METRO GROUP 2013/14 with positive dynamic during the course of the year

16 December 2014

Significant progress in transformation process

  • EBIT before special items at €1,727 million – profit for the period significantly above the previous year's figur
  • 1.3% rise in sales (adjusted for portfolio changes and currency effects) – like-for-like sales increased slightly after a decline during the previous year
  • EPS before special items increased by about 25% to €1.84
  • Dividend proposal of €0.90 per ordinary share
  • Net debt reduced considerably by €736 million
  • Online and delivery with significant growth
  • Like-for-like sales rose in the fourth quarter by 0.7%; increase in all sales divisions
  • Christmas business satisfactory after slow start
  • Outlook for 2014/15: Adjusted for currency effects further rise in sales and earnings expected

In financial year 2013/14, METRO GROUP successfully continued to implement its transformation process and met its targets: The Düsseldorf-based retail and wholesale company was in line with outlook with EBIT before special items of €1,727 million and sales growth adjusted for portfolio changes and currency effects of 1.3%. The considerable improvement in earnings at Media-Saturn made a significant contribution to this development. "We have made significant progress in all business activities by systematically focusing on our customer groups in terms of range, services and multichannel marketing," said Olaf Koch, CEO of METRO AG. "This trend is also reflected in our figures. The fourth quarter was especially outstanding with a rise in like-for-like sales in all sales divisions. In order to keep momentum for this business development going, not only will we proceed in 2014/15 resolutely with the transformation of METRO GROUP, but we will also intensify those efforts." In addition, METRO GROUP further strengthened its financial foundation by significantly reducing its net debt by €736 million. At the Annual General Meeting, a dividend of €0.90 per ordinary share will be proposed to let the shareholders participate in the positive development of business.

The METRO GROUP sales divisions have also had a positive start to financial year 2014/15, which began in early October. While the Christmas business in Germany in November − especially with regard to food and textile − got off to a slow start (in the case of textile due in part to mild weather), it began to pick up in the first two weeks of December. In particular, METRO Cash & Carry and Media-Saturn have been able to record year-on-year growth. METRO GROUP anticipates an overall satisfactory Christmas business for 2014.

Thanks to the systematic implementation of their strategies, in addition to a number of measures and initiatives, all sales divisions contributed to the successful transformation of METRO GROUP in financial year 2013/14.

In 2014, METRO Cash & Carry celebrated its 50th anniversary in all 28 countries where it is represented. At the same time, it publicly launched its new brand presence. Highlights from the jubilee included celebrations and events for customers and employees in Berlin, Düsseldorf and Mülheim, where the company was founded, as well as the national minitruck tour. The international promotional campaign "50 Years Jubilee Weeks", which offered a product deal every day for 50 days in honour of the anniversary, also provided a significant boost to the business of the wholesale subsidiary. "During the anniversary year, we succeeded in increasing customer frequency, sparking enthusiasm in new customers and winning back former customers. However, it is as important to us that the festivities and special offers allowed us to show our gratitude to our customers and employees for their loyalty and deep commitment," Koch said. Sales from the delivery business of METRO Cash & Carry continued to grow dynamically, rising by 9.5% in 2013/14 to €2.8 billion (in local currency: +13.6%). The share of own brand sales also increased and rose from 16.8% to 17.0%. METRO Cash & Carry aims to gradually separate delivery from the wholesale store and implement a professional food-distribution concept. This plan includes delivery hubs, for example, where products specially tailored to local customers from the catering industry are stored. METRO Cash & Carry made the first steps towards achieving this aim in financial year 2013/14 by establishing the first hubs in China and Germany.

In financial year 2013/14, Media-Saturn successfully expanded its online and multichannel retailing activities and opened Europe’s most cutting-edge consumer electronics store. The new Media Markt in Ingolstadt offers customers a completely new shopping experience through the networking of online and offline media, innovative interactive features in the store and multimedia product presentations. Online generated sales at Media-Saturn rose by nearly 30% in financial year 2013/14 to €1.4 billion.

In late September 2014, Real was able to take stock of the tangible successes of the transformation process: Across Germany, the sales division had remodelled and modernised 50 locations by then − based on the successful new market concept in Essen-Altendorf, where it was implemented already in October 2013. Real is now offering an optimised product range, more attractive prices and an enhanced shopping atmosphere in all of its remodelled stores. Further stores are to be remodeled based on the new concept in financial year 2014/15.

Galeria Kaufhof also promoted its online business in 2013/14. Since summer 2014, the sales division’s German stores have been fitted with some 1,100 tablet computers to support customer service and sales. The mobile tablets enable employees to access the online shop, galeria.de, and order products which are sold out at their store, for example, or which are not part of the usual stock on offer. Online sales at Galeria Kaufhof rose by 64% in financial year 2013/14 to €63 million.


Progress in portfolio optimisation successfully continued

METRO GROUP has made further progress in optimising its portfolio: In late November 2014, the retail and wholesale company announced that it had sold its Greek wholesale subsidiary MAKRO Cash & Carry to the local retailer Sklavenitis. The transaction, which is expected to be concluded during H1 2015, includes the entire operating business of MAKRO Greece comprising nine wholesale stores and the associated real estate portfolio with a company value of €65 million. "By selling our wholesale business in Greece, we continue to pursue our strategy of focussing on those countries in which we have a critical mass and relevant market position − both of which we can use as a foundation for developing long-term growth potential," Koch commented.

Additional measures for placing focus on the portfolio during financial year 2013/14 were the withdrawal of METRO Cash & Carry from Denmark (expected to be completed as at 31 December), the disposal of the wholesale business in Vietnam (execution of transaction expected for the first half of 2015), the sale of Real in Turkey and the sale of the shareholdings in British wholesale company Booker. The transactions enable METRO GROUP to invest in future growth and also to further strengthen its balance sheet. 


Business development 2013/14 

METRO GROUP sales rose by 1.3% in financial year 2013/14 (adjusted for portfolio changes and currency effects). Like-for-like sales increased slightly by 0.1% following a decline during the previous year of 1.3%. Considerably negative exchange rates and portfolio effects especially due to a weak Russian ruble and sale of Real Eastern Europe led to a decline of reported sales by 4.0% to € 63.0 billion. 

At €1,273 million, METRO GROUP's EBIT fell short of the previous year's level by €415 million in financial year 2013/14 (2012/13: €1,688 million). However, this figure included special items of €454 million (2012/13: €313 million). In particular, these special items comprised portfolio measures, projects to increase efficiency and goodwill impairment losses. EBIT before special items amounted to €1,727 million. While EBIT before special items is down by €273 million on the previous year, it should be noted that the previous year's figure of €2,000 million contained income from real estate disposals and portfolio changes that exceeded usual levels. The comparable previous year's figure amounted to approximately €1.7 billion. METRO GROUP expected EBIT before special items to considerably exceed the comparable previous year's figure of €1.7 billion, assuming that exchange rates remain constant. This target was later set at €1.75 billion, provided that exchange rates remain constant. In reality, METRO GROUP generated EBIT before special items of €1,727 million and therefore met its target. The impact of negative currency effects amounted to €82 million.

Profit for the period amounted to €182 million in financial year 2013/14, which is €124 million higher than the previous year's level (2012/13: €58 million). Net of non-controlling interests, profit for the period attributable to the shareholders of METRO AG amounted to €127 million (2012/13: € 35 million). This corresponds to a significant increase of €162 million. Profit for the period adjusted for special items that totalled €491 million amounted to €673 million (2012/13: €580 million). In financial year 2013/14, METRO GROUP generated improved earnings per share of €0.39 (2012/13: € 0.11). EPS before special items amounted to €1.84 (2012/13: €1.47). At the Annual General Meeting on 20 February 2015, the Management Board of METRO AG will propose distributing a dividend of €0.90 per ordinary share. METRO AG's dividend policy calls for distribution of between 40% and 50% of EPS before special items. This year’s dividend proposal corresponds to a payout ratio of 48.9%.

  Before special items
As reported 
Income Statement METRO GROUP (€ million)
2012/13 2013/14 2012/13 2013/14
EBIT 2,000 1,727 1,688 1,273
EBT 1,429 1,233 1,048 709
Profit for the period 580 673 58 182
Profit or loss for the period attributable to shareholders of METRO AG 481 600 -35 127
EPS in € 1.47 1.84 -0.11 0.39

METRO GROUP was able to reduce its net debt year on year by €736 million. Net debt totalled €4.7 billion as at 30 September 2014 (30.09.2013: €5.4 billion).


Outlook

For financial year 2014/15, METRO GROUP expects adjusted for currency effects and based on current Group structure to see a slight rise in overall sales, despite the persistently challenging economic environment. In like-for-like sales, METRO GROUP foresees again a slight increase that will follow the 0.1% gain in the reporting period 2014/15.

In financial year 2014/15, earnings development will also be shaped by the persistently challenging economic environment. Nevertheless, METRO GROUP is confident that it can again achieve a slight earnings increase as a result of the progress it has made and will continue to make in transforming its business models. In addition, METRO GROUP will closely focus on efficient structures and strict cost management in 2014/15. For these reasons, METRO GROUP expects EBIT before special items to rise - adjusted for currency effects - slightly above the €1,727 million achieved in financial year 2013/14, including usual levels of income from real estate sales.


METRO Cash & Carry

METRO Cash & Carry was able to increase like-for-like sales by 1.0% in financial year 2013/14. Total sales declined by 2.1% to €30.5 billion as a result of strong negative currency effects. Conversely, sales in local currency grew by 2.0%. In Germany, METRO Cash & Carry sales fell only slightly by 0.4% to €4.8 billion (0.3% decrease in like-for-like terms). Over the course of financial year 2013/14, a slight trend improvement materialised, which was due to the success of the revamped product ranges. METRO Cash & Carry's overall like-for-like sales rose in the fourth quarter of 2013/14 for the fifth consecutive quarter. The activities related to the 50th anniversary of the wholesale subsidiary had an especially noticeable positive effect in September.

METRO Cash & Carry's EBIT totalled €904 million in financial year 2013/14 (2012/13: €1,205 million) and included special items of €221 million. The largest individual item is a non-cash impairment of goodwill of METRO Cash & Carry in the Netherlands (€88 million). Furthermore, restructuring and closure costs are included, which are spread among many individual measures. EBIT before special items amounted to €1,125 million (2012/13: €1,379 million). This decline was mainly the result of the lack of earnings from the real estate transaction in France in the previous year as well as negative currency effects. Adjusted for these effects, earnings before special items improved.


Media-Saturn

Sales in local currency at Media-Saturn rose by 0.8% in financial year 2013/14. In euros, sales fell slightly by 0.3% to €21.0 billion due to currency effects. In like-for-like terms, sales were down by 0.9%. A significant trend improvement materialised over the course of the financial year. Sales at Media-Saturn in Germany totalled €9.8 billion in financial year 2013/14, down slightly year on year. During the course of the year the trend improved considerably. Like-for-like sales at Media-Saturn rose overall by 1.7% in the fourth quarter of 2013/14. Sales at Media-Saturn rose significantly, both in Germany and internationally. In addition to successful marketing campaigns, including campaigns during the Soccer World Championship, increased multichannel sales also contributed to the positive development. 

EBIT at Media-Saturn increased to €244 million (2012/13: €184 million) and included special items of €91 million. These items comprised in large part numerous restructuring and efficiency measures, especially in Germany. EBIT before special items rose significantly from €299 million to €335 million. Sales-related declines in earnings were able to be compensated through cost-saving measures and margin improvements. 


Real

As a result of the disposal of the business in Eastern Europe, sales at Real in financial year 2013/14 declined by 18.7% to €8.4 billion (in local currency: -18.3%). By contrast, like-for-like sales declined only by 0.8%. In Germany, sales fell by 1.3% to €7.9 billion. In like-for-like terms, the decline amounted to 0.9%. The trend improved over the course of the year: Like-for-like sales at Real rose slightly in Germany by 0.2% in the fourth quarter of 2013/14. Overall, the improved positioning and modernisation efforts of the METRO GROUP hypermarket business were noticeable amid price competition that remains very stiff. The remodelled Real stores in particular contributed to positive sales growth. The share of own brand sales continued to develop positively in financial year 2013/14 and rose from 16.1% to 16.3%.

Real's EBIT totalled €19 million in financial year 2013/14 (2012/13: €224 million). This included special items of €62 million relating almost exclusively to the closure of stores in Germany. Before special items, EBIT amounted to €81 million after €145 million in the same period of the previous year. This decline was largely due to the loss of earnings contributions from the sold Real business in Eastern Europe. In Germany, EBIT before special items increased due to earnings contributions from real estate transactions as well.


Galeria Kaufhof

Sales at Galeria Kaufhof rose by 0.5% in financial year 2013/14 to €3.1 billion. In like-for-like terms, sales also grew by 0.5%. In Germany, Galeria Kaufhof sales were up by 0.7% year on year at €2.9 billion. In like-for-like terms, sales grew by 0.8%. In addition to an attractive product range at the department stores, online business contributed to the sales increase as well. 

EBIT at Galeria Kaufhof totalled €193 million in financial year 2013/14 (2012/13: €214 million). EBIT before special items also amounted to €193 million (2012/13: €229 million). The decline was primarily due to the income from real estate transactions in the same period of the previous year.


Please find further information concerning business development of METRO GROUP and its sales divisions in the Annual Report on reports.metrogroup.de


Key figures 2013/14

METRO GROUP  2012/13 1
(€ million)
2013/14
(€ million)
Change (€) Change (local currency)
Sales 65,679 63,035 -4.0% -1.7%
Germany 25,623 25,478 -0.6% -0.6%
Western Europe (excl. Germany) 19,192 19,081 -0.6% -0.4%
Eastern Europe 17,180 14,755 -14.1% -6.5%
Asia/Africa 3,685 3,722 1.0% 6.2%
EBIT (before special items) 2,000 1,727 -273 € million
METRO Cash & Carry  2012/13 1
(€ million)
2013/14
(€ million)
Change (€) Change
(local currency)
Like-for-like
(local currency)
Sales 31,165 30,513 -2.1% 2.0% 1.0%
Germany 4,837 4,819 -0.4% -0.4% -0.3%
Western Europe (excl. Germany) 10,668 10,547 -1.1% -1.1% -1.5%
Eastern Europe 12,037 11,431 -5.0% 4.2% 2.9%
Asia/Africa 3,623 3,716 2.5% 7.9% 4.4%
EBIT (before special items) 1,379 1,125 -254 € million
 
Media-Saturn   2012/13 1
(€ million)
2013/14
(€ million)
Change (€) Change
(local currency)
Like-for-like
(local currency)
Sales 21,053 20,981 -0.3% 0.8% -0.9%
Germany 9,839 9,795 -0.4% -0.4% -1.9%
Western Europe (excl. Germany) 8,341 8,356 0.2% 0.5% -0.1%
Eastern Europe 2,819 2,831 0.4% 8.8% 0.7%
Asia/Africa 54 0 - - -
EBIT (before special items) 299 335 36 € million
 
Real   2012/13 1
(€ million)
2013/14
(€ million)
Change (€) Change
(local currency)
Like-for-like
(local currency)
Sales 10,366 8,432 -18.7% -18.3% -0.8%
Germany 8,043 7,939 -1.3% -1.3% -0.9%
Eastern Europe 2,323 493 -78.8% -78.4% -
EBIT (before special items) 145 81 -64 € million
 
Galeria Kaufhof   2012/13 1
(€ million)
2013/14
(€ million)
Change (€) Change
(local currency)
Like-for-like
(local currency)
Sales 3,082 3,099 0.5% 0.5% 0.5%
Germany 2,899 2,920 0.7% 0.7% 0.8%
Western Europe (ex. Germany) 183 178 -2.8% -2.8% -2.8%
EBIT (before special items) 229 193 -36 € million
 

Key figures Q4 2013/14

Sales Q4 2012/13 2
(€ million)
Q4 2013/14
(€ million)
Change (€) Like-for-like
(local currency) 
METRO GROUP 15,540 15,126 -2.7%  0.7%
METRO Cash & Carry 7,765 7,595 -2.2%  0.1%
Media-Saturn 4,796 4,936 2.9%  1.7%
Real 2,262 1,871 -17.3%  0.2%
Galeria Kaufhof 712 721 1.2%  1.2%
EBIT before special items Q4 2012/13 2
(€ million)
Q4 2013/14
(€ million)
Change (€)
METRO GROUP 437 418 -19
METRO Cash & Carry 387 261 -126
Media-Saturn 75 130 +55
Real 13 28 +15
Galeria Kaufhof 16 14 -2

1 To enable better comparability, financial year 2012/13 consists of Q4 2012,Q1 2013, Q2 2013 and Q3 2013
2 To enable better comparability following the change of the financial year, Q3 2013 is here indicated as Q4 2012/13

METRO GROUP is one of the largest and most important international retailing companies. In the financial year 2013/14 it generated sales of around €63 billion. The company operates around 2,200 stores in 31 countries and has a headcount of around 250,000 employees. The performance of METRO GROUP is based on the strength of its sales brands that operate independently in their respective market segments: METRO/MAKRO Cash & Carry - the international leader in self-service wholesale - Media Markt and Saturn - the European market leader in consumer electronics retailing - Real hypermarkets and Galeria Kaufhof department stores.