Improved sales trend at MediaMarktSaturn and METRO Cash & Carry

  • Changes in the presentation of key financials as a result of the annual general meeting having approved the demerger of METRO GROUP1
  • Slightly positive development of like-for-like sales of the continuing operations (future CECONOMY): Q2 2016/17 +0.3 %, H1 +0.1 %; reported sales at previous year’s level
  • EBIT before special items for the continuing operations below last year’s figures: Q2 -€19 million (Q2 2015/16: €38 million), H1 €289 million (H1 2015/16: €342 million)
  • Decline in like-for-like sales of discontinued operations (future METRO): Q2 -1.1 %, H1 -0.4 %; significant increase in reported sales: Q2 +2.4 %, H1 +0.5 %
  • Improvement of comparable EBIT before special items (after renewed depreciation/amortisation in accordance with IFRS 5) of discontinued operations due to real estate income and positive currency effects: Q2 €90 million (Q2 2015/16: -€27 million), H1 €603 million (H1 2015/16: €496 million)

In the 2nd quarter and the 1st half of financial year 2016/17, METRO GROUP has seen a continued trend improvement in the sales performance of MediaMarktSaturn and METRO Cash & Carry. Like-for-like sales of the continuing operations increased by 0.3 % in the 2nd quarter 2016/17. MediaMarktSaturn in Germany, in particular, showed a strong performance with a growth in like-for-like sales of 3.4 %. Online sales of the sales brands Media Markt and Saturn continued to develop positively across all countries and grew by more than 40%, reaching a share of almost 12% of total sales. EBIT before special items of the continuing operations was impacted in the 2nd quarter by a high comparison base and by investment in the transformation, such as IT and CRM. In addition, earnings were reduced by investments in start-up activities, such as the Retail Media Group and Deutsche Technikberatung, and measures to strengthen the market position in various countries. Accordingly, as a result of investing in the restructuring of the group of companies, EBIT before special items fell to -€19 million in the 2nd quarter from €38 million in the previous year.

Like-for-like sales of the discontinued operations decreased by 1.1% in the 2nd quarter. This was also due to the negative calendar effects, especially for Real. Reported sales of METRO Cash & Carry showed a significant increase of 5.4 %, which was also partly due to the acquisition of Pro à Pro. This contributed to the increase of more than 30 % in delivery sales of the sales line to a record high of 16.1 % of total sales. EBIT before special items of the discontinued operations improved significantly to €90 million compared to -€27 million in the same quarter last year in particular due to real estate income and positive currency effects.

For the 1st half of 2016/17, like-for-like sales of the continuing operations grew slightly by 0.1 %. EBIT before special items amounted to €289 million compared to €342 million in the previous year. Like-for-like sales of the discontinued operations were down by 0.4 %. EBIT before special items increased from €496 million in the previous year to  €603 million.

"In the 2nd quarter of financial year 2016/17, the positive trend in terms of the sales performance of METRO Cash & Carry and MediaMarktSaturn continued. The transformation of METRO GROUP towards a customer-centric company is progressing further. With the delivery business, we have reached a new record regarding the share of total sales of METRO Cash & Carry. We have also seen strong growth in online sales," says Olaf Koch, Chairman of the Management Board of METRO AG. "We are on the home straight of the demerger of METRO GROUP into two strong, successful and strategically focused companies."

Pieter Haas, member of the Management Board of METRO AG and designated CEO of the future CECONOMY AG, says: "We will continue to pursue our strategy focusing on multi-channel and service. With our core business of MediaMarktSaturn, we further increased our like-for-like sales in the 2nd quarter as well as the total market share in the 1st half of the year and once again improved online sales of the sales brands Media Markt and Saturn by more than 40% to currently nearly 12% of total sales."

An important milestone in the group's repositioning was reached on 6 February 2017, when the METRO AG Annual General Meeting authorised the group's demerger into two independent, stock-listed companies. As a result, the consumer electronics segment, essentially consisting of the MediaMarktSaturn sales line including the relevant holding functions, is recognised as a continuing operation. The discontinued operations of METRO GROUP include, above all, the METRO Cash & Carry and Real sales lines including associated real estate assets as well as related management and service activities.

Like-for-like sales of continuing operations increased by 0.1% in H1 2016/17. Sales in local currency matched the previous year's level. Overall, currency effects were slightly positive, with positive effects from the development of the Russian rouble outweighing the negative effects from the development of the Turkish lira.
Despite the calendar effect (leap day in the previous year), like-for-like sales rose by 0.3% in Q2 2016/17. However, sales in local currency declined by 0.5%. As this was offset by slightly positive currency effects, quarterly sales matched the previous year's level at €5.3 billion.

METRO GROUP (Continuing operations) H1 2015/16
(€ million)
H1 2016/17
(€ million)
Sales 12,148 12,150
METRO GROUP (Continuing operations) Q2 2015/16
(€ million)
Q2 2016/17
(€ million)
Sales 5,259 5,258


Earnings before interest and taxes (EBIT)
of METRO GROUP's continuing operations essentially comprise the MediaMarktSaturn sales line and the holding functions that are part of continuing operations. In H1 2016/17, EBIT totalled €280 million (H1 2015/16:
€322 million). This figure includes special items totalling about €9 million (H1 2015/16: €20 million). EBIT before special items amounted to €289 million (H1 2015/16:
€342 million). The decline is due, in particular, to measures aimed at adding market share in various countries of the MediaMarktSaturn sales line such as the value-added tax campaign at Saturn Germany in January.

In Q2 2016/17, EBIT of METRO GROUP's continuing operations totalled €-34 million (Q2 2015/16: €25 million). Special items amounted to about €14 million (Q2 2015/16: €12 million). Special items particularly concern restructuring and efficiency-enhancing measures. EBIT before special items came in at €-19 million (Q2 2015/16: €38 million).

In H1 2016/17, EBT amounted to €279 million (H1 2015/16: €319 million). EBT before special items totalled €288 million (H1 2015/16: €338 million).

In H1 2015/16, profit for the period from continuing operations stood at €122 million (H1 2015/16: €195 million). Profit for the period before special items declined from  €208 million to €146 million. In consideration of the suspended depreciation/amortisation, profit for the period of discontinued operations declined from €349 million to €249 million. Before special items after renewed depreciation/amortisation that was suspended in accordance with IFRS 5, profit for the period increased from €166 million to €311 million. Profit for the period of METRO GROUP, comprising both continuing and discontinued operations, stood at €371 million in H1 2016/17 (H1 2015/16: €544 million).

In H1 2016/17, METRO GROUP's earnings per share, comprising both continuing and discontinued operations, amounted to €1.01 (H1 2015/16: €1.48). Adjusted for special items after renewed depreciation/amortisation in accordance with IFRS 5, earnings per share stood at €1.24 (H1 2015/16: €0.95).
In Q2 2016/17, earnings per share came to €0.40 (Q2 2015/16: €-0.20). Adjusted for special items after renewed depreciation/amortisation in accordance with IFRS 5, earnings per share stood at €0.07 in Q2 2016/17 (Q2 2015/16: €-0.18). 

 


Before special items
As reported
METRO GROUP earnings (€ million) H1 2015/16 H1 2016/17
H1 2015/16 H1 2016/17
EBIT (Continuing operations)
342
289 322 280
EBT (earnings before taxes) (Continuing operations)
338
288 319
279
Profit or loss for the period from continuing operations
208
146
195 122
Profit or loss for the period from discontinued operations after tax
166
311
349
249
Profit or loss for the period
374
547 544
371
Profit or loss for the period attributable to shareholders of METRO AG
310
405 484 331
from continuing operations
154 109
144 98
from discontinued operations
157
296
340
233
Earnings per share in €
0.95 1.24 1.48 1.01
from continuing operations
0.47 0.33 0.44 0.30
from discontinued operations
0.48 0.91 1.04
0.71

Before special items
As reported
Earnings of METRO GROUP (€ million) Q2 2015/16 Q2 2016/17
Q2 2015/16 Q2 2016/17
EBIT (Continuing operations)
38
19

25

-34
EBT (earnings before taxes) (Continuing operations)
37
-20 24 -35
Profit or loss for the period from continuing operations
24
-14 15 19
Profit or loss for the period from discontinued operations after tax
-67
46
-69
122
Profit or loss for the period
-43
33 -53
141
Profit or loss for the period attributable to shareholders of METRO AG
-57
24 -65 131
from continuing operations
14 -13
8 21
from discontinued operations
.71
36
-73 111
Earnings per share €
-0.18 0.07 -0.20 0.40
from continuing operations
0.04 -0.04
0.03 0.06
from discontinued operations
-0.22 0.11 -0.22
0.34


Net debt
, after netting cash and cash equivalents as well as financial investments with financial liabilities (including finance leases), totalled €-0.7 billion (net deposits) for continuing operations as of 31 March 2017. The previous year's figure as of 31 March 2016 also includes discontinued operations and amounts to €2.7 billion. The comparable figure as of 31 March 2017 was €3.2 billion.

Outlook

Due to the authorisation of the demerger of METRO GROUP by METRO AG's Annual General Meeting on 6 February 2017, the activities of the METRO Cash & Carry and Real sales lines as well as the associated management and service activities are shown as "discontinued operations". As a result, the forecast for METRO GROUP will be adjusted as it now relates exclusively to continuing operations of METRO GROUP.

The forecast is based on currency-adjusted figures. In addition, it is based on the assumption of a continuously complex geopolitical situation.

For financial year 2016/17, we expect a slight increase in overall sales from continuing operations, despite the persistently challenging economic environment. We expect like-for-like sales from continuing operations to trend slightly higher again.

We expect EBIT before special items from continuing operations to increase slightly compared with the figure of €466 million for financial year 2015/16.

MediaMarktSaturn

Despite the calendar effect in H1 2016/17, like-for-like sales of MediaMarktSaturn increased slightly by 0.1%. However, sales in local currency matched the previous year's level. The stable first-quarter sales trend continued in Q2 2016/17. At €12.2 billion, sales in H1 2016/17 matched the level of the previous year's period, leading to another increase in the overall market share.

Online generated sales of the Media Markt and Saturn sales brands increased by more than 40% in both H1 2016/17 and Q2 2016/17. Total online sales rose by more than 25%, reaching nearly 12% of total sales in Q2 2016/17.

In Germany, like-for-like sales rose markedly by 1.1% in H1 2016/17 as the slight decline during the Christmas quarter was more than offset by sales in Q2 2016/17. Overall, sales in Germany increased by 0.9% to €5.8 billion in H1 2016/17.

In Western Europe, like-for-like sales fell by 2.2% in H1 2016/17. Sales in local currency declined by 2.0%. All in all, half-year sales at MediaMarktSaturn amounted to €4.8 billion, down 2.1% from the same period a year earlier. Sales in Q2 2016/17 declined more strongly than during the Christmas quarter due to negative sales trends in Italy and Switzerland, among others.

In Eastern Europe, like-for-like rose markedly by 3.9% in H1 2016/17. In local currency, the increase amounted to 2.9%. As a result, total sales rose by 3.6% to €1.5 billion. Sales also continued their upward trend in Q2 2016/17, with like-for-like sales rising by 2.2%. The key driver behind this positive trend was the development in Turkey which more than compensated for the negative trend in Russia. While sales in local currency rose by 1.1%, total sales jumped 4.5% to €0.6 billion thanks to positive currency effects.

In H1 2016/17, EBIT amounted to €299 million (H1 2015/16: €332 million). This figure includes special items totalling €9 million (H1 2015/16: €20 million). EBIT before special items declined to €308 million from €352 million. The decline is due, in particular, to measures aimed at adding market share in various countries such as the value-added tax campaign at Saturn Germany in January. In Q2 2016/17, EBIT before special items declined from €43 million to €-4 million.

 

Media-Saturn
H1 2015/16
(€ million)
H1 2016/17
(€ million)
Change
(€)
Change
(in local currency)
like-for-like
(in local currency)
Sales 12,148 12,150 0.0% 0.0% 0.1%
Germany 5,789 5,841 0.9% 0.9% 1.1%
Western Europe
(excl. Germany)
4,926 4,825 -2.1% -2.0% -2.2%
Eastern Europe
1,433 1,484 3.6% 2.9% 3.9%
EBIT before special items
352
308
-€44 million
-
-
Media-Saturn
Q2 2015/16
(€ million)
Q2 2016/17
(€ million)
Change
(€)
Change
(in local currency)
like-for-like
(in local currency)
Sales 5,259
5,258 0.0% -0.5% 0.3%
Germany 2,498 2,548 2.0% 2.0% 3.4%
Western Europe
(excl. Germany)
2,169 2,089 -3.7% -3.8% -3.9%
Eastern Europe 592
619 4.5% 1.1% 2.2%
EBIT before special items
43
-4 -€48million


Discontinued operations

Like-for-like and currency-adjusted sales declined slightly by 0.4% in H1 2016/17. This was partly due to developments at Real, which were also dampened by the calendar effect. Sales in local currency fell short of the previous year's level. Currency effects were positive. At €18.6 billion, total sales exceeded the previous year's level by 0.5%.

In Q2 2016/17, like-for-like, currency-adjusted sales decreased by 1.1%. While sales at METRO Cash & Carry slightly exceeded the previous year's level, sales at Real declined markedly partly due to the calendar effect. The previous year's reporting quarter included both the additional calendar day due to the leap year and the Easter business. Sales in local currency rose by 0.3%. All in all, sales for the quarter increased by 2.4% to €8.5 billion, boosted partly by the stronger Russian rouble and by the acquisitions of METRO Cash & Carry (particularly Pro à Pro in France), which more than offset the decline in sales at Real.

Discontinued operations H1 2015/16
(€ million)
H1 2016/17
(€ million)
Sales 18,515 18,608
Discontinued operations Q2 2015/16
(€ million)
Q2 2016/17
(€ million)
Sales 8,315 8,514

In H1 2016/17, EBIT of METRO GROUP's discontinued operations stood at €614 million (H1 2015/16: €884 million) and comprised special items of €106 million, particularly from restructuring at Real and METRO Cash & Carry. The previous year's figure included positive special items totalling €388 million. These primarily concerned gains from the disposal of METRO Cash & Carry Vietnam. EBIT before special items after renewed depreciation/amortisation in accordance with IFRS 5 reached €603 million (H1 2015/16: €496 million). The increase is due to gains from real estate transactions and positive currency effects.

In Q2 2016/17, EBIT totalled €193 million (Q2 2015/16: €-59 million). Special items amounted to €13 million (Q2 2015/16: €32 million). Due to the above-mentioned gains from real estate transactions and positive currency effects, EBIT before special items after renewed depreciation/amortisation in accordance with IFRS 5 reached €90 million (Q2 2015/16: €-27 million).

In H1 2016/17, earnings before taxes amounted to €539 million (H1 2015/16: €690 million). Earnings before taxes and special items after renewed depreciation/amortisation in accordance with IFRS 5 reached €527 million (H1 2015/16: €314 million).

In H1 2016/17, profit for the period from discontinued operations totalled €249 million (H1 2015/16: €349 million). Profit for the period before special items after renewed depreciation/amortisation in accordance with IFRS 5 increased markedly from €166 million to €311 million.

 


Before special items before IFRS 5
As reported
Earnings from discontinued operations (€ million)
H1 2015/16 H1 2016/17
H1 2015/16 H1 2016/17
EBIT
496
603 884 614
EBT (earnings before taxes)
314
527 690
539
Profit or loss for the period from discontinued operations after tax
166
311
349 249

Before special items before IFRS 5
As reported
Earnings from discontinued activities (€ million) Q2 2015/16 Q2 2016/17
Q2 2015/16 Q2 2016/17
EBIT
-27
90 -59 193
EBT (earnings before taxes)
-109
67 -122 173
Profit or loss for the period from discontinued operations after tax
-67
46 -69 122


Net debt
of discontinued operations, after netting cash and cash equivalents as well as financial investments with financial liabilities (including finance leases), totalled €3.9 billion as of the closing date of 31 March 2017 (31 March 2016: €3.5 billion). The increase of almost €0.4 billion compared to the previous year is due to the purchase of Pro à Pro, among others.

METRO Cash & Carry 

Like-for-like sales at METRO Cash & Carry rose by 0.4% in H1 2016/17. Sales in local currency increased by 1.1%. Thanks to positive currency effects, total sales rose by 2.3% to €14.9 billion. For the first time, the acquisition of Pro à Pro in France, which has been part of METRO since the beginning of February 2017, contributed to total sales. In Q2 2016/17, like-for-like sales increased by 0.1%. However, in local currency, the sales increase was markedly higher at 2.6%, with total sales up 5.4% to €6.9 billion.

METRO Cash & Carry's delivery sales continued to develop positively, with sales rising by more than 23% to €2.1 billion in H1 2016/17. At 14.2%, the sales share of the delivery business thus reached a new record high. The acquisition of Pro à Pro contributed to this increase. As a result, growth was even higher in Q2 2016/17, with delivery sales increasing by more than 30% to €1.1 billion, reaching 16.1% of total sales of METRO Cash & Carry.

Like-for-like sales in the Horeca segment declined by 0.9% in H1 2016/17. However, sales in local currency rose by 2.3%. Total sales increased by 1.3% to €6.9 billion and were dampened slightly by negative currency effects. In Q2 2016/17, the calendar effect had a negative impact on like-for-like sales, which fell by 0.4%. Despite negative currency effects, though, total sales rose by 3.6% to €3.2 billion, driven mostly by the acquisitions of Pro à Pro and Rungis Express. Partly due to the calendar effect, like-for-like sales declined in the largest Horeca country Germany. Like-for-like sales in Turkey, in turn, continued their strong growth.

Like-for-like sales in the multispecialists segment rose by 1.0% in H1 2016/17. Sales in local currency increased by 1.7%. Thanks to positive currency effects, sales rose by 5.7% to €6.5 billion. In Q2 2016/17, like-for-like sales fell by 0.4%. Negative developments in Russia and the Netherlands were partly compensated by positive trends in Pakistan and India. Thanks to positive currency effects, sales rose by 8.0% to €3.1 billion.

Like-for-like sales in the traders segment rose by 4.0% in H1 2016/17, with Ukraine and Romania as key drivers. Sales in local currency climbed by 1.7%. As a result of negative currency effects, however, sales increased by just 0.1% to €1.4 billion. Developments improved in Q2 2016/17 and sales rose by 3.4% to €0.6 billion thanks also to slightly positive currency effects.

In H1 2016/17, EBIT amounted to €603 million (H1 2015/16: €865 million) and included special items amounting to €31 million, which essentially concerned restructurings. The previous year's figure included positive special items totalling €368 million. These primarily concerned gains from the disposal of METRO Cash & Carry Vietnam. At €563 million, EBIT before special items after renewed depreciation/amortisation in accordance with IFRS 5 was €66 million higher than in the comparable period of the previous year.

In Q2 2016/17, EBIT before special items after renewed depreciation/amortisation in accordance with IFRS 5 totalled €132 million (Q2 2015/16: €38 million). The distinct improvement is due, in particular, to a real estate transaction in China, which contributed about €80 million to earnings. In addition, EBIT was bolstered by positive currency effects of €24 million that primarily related to Russia.

METRO Cash & Carry
H1 2015/16
(€ million)
H1 2016/17
(€ million)
Change
(€)
Change
(in local currency)
like-for-like
(in local currency)
Total Sales 14,535 14,867 2.3% 1.1% 0.4%
Horeca 6,848 6,940 1.3% 2.3% -0.9%
Multispecialists
6,193 6,547 5.7%
1.7%
1.0%
Traders
1,365 1,367 0.1%
1.7% 4.0%
Others
130 13 - - -
EBIT before special items after renewed depreciation/amortisation in accordance with IFRS 5
497
563 €66 million


METRO Cash & Carry
Q2 2015/16
(€ million)
Q2 2016/17
(€ million)
Change
(in €)
Change
(in local currency)
like-for-like
(local currency)
Total Sales 6,498 6,852 5.4% 2.6% 0.1%
Horeca 3,047 3,155 3.6% 5.1% -0.4%
Multispecialists
2,848 3,076 8.0% 0.3% -0.4%
Traders
598 618 3.4% 2.9% 5.2%
Others
6
3 - - -
EBIT before special items after renewed depreciation/amortisation in accordance with IFRS 5
38
132 €94 million



Real

In H1 2016/17, like-for-like sales at Real decreased by 3.4%. Due mostly to store disposals, sales declined by 5.7% to €3.7 billion compared with the previous year's period. In Q2 2016/17, like-for-like sales fell by 5.4%. This decline is partly attributable to the negative calendar effect. Stronger increase in food prices also dampened footfall. Due to nine store closures, sales fell more steeply by 7.8% to €1.7 billion year-to-year.

Online sales continued to develop very positively, rising markedly by more than 40% from €37 million to €53 million in H1 2016/17. In Q2 2016/17, sales even grew by nearly 60%. Since mid-February, Real has been offering more than 5 million products in its online store thanks to the full integration of the Hitmeister online store.

In H1 2016/17, EBIT stood at €45 million (H1 2015/16: €66 million). This figure includes special items from restructuring measures totalling €47 million (H1 2015/16: €0 million). EBIT before special items after renewed depreciation/amortisation in accordance with IFRS 5 amounted to €68 million after €67 million in the previous year's period.

In Q2 2016/17, EBIT before special items after renewed depreciation/amortisation in accordance with IFRS 5 increased to €-3 million (Q2 2015/16: €-16 million). Positive effects from the closure of loss-making stores in the previous year's period, higher value added from trade transactions and lower selling and administrative expenses as well as a one-time gain from a real estate transaction more than offset the sales-related earnings decline.

Real
H1 2015/16
(€ million)
H1 2016/17
(€ million)
Change
(€)
like-for-like
Sales
3,945
3,718 -5.7% -3.4%
EBIT before special items after renewed depreciation/amortisation in accordance with IFRS 5
67
68 €1 million

Real
Q2 2015/16
(€ million)
Q2 2016/17
(€ million)
Change
(€)
like-for-like
Sales
1,800 1,660 -7.8% -5.4%
EBIT before special items after renewed depreciation/amortisation in accordance with IFRS 5
-16 -3 € 13 million

 

1 At the Annual General Meeting of METRO AG on 6 February 2017, the shareholders approved the separation of METRO GROUP into two independent, stock-listed companies. As a result, the activities of the METRO Cash & Carry and Real sales lines including the associated real estate assets and management and service activities are shown as "discontinued operations". METRO GROUP's financials have been recalculated accordingly and the previous year's figures have been adjusted (with the exception of the balance sheet). The demerger is expected to be implemented by mid-2017.

 

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.

This press release may contain forward-looking statements based on current assumptions and forecasts made by METRO management and other information currently available to METRO. Various known and unknown risks, uncertainties, and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. METRO does not intend, and does not assume any liability whatsoever, to update these forward-looking statements or to conform them to future events or developments.