728 million which is €22 million up from the prior-year value. Adjusted for portfolio changes and currency effects, sales climbed by 0.9 per cent. "In 2013, we achieved what we set out to do in terms of both, sales and EBIT", said Olaf Koch, Chairman of the Management Board of METRO AG. "Especially the improved like-for-like sales trend is very encouraging. For the financial year 2013/14, we therefore expect to markedly exceed the adjusted EBIT before special items". With a reduction of the net debt by more than €2 billion and a further improvement of its cash flow, METRO GROUP also continued to materially strengthen its economic substance in 2013. 

"All sales lines have further driven and consistently implemented their strategies during the short financial year – always with a focus on our primary objective of creating value added for the customer. And we are seeing success: in many countries, we have further extended our market share. We will continue to pursue the transformation of METRO GROUP in financial year 2013/14 and support it in the perception of the public with a new brand appearance. In addition, we will also be celebrating the 50th anniversary of METRO Cash & Carry in 2014: for our customers, this will mean many great offers throughout the year and for us an important impetus for our business", said Koch. 

Business development 2013

Despite continued challenging international conditions for the retail sector, METRO GROUP succeeded in increasing sales by 0.9 percent to €45.0 billion during the short financial year (adjusted for portfolio changes and currency effects). Reported sales came in at €46.3 billion or 2.2 per cent down from the prior-year (9M 2012: €47.4 billion). This is attributable to the continued challenging economic environment in many parts of Europe, the already fulfilled portfolio changes as well as negative currency effects. 

Despite challenging market conditions and the resulting price investments in amounting to €706 million, EBIT before special items climbed to €728 million during the short financial year 2013 and thus developed in line with the guidance. Adjusted for special items, EBIT stood at €703 million which is €294 million up from the prior-year value. This includes special items in the amount of €25 million (9M 2012: €297 million). These special items in particular include positive effects from the divestment of Real's business activities in Eastern Europe. A negative effect resulted in particular from the insolvency of Praktiker AG and its subsidiaries as well as from the expenses for restructuring measures. Other special effects related to the expenses resulting from the transformation and streamlining of the non-food product ranges at METRO Cash & Carry. 

The net profit for the period before special items stands at €16 million (9M 2012: €165 million). The net profit for the period includes special items in the amount of €87 million (9M 2012: €179 million). Adjusted for these special items, the net loss for the period is €57 million down from the prior-year period and comes in at €-71 million. This corresponds in the short financial year with the net loss for the period attributable to the shareholders of METRO AG. The earnings per share before special items came in at €0.03 (9M 2012: €0.49). Adjusted for special items, the earnings per share amounted to €-0.22 (9M 2012: €-0.06). The Management Board of METRO AG will propose to the Annual General Meeting on 12 February 2014 not to pay out a dividend from the short financial year 2013. 

  Before special items Adjusted for special items
Earnings of METRO GROUP (in Million €) 30/09/20121 30/09/2013 30/09/20121 30/09/2013
EBIT 706 728 409 703
Earnings before taxes 289 282 -30 189
Net profit/loss for the period 165 16 -14 -71
Net profit/loss for the period attributable to the shareholders of METRO AG 160 9 -19 -71
Earnings per share in € 0.49 0.03 -0.06 -0.22

The operating cash flow of METRO GROUP continued to improve by more than €300 million: during the period under review, a cash outflow from operating activities in the amount of €1,768 million (9M 2012: €2,095 million cash outflow) was generated. In total, the company succeeded in significantly increasing the cash flow before financing activities by almost €1.7 billion compared to the prior-year period. This is also reflected in the reduction of the net debt by €2.3 billion to €5,391 million.  

Outlook

For the financial year 2013/14, METRO GROUP expects to see a slight rise in overall sales – even though economic momentum will remain below average and adjusted for implemented and announced portfolio measures. METRO GROUP used virtually consistent exchange rates in preparing this forecast. In like-for-like sales, METRO GROUP expects to see a trend improvement following the level of the comparable prior year period (pro forma 2012/2013) of -1.3 per cent and a level of sales that will roughly equal the previous year's level. 

Earnings during the financial year 2013/14 will also be shaped by the below-average pace of the economy. As a result, METRO GROUP will continue to closely focus in 2013/14 on efficient structures and strict cost management. 

The announced changes in the real estate strategy will impact earnings. In the comparable prior year period (pro forma 2012/2013), EBIT before special items of €2,000 million contained income from real estate sales that exceeded typical levels. In addition, the comparative base is reduced by the contributions from the portfolio changes. Adjusted for these effects totalling around €300 million, the comparative level from the previous year is €1.7 billion. METRO GROUP intends to markedly exceed this level in the financial year 2013/14. METRO GROUP used virtually unchanged exchange rates in preparing this forecast.
 

METRO Cash & Carry

Sales of METRO Cash & Carry during the period from January to September 2013 dropped by 2.0 per cent to €22.6 billion (in local currency: -0.5 per cent). Adjusted for the divestment of MAKRO Cash & Carry in the United Kingdom, sales remained at almost the same level as last year. The delivery service continued to develop dynamically and grew significantly by nearly 20 per cent to reach €2.0 billion (9M 2012: €1.6 billion). The share of own brand sales in total sales rose as well and came in at 17.0 percent (9M 2012: 16.9 per cent). In the third quarter 2013, METRO Cash & Carry reported a significant improvement in the sales trend in most countries where it is active. In the region Eastern Europe, sales in local currency developed very gratifyingly, especially in Russia and Turkey. Also China and India reported a very good sales trend. Overall, like-for-like sales in the region Asia/Africa grew by as much as 5.7 per cent. 

EBIT before special items of METRO Cash & Carry reached €442 million following €459 million during the prior-year period. By stabilising its EBIT margin before special items at 2.0 per cent, METRO Cash & Carry confirmed its profitability in a challenging economic environment. Adjusted for special items, EBIT climbed by €80 million to €339 million. Expenses for the transformation and streamlining of the non-food product range, amortisation of goodwill as well as restructuring expenses weighed on earnings. 

Media-Saturn

Media-Saturn further consolidated its market leadership in Europe during the short financial year 2013. Overall, the company gained additional market share in 9 out of 15 countries. Against this backdrop and despite the continued difficult macroeconomic conditions sales climbed by 0.6 per cent to €14.4 billion (in local currency: +1.0 per cent). Adjusted for the withdrawal from China, sales even climbed by 1.1 per cent. Online sales reported a tremendous growth of 75.0 per cent to €0.8 billion and reached a share of nearly 6 per cent in total sales of Media-Saturn. In Germany, sales continued to develop very positively growing by 3.1 per cent to €6.7 billion. Media-Saturn won further market share with both sales brands. Both, the online-only business and also the multichannel offer continue to report a very strong customer demand.  

EBIT before special items changed from €-6 million to €-33 million. Here, also the price investments and the decline in the share of brown goods in total sales to the benefit of a higher share in sales with new media products are showing their effects. Special items were in particular incurred as a result of restructuring activities in Sweden and Turkey, the conversion of Saturn stores to Media Markt stores in several countries as well as positive effects from the previously set up risk provision for the withdrawal from the Chinese market. Adjusted for special items, EBIT of Media-Saturn came in at €-54 million (9M 2012: €-3 million).

Real

The divestment of Real's activities in Russia, Romania and Ukraine have strongly influenced the company's sales in the short financial year 2013. The sales volume dropped significantly by 8.2 per cent to €7.3 billion (in local currency: -7.9 per cent). Like-for-like, however, sales only dropped by 2.1 per cent. In Germany, the share of own brand products in total sales developed positively and climbed from 16.0 per cent to 16.4 per cent. EBIT before special items improved from €-4 million to €-1 million. Positive special items that mainly resulted from the divestment of Real's business in Eastern Europe were reported in the amount of €119 million (9M 2012: €4 million). As a consequence, EBIT climbed significantly from €0 million to €118 million. In Germany, EBIT before special items climbed €8 million to reach €-9 million. In this context, higher energy and personnel expenses were more than offset by cost reductions in the store-specific other selling expenses. 

Galeria Kaufhof

As a result of four department store closures last year, sales of Galeria Kaufhof during the short financial year 2013 dropped slightly by 0.5 per cent to € 2.1 billion. Like-for-like, however, sales climbed by 0.9 per cent. In Germany, a distinctly positive trend was reported during the period under review for the textiles assortment, especially ready-to-wear and accessories. It allowed Galeria Kaufhof to win significant market share as compared to the overall textiles market, in particular in the fields of ladieswear and childrenwear. Furthermore, Galeria Kaufhof more than doubled its online sales to reach €24 million. EBIT before special items of Galeria Kaufhof improved by €8 million to €-16 million. This is mainly attributable to cost optimisation. EBIT adjusted for special items dropped to €-32 million (9M 2012: €-24 million). Here, further measures to optimise the store network showed their effect. 

Real Estate

EBIT before special items of the Real Estate segment climbed by €44 million to €455 million. Positive special items resulted from the divestment of Real's business operations in Eastern Europe. Negative special items were incurred as a result of the insolvency of Praktiker as well as of impairment losses in the framework of portfolio optimisations. During the short financial year 2013, EBIT adjusted for special items of the Real Estate segment climbed from €368 million to €447 million. This growth is attributable to higher gains from portfolio transactions, especially the divestment of the remaining METRO Cash & Carry locations in France. These divestment gains contrast with lower rental income due to divestments and higher impairment losses on real estate.

Key Financials 2013

METRO GROUP 30/09/2012
(€ billion)
30/09/2013
(€ billion)
Change Change in local currency
Sales 47.4 46.3 -2.2% -1.3%
Germany 17.8 17.8 0.0% 0.0%
Western Europe (excl. Germany) 14.3 13.7 -4.3% -4.2%
Eastern Europe 12.6 12.0 -4.5% -2.2%
Asia/Africa 2.7 2.8 5.1% 9.7%
EBIT1

(before special items)
€706 million €728 million € +22 million -
METRO Cash & Carry 30/09/2012
(€ billion)
30/09/2013
(€ billion)
Change Change in local currency
Sales 23.0 22.6 -2.0% -0.5%
Germany 3.6 3.4 -3.3% -3.3%
Western Europe (excl. Germany) 8.2 7.8 -5.9% -5.7%
Eastern Europe 8.7 8.6 -1.0% 1.6%
Asia/Africa 2.6 2.8 8.5% 13.3%
EBIT1

(before special items)
€459 million €442 million € -17 million -
Media-Saturn 30/09/2012
(€ billion)
30/09/2013
(€ billion)
Change Change in local currency
Sales 14.3 14.4 0.6% 1.0%
Germany 6.5 6.7 3.1% 3.1%
Western Europe (excl. Germany) 5.9 5.8 -2.2% -2.1%
Eastern Europe 1.8 1.9 4.8% 7.9%
Asia/Africa € 100 million € 21 million -78.5% -78.5%
EBIT

(before special items)
€-6 million €-33 million € -27 million -
Real 30/09/2012
(€ billion)
30/09/2013
(€ billion)
Change Change in local currency
Sales 7.9 7.3 -8.2% -7.9%
Germany 5.8 5.7 -1.3% -1.3%
Eastern Europe 2.1 1.5 -27.6% -26.6%
EBIT

(before special items)
€-4 million €-1 million € +3 million -
Galeria Kaufhof 30/09/2012
(€ billion)
30/09/2013
(€ billion)
Change Change in local currency
Sales 2.1 2.1 -0.5% -0.5%
Germany 2.0 2.0 -0.5% -0.5%
Western Europe (excl. Germany) 0.1 0.1 -0.6% -0.6%
EBIT

(before special items)
€-24 million €-16 million € +8 million -

Financials Q3 2013

Sales Q3 2012
(€ billion)
Q3 2013
(€ billion)
Change Change in local currency
METRO GROUP 15.9 15.5 -2.2% -0.2%
METRO Cash & Carry 7.8 7.8 -0.4% 2.,7%
Media-Saturn 4.8 4.8 -0.1% 1.0%
Real 2.6 2.3 -12.4% -11.6%
Galeria Kaufhof 0.7 0.7 1.1% 1.1%
EBIT before special items Q3 2012
(€ million)
Q3 2013
(€ million)
Change
(€ million)
METRO GROUP 399 437 +38
METRO Cash & Carry 238 233 -4
Media-Saturn 73 75 +2
Real 2 9 +7
Galeria Kaufhof -2 3 +5
Immobilien 128 179 +51

1 Adjustment of prior-year figure (see chapter Notes to the Group accounting principles and methods for the preparation of the consolidated financial statements in the Annual Report

METRO GROUP is one of the largest and most international retailing companies. The Group reached sales of around € 66 billion in the financial year 2012/13 (based on pro forma calculating period 1.10.2012-30.9.2013 due to short financial year 2013). The company has a headcount of around 265,000 employees and operates around 2,200 stores in 32 countries. The performance of METRO GROUP is based on the strength of its sales brands which operate independently in their respective market segment: METRO/MAKRO Cash & Carry – the international leader in self-service wholesale, Real hypermarkets, Media Markt and Saturn – European market leader in consumer electronics retailing, and Galeria Kaufhof department stores.