METRO continues sales growth acceleration (+3.4% lfl)

23 July 2019
In Q3 2018/19, METRO AG’s like-for-like sales increased by 3.4% in comparison with the same quarter of the previous year. In local currency METRO’s sales increased by 3.6%. Reported sales increased by 2.8% to €7.6 billion.
  • Like-for-like sales increased by 3.4% in Q3 2018/19
  • Growth driven by all regions except Russia
  • EBITDA excluding earnings contributions from real estate transactions reached €316 million (Q3 2017/18: €305 million)
  • Profit or loss for the period from continuing operations at €110 million (Q3 2017/18: €110 million)
  • Earnings per share for continuing operations at €0.30
  • Negotiations with redos regarding the sales process for the hypermarket business have made strong progress and exclusivity will be continued

EBITDA excluding earnings contributions from real estate transactions reached a total of €316 million in Q3 2018/19 (Q3 2017/18: €305 million), mainly driven by the Easter business. In the nine-month period of 2018/19, EBITDA excluding earnings contributions from real estate transactions reached €869 million (9M 2017/18: €920 million). Reasons for the decrease are the operative development in Russia as well as negative currency effects in Russia and Turkey. Adjusted for currency effects, EBITDA excluding earnings contributions from real estate transactions decreased by €-28 million (-3.1%) in comparison with the previous year. However, the positive earnings trend in Western Europe (excluding Germany) and Asia had a compensating effect. “In Q3 2018/19 METRO increased like-for-like sales by 3.4%, which is very encouraging. In our core business wholesale, METRO hits its 24th consecutive quarter of like-for-like growth”, says Olaf Koch, Chairman of the Management Board of METRO AG. “The sales growth was driven by all regions except Russia, and even there we are on the right track. The exclusive negotiations with redos regarding the sales process for Real are progressing very well and exclusivity will be continued.”

 

METRO 9M 2017/18
(in € million)
1
9M 2018/19
(in € million)
Change
Sales 22,151 22,320 0.8%
EBITDA excluding earnings contributions from real estate transactions 920 869 -5.5%
Earnings contributions from real estate transactions 7 66 -
EBITDA 927 935 0.9%
EBIT 522 513 -1.6%
Earnings before taxes (EBT) 429 425 -0.9%
Profit or loss for the period from continuing operations2 244 257 5.3%
Earnings per share from continuing operations (€)2 0.67 0.71 5.3%
Profit or loss for the period2 235 -178 -
Earnings per share (€) 0.65 -0.49 -

1 Adjustment of previous year due to discontinued operations and according to notes in Investor Relations’ Q3 statement.
2 Attributable to METRO shareholders.

 

METRO Q3 2017/18
(in € million)
1
Q3 2018/19
(in € million)
Change
Sales 7,348
7,551 2.8%
EBITDA excluding earnings contributions from real estate transactions 305 316 3.7%
Earnings contributions from real estate transactions 0
32 -
EBITDA 305 347 14.0%
EBIT 175
207 18.4%
Earnings before taxes (EBT) 148 181 22.3%
Profit or loss for the period from continuing operations2 110 110 0.2%
Earnings per share from continuing operations (€)2 0.30 0.30 0.2%
Profit or loss for the period2 56 79 41.1%
Earnings per share (€) 0.15 0.22 41.1%

1 Adjustment of previous year due to discontinued operations and according to notes in Investor Relations’ Q3 statement.
2 Attributable to METRO shareholders.

 

Strong sales growth in Eastern Europe and Asia

Sales and earnings in Q3 2018/19 are in line with expectations for the financial year 2018/19.

In Germany, METRO showed an increase in like-for-like sales of 3.6% in Q3 2018/19, mainly due to the Easter business. Reported sales increased by 3.0%.

In Western Europe (excluding Germany) like-for-like sales increased by 2.2% in Q3 2018/19. This was driven by nearly all countries, but also due to Easter. Reported sales increased by 2.2%.

In Russia like-for-like sales decreased by -4.8% in Q3 2018/19 compared to the same quarter in the previous year. The decline is partly attributable to declining low-margin volume business. The initiated measures, such as price investments, continue to take effect, although they were slower than expected. In addition, the sales development in the previous year was supported by the 2018 FIFA World Cup, hosted by Russia. In local currency, sales decreased by -3.2%. As a result of a positive currency effects in Q3 2018/19, reported sales only declined by -0.8%.

In Eastern Europe (excluding Russia) like-for-like sales in Q3 2018/19 continued to grow at a high level of 7.1%. Double-digit growth rates in Turkey, Romania and Ukraine contributed notably to this. In local currency sales grew by 7.3%. Due to negative currency effects, especially in Turkey, the reported sales grew by 3.4%.

Like-for-like sales in Asia grew by 5.5% in Q3 2018/19, driven by nearly all countries. In local currency sales grew by 6.8%. Due to negative currency effects, mainly in Pakistan, reported sales grew by 5.7%.

In Q3 2018/19, like-for-like sales with HoReCa (hotels, restaurants and caterers) grew by 4.9%, with Trader1  growing by 4.4%. These target groups account for two thirds of METRO’s overall sales.

Delivery sales increased again by around 9% in Q3 2018/19 and account for 20% of METRO’s total sales.

The digitalisation of the core business continues to make progress. Meanwhile, the digital ordering process is available for professional customers in 18 countries or activation is ongoing. It records in average 170,000 orders per week.

As of 30 June 2019, the store network included 773 stores, 4 stores more than on reporting date 30 September 2018.

In Germany, EBITDA excluding earnings contributions from real estate transactions reached €31 million in Q3 2018/19 (Q3 2017/18: €21 million). This was mainly due to the Easter business.

In Western Europe (excluding Germany) it reached €154 million (Q3 2017/18: €141 million). Margin improvements at METRO and Pro à Pro in France contributed to this.

In Russia EBITDA excluding earnings contributions from real estate transactions reached €56 million (Q3 2017/18: €71 million). This decrease was mainly sales and margin driven. Moreover, the same quarter in the previous year included a positive one-time gain in the amount of €10 million.

In Eastern Europe (excluding Russia), EBITDA excluding earnings contributions from real estate transactions reached €86 million (Q3 2017/18: €89 million).

In Asia EBITDA excluding earnings contributions from real estate transactions reached €42 million (Q3 2017/18: €38 million). This increase is attributable to the positive sales development.

In the segment Others EBITDA excluding earnings contributions from real estate transactions reached €-54 million (Q3 2017/18: €-55 million). The previous year was negatively affected by one-time expenses, while the current year was impacted by increased costs for digitalisation/IT and special projects.

In Q3 2018/19 the profit or loss for the period from continuing operations attributed to the shareholders of METRO amounted to €110 million (Q3 2017/18: €110 million). Earnings per share (EPS) from continuing operations reached €0.30 (Q3 2017/18: €0.30).

The profit or loss for the period from continuing and discontinued operations attributed to the shareholders of METRO amounted to €79 million in Q3 2018/19 (Q3 2017/18: €56 million). Earnings per share (EPS) from continuing operations and discontinued operations amounted to €0.22 in Q3 2018/19 (Q2 2017/18: €0.15).

Net debt in continuing operations as of 30 June 2019 stood at €3.4 billion and thus remained stable (30 June 2018: €3.9 billion, thereof €3.4 billion in continuing operations).

1 Trader countries without Russia: Bulgaria, India, Pakistan, Poland, Romania, Serbia, Slovakia, Czech Republic.

 

METRO Sales (€ million) Change (€) Change
(local currency)
Like-for-like
(local currency)

9M 2017/18 9M 2018/19 9M 2017/18 9M 2018/19 9M 2017/18 9M 2018/19 9M 2017/18 9M 2018/19
Total 22,151 22,320 -1.3% 0.8% 1.5% 2.4% 1.2% 2.3%
Germany 3,607 3,581 0.6% -0.7% 0.7% -0.7% 1.3% 0.2%
Western Europe (excl. Germany) 7,949 8,038 2.3% 1.1% 2.3% 1.1% -0.2% 1.0%
Russia 2,210 2,044 -16.4% -7.5% -8.1% -2.8% -7.0% -3.7%
Eastern Europe (excl. Russia) 5,144 5,256 2.0% 2.2% 5.6% 6.8% 6.1% 6.7%
Asia 3,208 3,365 -3.5% 4.9% 3.2% 6.0% 2.9% 4.9%
Others 32 35 -63.7% 9.2% -63.5% 9.2% - -

 


EBITDA
excluding earnings contributions
from real estate transactions
EBITDA EBIT
in € million 9M 2017/18 9M 2018/19 Change
(in €)
9M 2017/18 9M 2018/19 9M 2017/18 9M 2018/19
Total 920
869 -51 927 935 522 513
Germany 75
77 2
75 77 18 17
Western Europe (excl. Germany) 335
349 14 336 379 233 276
Russia 214
165 -49 214 165 174 126
Eastern Europe (excl. Russia) 256
241 -15 257 243 184 168
Asia 121
126 5
124 157 74 105
Others -79 -90 -10 -76 -86 -160 -179
Consolidation -2
0
2 -2 0
-1 0

 

METRO Sales (€ million) Change (€) Change
(local currency)
Like-for-like
(local currency)

Q3 2017/18 Q3 2018/19 Q3 2017/18 Q3 2018/19 Q3 2017/18 Q3 2018/19 Q3 2017/18 Q3 2018/19
Total 7,348 7,551 -2.8% 2.8% 0.7% 3.6% 1.0% 3.4%
Germany 1,170 1,205 -2.2% 3.0% -2.2% 3.0% -1.4% 3.6%
Western Europe (excl. Germany) 2,724 2,784 -0.6% 2.2% -0.6% 2.2% -1.2% 2.2%
Russia 676 671 -19.5% -0.8% -4.7% -3.2% -3.2% -4.8%
Eastern Europe (excl. Russia) 1,785 1,846 0.9% 3.4% 5.9% 7.3% 6.2% 7.1%
Asia 981 1,037 -0.8% 5.7% 4.2% 6.8% 4.1% 5.5%
Others 12 7 -50.9% -40.4% -51.1% -40.3% - -

 


EBITDA
excluding earnings contributions
from real estate transactions
EBITDA EBIT
in € million Q3 2017/18 Q3 2018/19 Change
(in €)
Q3 2017/18 Q3 2018/19 Q3 2017/18 Q3 2018/19
Total 305 316 11 305 347 175 207
Germany 21 31 10 21 31 2
10
Western Europe (without Germany) 141 154 13 141 183 106 148
Russia 71 56 -15 71 56 58 43
Eastern Europe (without Russia) 89 86 -3 89 86 65 62
Asia 38 42 4
38 42 21 25
Others -55 -54 1
-55 -52 -78 -82
Consolidation -1 0
1 -1 0
-1 0

 

Discontinued operations2

The hypermarket business, which is up for sale, is reported as discontinued operations as of 30 September 2018. In Q3 2018/19, like-for-like sales increased by 3.3%, mainly due to the Easter business. Reported sales increased by 2.3% to €1.7 billion.

The online business real.de continued to show dynamic development and increased by 46% to a Gross Merchandise Value (GMV) of €142 million in
Q3 2018/19.

EBITDA excluding earnings contributions from real estate transactions reached a total of €-21 million (Q3 2017/18: €-3 million).
Due to the reporting as discontinued operations in accordance with IFRS 5, depreciation of fixed assets in the amount of €124 million was suspended in 9M 2018/19. In the nine-month period of 2018/19, as part of the advanced sale process, an impairment of the hypermarket business was recognized in the amount of €385 million in Q2 2018/19.

2 Includes mainly the former segment Real and a few entities and assets from the former segment Others.

 

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 24 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 sector leader in the Dow Jones Sustainability Index for the last four years. The company operates in 35 countries and employs more than 150,000 people worldwide. In financial year 2017/18, METRO generated sales of €36.5 billion. In September 2018 METRO AG initiated the divestment process for the food retail chain Real with its 34,000 employees.