METRO GROUP shows positive operating performance in first 9 months

  • Like-for-like Group sales increase by 1.6% in 9M 2014/15; slight decline by 0.4% in Q3 2014/15 due to Easter shift
  • METRO Cash & Carry and Media-Saturn post 8th and 4th consecutive quarterly increase in like-for-like sales, respectively
  • METRO GROUP boosts online sales in Q3 by 26%; delivery sales continue strong growth (Q3 2014/15: +14.5%) 
  • Profit for the period in Q3 improved by €180 million to €97 million (Q3 2013/14: €-83 million).
  • Negative currency effects reduce EBIT before special items by about €100 million in first nine months 
  • METRO GROUP confirms forecast for continuing operations in financial year 2014/15
  • New growth potential for METRO Cash & Carry: METRO GROUP buys Classic Fine Foods Group

METRO GROUP continued its positive operating performance during the first nine months of financial year 2014/15: Like-for-like sales increased by 1.6% between October 2014 and June 2015. The shift in the Easter business left its mark on business developments in Q3 2014/15, causing like-for-like sales to decline slightly by 0.4%. Due to negative currency effects, EBIT before special items fell short of the previous year's period in the first nine months of 2014/15 at €1,076 million (Q3 2013/14: €1,127 million). However, EBIT before special items adjusted for currency effects increased. In the third quarter, EBIT before special items amounted to €209 million after €253 million in Q3 2013/14. "The positive operating trend continued in many parts of our Group during the third quarter of the current financial year", said Olaf Koch, Chairman of the Management Board of METRO AG. "In spite of the earlier Easter business compared with the previous year, METRO Cash & Carry posted the 8th consecutive quarterly increase in like-for-like sales. Media-Saturn also continued its stable sales development while posting significantly better earnings as well as market share gains in numerous countries. As a result, we expressly confirm our forecast for our continuing operations in financial year 2014/15."

In addition, METRO GROUP has continued to strengthen its core business by acquiring Classic Fine Foods Group (CFF), one of Asia's leading providers in the fast-growing food service delivery market. "We continue to attack: With this acquisition we will exploit new sales and earnings potential for METRO Cash & Carry while offering our customers a markedly wider range of professional and flexible services", Koch says. 

METRO GROUP acquires leading Asian food service distribution player Classic Fine Foods

Singapore-based Classic Fine Foods Group -, which METRO GROUP has acquired from private equity group EQT, is one of the leading providers in the food service distribution (FSD) market, which offers direct food supplies to hotel, restaurant and catering customers. The transaction covers the operations and all fixed assets of CFF for an enterprise value of $290 million plus an earn-out of up to $38 million depending on the EBITDA performance in 2015 to 2017. CFF supplies high-quality foods and exclusive fine food products of international brand-name producers to premium hotels and restaurants as well as to airlines, supermarkets and fine food retailers in 25 mostly Asian cities. With the acquisition of CFF, METRO Cash & Carry will expand its presence in wholesale business to 36 from 26 countries while gaining access to the fast-growing premium FSD market in Asia. CFF has an established own delivery and storage system and about 800 employees in 14 countries. The company generates annual sales of more than $200 million and is highly profitable.

Media-Saturn launches entertainment portal JUKE

Media-Saturn continues to expand its digital business and now also offers content: The company's entertainment portal JUKE went live in Germany on 3rd of August. Media-Saturn is bundling the world of entertainment in a single platform under the JUKE brand, which previously only comprised the music streaming service launched in 2011. The broad offering comprises movies and series, music, e-books, PC games and PC software and can be used on all popular end devices.

Sales and earnings development at METRO GROUP

Adjusted for currency effects and portfolio changes, METRO GROUP posted sales growth of 2.0% during the first nine months of 2014/15 (1 October 2014 to 30 June 2015) compared with the previous year's period. Reported sales declined by 1.2% to €45.0 billion. This is due mostly to the sale of Real in Eastern Europe as well as to significant negative currency effects in large parts of Eastern Europe, particularly Russia and Ukraine. Like-for-like sales increased noticeably by 1.6%. In Q3 (1 April to 30 June 2015), sales adjusted for currency effects and portfolio changes declined slightly by 0.2%. Reported sales declined by 1.4% to €14.0 billion. Like-for-like sales were down only slightly by 0.4%. This is due to the earlier Easter business, which mostly fell into the second quarter.

From October 2014 to June 2015, METRO GROUP's online sales totalled €1.4 billion, a rise of more than 26% compared with the previous year's period. Online sales also grew substantially during Q3 2014/15, rising by 26% to €0.4 billion. METRO GROUP´s delivery business also continues to grow strongly: Delivery sales increased by 13.1% to €2.3 billion in the first nine months of 2014/15 (9M 2013/14: €2.0 billion). In Q3 2014/15, delivery sales rose by as much as 14.5% to €0.8 billion.

In Germany, sales between October 2014 and June 2015 totalled €17.2 billion and thus fell slightly short of the previous year’s level. In Q3, several factors including the different timing of the Easter business affected sales, which fell by 3.4% to €5.1 billion. International sales fell by 1.8% to €27.8 billion during the reporting period, due mostly to exchange rate developments. In spite of negative portfolio effects, currency-adjusted sales increased by 0.8%. Sales declined slightly by 0.2% in Q3 to €8.8 billion (-0.2% also in local currency). In Western Europe (excluding Germany), sales rose by 0.7% to €14.4 billion during the first nine months of 2014/15. This is due to positive developments at Media-Saturn. In Q3 2014/15, sales increased by 0.1% to €4.6 billion. In Eastern Europe, sales declined by 9.9% to €10.1 billion during the reporting period. The decrease resulted from distinctly negative currency effects and the disposal of Real in Eastern Europe. Currency-adjusted sales increased by 0.9%. Sales fell by 5.2% to €3.3 billion in Q3 2014/15, while sales in local currency increased by 0.9%. Sales in Asia/Africa grew markedly by 18.1% to €3.2 billion, supported by favourable operational developments and positive currency effects. Measured in local currency, sales rose by 2.2%. Sales increased by 18.6% to €1.0 billion in Q3 (in local currency: -3.2%).

METRO GROUP 9M 2013/14
(€ million)
9M 2014/15
(€ million)
 Change
(in €)
Change (in local currency) 
Sales 45,532
44,977
-1.2%   0.4% 
Germany 17,231 17,180
-0.3%  -0.3% 
Western Europe
(excl. Germany)
14,323 14,430
 0.7%   0.5% 
Eastern Europe 11,234 10,126 -9.9%    0.9%
Asia/Africa
2,743 3,241
18.1%   2.2% 
METRO GROUP Q3 2013/14
(€ million)
Q3 2014/15
(€ million)
 Change
(in €)
Change (in local currency) 
Sales 14,168 13,967 -1.4% -1.4%
Germany 5,312 5,130 -3.4% -3.4%
Western Europe
(excl. Germany)
4,565 4,570  0.1% -0.4%
Eastern Europe 3,454
3,274 -5.2%  0.9%
Asia/Africa
837 993
 18.6% -3.2%
During the first nine months of 2014/15, EBIT at METRO GROUP stood at €487 million (9M 2013/14: €872 million). It includes special items totalling €590 million (in 9M 2013/14: €255 million). These relate mostly to impairment losses on goodwill at Real. EBIT before special items amounted to €1,076 million (9M 2013/14: €1,127 million). This decline is due, in particular, to foreign exchange losses of about €100 million, primarily in relation to Russian rouble. As a result, EBIT before special items adjusted for currency effects increased.

In Q3 2014/15, EBIT stood at €175 million (Q3 2013/14: €171 million). Special items totalling €35 million (Q3 2013/14: €83 million) relate to restructuring expenses in the segments METRO Cash & Carry, Media-Saturn and Real. EBIT before special items totalled €209 million (Q3 2013/14: €253 million). In this context, it should be noted that the result from real estate transactions was markedly higher in the previous year's quarter than in the reporting quarter. Adjusted for income from real estate and currency effects, EBIT before special items roughly equalled the previous year's level.

Earnings before taxes totalled €212 million between October 2014 and June 2015 (9M 2013/14: €454 million). Before special items, EBT amounted to €807 million (9M 2013/14: €751 million). Reported tax expenses of €139 million (9M 2013/14: €476 million) correspond to a group tax rate of 65.4% (9M 2013/14: 104.8%). The tax rate before special items stands at 56.6% (9M 2013/14: 56.8%). Tax expenses only relate to continuing operations. Under consideration of discontinued operations, the group tax rate amounted to 49.2% (9M 2013/14: 74.2%), tax rate before special items stands at 51.4% (9M 2013/14: 44.8%).

In the first nine months of 2014/15, profit or loss for the period amounted to €158 million (9M 2013/14: €160 million). It is divided into profit or loss for the period from continuing operations in the amount of €73 million (9M 2013/14: €-22 million) and profit or loss for the period from discontinued operations in the amount of €85 million (9M 2013/14: €182 million).  Profit for the period before special items declined to €445 million from €506 million. This includes €351 million (9M 2013/14: €325 million) from continuing operations and €94 million (€181 million) from discontinued operations. In Q3 2014/15, profit for the period improved by €180 million to €97 million (Q3 2013/14: €-83 million).

In the first nine months, earnings per share amounted to €0.38 (9M 2013/14: €0.36). Adjusted for special items, earnings per share amounted to €1.23 (9M 2013/14: €1.39). This includes €0.94 (9M 2013/14: €0.84) from continuing operations and €0.29 (9M 2013/14: €0.55) from discontinued operations. In Q3 2014/15, earnings per share came to €0.35 (Q3 2013/14: €-0.19). Adjusted for special items, earnings per share in Q3 2014/15 stood at €0.07 (Q3 2013/14: €0.32). This includes €0.05 (Q3 2013/14: €0.27) from continuing operations and €0.02 (Q3 2013/14: €0.05) from discontinued operations.

Net debt of METRO GROUP improved to €5.1 billion as of 30 June 2015. Compared with 30 September 2014, net debt also increased as a result of the dividend payout.

Earnings of METRO GROUP (€ million) 9M 2013/14 9M 2014/15
EBIT before special items 1,127 1,076
Earnings before taxes (EBT) and special items
751
807
Profit or loss for the period before special items
506
445

Profit or loss for the period attributable to shareholders of METRO AG before special items

454
400
from continuing operations
274
306
from discontinued operations
180
94
Earnings per share before special items in € 1.39 1.23
from continuing operations
0.84
0.94
from discontinued operations
0.55
0.29
EBIT
872
487
Earnings before taxes (EBT)
454
212
Profit or loss for the period
160 158
Profit or loss for the period attributable to shareholders of METRO AG
119
125
from continuing operations
-62
40
from discontinued operations
181
85
Earnings per share in €
0.36 0.38
from continuing operations
-0.19
0.12
from discontinued operations
0.55
0.26
Earnings of METRO GROUP (€ million) Q3 2013/14 Q3 2014/15
EBIT before special items 253 209
Earnings before taxes (EBT) and special items
151
115
Profit or loss for the period before special items
95
7
Profit or loss for the period attributable to shareholders of METRO AG before special items
106 22
from continuing operations
89
17
from discontinued operations
17 5
Earnings per share before special items in € 0.32 0.07
from continuing operations
0.27
0.05
from discontinued operations
0.05
0.02
EBIT
171
175
Earnings before taxes (EBT)
61
65
Profit or loss for the period
-83
97
Profit or loss for the period attributable to shareholders of METRO AG
-63
115
from continuing operations
-80 108
from discontinued operations
17 7
Earnings per share in €
-0.19 0.35
from continuing operations
-0.24
0.33
from discontinued operations
0.05
0.02

Outlook

Due to the announced sale of Galeria Kaufhof, the outlook is now based on continuing operations. The forecast continues to be based on currency-adjusted figures. In addition, it is based on the assumption of an unchanged geopolitical situation from the half-year report for H1 2014/15.

For financial year 2014/15, METRO GROUP expects to see a slight rise in overall sales of continuing operations, despite the persistently challenging economic environment. In like-for-like sales, METRO GROUP foresees a slight increase that will follow the 0.1% gain in the previous year. In financial year 2014/15, earnings development will also be shaped by the persistently challenging economic environment. Given the progress made so far, METRO GROUP will continue to realign its business models with a focus on efficient structures and strict cost control. For these reasons, METRO GROUP expects EBIT before special items from continuing operations adjusted for currency effects to rise slightly above the €1,531 million produced in financial year 2013/14, including typical levels of net income from real estate sales. Developments in the different sales lines are expected to diverge.

METRO Cash & Carry

Due to the development of exchange rates (primarily Russian rouble), sales of METRO Cash & Carry decreased by 2.5% to €22.3 billion from October 2014 to June 2015. In local currency, in turn, sales matched the previous year’s figure. Like-for-like sales even increased by 0.9%. Due in particular to the different timing of the Easter business, sales declined by 1.3% in Q3 2014/15 (-1.3% also in local currency). METRO Cash & Carry continued its very positive development, recording the 8th consecutive quarter of like-for-like sales growth at 0.1% in spite of the earlier Easter business.

Delivery sales continued their very positive trend, rising by 13.1% to €2.3 billion between October 2014 and June 2015. As a result, sales from the delivery business accounted for more than 10% of sales of METRO Cash & Carry for the first time. Sales from the delivery business continued their strong momentum in Q3 2014/15, rising by 14.5% to €0.8 billion.

As announced, in Germany the Schaper brand will be subsumed under the METRO sales brand. In a first step, 17 of the 51 Schaper stores will be rebranded into METRO GASTRO still this calendar year.

During the first nine months of 2014/15, EBIT of METRO Cash & Carry amounted to €759 million (9M 2013/14: €715 million). It includes special items totalling €23 million (9M 2013/14: €148 million). EBIT before special items amounted to €781 million (9M 2013/14: €864 million). This decline is due mostly to negative year-to-year currency effects of about €110 million in Russia. As a result, METRO Cash & Carry's EBIT improved in local currency terms. In Q3 2014/15, EBIT before special items totalled €262 million (Q3 2013/14: €281 million). This figure includes negative currency effects of about €15 million. In addition, EBIT declined as a result of the earlier Easter business.

METRO Cash & Carry
9M 2013/14
(€ million)
9M 2014/15
(€ million)
 Change
(in €)
Change (in local currency)  Like-for-like (in local currency) 
Sales 22,918 22,338 -2.5% 0.0% 0.9%
Germany 3,651 3,584 -1.8% -1.8% -1.8%
Western Europe
(excl. Germany)
7,916 7,672 -3.1% -3.1%

-1.1%
Eastern Europe 8,613 7,847 -8.9% 3.3% 4.2%
Asia/Africa
2,739 3,235 18.1% 2.2% 1.6%
EBIT before special items 864 781 €-83 million
   
METRO Cash & Carry
Q3 2013/14
(€ million)
Q3 2014/15
(€ million)
 Change
(in €)
Change (in local currency)  Like-for-like (in local currency) 
Sales 7,549 7,449 -1.3% -1.3% 0.1%
Germany 1,120 1,182 -2.3% -2.3% -2.4%
Western Europe
(excl. Germany)
2,724 2,627 -3.6% -3.6% -0.9%
Eastern Europe 2,780 2,649 -4.7% 2.3% 3.7%
Asia/Africa
836 991 18.6% -3.2% -3.6%
EBIT before special items 281 262 €-19 million
   

Media-Saturn 

Media-Saturn sales between October 2014 and June 2015 rose by 3.8% to €16.7 billion. Sales in local currency even increased by 4.7%. Like-for-like sales were 3.2% higher, with Media-Saturn adding market share in 11 of 15 countries. Sales grew by 1.2% in Q3 (+1.2% also in local currency). Like-for-like sales were up 0.2%, the 4th consecutive quarterly increase. The perceived loss of momentum is due, in particular, to the fact that business was boosted by the soccer World Cup in the previous year. Media-Saturn continued to push the targeted expansion of its online activities and the successful dovetailing of its sales channels. As a result, online sales rose markedly by 25% to €1.4 billion between October 2014 and June 2015, accounting for more than 8% of Media-Saturn's total sales. Online sales also grew during Q3, rising by more than 24% to €0.4 billion. Media-Saturn's multi-channel offering is now fully integrated into the sales line's business. The online product range was expanded once again. At the end of June 2015, it consisted of about 130,000 items at Mediamarkt.de and about 120,000 at Saturn.de.

EBIT of Media-Saturn rose markedly to €258 million between October 2014 and June 2015 (9M 2013/14: €168 million). This figure includes special items totalling €51 million (9M 2013/14: €37 million), which mostly relate to store-related restructuring measures. EBIT before special items amounted to €309 million (9M 2013/14: €205 million), a significant improvement of more than 50%. The strong increase was largely due to good like-for-like sales growth. In Q3 2014/15, EBIT before special items improved to €-60 million (Q3 2013/14: €-70 million).

Media-Saturn
9M 2013/14
(€ million)
9M 2014/15
(€ million)
 Change
(in €)
Change (in local currency)  Like-for-like (in local currency) 
Sales 16,045 16,655  3.8% 4.7% 3.2%
Germany 7,498 7,652  2.1% 2.1% 1.4%
Western Europe
(excl. Germany)
6,407 6,758  5.5% 4.8% 3.3%
Eastern Europe 2,140 2,245  4.9% 14.5% 10.1%
EBIT before special items 205 309 €+104 million
   
Media-Saturn
Q3 2013/14
(€ million)
Q3 2014/15
(€ million)
 Change
(in €)
Change (in local currency)  Like-for-like (in local currency) 
Sales 4,563 4,620 1.2% 1.2%  0.2%
Germany 2,110 2,064 -2.2% -2.2% -2.1%
Western Europe
(excl. Germany)
1,842 1,943  5.5% 4.2%  2.3%
Eastern Europe 611
613  0.3% 4.1%  2.1%
EBIT before special items -70 -60 €+10 million

 

Real

As a result of the disposal of Real Eastern Europe, sales at Real declined by 9.4% to €5.9 billion between October 2014 and June 2015. The figure for the previous year's period still included sales of Real in Poland and Turkey until disposal. Due partly to 6 store closures, sales of Real Germany declined by 2.2% to €5.9 billion in the first nine months of 2014/15. Like-for-like sales declined slightly by 0.6%. In Q3 2014/15, the earlier Easter business and the strong previous year's quarter impacted sales, which fell by 5.3%. Like-for-like sales were down by 3.7%. Deflationary price developments continued, particularly in the "ultra-fresh produce" area. Online sales doubled to €12 million during Q3 2014/15. As the first retailer in Germany, Real introduced a dynamic pricing strategy during Q3 2014/15. As a result, Real now offers members of the customer loyalty programme direct price advantages. At the checkout, a discount is granted for more than 1,500 food products from all food categories.

EBIT of Real totalled €-439 million between October 2014 and June 2015 (9M 2013/14: €-3 million). This figure includes special items totalling €491 million (9M 2013/14: €57 million). Against the backdrop of earnings developments, this relates to goodwill impairments, in particular. Following a long-term repositioning, Real has carried out impairments for goodwill resulting from company acquisitions that were completed 17 years ago. EBIT before special items amounted to €53 million (9M 2013/14: €54 million). The decline in EBIT in Germany was offset by positive effects from the sale of Real Eastern Europe. In Q3 2014/15, EBIT before special items totalled €5 million (Q3 2013/14: €-3 million).

Real ended its commitment to the collective bargaining agreement in June 2015. Real offered to negotiate an in-house collective agreement with the union.

Real
9M 2013/14
(€ million)
9M 2014/15
(€ million)
 Change
(in €)
Change (in local currency)  Like-for-like (in local currency) 
Sales 6,561
5,944
-9.4% -9.4% -0.6%
Germany 6,079 5,944
-2.2% -2.2% -0.6%
EBIT before special items 54
53 €-1 million
   
Real
Q3 2013/14
(€ million)
Q3 2014/15
(€ million)
 Change
(in €)
Change (in local currency)  Like-for-like (in local currency) 
Sales 2,053 1,885
-8.2% -8.2% -3.7%
Germany 1,990 1,885 -5.3% -5.3% -3.7%
EBIT before special items -3
5
+ €8 million

 

Discontinued operations (Galeria Kaufhof)

Discontinued operations relate to Galeria Kaufhof. Sales between October 2014 and June 2015 declined by 1.9% to €2.3 billion. Like-for-like sales decreased by 1.5%. In particular, the downswing in the textile market was felt here. In Q3, the earlier Easter business impacted sales, which fell by 3.9%. Like-for-like sales declined by 2.6%.

EBIT totalled €116 million between October 2014 and June 2015 (9M 2013/14: €182 million). In Q3 2014/15, EBIT stood at €9 million (Q3 2013/14: €22 million). This decline is due, in particular, to the earlier Easter business and negative developments in the textile area.

Galeria Kaufhof
9M 2013/14
(€ million)
9M 2014/15
(€ million)
 Change
(in €)
Like-for-like  
Sales 2,378 2,334 -1.9% -1.5%
Galeria Kaufhof
Q3 2012/13
(€ million)
Q3 2013/14
(€ million)
 Change
(in €)
Like-for-like 
Sales 694 667 -3,9% -2.6%

 

1 Due to the announced sale to Hudson’s Bay Company, Galeria Kaufhof will no longer be shown as a separate segment, but as a "discontinued operation". Accordingly, METRO GROUP's financials have been recalculated to account for the departure of Galeria Kaufhof and the previous year's figures have been adjusted (with the exception of the balance sheet). The transaction is scheduled to close in September2015.

METRO GROUP is one of the most important international trading companies. In the financial year 2013/14, it generated sales of about €63 billion. The company operates around 2,200 stores in 30 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