Until the end of last year, the least we can say is that the company's prospects were hardly encouraging - see Metro AG: Untenable position? The market saw things the same way, since the Group's valuation has fallen by a further third in the meantime.
It has to be said that Metro's profitability had melted like snow in the sun over the years. The sale of subsidiaries and large sections of its real estate assets had helped to keep the company afloat, but this was tantamount to burning the furniture to keep warm - an option that sometimes saved the day, but was unsustainable in the long term.
With hindsight, however, this defensive choice was better than sinking into debt. It would also appear that Metro has finished burning the furniture, and largely completed the rationalization of its geographical footprint, with 624 stores in operation by the end of 2024, compared with 625 last year.
Built around the so-called "sCore" plan, its highly ambitious roadmap remains on track, and is built on three main pillars: concentration on its wholesale activities, new logistics and digital services for professionals, and a focus on its own brands. It's all very straightforward.
By 2030, the aim remains to achieve sales of EUR40 billion and generate at least EUR600 million in free cash flow. This last parameter betrays the heavy capital intensity that will be required to achieve the targeted sales.
It is interesting to note, however, that Metro intends to self-finance the redeployment of its offering, rather - as we said - than take on additional debt. Yet another defensive choice that, on the face of it, wins our favor.
This is where a reference shareholder of the calibre of Daniel Kretinsky - who now holds half the capital - can make a difference. Kretinsky, who also had a hand in Casino, is certainly not short of ideas, and although his reputation is sometimes sulphurous, he is clearly courageous.
As we wrote earlier, however, Metro is not out of its rut. This year, sales were growing at the same rate as inflation - or even slightly below it: in absolute terms, therefore, there was no growth - and the Group still generated 8% of its sales in Russia, with all the risks that this implies.
Similarly, while progress on new logistics services is noteworthy, with sales up from EUR7 to EUR8 billion, in-store sales continue to erode. This development gives rise to fears of further site closures, which will inevitably be accompanied by associated sales declines.
Management's optimistic promises are greeted with the usual reservations. This year's decline in adjusted operating profit clearly exceeds last year's expectations, to name but one example.
The fact remains, however, that Metro is walking a tightrope, repositioning its offering while maintaining a balanced cash flow. This feat alone calls for encouragement. In this respect, good connoisseurs of the brand, convinced that it still has an up-to-date card in services for professionals, will no doubt find the current valuation very attractive.