METRO with 2.3% like-for-like sales growth and adjusted EBITDA above previous year in Q2 2019/20

06 May 2020Download

In Q2 2019/20 METRO AG´s like-for-like sales increased by 2.3% compared to the previous year. Eastern Europe, Russia and Germany mainly contributed to this positive development. In local currency, sales grew by 2.1%. Reported sales increased by 1.8% to €6.0 billion.

Previous year’s adjustment to continuing operations (without Real and METRO China) and due to full retrospective application of IFRS 16 (leasing agreements)

Like-for-like sales grow by 2.3% in Q2 2019/20
Sales growth driven by Eastern Europe (11.2%), Russia (9.8%) and Germany (4.8%); Western Europe (excl. Germany) affected by COVID-19 pandemic
EBITDA adjusted (excluding transformation costs and earnings contributions from real estate transactions) at €133 million (Q2 2018/19: €130 million)
Profit or loss for the period from continuing operations attributable to METRO shareholders reach €-116 million (Q2 2018/19: €-58 million)
Earnings per share from continuing operations at €-0,32 (Q2 2018/19: €-0,16 )
Sale of a majority stake in METRO China to Wumei Technology Group successfully completed in exchange for net cash proceeds of more than €1.5 billion after quarterly reporting date

EBITDA excluding transformation costs and earnings contributions from real estate transactions reached €133 million in Q2 2019/20 (Q2 2018/19: €130 million). It should be noted that the business development since mid-March has been significantly negatively affected by COVID-19. Thanks to the good start in Q2, which also benefited from an additional day in February due to the leap year, this negative impact could be offset in the total earnings of Q2 2019/20. The solid sales growth in Germany, Russia and Eastern Europe as well as the segment Others contributed to the overall positive development. In Western Europe (excl. Germany) and Asia earnings decreased due to a sales decline caused by COVID-19. In Q2 2019/20 transformation costs of €45 million (Q2 2018/19: €0 million) from efficiency programmes to adapt the group to its wholesale strategy incurred. Earnings contributions from real estate transaction were at €0 million (Q2 2018/19: €32 million). Reported EBITDA in consideration of transformation costs and reduced earnings contributions from real estate transaction reached €87 million (Q2 2018/19: €163 million). In H1 2019/20 EBITDA excluding transformation costs and earnings contributions from real estate transactions reached €659 million (H1 2018/19: €660 million). Adjusted for currency effects EBITDA excluding transformation costs and earnings contributions from real estate transactions decreased by €-7 million (-1.0%).

“METRO, with its business units and customer structures, is significantly less affected by the COVID-19 crisis than other companies. We have taken immediate and consistent measures to protect our employees and customers, secure our supply chains, reduce our costs and thus steer our company reliably through this phase“, says Olaf Koch, Chairman of the Management Board of METRO AG. “At the same time, we have launched numerous initiatives to support and strengthen our customers and to be a reliable partner during this crisis. Gastronomy in particular stands for diversity and quality of life in our society and has earned the support and appreciation of us citizens, but also of the state institutions. This is what we are committed to. We therefore see this crisis as an opportunity to further expand our position as a partner for independent entrepreneurship.”

Until the end of February, the operational business developed mostly positive and was largely unaffected by the pandemic. At the beginning of the COVID-19 crisis in Europe, the decline in sales and earnings of HoReCa customers was initially offset by the positive sales and earnings effects from other customer groups (especially stock-up purchases from SCO customers). Since mid-March, however, the overall development in terms of sales and earnings has been clearly negative. Based on a projection of the business development from mid-March until end of April, METRO now expects that every month in the current lock-down situation will cause a sales decline of 2%-point compared to the previous year. The EBITDA burden associated with the loss of sales and further reductions in earnings due to the crisis can probably only be compensated to a small extent by countermeasures. The different segments of METRO are affected by the COVID-19 pandemic to varying degrees. This depends mainly on the severity and timing of the pandemic as well as the government measures and cuts imposed in the respective countries. Furthermore, the customer groups also play an important role. In segments with a high HoReCa sales share, the restrictions on restaurants and hotels have a greater impact on the operational development. This is specifically the case in Western Europe (excl. Germany) with a HoReCa sales share of 65% (in FY 2018/19). In segments with a higher SCO share the increased frequency and demand of this customer group has a noticeably positive effect. This was mainly the case in Russia (54% SCO sales share in FY 2018/19) and Germany (41% SCO sales share in FY 2018/19).

METRO	H1 2018/19 (in € million)^{1, 2}	H1 2019/20 (in € million)	Change
Sales	13,286	13,555	2.0%
EBITDA adjusted (excl. transformation costs and earnings contributions from real estate transactions)	660	659	-0.1%
Transformation costs	0	45	-
Earnings contributions from real estate transactions	34	1	-
EBITDA	694	615	-11.5%
EBIT	316	184	-
Earnings before taxes (EBT)	198	24	-
Profit or loss for the period from continuing operations³	114	5	-
Earnings per share from continuing operations (€)³	0.31	0.01	-
Profit or loss for the period³	183	-121	-
Earnings per share (€)	0.50	-0.33	-

¹ Previous year’s adjustment due to discontinued operations METRO China.
² Previous year’s adjustment due to full retrospective application of IFRS 16 (leasing agreements).
³ Attributable to METRO shareholders.

METRO	Q2 2018/19 (in € million)^{1, 2}	Q2 2019/20 (in € million)	Change
Sales	5,898	6,006	1.8%
EBITDA adjusted (excl. transformation costs and earnings contributions from real estate transactions)	130	133	1.9%
Transformation costs	0	45	-
Earnings contributions from real estate transactions	32	0	-
EBITDA	163	87	-46.3%
EBIT	-31	-143	-
Earnings before taxes (EBT)	-86	-252	-
Profit or loss for the period from continuing operations³	-58	-116	-
Earnings per share from continuing operations (€)³	-0.16	-0.32	-
Profit or loss for the period³	-41	-87	-
Earnings per share (€)	-0.11	-0.24	-

Sales and EBITDA development

In Germany, like-for-like sales increased by 4.8% in Q2 2019/20. This was mainly attributable to a significant increase in sales by SCO customers as a result of the COVID-19 situation. Reported sales increased by 4.9% to €1.1 billion.

In Western Europe (excl. Germany) like-for-like sales decreased by -6.3% in Q2 2019/20. This reflects the impact of temporary restaurant closings in Italy, Spain and France due to the COVID-19 pandemic. Reported sales decreased by -6.3% to €2.2 billion.

In Russia like-for-like sales increased by 9.8% in Q2 2019/20. In local currency sales increased by 10.4% and reported sales increased by 11.3%. The increase is to a significant extent driven by the strategic measures introduced. In addition, the increased demand and frequency of SCO customers due to the COVID-19 pandemic had a positive effect.

In Eastern Europe (excl. Russia) like-for-like sales increased very positively by 11.2% in Q2 2019/20. Nearly all countries in this segment contributed to this. In local currency sales also increased by 11.2%. Due to negative currency effects, especially in Turkey, reported sales only increased by 9.9% to €1.7 billion.

Like-for-like sales in Asia remained on previous year’s level (+0.2%) in Q2 2019/20. This is in particular due to the weaker sales performance of Classic Fine Foods and in Japan as a result of the COVID-19 crisis. Sales in local currency increased by 0.5%. Reported sales were on previous year’s level.

Sales in METRO´s delivery business decreased by -5.3% in Q2 2019/20 due to a decline in demand from the HoReCa sector. The delivery sales share reached 16.3% (Q2 2018/19: 17.6%).

As of 31 March 2020 the store network included 679 stores, 3 stores more than on the same date in the previous year.

In Germany in Q2 2019/20 EBITDA adjusted (excluding transformation costs and earnings contributions from real estate transactions) was at €-4 million (Q2 2018/19: €-15 million). This improvement is mainly due to the good sales development with SCO customers.

In Western Europa (excl. Germany) EBITDA adjusted in Q2 2019/20 was at €23 million (Q2 2018/19: €54 million). This decline is mainly attributable to a decline in sales and margin in Italy, Spain and France as well as at Pro à Pro, where government restrictions in the gastronomy sector in the wake of the COVID-19 crisis have a significant negative impact.

In Russia EBITDA adjusted was at €37 million (Q2 2018/19: €34 million).

In Eastern Europe (excl. Russia) EBITDA adjusted was at €64 million (Q2 2018/19: €54 million). This increase is mainly due to the good earnings development in Turkey, Ukraine and Poland.

In Asia EBITDA adjusted was at €-1 million (Q2 2018/19: €8 million). Earnings contributions from real estate transactions were at €0 million (Q2 2018/19: €30 million).

In the segment Others EBITDA adjusted in Q2 2019/20 was at €14 million (Q2 2018/19: €-4 million), benefiting from improved operating results in logistics and cost savings from efficiency measures in the headquarter. Transformation costs for efficiency measures amounted to €45 million. Therefore, in Q2 2019/20 EBITDA was at €-31 million.

In Q2 2019/20 the profit or loss for the period from continuing operations attributable to METRO shareholders reached €-116 million (Q2 2018/19: €-58 million). The profit or loss for the period from continuing and discontinued operations attributable to METRO shareholders reached €-87 million (Q2 2018/19: €-41 million; reported pre IFRS 16: €-459¹).

In Q2 2019/20 earnings per share (EPS) from continuing operations decreased to €-0.32 (Q2 2018/19: €-0.16). Earnings per share from continuing operations and discontinued operations were at €-0.24 (Q2 2018/19:€-0.11; reported pre IFRS 16: €-1.26²).

On 31 March 2020 net debt for the continuing operations amounted to €6.2 billion (31 March 2019: €6.3 billion).

^{1, 2} Differences in previous year’s numbers are due to a change of reporting standards and therefore technical in nature. From the beginning of its financial year 2019/20 onwards METRO reports its financial statements, including current fiscal year and the respective previous year’s base, under IFRS 16 (new financial reporting standard on accounting for leases). Compared to the formerly applicable standards (IAS 17 and IFRIC 4) net asset values thereby have been significantly lower already in the opening balance sheet. Consequently, post-IFRS 16 the necessary impairment of the disposal group was also lower and explains the significant differences in previous year’s numbers.

METRO sales and EBITDA figures^{1, 2} H1 2019/20

METRO	Sales (€ million)		Change (€)		Change (local currency)		Like-for-like (local currency)
	H1 2018/19	H1 2019/20	H1 2018/19	H1 2019/20	H1 2018/19	H1 2019/20	H1 2018/19	H1 2019/20
Total	13,286	13,555	-0.7%	2.0%	1.6%	1.5%	1.6%	1.5%
Germany	2,376	2,421	-2.5%	1.9%	-2.5%	1.9%	-1.5%	1.9%
Western Europe (excl. Germany)	5,253	5,117	0.5%	-2.6%	0.5%	-2.6%	0.4%	-2.5%
Russia	1,374	1,459	-10.4%	6.2%	-2.6%	1.4%	-3.1%	0.9%
Eastern Europe (excl. Russia)	3,410	3,677	1.5%	7.8%	6.5%	7.9%	6.6%	7.8%
Asia	843	867	4.7%	2.8%	8.8%	2.0%	6.3%	1.8%
Others	29	14	-	-	-	-	-	-

¹ Previous year’s adjustment due to discontinued operations METRO China.
² Previous year’s adjustment due to full retrospective application of IFRS 16 (leasing agreements).

	EBITDA adjusted			Transformation costs		EBITDA contributions from real estate transactions		EBITDA
in € million	H1 2018/19	H1 2019/20	Change (in €)	H1 2018/19	H1 2019/20	H1 2018/19	H1 2019/20	H1 2018/19	H1 2019/20
Total	660	659	-1	0	45	34	1	694	615
Germany	62	72	11	0	0	0	0	62	72
Western Europe (excl. Germany)	262	227	-34	0	0	0	1	262	228
Russia	117	124	8	0	0	0	0	116	124
Eastern Europe (excl. Russia)	175	181	6	0	0	2	0	178	181
Asia	26	11	-14	0	0	30	0	56	11
Others	20	42	22	0	45	2	0	21	-4
Consolidation	0	1	2	0	0	0	0	0	1

¹ Previous year’s adjustment due to discontinued operations METRO China.
² Previous year’s adjustment due to full retrospective application of IFRS 16 (leasing agreements).

METRO sales and EBITDA figures^{1, 2} Q2 2019/20

METRO	Sales (€ million)		Change (€)		Change (lokal currency)		Like-for-like (lokal currency)
	Q2 2018/19	Q2 2019/20	Q2 2018/19	Q2 2019/20	Q2 2018/19	Q2 2019/20	Q2 2018/19	Q2 2019/20
Total	5,898	6,006	-0.4%	1.8%	1.3%	2.1%	1.0%	2.3%
Germany	1,024	1,074	-4.1%	4.9%	-4.1%	4.8%	-3.1%	4.8%
Western Europe (excl. Germany)	2,333	2,185	-0.3%	-6.3%	-0.3%	-6.3%	-0.3%	-6.3%
Russia	573	637	-8.3%	11.3%	-2.3%	10.4%	-4.0%	9.8%
Eastern Europe (excl. Russia)	1,550	1,703	2.4%	9.9%	6.8%	11.2%	6.8%	11.2%
Asia	401	401	6.7%	0.0%	7.6%	0.5%	5.1%	0.2%
Others	18	7	-	-	-	-	-	-

¹ Previous year’s adjustment due to discontinued operations METRO China.
² Previous year’s adjustment due to full retrospective application of IFRS 16 (leasing agreements).

	EBITDA adjusted			Transformation costs		EBITDA contributions from real estate transactions		EBITDA
in € million	Q2 2018/19	Q2 2019/20	Change (in €)	Q2 2018/19	Q2 2019/20	Q2 2018/19	Q2 2019/20	Q2 2018/19	Q2 2019/20
Total	130	133	2	0	45	32	0	163	87
Germany	-15	-4	11	0	0	0	0	-15	-4
Western Europe (excl. Germany)	54	23	-32	0	0	0	0	54	23
Russia	34	37	3	0	0	0	0	34	37
Eastern Europe (excl. Russia)	54	64	10	0	0	0	0	54	64
Asia	8	-1	-9	0	0	30	0	38	-1
Others	-4	14	18	0	45	2	0	-2	-31
Consolidation	-1	0	1	0	0	0	0	-1	0

¹ Previous year’s adjustment due to discontinued operations METRO China.
² Previous year’s adjustment due to full retrospective application of IFRS 16 (leasing agreements).

Discontinued operations

In Q2 2019/20, like-for-like sales for discontinued operations increased by 7.7%. This was mainly attributable to the positive sales development at Real with a like-for-like sales growth of 8.7%. Reported sales from discontinued operations increased by 6.3% to €2.6 billion. EBITDA adjusted was at €135 million (Q2 2018/19: €50 million).

Due to its disclosure as discontinued operations in accordance with IFRS 5, in H1 2019/20 depreciation of fixed assets amounting to €196 million (H1 2018/19: €136 million) were suspended. In H1 2019/20 based on the selling agreement, which in the meantime has been concluded, as well as paused depreciation of fixed assets an impairment of the hypermarket business amounting to €303 million incurred.

METRO AG is confident that the progress of another major transaction of Real hypermarket business being entirely acquired by SCP Group is on track.

METRO is a leading international wholesale company with food and non-food assortments that specialises on serving the needs of hotels, restaurants and caterers (HoReCa) as well as independent traders. Around the world, METRO has some 16 million customers who can choose whether to shop in one of the large-format stores, order online and collect their purchases at the store or have them delivered. METRO in addition also supports the competitiveness of entrepreneurs and own businesses with digital solutions and thereby contributes to cultural diversity in retail and hospitality. Sustainability is a key pillar of METRO’s business. METRO has been the European sector leader in the Dow Jones Sustainability Index. The company operates in 34 countries and employs more than 100,000 people worldwide. In financial year 2018/19, METRO generated sales of €27.1 billion. In September 2018 METRO initiated the divestment process for the food retail chain Real with its 34,000 employees.

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METRO sales and EBITDA figures1, 2 H1 2019/20

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METRO sales and EBITDA figures^{1, 2} H1 2019/20

METRO sales and EBITDA figures^{1, 2} Q2 2019/20