METRO GROUP in Q3 with further progress regarding the transformation

  • Like-for-like group sales up 0.2% in 9M 2015/16; on a par with previous year's quarter in Q3
  • Twelfth consecutive quarterly increase in like-for-like sales for METRO Cash & Carry in Q3, eighth consecutive increase for Media-Saturn
  • EBIT rises to €1,170 million in 9M (9M 2014/15: €487 million)
  • EBIT totals €-36 million in Q3 (Q3 2014/15: €175 million) including special items in the amount of €190 million (Q3 2014/15: €35 million)
  • EBIT before special items totals €992 million in 9M (9M 2014/15: €1,076 million),
    €154 million in Q3 (Q3 2014/15: €209 million)-dampened considerably by currency effects
  • EPS before special items amounts to €1.19 in 9M (9M 2014/15: €1.23)
  • Significant improvement in EPS before special items in Q3 to €0.24
    (Q3 2014/15: €0.07)
  • New record revenue share of 13.3% for delivery sales in Q3
  • Significant online sales growth of around 35% in Q3 for Media Markt and Saturn
  • Guidance confirmed for financial year 2015/16

METRO GROUP achieved further progress regarding the transformation of the group and once more increased its sales in the online and delivery business in the third quarter of financial year 2015/16. Online sales at Media Markt and Saturn increased by 34.7%, while the delivery sales of METRO Cash & Carry grew by more than 15% to a new record share of sales of 13.3%. METRO GROUP's like-for-like sales rose by 0.2% over the nine-month period and was on par with the previous year in the third quarter. It was METRO Cash & Carry and Media-Saturn in particular that continued the positive trend seen in the previous quarters: METRO Cash & Carry's like-for-like sales in the third quarter marked the twelfth consecutive quarterly increase, while for Media-Saturn it was the eighth consecutive increase. METRO GROUP's EBIT increased significantly from €487 million to €1,170 million in the first nine months. In Q3 2015/16, EBIT stood at €-36 million after €175 million in previous year's quarter and included special items in the amount of €190 million (Q3 2014/15: €35 million). These relate mainly to the implementation of the value creation plans at METRO Cash & Carry. METRO GROUP's EBIT before special items totalled €992 million in the first nine months of the year, down from the previous year's level of €1,076 million and primarily due to negative currency effects in the amount of €72 million. EBIT before special items, which was also affected by exchange-rate effects, declined from €209 million in the previous year's quarter to €154 million in the third quarter. Earnings per share before special items decreased slightly over the nine-month period from €1.23 to €1.19, but improved considerably in the third quarter from €0.07 to €0.24.

"We are on the right track with our transformation of the company to achieve more growth, customer orientation and entrepreneurial behaviour: That is once again confirmed by the record figure for delivery sales and the continued growth of the online business," says Olaf Koch, Chairman of the Management Board of METRO AG. "Our signing of the acquisition of the French food service distribution company Pro à Pro just a few weeks ago further strengthens our position in the market for deliveries to professional customers. At the same time, we are increasingly focusing on digitalisation in the hospitality industry and on consumer electronics services with our strategic investments, such as those made recently in Orderbird, Shore and Deutsche Technikberatung."

METRO GROUP posted an increase of 0.2% in like-for-like sales for the first nine months of financial year 2015/16 (1 October 2015 to 30 June 2016). Like-for-like sales at METRO Cash & Carry and Media-Saturn maintained their positive momentum, while sales at Real declined. METRO GROUP sales in local currency increased by 0.4%. However, exchange rate developments in particular-mostly relating to the Russian rouble-caused reported sales to decline by 1.6% to €44.3 billion.
Like-for-like sales were unchanged year-to-year in Q3 2015/16 (1 April to 30 June 2016). Sales in local currency increased by 0.4%. However, exchange rate developments caused reported sales to decline by 2.7% to €13.6 billion.

 

METRO GROUP
9M 2014/15
(€ million)
9M 2015/16
(€ million)
Change
(€)
Sales
44,977
44,253 -1.6%
Germany
17,180
17,343 1.0%
International
27,797
26,909 -3.2%
International share of sales
61.8%
60.8% -

METRO GROUP
Q3 2014/15
(€ million)
Q3 2015/16
(€ million)
Change
(€)
Sales
13,967
13,589 -2.7%
Germany
5,130
5,167 0.7%
International
8,837
8,422 -4.7%
International share of sales
63.3%
62.0% -

METRO GROUP EBIT totalled €1,170 million in the period from October 2015 to June 2016 (9M 2014/15: €487 million). This figure includes positive special items totalling €179 million (9M 2014/15: €-590 million). Special items concern gains from the disposal of METRO Cash & Carry Vietnam, which were realised in Q1 2015/16, and restructuring expenses. The high figure for special items in the previous year is largely due to goodwill impairment at Real. EBIT before special items amounted to €992 million (9M 2014/15: €1,076 million). This decline is almost exclusively due to foreign exchange losses of €72 million, primarily in relation to the Russian rouble. In addition, lower gains from real estate disposals were offset by positive effects from portfolio changes.
In Q3 2015/16, EBIT stood at €-36 million (Q3 2014/15: €175 million) and included special items of €190 million (Q3 2014/15: €35 million). These relate mainly to the implementation of the value creation plans at METRO Cash & Carry. EBIT before special items totalled €154 million (Q3 2014/15: €209 million). EBIT before special items thus declined by €56 million, which is due in particular to developments at Media-Saturn, lower gains from real estate disposals and currency effects. At €25 million, negative currency effects accounted for nearly half of this decline.

Earnings before taxes stood at €930 million in the first nine months of 2015/16 (9M 2014/15: €212 million). Before special items, EBT amounted to €766 million (9M 2014/15: €807 million).

In 9M 2015/16, net profit for the period amounted to €158 million (9M 2014/15: €506 million). Net profit for the period before special items of €441 million is almost as much as in the previous year's quarter. In Q3 2015/16 net profit before special items rose from €7 million to €67 million.

In the first nine months of 2015/16, earnings per share amounted to €1.41 (9M 2014/15: €0.38). Adjusted for special items, earnings per share stood at €1.19 (9M 2014/15: €1.23). In Q3 2015/16, earnings per share came to €-0.07 (Q3 2014/15: €0.35). Adjusted for special items, earnings per share in Q3 rose markedly to €0.24 (Q3 2014/15: €0.07).

 

   Before special items
After special items
METRO GROUP earnings (€ million) 9M 2014/15 9M 2015/16  9M 2014/15
9M 2015/16
EBIT
1,076 992  487 1,170
Earnings before tax
807
766
 212 930
Profit or loss for the period from continuing operations
351 441  73 506
Profit or loss for the period from discontinued operations after tax 95
0  85 0
Profit or loss for the period 445 441  158 506
Profit or loss for the period attributable to shareholders of METRO AG
400
389  125 460
thereof from continuing operations
306
389  40  460
thereof from discontinued operations
94
0  85 0
Earnings per share (€) 1.23
1.19  0.38 1.41
thereof from continuing operations
0.94
1.19  0.12 1.41
thereof from discontinued operations
 0.29 0.00  0.26 0.00

 

   Before special items
After special items
METRO GROUP earnings (€ million) Q3 2014/15 Q3 2015/16  Q3 2014/15
Q3 2015/16
EBIT
209 154  175 -36
Earnings before tax
115
114
 65 -79
Profit or loss for the period from continuing operations
2 67 90 -38
Profit or loss for the period from discontinued operations after tax 5
0  7 0
Profit or loss for the period 7 67  97 -38
Profit or loss for the period attributable to shareholders of METRO AG
22
79 115 -24
thereof from continuing operations
17
79  108  -24
thereof from discontinued operations
5
0  7 0
Earnings per share (€) 0.07
0.24  0.35 -0.07
thereof from continuing operations
0.05
0.24  0.33 -0.07
thereof from discontinued operations
 0.02 0.00  0.02 0.00
Net debt, after netting cash and cash equivalents as well as financial investments with financial liabilities (including finance leases), developed very favourably due partly to the sale of Galeria Kaufhof and METRO Cash & Carry Vietnam. As of 30 June 2016, net debt improved markedly from €5.1 billion to €3.1 billion compared with the previous year's period.

 

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 in the previous year. METRO Cash & Carry and Media-Saturn are expected to be the key drivers of total sales and like-for-like sales growth; METRO GROUP projects an improvement compared with the previous year for the Real sales line.

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 the increase. Developments at the Real sales line will depend on the successful implementation of the measures that have been initiated.

 

METRO Cash & Carry1

METRO Cash & Carry continued to record a positively overall development. Like-for-like sales increased by 0.3% in the first nine months of 2015/16. Sales in local currency increased by 0.1%. Reported sales fell by 3.1% to €21.6 billion (9M 2014/15: €22.3 billion). However, it should be noted that exchange rate and portfolio effects had a negative impact on sales.
In Q3 2015/16, like-for-like sales rose by 0.1%, which means that like-for-like sales increased in twelve consecutive quarters. Measured in local currency, sales rose by 0.2%. In line with developments to date, reported sales declined by 4.5% due partly to currency effects.

Delivery sales continued their very positive trend, rising by 16.8% to €2.7 billion between October 2015 and June 2016. Delivery sales in local currency increased by nearly 20%. The acquisitions of Classic Fine Foods and Rungis Express also contributed to this positive development as they had not yet been included in the previous year's figure. Delivery sales now account for 12.3% of sales of METRO Cash & Carry, another new record. Sales from the delivery business continued their upward trend in Q3 2015/16, rising by more than 15% to €0.9 billion. Delivery sales in local currency increased by over 20%.

Like-for-like sales in the Horeca segment rose by 0.8% during the first nine months of 2015/16. Like-for-like sales in local currency increased by 3.1%. Reported sales rose by 2.2%. In Q3 2015/16, however, like-for-like sales decreased slightly. In France, fears of more assaults and strikes had a negative impact, causing sales losses among METRO Cash & Carry's hospitality customers. Conversely, like-for-like sales continued their positive trend in Turkey and Spain.

Like-for-like sales in the Multispecialists segment declined by 0.7% during the first nine months of 2015/16. Measured in local currency, though, sales rose by 0.9%. Conversely, reported sales declined by 4.6% due to currency effects. Like-for-like sales improved by 1.0% in Q3 2015/16-but negative currency effects increased markedly. This was particularly the case for Russia. Like-for-like sales in Russia developed positively and better than during H1 2015/16. Measured in rouble, total sales in Russia actually increased.

Like-for-like sales in the Trader segment rose by 2.3% between October 2015 and June 2016. Measured in local currency, sales rose by 1.7%. Conversely, reported sales declined by 3.7% due to currency effects. In Q3 2015/16, like-for-like sales increased across all countries with the exception of Poland. Sales in local currency rose more strongly than in H1 2015/16. However, reported sales declined due to currency effects.

During the first nine months of 2015/16, EBIT amounted to €966 million (9M 2014/15: €759 million). This figure includes the sale of METRO Cash & Carry Vietnam as a positive special item. Restructuring expenses and store closures had an opposite effect. EBIT before special items amounted to €737 million (9M 2014/15: €781 million). This decline is due to negative year-to-year currency effects of €65 million which particularly relate to Russia. However, as a result, and due to positive portfolio effects, METRO Cash & Carry's EBIT improved in local currency terms.
In Q3 2015/16, EBIT was €101 million (Q3 2014/15: €255 million). This decline is mainly due to special items of €140 million (Q3 2014/15: €8 million) especially regarding restructuring measures in Germany and Belgium. EBIT before special items totalled therefore €241 million (Q3 2014/15: €262 million). This figure includes negative currency effects totalling €25 million, which particularly relate to Russia. Adjusted for currency effects, METRO Cash & Carry's EBIT thus improved slightly.

 


Metro Cash & Carry
9M 2014/15
(€ million)
9M 2015/16
(€ million)
Change
(€)
Change (in local currency)
  Like-for-like (in local currency)
Total sales
22,338 21,648
-3.1% 0.1% 0.3%
Horeca 10,175 10,400 2.2% 3.1% 0.8%
Multispecialists 9,487 9,051 -4.6% 0.9% -0.7%
Trader 2,143 2,064 -3.7% 1.7% 2.3%
Others2
533 134
- - -
EBIT before special items 781
737
€-44 m    

 

Metro Cash & Carry
Q3 2014/15
(€ million)
Q3 2015/16
(€ million)
Change
(€)
Change (in local currency)
  Like-for-like (in local currency)
Total sales
7,449 7,113
-4.5% 0.2% 0.1%
Horeca 3,516 3,552 1.0% 1.8% -1.1%
Multispecialists 3,078 2,858 -7.2% 1.9% 1.0%
Trader 735 699 -4.9% 1.4% 2.9%
Others2
120 4
- - -
EBIT before special items 262
241
€-21 m    

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 0.7% in the first nine months of 2015/16 compared with the previous year's period. Measured in local currency, Media-Saturn's sales rose by 2.3%. Total sales increased by 1.1% to €16.8 billion. The sales development improved during Q3 2015/16 compared with H1 2015/16. Like-for-like sales increased by 1.2% and is therefore the eighth consecutive quarter with positive development. Sales in local currency rose by 3.2%. Reported sales also increased by 1.5% to €4.7 billion. Media-Saturn thus confirmed its strong market position in its individual countries.

Online generated sales increased by 10.0% to €1.5 billion during the first nine months of 2015/16. Online sales also grew during Q3, rising by 7.8% to €0.4 billion. While sales continued to decline at Redcoon due to the termination of select unprofitable wholesale business, the Media Markt and Saturn sales brands were able to boost sales by 34.5% during the first nine months of 2015/16. The strong growth trend continued in Q3, with sales of both sales brands improved clearly by 34.7%.

In Germany, like-for-like sales increased markedly by 2.5% during the first nine months of 2015/16. Reported sales rose by 4.6% to €8.0 billion. In Q3 2015/16, like-for-like sales increased by 3.8%. With a strong increase in reported sales of as much as 7.4%, the sales line reinforced its strong market position in Germany. The European Football Championship had a substantially positive effect.

In Western Europe, like-for-like sales declined slightly by 0.4% in the first nine months of 2015/16. Sales in local currency rose by 0.9%. Reported sales increased by 1.0%. Sales momentum declined in Q3 compared to H1 2015/16. During Q3 2015/16, like-for-like sales decreased by 2.8%. Sales in local currency declined by 1.8%. Reported sales fell by 2.3%.

In Eastern Europe, like-for-like sales declined by 2.3% in the first nine months of 2015/16. Sales in local currency declined by 1.9%. Reported sales fell by 10.6%. The trend improved markedly during Q3 2015/16 compared with H1 2015/16. Like-for-like sales in Eastern Europe increased substantially by 5.0%. Measured in local currency, sales rose by 5.1%. Due to negative currency effects, reported sales declined by 6.5%. Double-digit percentage increases in like-for-like sales were recorded in Turkey, Hungary and Russia.

During the first nine months of 2015/16, EBIT amounted to €238 million (9M 2014/15: €258 million). This figure includes special items totalling €37 million (9M 2014/15: €51 million). EBIT before special items declined to €275 million from €309 million.
In Q3 2015/16, EBIT before special items declined from €-60 million to €-77 million. This decline is largely due to an unfavourable product and margin mix, implementation costs for the new, successful Media Markt customer club as well as higher IT costs for the further multi-channel expansions.



Media-Saturn 9M2014/15
(€ million)
9M 2015/16
(€ million)
Change
(€)
Change
(in local currency)
Like-for-like
(in local currency)
Sales
16,655 16,837 1.1% 2.3% 0.7%
Germany
7,652 8,007 4.6% 4.6% 2.5%
Western Europe (excl. Germany) 6,758 6,824 1.0% 0.9% -0.4%
Eastern Europe
2,245 2,006 -10.6% -1.9% -2.3%
EBIT before special items 309 275  €-34 m  -  -

Media-Saturn Q3 2014/15
(€ million)
Q3 2015/16
(€ million)
Change
(€)
Change
(in local currency)
Like-for-like
(in local currency)
Sales
4,620 4,689 1.5% 3.2% 1.2%
Germany
2,064 2,218 7.4% 7.4% 3.8%
Western Europe (excl. Germany) 1,943 1,898 -2.3% -1.8% -2.8%
Eastern Europe
613 573 -6.5% 5.1% 5.0%
EBIT before special items -60 -77  €-17 m  -  -

 

Real

Real's like-for-like sales declined by 1.5% during the first nine months of 2015/16. Due mostly to store disposals, reported sales declined by 3.8% to €5.7 billion compared with the previous year's period. In Q3 2015/16, like-for-like sales fell by 3.5%. Due to 10 store closures, reported sales declined more strongly by 6.0% to €1.8 billion compared with the previous year's quarter. Deflationary price developments in important product categories also had a negative impact.

Online sales continued to develop very positively, rising markedly by more than 50% from €35 million to €53 million during the first nine months of 2015/16.

In June 2016, nearly one year after the collective bargaining agreement at Real had been terminated, the bargaining commissions at Real and the Verdi trade union agreed on the key parameters for a resolution in the wage negotiations. Essentially, the agreement on a future package with a three-and-a-half-year term stipulates that Real will fundamentally accept the collective bargaining agreements for the retail sector and that negotiations regarding a new remuneration structure will begin in October 2016. In addition, both parties have agreed to significant short-term cutbacks in wage increases, vacation and Christmas allowances. Executive employees will also make a significant contribution to these cutbacks. In return, comprehensive provisions have been adopted to maintain store operations and safeguard jobs. This creates the prerequisites for planned investments of €1 billion in the modernisation of Real over the next five years.

EBIT totalled €73 million in the first nine months of 2015/16 (9M 2014/15: €-439 million). This figure does not include any substantial special items (9M 2014/15: €491 million). EBIT before special items amounted to €73 million, compared with €53 million in the previous year's period.
In Q3 2015/16, EBIT before special items came to €6 million (Q3 2014/15: €5 million). Lower sales were more than offset by positive effects from the closure of loss-making stores during the previous year, cost savings and better purchasing conditions as well as regulation by Markant.

 

Real 9M 2014/15
(€ million)
9M 2015/16
(€ million)
Change
(€)
Like-for-like
(in local currency)
Sales
5,944 5,715 -3.8% -1.5%
EBIT before special items 53 73 €+20 m  

Real Q1 2014/15
(€ million)
Q1 2015/16
(€ million)
Change
(€)
Like-for-like
(in local currency)
Sales
1,885 1,771 -6.0% -3.5%
EBIT before special items 5 6 €+2 m  

 

 

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.