METRO continues positive growth trend in Q2 2023/24

07 May 2024

Implementation of sCore growth strategy leads to continued positive sales development in Q2 2023/24

  • Implementation of sCore growth strategy leads to continued positive sales development in Q2 2023/24:
    • Sales growth adjusted for currency and portfolio effects of 7.2%; sales growth in local currency 3.9%; reported sales on previous year level at €6.9 billion
    • Adjusted EBITDA reaches €73 million (Q2 2022/23: €111 million)
  • All channels contributed to sales growth (currency and portfolio adjusted) in Q2: sales in store-based business grows to €5.1 billion (+3.7%), delivery sales to €1.8 billion (+18.0%) and METRO MARKETS sales to €35 million (+45.1%)
  • Net income (attributable to METRO shareholders) was €-193 million in Q2 2023/24 (Q2 2022/23: €-107 million), earnings per share decline to  €-0.53 in Q2 2023/24 (Q2 2022/23: €-0.29) due to non-cash currency effects in the net financial result, which had a positive impact in the previous year
  • Outlook for financial year 2023/24 confirmed

Despite the persistent tense economic and geopolitical situation, which coincided with a sharp downward trend in inflation, METRO was able to continue the positive sales trend in the second quarter of 2023/24. Adjusted for currency and portfolio effects, sales rose by 7.2%, and in local currency by 3.9%. All segments and channels contributed to the positive sales trend. Adjusted EBITDA reached €73 million (Q2 2022/23: €111 million). The decrease is primarily attributable to the discontinuation of license earnings from WM Holding (HK) Limited and other post-transaction effects (Others segment).

Currency- and portfolio-adjusted sales were up 8.2% in H1 2023/24, and in local currency by 5.1%. All segments and channels contributed to this growth. Reported total sales rose slightly by 0.1% to €15.0 billion and were heavily impacted by negative currency effects, especially in Russia and Turkey. The adjusted EBITDA declined to €478 million in H1 2023/24 (H1 2022/23: €577 million). The reasons likewise include the discontinuation of license earnings from WM Holding (HK) Limited and other post-transaction effects (Others segment), as well as a transformation-related development in Germany.

“We are moving full steam ahead with METRO’s wholesale transformation in all areas. This applies both to expanding our delivery business and sales force as well as to streamlining our assortment and strengthening our digital offerings. This is reflected in positive key figures across all our countries: for example, the FSD sales share increased to 24% in the first half of 2023/24 as against 22% in the prior-year period, the digital sales share to 13% as against 9% and the sales share of own brands to 23% compared to 21% in the previous year. Also, the positive sales trend continued apace in a quarter that tends to be seasonally weaker and despite the persistently difficult economic situation. We saw solid volume growth in the second quarter of 2023/24 with declining inflation. This shows that we are well on track with implementing our strategy and confident that we will achieve our growth targets for 2030,” said Dr Steffen Greubel, CEO of METRO AG.

Sales and earnings growth by segment

In Germany, reported sales in local currency in Q2 2023/24 grew by 2.0% in a slightly deflationary environment. Adjusted EBITDA decreased to €-12 million (Q2 2022/23: €-10 million). The implementation of the sCore strategy made further progress, and this is also demonstrated by the sales development with HoReCa customers. However, the Germany segment is still in a transformation phase. In H1 2023/24, sales climbed by 2.8% and reported sales amounted to €2.5 billion. Adjusted EBITDA declined to €53 million in H1 2023/24 (H1 2022/23: €75 million); it was impacted by expected cost inflation and continued investments in price positioning.

In the segment West, reported sales in Q2 2023/24 rose by 2.5%, and in local currency by 2.4%, while adjusted EBITDA increased to €69 million (Q2 2022/23: €59 million) on the back of sales growth. In H1 2023/24, sales were up by 4.1% and reported sales amounted to €6.2 billion. Spain, France and Italy, as well as the delivery specialists, contributed to this sales growth. The HoReCa business in particular showed a clearly positive development. Adjusted EBITDA increased to €248 million in H1 2023/24 (H1 2022/23: €232 million). The increase is particularly attributable to the strong sales development compared to the same period of the previous year. The already-expected cost inflation had the opposite effect.

In Russia, sales development in local currency was clearly positive in Q2 2023/24, with sales up by 13.4%, although reported sales decreased by -4.6% to €0.5 billion, driven by negative currency effects. Adjusted EBITDA decreased slightly to €18 million (Q2 2022/23: €20 million). Adjusted for currency effects, adjusted EBITDA decreased slightly by €-1 million. In H1 2023/24, sales in local currency rose considerably by 16.9%, following significant negative effects from cyberattacks in the previous year. Reported sales fell by -15.8% to €1.2 billion due to negative currency effects. The adjusted EBITDA declined in Russia to €62 million in H1 2023/24 (H1 2022/23: €80 million). Adjusted for currency effects, adjusted EBITDA increased by €4 million.

In the segment East, sales recorded positive growth of 4.1%1 in local currency in Q2 2023/24, driven by all countries. Reported sales decreased by -3.1% because of portfolio effects from the sale of the Indian business and negative currency effects. Adjusted EBITDA increased to €55 million (Q2 2022/23: €50 million). Adjusted for currency effects, adjusted EBITDA increased by €9 million. Sales in local currency developed positively, rising by 4.5%1 in H1 2023/24. All countries, especially Romania, Ukraine and the Czech Republic, contributed to this positive development, which was driven in particular by the significant growth of business with strategic customers. The largest increase in sales was recorded in Turkey, which was heavily supported by inflation. Because of negative currency effects, especially in Turkey, reported sales declined by -1.9%. Adjusted EBITDA in the East segment remained at the previous year’s level in H1 2023/24, at €195 million (H1 2022/23: €196 million). Adjusted for currency effects, adjusted EBITDA rose by €17 million on the back of the sales growth.

In the Others segment, Q2 2023/24 sales rose to €60 million (Q2 2022/23: €47 million) and include in particular METRO MARKETS sales of €35 million (Q2 2022/23: €24 million). The adjusted EBITDA was €–56 million (Q2 2022/23: €-10 million). Transformation gains of €8 million (Q2 2022/23: €3 million) were generated. EBITDA reached €-46 million (Q2 2022/23: €-7 million). In H1 2023/24, sales rose to €119 million (H1 2022/23: €98 million) and include in particular METRO MARKETS sales of €70 million (H1 2022/23: €45 million). The increase was driven in particular by growth of the marketplace in all 6 METRO MARKETS countries, in particular France. DISH Digital Solutions sales also made a significant contribution to growth (+>30%). The adjusted EBITDA in the segment Others amounted to €−81 million in H1 2023/24 (H1 2022/23: €-12 million). In the previous year, adjusted EBITDA up to April 2023 benefited from license earnings from the partnership with WM Holding (HK) Limited and other post-transaction effects, which are no longer included in the current financial year. Further investments in digital transformation were made in the current financial year. Earnings contributions from real estate transactions amounted to €29 million (H1 2022/23: €203 million) and were primarily the result of two real estate transactions in Turkey (in Q1 2023/24). The previous year included the sale of part of the METRO Campus. Transformation gains of €11 million (H1 2022/23: €3 million) were generated. EBITDA reached €-41 million (H1 2022/23: €194 million).

As of 31 March 2024, the store network comprised 624 stores, of which 525 were out-of-store (OOS) locations, and 86 depots.

1 This includes a negative portfolio effect of around 10%e from the sale of the Indian business

METRO key financial figures H1 2023/24

METRO in figures
Key financial figures (€ million) H1 2022/23 H1 2023/24 Change Change in %
Sales (net) 15,004 15,013 8 0.1%
Adjusted EBITDA 577 478 -99 -17.2%
EBIT 369 93 -276 -74.8%
Earnings per share (EPS) in € (basic = diluted) 1.14 -0.17 -1.32 -

Multichannel development
Sales development (€ million) H1 2022/23 H1 2023/24 Change Ambition FY 2030
Store-based and other business 11,692 11,286 -406 ~1.2x vs. 2020/21
FSD 3,266 3,657 391 > 3 x vs. 2020/21
METRO MARKETS sales 45 70 24 -
METRO MARKETS marketplace sales1 73 106 33 > €3 billion

1 Total volumes of METRO MARKETS platform (and third-party platforms) excluding VAT and after cancellations but before any deductions; contains vendor sales in full.

Network
30 September 2023 31 March 2024 Change
Stores & Delivery (number of countries) 32 33 1
Marketplace (number of countries) 6 6 0
DISH POS2 (number of countries) 4 6 2
Stores (number of locations) 625 624 -1
of which delivery OOS3 (number of locations) (529) (525) (-4)
FSD depots (number of locations) 76 86 10

2 DISH POS is a cloud-based all-in-one POS system with solutions for the hospitality industry. The product was developed by POS supplier Eijsink. Following the acquisition by DISH Digital Solutions (formerly Hospitality Digital) in March 2022, the product has since been further developed and integrated into the range of digital DISH tools. The system is called Booq in the Netherlands and Belgium.
3 OOS refers to the existing METRO store network and includes METRO stores that supply from the store as well as stores that operate their own depot in the store.

METRO segments sales and earnings key figures Q2 2023/24


Sales (€ million) Change (€) Currency effects Change
(local currency)

Q2
2022/23
Q2
2023/24
Q2
2022/23
Q2
2023/24
Q2
2022/23
Q2
2023/24
Q2
2022/23
Q2
2023/24
Total 6,897 6,898 10.4% 0.0% 0.0% -3.9% 10.5% 3.9%
Germany 1,078 1,100 8.7% 2.0% 0.0% 0.0% 8.7% 2.0%
West 2,769 2,837 9.4% 2.5% 0.0% 0.0% 9.4% 2.4%
Russia 571 545 -0.7% -4.6% 13.7% 18.0% -14.4% 13.4%
East 2,432 2,355 14.4% -3.1% -6.6% -7.3% 21.0% 4.1%
Others 47 60 - - - - - -



Adjusted EBITDA Transformation costs (+)/ transformation gains (-) Earnings contributions (+)
from real estate
transactions
EBITDA

€ million
Q2
2022/23
Q2
2023/24
Change
(€)
Q2
2022/23
Q2
2023/24
Q2
2022/23
Q2
2023/24
Q2
2022/23
Q2
2023/24
Total 111 73 -38 -2 -8 0 2 114 84
Germany -10 -12 -3 0 0 0 0 -10 -12
West 59 69 9 -1 0 0 0 61 69
Russia 20 18 -2 0 0 0 0 20 18
East 50 55 5 2 0 0 0 48 55
Other -10 -56 -46 -3 -8 0 2 -7 -46
Consolidation 2 0 -1 0 0 0 0 2 0


METRO segments sales and earnings key figures H1 2023/24


Sales (€ million) Change (€) Currency effects Change
(local currency)

H1
2022/23
H1
2023/24
H1
2022/23
H1
2023/24
H1
2022/23
H1
2023/24
H1
2022/23
H1
2023/24
Total 15,004 15,013 8.3% 0.1% 0.6% -5.0% 7.7% 5.1%
Germany 2,421 2,489 5.8% 2.8% 0.0% 0.0% 5.8% 2.8%
West 5,931 6,176 6.4% 4.1% 0.0% 0.0% 6.4% 4.1%
Russia 1,459 1,229 6.2% 15.8% 20.5% 32.7% -14.3% 16.9%
East 5,095 4,999 11.4% -1.9% -6.4% -6.4% 17.8% 4.5%
Others 98 119 - - - - - -



Adjusted EBITDA Transformation costs (+)/ transformation gains (-) Earnings contributions (+)
from real estate
transactions
EBITDA

€ million
H1
2022/23
H1
2023/24
Change
(€)
H1
2022/23
H1
2023/24
H1
2022/23
H1
2023/24
H1
2022/23
H1
2023/24
Total 577 478 -99 -3 -11 207 30 787 519
Germany 75 53 -21 0 0 0 0 75 53
West 232 248 16 -3 0 4 1 238 249
Russia 80 62 -18 0 0 0 0 80 62
East 196 195 -1 2 0 0 0 194 195
Other -12 -81 -68 -3 -11 203 29 194 -41
Consolidation 6 0 -6 0 0 0 0 6 0


METRO is a leading international food wholesaler which specialises in serving the needs of hotels, restaurants, and caterers (HoReCa) as well as independent merchants (Traders). Around the world, METRO has approx. 15 million customers who benefit from the wholesale company’s unique multichannel mix: customers can purchase their goods in one of the large stores in their area as well as by delivery (Food Service Distribution, FSD) – all digitally supported and connected. In parallel, METRO MARKETS is being developed as an international online marketplace for the needs of professional customers which has been growing and expanding continuously since 2019. Acting sustainably is one of the company principles of METRO which has been listed in various sustainability indices and rankings, including MSCI, Sustainalytics and CDP. METRO operates in more than 30 countries and employs over 89.000 people worldwide. In financial year 2022/23, METRO generated sales of €30.6 billion.

More information can be found at MPULSE.de, our online magazine.

Further information

Half-Year Financial Report H1/Q2 2023/24

7 May 2024, 6.30pm CEST

H1/Q2 2023/24 Results Presentation

08 May 2024, 08:45 CEST