METRO GROUP continues solid operating performance

  • Like-for-like group sales up 0.6% in Q2 2015/16 and up 0.3% in H1 2015/16; growth in all sales lines in Q2; in Germany like-for-like sales up 1.1% in Q2
  • EBIT improves to €-34 million in Q2 (Q2 2014/15: €-564 million including goodwill impairment at Real)
  • EBIT in H1 improves to €1,206 million including gains from sale of METRO Cash & Carry Vietnam (H1 2014/15: €312 million)
  • EBIT before special items in Q2 significantly up on previous year at €11 million (Q2 2014/15: €-24 million) and at €838 million in H1 2015/16 including negative currency effects in the amount of €47 million (H1 2014/15: €867 million)
  • Delivery sales achieve record 11.8% revenue share at METRO Cash & Carry
  • Online sales at Media Markt and Saturn rose by about 35% in Q2, and by more than 60% at Real in H1 2015/16
  • Guidance confirmed for financial year 2015/16

METRO GROUP has continued its sound operating development from the first quarter of financial year 2015/16 with an increase of 0.6% in like-for-like sales in the second quarter. All sales lines contributed to this development, which was also helped by calendar effects. Particularly the company's home market of Germany displayed strong development, with like-for-like sales increasing by 1.1% and reported sales increasing by 1.7% to €5.4 billion. Due to portfolio and exchange rate effects, group-wide METRO GROUP's sales fell by 0.9% to €13.6 billion in the second quarter. Adjusted for currency effects, however, there was a 0.7% increase in sales. EBIT before special items significantly improved over the previous year, climbing €35 million to €11 million in spite of negative exchange rate effects in the amount of €9 million. In the first half of 2015/16, EBIT before special items amounted to €838 million, falling below the previous year's figure of €867 million as a result of negative exchange rate effects totalling €47 million. At €1,206 million, EBIT was clearly over the previous year's value of €312 million, also the company's sale of its wholesale business in Vietnam in January had a positive effect on this balance. "METRO GROUP has recorded consistently positive operating improvements over the past few quarters, in spite of the challenging economic conditions. The second quarter seamlessly continues this development," said Olaf Koch, Chairman of the Management Board of METRO AG. "The new record delivery sales figures and the rapid growth of our online business once again demonstrate how successfully the wholesale and food business areas as well as the consumer electronics division have been transformed. We are especially pleased with the positive development in our home market, Germany. The planned demerger of METRO GROUP into two independent, strong wholesale and retail groups will allow our sales brands to further accelerate this growth and continue to strengthen their focus on their respective business areas and customer groups."

METRO GROUP posted an increase of 0.3% in like-for-like sales for H1 2015/16 (1 October 2015 to 31 March 2016). Like-for-like sales at METRO Cash & Carry and Media-Saturn maintained their positive momentum, while sales at Real declined due to a negative sales trend in Q1. METRO GROUP sales in local currency increased by 0.4%. However, exchange rate developments - particularly relating to the Russian rouble - and portfolio effects caused reported sales to decline by 1.1% to €30.7 billion.

Like-for-like sales rose by 0.6% in Q2 2015/16 (1 January to 31 March 2016). All sales lines contributed to the company's sales growth. Sales in local currency increased by 0.7%. However, portfolio effects and exchange rate developments caused reported sales to decline by 0.9% to €13.6 billion.


METRO GROUP H1 2014/15
(€ million)
H1 2015/16
(€ million)
Change
(€)
Sales 31,010 30,663
-1.1%
Germany 12,049
12,176
1.1%
International 18,960
18,487
-2.5%
International share of sales
61.1%
60.3%
-
METRO GROUP Q2 2014/15
(€ million)
Q2 2015/16
(€ million)
Change
(€)
Sales 13,692 13,574 -0.9%
Germany 5,275 5,367 1.7%
International
8,417
8,206 -2.5%
International share of sales
61.5%
60.5% -

During H1 2015/16, EBIT at METRO GROUP reached €1,206 million (H1 2014/15: €312 million). This figure includes positive special items totalling €368 million (H1 2014/15: €-555 million). Special items primarily concern gains from the disposal of METRO Cash & Carry Vietnam. EBIT before special items amounted to €838 million (H1 2014/15: €867 million). This decline is especially due to foreign exchange losses of about €47 million, primarily in relation to the Russian rouble. As a result, EBIT before special items adjusted for currency effects increased during the reporting quarter.

In Q2 2015/16, EBIT totalled €-34 million (Q2 2014/15: €-564 million). Special items amounted to €-44 million (Q2 2014/15: €-539 million). The previous year's special items relate in particular to a goodwill impairment at Real. EBIT before special items reached €11 million (Q2 2014/15: €-24 million). As such, EBIT before special items markedly improved by €35 million despite negative currency effects of €9 million.

In H1 2015/16, earnings before taxes amounted to €1,009 million (H1 2014/15: €147 million). Before special items, earnings before taxes totalled €652 million (H1 2014/15: €692 million).

In H1 2015/16, net profit for the period amounted to €544 million (H1 2014/15: €62 million). Net profit for the period before special items declined from €438 million to €374 million.

In H1 2015/16, earnings per share amounted to €1.48 (H1 2014/15: €0.03). Adjusted for special items, earnings per share amounted to €0.95 (H1 2014/15: €1.16). In Q2 2015/16, earnings per share reached €-0.20 (Q2 2014/15: €-1.21). Adjusted for special items, earnings per share in Q2 2015/16 stood at €-0.18 (Q2 2014/15: €-0.21).



Before special items
After special items
METRO GROUP earnings (€ million) H1 2014/15 H1 2015/16
H1 2014/15 H1 2015/16
EBIT
867
838 312 1,206
Earnings before tax
692
652 147 1,009
Profit or loss for the period from continuing operations
349
374 -16 544
Profit or loss for the period from discontinued operations after tax
89
0 78 0
Profit or loss for the period
438
374 62 544
Profit or loss for the period attributable to shareholders of METRO AG
378
310 10 484
thereof from continuing operations
289 310 -68 484
thereof from discontinued operations
89
0 78
0
Earnings per share (€)
1.16 0.95 0.03 1.48
thereof from continuing operations
0.89 0.95 -0.21 1.48
thereof from discontinued operations
0.27 0.00 0.24 0.00

Before special items
After special items
METRO GROUP earnings (€ million) Q2 2014/15 Q2 2015/16
Q2 2014/15 Q2 2015/16
EBIT
-24
11

-564

-34
Earnings before tax
-89
-72 -626 -98
Profit or loss for the period from continuing operations
-67
-43 -390 -53
Profit or loss for the period from discontinued operations after tax
4
0 -7
0
Profit or loss for the period
-63
-43 -397
-53
Profit or loss for the period attributable to shareholders of METRO AG
-67
-57 -394 -65
thereof from continuing operations
-71 -57
-387 -65
thereof from discontinued operations
4
0 -7 0
Earnings per share (€)
-0.21 -0.18 -1.21 -0.20
thereof from continuing operations
-0.22 -0.18
-1.19 -0.20
thereof from discontinued operations
0.01 0.00 -0.02
0.00

Net debt totalled €2.7 billion as of 31 March 2016. As a result, net debt fell by €2.1 billion compared with 31 March 2015. Compared with 30 September 2015, net debt increased by €0.2 billion.


Outlook

The METRO GROUP forecast is based on the current group structure and refers to currency-adjusted figures. In addition, it is based on the assumption of a persistently complex geopolitical situation.

For financial year 2015/16, METRO GROUP continues to expect a slight increase in overall sales, despite the persistently challenging economic environment. In like-for-like sales, METRO GROUP foresees a slight increase that will follow the 1.5% gain over the previous year.

In financial year 2015/16, earnings development will also be shaped by the persistently challenging economic environment. Nevertheless, METRO GROUP remains confident that it can continue its earnings growth as a result of the progress it has made and will continue to make in transforming its business models. Aside from operational improvements, METRO GROUP will again closely focus on efficient structures and strict cost management in 2015/16 in this context.

For these reasons, METRO GROUP expects EBIT before special items to rise slightly above the €1,511 million achieved in financial year 2014/15, including income from real estate sales. METRO Cash & Carry and Media-Saturn are expected to be the key drivers of this increase. Developments at the Real sales line will depend on the successful implementation of the measures that have been initiated.


METRO Cash & Carry 1

METRO Cash & Carry recorded a positive overall development. Like-for-like sales increased by 0.3% in H1 2015/16. Sales in local currency matched the previous year's level. Reported sales fell by 2.4% to €14.5 billion (H1 2014/15: €14.9 billion). However, it should be noted that exchange rate and portfolio effects had a negative impact on sales.

Like-for-like sales improved during Q2 2015/16 and increased by 0.5%, supported by positive calendar effects, which resulted in the eleventh consecutive quarterly increase in like-for-like sales. Sales in local currency declined slightly, and reported quarterly sales declined, as with half-year sales, by 2.9% due to exchange rate and portfolio effects.

Delivery sales continued their very positive trend, rising by 23.4% to €1.7 billion in H1 2015/16. Sales of Classic Fine Foods contributed to this positive development, as they had not yet been included in the previous year's figure. Delivery sales now account for 11.8% of sales at METRO Cash & Carry, a new record. Delivery sales continued their upward trend in Q2 2015/16, rising by 23.5% to €0.8 billion.

Like-for-like sales in the Horeca segment rose by 1.8% during H1 2015/16. Sales in local currency increased by 3.9%. Reported sales increased by 2.8%. The positive first-quarter trend gained additional momentum in Q2 2015/16. On a like-for-like basis, sales increased by 2.2%. Germany continued the positive trend from the Christmas quarter with a like-for-like sales growth of 2.0%. This trend reflected the continued positive impact of the customer offensive. The positive trend in like-for-like sales also continued in Turkey, Italy and Spain. In France, positive momentum markedly increased compared to the same quarter in the previous year and Q1 2015/16.

Like-for-like sales in the Multispecialists segment declined by 1.6% during H1 2015/16. Sales in local currency rose by 0.4%. Conversely, reported sales declined by 3.4%, as the first-quarter trend continued in Q2. While the sales in Russia came in still slightly negative, the sales trend was slightly positive already. The company has now increased its focus on the Trader segment in this market, as this segment continues to offer strong potential, particularly in the franchise area. In contrast, like-for-like sales markedly increased in India and Hungary, while Belgium and the Netherlands in particular recorded lower like-for-like sales.

Like-for-like sales in the Trader segment increased by 2.0%. Lower sales in Poland were more than offset by the positive trend in Romania and Ukraine. Sales in local currency also increased by 1.9%. Conversely, reported sales declined by 3.1% due to currency effects. The first-quarter trend slowed down in Q2.

In H1 2015/16, EBIT amounted to €865 million (H1 2014/15: €504 million). This figure includes the sale of METRO Cash & Carry Vietnam as a positive special item. Restructuring expenses at METRO Cash & Carry in the Netherlands had an opposite effect. EBIT before special items amounted to €497 million (H1 2014/15: €519 million). This decline is essentially due to negative year-to-year currency effects of €40 million in Russia. As a result, METRO Cash & Carry's EBIT improved in local currency terms.

In Q2 2015/16, EBIT before special items came to €38 million (Q2 2014/15: €37 million). This figure includes negative currency effects totalling €8 million, which particularly relate to Russia. As a result, METRO Cash & Carry's EBIT markedly improved in local currency terms.

 

METRO Cash & Carry
H1 2014/15
(€ million)
H1 2015/16
(€ million)
Change
(€)
Change
(in local currency)
Like-for-like
(in local currency)
Total Sales 14,889 14,535 -2.4% 0.0% 0.3%
Horeca 6,659 6,848 2.8% 3.9% 1.8%
Multispecialists
6,409 6,193 -3.4% 0.4%
-1.6%
Trader
1,408 1,365 -3.1% 1.9% 2.0%
Others 2
413 130 - - -
EBIT before special items
519
497 € -22 million
METRO Cash & Carry
Q2 2014/15
(€ million)
Q2 2015/16
(€ million)
Change
(in €)
Change
(in local curreny)
Like-for-like
(local currency)
Total Sales 6,691 6,498 -2.9% -0.3% 0.5%
Horeca 2,956 3,047 3.1% 4.4% 2.2%
Multispecialists
2,941 2,848 -3.2% 0.5% -1.4%
Trader
625 598 -4.3% 0.2% 0.5%
Others 2
169 6 - - -
EBIT before special items
37
38 € +1 million

1 As of the first quarter of 2015/16, the sales and results of METRO Cash & Carry are reported on the basis of a new structure. The previous reporting regions of Germany, Western Europe, Eastern Europe and Asia/Africa have been replaced by the new segments Horeca, Multispecialists and Trader. The Horeca segment comprises France, Germany, Italy, Japan, Portugal, Spain, Turkey and Classic Fine Foods. The Multispecialists segment encompasses Austria, Belgium, Bulgaria, China, Croatia, India, Kazakhstan, the Netherlands, Pakistan, Russia, Serbia, Slovakia, the Czech Republic and Hungary. The Trader segment consists of Moldova, Poland, Romania and Ukraine.
2 including primarily sales of divested country operations


Media-Saturn

Like-for-like sales of Media-Saturn rose by 0.6% in H1 2015/16 compared with the previous year's period, resulting in the seventh consecutive quarterly sales increase. Measured in local currency, Media-Saturn's sales rose by 1.9%. Total sales increased by 0.9% to €12.1 billion. Compared with Q1 2015/16, the sales trend improved during Q2 2015/16. Like-for-like sales increased by 0.7%, while sales in local currency rose by 2.8%. Reported sales also increased by 1.9% to €5.3 billion. The sales line continued to gain market share across most countries. In addition, the service sales of acquired company RTS were for the first time included in overall sales.

Online sales increased by 10.9% to €1.1 billion during H1 2015/16. Online sales also grew during Q2, rising by 9.6% to €0.5 billion. While Redcoon posted lower sales due to the discontinuation of selected wholesale business, the Media Markt and Saturn sales brands were able to boost sales by 34.5% during H1 2015/16. In Q2, sales of the two sales brands jumped by 34.8%.

Service sales markedly increased to €0.7 billion (H1 2014/15: €0.5 billion) in H1 2015/16, thanks partly to the initial consolidation of RTS. Service sales in Q2 rose to €0.3 billion (Q2 2014/15: €0.2 billion).

In Germany, sales markedly increased by 2.0% during H1 2015/16. Reported sales rose by 3.6% to €5.8 billion. In Q2 2015/16, like-for-like sales increased by 1.1%. Reported sales rose by as much as 4.1%, leading to another increase in market share in Germany.

On 18 February 2016, the new customer loyalty programme Media Markt Club was rolled out across Germany. With this programme, Media-Saturn is continuing its transformation into a customer-centric organisation. The programme launch was supported by a comprehensive marketing campaign. Media Markt Club rewards multiple purchases and offers customers extended return periods as well as access to all sales receipts in their customer account. In addition, individual Media Markt stores organise special local events, activities, competitions and surprises.

In Western Europe, like-for-like sales increased by 0.5% in H1 2015/16. Several countries experienced favourable developments, while like-for-like sales in Switzerland declined. Measured in local currency, sales rose by 1.9%. Reported sales rose by 2.3%. Growth momentum increased during Q2 compared to Q1. Like-for-like sales increased by 0.8% in Q2 2015/16. Sales in local currency rose by 2.2%. Reported sales increased by 1.9%, supported in particular by positive developments in the Netherlands and Spain. In contrast, sales in Italy declined.

In Eastern Europe, like-for-like sales fell by 4.8% in H1 2015/16. Sales in local currency declined by 4.4%. Reported sales fell by 12.2% on the back of the weak first-quarter development. In December 2014, at the height of the rouble crisis, the Russian business had benefited from substantial pull-forward effects. This effect related to the first 4 months of H1 2014/15. In Q2 2015/16, like-for-like sales in Eastern Europe were more or less stable. Sales in local currency matched the previous year's level. Due to negative currency effects, reported sales declined by 6.6%. While like-for-like sales in Russia were only slightly lower in Q2 and sales in Poland declined, sales in Turkey gained even more momentum, with like-for-like sales up nearly 20%. In Hungary, sales were also positive.

As in the previous year, EBIT stood at €332 million in H1 2015/16. This figure includes special items totalling €-20 million (H1 2014/15: €-38 million). EBIT before special items declined to €352 million from €369 million. This decline is due to the comparison with the previous year's quarter, which was marked by pull-forward effects in Russia. No such positive earnings effects materialised during Q1 2015/16.

In Q2 2015/16, EBIT before special items markedly improved from €20 million to €43 million. Aside from cost reductions, this was due to positive contributions from commissions and supplier compensation.

 

Media-Saturn
H1 2014/15
(€ million)
H1 2015/16
(€ million)
Change
(€)
Change
(in local currency)
Like-for-like
(in local currency)
Sales 12,148 12,035 0.9% 1.9% 0.6%
Germany 5,588 5,789 3.6% 3.6% 2.0%
Western Europe
(excl. Germany)
4,815 4,926 2.3% 1.9% 0.5%
Eastern Europe
1,632 1,433 -12.2% -4.4% -4.8%
EBIT before special items
369
352
€ -18 million


Media-Saturn
Q2 2014/15
(€ million)
Q2 2015/16
(€ million)
Change
(€)
Change
(in local currency)
Like-for-like
(in local currency)
Sales 5,161
5,259 1.9% 2.8% 0.7%
Germany 2,399 2,498 4.1% 4.1% 1.1%
Western Europe
(excl. Germany)
2,127 2,169 1.9% 2.2% 0.8%
Eastern Europe 634
592 -6.6% 0.0% -0.8%
EBIT before special items
20
43 € +23 million


Real

During H1 2015/16, like-for-like sales at Real decreased slightly. In an environment characterised by intense competition and deflationary price trends, like-for-like in the food segment were nearly stable in year-to-year comparison, while non-food sales declined. Primarily due to store disposals, reported sales declined by 2.8% to €3.9 billion compared with the previous year's period.

In Q2, the calendar effect had a positive impact on like-for-like sales, which increased by 0.5%. In contrast, the lower number of stores caused reported sales to decline by 1.6% to €1.8 billion.

Online sales developed very positively, jumping by more than 60% to €37 million in H1 2015/16. Real continues to strongly focus on its online business and plans to invest in its digital expertise. To strengthen its online business, the sales line signed contracts for the acquisition of the shopping portal "Hitmeister" (www.hitmeister.de) at the end of March 2016. Real therefore continues to expand its capabilities and expertise in the digital area.

In H1 2015/16, EBIT stood at €66 million (H1 2014/15: €-432 million). This figure does not include any substantial special items (H1 2014/15: €-480 million). EBIT before special items amounted to €67 million, compared with €48 million in the previous year’s period.

In Q2 2015/16, EBIT before special items stood at €-16 million (Q2 2014/15: €-36 million). This increase is due in particular to the closure of unprofitable stores during the previous year, better purchasing conditions and higher cost efficiency.

 

Real
H1 2014/15
(€ million)
H1 2015/16
(€ million)
Change
(€)
Like-for-like
(in local currency)
Sales
4,059 3,945 -2.8% -0.6%
EBIT before special items
48
67 € +19 million
Real
Q2 2014/15
(€ million)
Q2 2015/16
(€ million)
Change
(€)
Like-for-like
(in local currency)
Sales
1,829 1,800 -1.6% 0.5%
EBIT before special items
-36 -16 € +20 million

 

METRO GROUP is one of the most important international retailing companies. It generated sales of some €59 billion in financial year 2014/15. The company operates over 2,000 locations in 29 countries and employs more than 220,000 people. The performance of METRO GROUP is based on the strength of its sales brands, which act independently on the market: METRO/MAKRO Cash & Carry, the international leader in the self-service wholesale trade; Media Markt and Saturn, the European market leader in consumer electronics retailing; and Real hypermarkets.