METRO GROUP meets sales and earnings targets in financial year 2015/16

14 December 2016

  • EBIT from continuing operations before special items reaches €1,560 million (2014/15: €1,511 million)
  • Earnings forecast met: comparable currency-adjusted figure of the previous year exceeded by €119 million
  • Profit for the period before special items increases to €727 million (2014/15: €688 million)
  • Earnings per share before special items improve to €1.96 (2014/15: €1.91)
  • Like-for-like sales up 0.2% - reported sales at €58.4 billion due to negative currency and portfolio effects
  • Net debt declines further by €0.2 billion to €2.3 billion
  • Management Board and Supervisory Board propose dividend of €1.00 per ordinary share
  • Outlook 2016/17: METRO GROUP expects renewed increase in sales and EBIT adjusted for currency effects in its current group structure

METRO GROUP successfully continued its transformation in financial year 2015/16 and met its sales and earnings targets. EBIT before special items amounted to €1,560 million in the reporting period, exceeding the comparable currency-adjusted figure for the previous year by €119 million. Currency effects had a negative impact of €70 million. “Our company's performance in financial year 2015/16 confirms that we are on the right track with our strategic focus on value creation for our customers and our continued transformation process: we achieved another increase in sales and earnings in a challenging market environment and met our forecast for the financial year, creating a solid foundation for the successful demerger of METRO GROUP,” says Olaf Koch, Chairman of the Management Board of METRO AG. “Both METRO Cash & Carry and Media-Saturn registered a sustainable increase in like-for-like sales, which was also reflected in earnings. At Real, we made further progress in strengthening the competitiveness and shaping the future business concept.” A dividend of €1.00 per ordinary share will be proposed to the Annual General Meeting to offer METRO AG shareholders an appropriate share in the company's positive business development.

The sales lines contributed to METRO GROUP's successful development in financial year 2015/16 by systematically implementing their strategies as well as numerous measures and initiatives:

METRO Cash & Carry continued its consistent alignment with customer needs and market requirements in financial year 2015/16. At the same time, the sales line reached important milestones in the expansion of its delivery business. Sales in the delivery business increased by 17.9%, accounting for 12.8% of total sales. Newly acquired premium food supplier Rungis Express complements the delivery business of METRO Cash & Carry Germany, particularly in the area of fresh and ultra-fresh food. With the agreement to acquire Pro à Pro, a French delivery company for commercial customers, METRO GROUP strategically advanced the wholesale business in the fast-growing French food service distribution market. The transaction has yet to be closed. METRO Cash & Carry also continued to promote the area of digitisation. The METRO Accelerator powered by Techstars started its second round in financial year 2015/16. With this programme, METRO GROUP supports young businesses that create and implement innovative, digital solutions for the hospitality industry.

Media-Saturn successfully combined its online and store-based businesses in financial year 2015/16, establishing itself as a multichannel provider. The sales line's share of online sales reached a new high at approximately 9% of total sales. In addition, METRO GROUP acquired a stake in the start-up company Deutsche Technikberatung, a participant in Media-Saturn's first Spacelab accelerator programme. Through a professional network of advisers, the company offers private customers and small businesses quick help in all questions relating to the purchase, installation, networking and troubleshooting of modern technology.

Real continued to go with its strategic repositioning in financial year 2015/16. With the development of the new hybrid store concept, the sales line aims to align its product range and services to the individual needs of different customer groups and to set new standards in German grocery retailing. At the end of November, Real opened the first renovated store in Krefeld. The sales line has also made further progress in the implementation of a more competitive cost structure: aside from the procurement cooperation with PHD, Real reached an agreement on the key terms and conditions of a future-oriented collective bargaining contract. This is the basis for improved competitiveness at Real and for the planned investment of €1 billion within five years.

Planned demerger of METRO GROUP

On 30 March, METRO GROUP announced that it was reviewing a demerger of the group into two independent, high-performing and stock-listed wholesale and retail groups. Following the successful completion of the analysis phase and the approval of the Management Board and Supervisory Board of METRO AG, METRO GROUP was split into two independent wholesale and retail groups in preparation for the demerger. Subject to the approval of the Annual General Meeting on 6 February 2017, the aim is to complete the demerger of METRO GROUP by mid-2017.

Business development 2015/16

In financial year 2015/16, like-for-like sales at METRO GROUP grew by 0.2%. At €58.4 billion, reported sales were 1.4% lower than a year earlier due to negative currency and portfolio effects. However, sales rose by 0.4% in local currency.

EBIT before special items amounted to €1,560 million (2014/15: €1,511 million). This figure contains income from the sale of real estate amounting to €162 million (2014/15: €154 million) and income from the dissolution of obligations for postemployment benefits plans of €42 million. Adjusted for negative currency effects of €70 million, EBIT before special items was €119 million higher than in the previous year. Reported consolidated EBIT totalled €1,513 million in financial year 2015/16, more than double the amount registered in the previous year (2014/15: €711 million). This strong increase was due in particular to non-cash impairment losses on goodwill at Real in the previous year (€446 million) as well as income from the sale of the activities in Vietnam during the reporting period (€446 million).

Profit for the period in financial year 2015/16 totalled €657 million, a decline of €57 million compared with the previous year's figure (2014/15: €714 million). Net of non-controlling interests, profit for the period attributable to the shareholders of METRO AG totalled €599 million (2014/15: €672 million). Profit for the period before special items, in turn, rose to €727 million (2014/15: €688 million).

In financial year 2015/16, METRO GROUP recorded earnings per share of €1.83 (2014/15: €2.06). At €1.96, earnings per share before special items are €0.05 higher than in the previous year (2014/15: €1.91). This result forms the basis for the dividend recommendation.

  Before special items
After special items
Earnings of METRO GROUP (€ million)
2014/15 2015/16 2014/15 2015/16
EBIT 1,511 1,560 711 1,513
EBT (earnings before taxes) 1,067 1,242 259 1,167

Profit or loss for the period from continuing operations

549 727 -221 608

Profit or loss for the period from discontinued operations after taxes

139 0 935 49
Profit or loss for the period 688 727 714 657
Profit or loss for the period attributable to the shareholders of METRO AG 625 639 672 599

thereof from continuing operations

486 639 -263 550

thereof from discontinued operations

139 0 935 49
Earnings per share in € 1.91 1.96 2.06 1.83

thereof from continuing operations

1.48 1.96 -0.80 1.68

thereof from discontinued operations

0.43 0.00 2.86 0.15

Net debt was reduced further by €0.2 billion and amounted to €2.3 billion as of 30 September 2016 (30/9/2015: €2.5 billion).


Outlook

The outlook is based on the current group structure and adjusted for currency effects. In addition, it is based on the assumption of a continuously complex geopolitical situation.

The outlook will be adjusted if the planned demerger of the group into two independent companies with a clear focus on the wholesale and food retail business on the one hand, and consumer electronics retailing on the other, is approved by the Annual General Meeting on 6 February 2017, as expected, and implemented, as scheduled, during financial year 2016/17.

For financial year 2016/17, METRO GROUP expects to see a slight rise in overall sales, despite the persistently challenging economic environment. The Real sales line is expected to generate slightly better performance compared with financial year 2015/16.

In like-for-like sales, METRO GROUP foresees another slight increase that will follow the reporting period's rise of 0.2%. The METRO Cash & Carry and Media-Saturn sales lines in particular are expected to contribute to this development. The Real sales line is expected to generate slightly better performance compared with financial year 2015/16.

In financial year 2016/17, earnings development will also be shaped by the persistently challenging economic environment, with political developments adding to economic challenges.

Nonetheless, METRO GROUP expects to achieve another slight improvement in earnings. Aside from operational improvements, METRO GROUP will again closely focus on efficient structures and strict cost management in this context. These measures are expected to result in special items for the last time, marking the successful conclusion of METRO GROUP's transformation.

For these reasons, we expect EBIT before special items to rise slightly above the €1,560 million achieved in financial year 2015/16, although this figure will include slightly lower income from real estate sales. METRO Cash & Carry and Media-Saturn are expected to contribute to the slight earnings improvement.


METRO Cash & Carry 1

Like-for-like sales of METRO Cash & Carry increased by 0.6% in financial year 2015/16, with consistent quarterly sales growth meaning that the sales line has now recorded sales increases in each quarter for more than three consecutive years. Sales rose by 0.4% in local currency. However, exchange rate developments - particularly relating to the Russian rouble - and portfolio effects caused reported sales to decline by 2.3% to €29.0 billion.

Sales in the delivery business continued their strong momentum, rising by 20.4% in local currency. Reported sales increased by 17.9% to €3.7 billion (2014/15: €3.1 billion). The acquisition of Classic Fine Foods also contributed to this positive development. The share of the delivery business in total sales climbed to 12.8% (2014/15: 10.6%).

EBIT at METRO Cash & Carry totalled €1,259 million in financial year 2015/16 (2014/15: €975 million). This figure includes positive special items from the sale of the activities in Vietnam (€446 million) and expenses for restructuring and efficiency-enhancing measures. The net balance of these special items is positive at €216 million (2014/15: expenses of €75 million). EBIT before special items amounted to €1,043 million (2014/15: €1,050 million), almost matching the previous year's figure despite negative currency effects of €65 million. Adjusted for these effects, EBIT before special items improved by €58 million.


Media-Saturn

Like-for-like sales of Media-Saturn increased by 0.1% in financial year 2015/16. Sales in local currency rose by 1.6% while reported sales grew by 0.6% to €21.9 billion.

Online retail maintained its strong momentum: The Media Markt and Saturn brands boosted their online sales by about 35% to €1.6 billion. In contrast, the pure online business that is not linked to the sales line's store-based business declined mostly as a result of the closure of selected unprofitable wholesale businesses at Redcoon. All in all, online sales (including in-store pick-up by customers) increased by about 11% to €2.0 billion. As a result, online retail now accounts for nearly 9% of Media-Saturn's total sales, a new record.

EBIT at Media-Saturn fell to €300 million in financial year 2015/16 (2014/15: €336 million). This figure includes higher special items of €154 million (2014/15: €107 million). These items involved numerous restructuring and efficiency-enhancing measures. EBIT before special items climbed from €442 million to €454 million.


Real

Real's like-for-like sales declined by 1.1% in financial year 2015/16. Due mostly to store closures, reported sales fell by 3.3% to €7.5 billion. The competitive environment in German food retail remains very tenuous and deflationary trends in a large number of product groups are weighing on sales development.

Online sales continued to develop very positively, again rising markedly by nearly 50% to €68 million in financial year 2015/16.

EBIT at Real totalled €103 million in financial year 2015/16 (2014/15: €-441 million). EBIT in the previous year still included special items for non-cash impairment losses on goodwill and store closures in particular. EBIT before special items climbed from €88 million to €100 million. This improvement, which was achieved despite the decline in sales, was partly due to improved purchasing terms, the successful conclusion of collective bargaining negotiations and closures of loss-making stores.


For more information about business developments at METRO GROUP and its sales lines, see the Annual Report 2015/16 at reports.metrogroup.de.


Key figures 2015/16

METRO GROUP  2014/15
(€ million)
2015/16
(€ million)
Changes
in €
Changes in
local currency
like-for-like
(local currency)
Sales 59,219 58,417 -1.4% 0.4% 0.2%
Germany
22,490 22,622 0.6% 0.6% 0.2%
Western Europe
(excl. Germany)
19,090 19,054 -0.2% -0.2% -0.7%
Eastern Europe
13,318 12,472 -6.4% 1.2% 0.8%
Asia 4,319 4,269 -1.2% -0.8% 2.4%
METRO Cash & Carry  2014/15
(€ million)
2015/16
(€ million)
Changes
in €
Changes in
local currency
like-for-like
(local currency)
Sales 29,690 28,999 -2.3% 0.4% 0.6%
Horeca 13,642 13,993 2.6% 3.3% 0.9%
Multispecialist 12,496 12,065 -3.4% 1.2% -0.2%
Trader
2,906 2,802 -3.6% 1.5% 2.6%
Others 646 138 - - -
Media-Saturn   2014/15
(€ million)
2015/16
(€ million)
Changes
in €
Changes in
local currency
like-for-like
(local currency)
Sales 21,737 21,869 0.6% 1.6% 0.1%
Germany 10,016 10,344 3.3% 3.3% 1.2%
Western Europe
(excl. Germany)
8,843 8,881 0.4% 0.4% -1.0%
eastern Europe
2,878 2,644 -8.1% -0.9% -0.6%
Real   2014/15
(€ million)
2015/16
(€ million)
Changes
in €
Changes in
local currency
like-for-like
(local currency)
Sales 7,735 7,478 -3.3% -3.3% -1.1%
EBIT before special items 2014/15
(€ million)
2014/15
(€ million)
comparable
(previous year adjusted for
currency effects)
2015/16
(€ million)
Changes 2015/16
vs. comparable 2014/15 figure
METRO GROUP 1,511 ~1,441
1,560 +119
METRO Cash & Carry 1,050 987 1,043 +58
Media-Saturn 442 ~437 454 +17
Real 88
88 100
+12

Key Figures Q4 2015/16

Sales Q4 2014/15
(€ million)
Q4 2015/16
(€ million)
Change
in €
like-for-like change
(local currency)
METRO GROUP 14,241 14,164 -0.5% 0.1%
METRO Cash & Carry 7,352 7,315 0.0% 1.4%
Media-Saturn 5,082
5,032 -1.0% -2.0%
Real 1,791 1,762 -1.6% 0.3%
EBIT
vor Sonderfaktoren
Q4 2014/15
(€ million)
Q4 2015/16
(€ million)
Changes
(€ million)
METRO GROUP 435
568
+133
METRO Cash & Carry 269 306
+37
Media-Saturn 133 179 +46
Real 35
27
-8

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 Traders. 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 Traders segment consists of Moldova, Poland, Romania and Ukraine.

 

METRO GROUP is one of the most important international retailing companies. It generated sales of some €58 billion in financial year 2015/16. The company operates at more than 2,000 locations in 29 countries and employs some 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.