METRO FACTBOOK 2019/20
BERENBERG
WEST COAST CONSUMER CONFERENCE
19 November 2020
DISCLAIMER AND NOTES
To the extent that statements in this presentation do not relate to historical or current facts, they constitute forward-looking statements.
All forward-looking statements herein are based on certain estimates, expectations and assumptions at the time of publication of this presentation and there can be no assurance that these estimates, expectations and assumptions are or will prove to be accurate. Furthermore, the forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or financial position to differ materially from any future results, performance or financial position expressed or implied in this presentation. Many of these risks and uncertainties relate to factors that are beyond METRO AG's ability to control or estimate precisely. The risks and uncertainties which these forward-looking statements may be subject to include (without limitation) future market and economic conditions, the behavior of other market participants, invest in innovative sales formats, expand in online and multichannel sales activities, integrate acquired businesses and achieve anticipated cost savings and productivity gains, and the actions of government regulators. Readers are cautioned not to place reliance on these forward-looking statements. METRO AG does not undertake any obligation to publicly update any forward-looking statements or to conform them to events or circumstances after the date of this presentation.
This presentation is intended for information only and should not be treated as investment advice or recommendation. It is not, and nothing in it should be construed as an offer for sale, or as a solicitation of an offer to purchase or subscribe to, any securities in any jurisdiction. Neither this presentation nor anything contained therein shall form the basis of, or be relied upon in connection with, any commitment or contract whatsoever. This presentation may not, at any time, be reproduced, distributed or published (in whole or in part) without prior written consent of METRO AG.
Not all figures included in this presentation have been audited and certain figures may also deviate substantially from information in the consolidated financial statements of METRO AG, thus, may not be fully comparable to such financial statements. The hypermarket business for sale is reported as a discontinued operation as of 30 September 2018 due to the ongoing sales process. Following the signing of the contract for the disposal of a majority stake in METRO China to Wumei Technology Group, METRO China has been reported as discontinued operation as of 30 September 2019. Meanwhile the sale has been closed and will be reflected in Q3 reporting. METRO will retain only 20% stake in METRO China. The discontinued segment primarily includes Real, majority of METRO China and some other individual companies or assets. All following explanations of the business development will focus on the continuing operations unless stated otherwise. Furthermore, the results are reported based on the retrospective adjustments due to IFRS 16.
This presentation includes supplemental financial measures which are or may be non-GAAP financial or operative measures. These measures should not be viewed in isolation as alternatives to financial measures presented in accordance with IFRS. Other companies that disclose similarly titled measures may calculate them differently. All amounts are stated in million euros (€ million) unless otherwise indicated. Amounts below €0.5 million are rounded and reported as 0. Rounding differences may occur.
2 19.11.2020 © METRO AG.
01 COMPANY STRUCTURE
3 19.11.2020 © METRO AG.
COMPANY STRUCTURE
Discontinued operations in FY2018/19
Hypermarket | METRO China |
Closed on 25.06.2020 | closed on 23.04.2020 |
4 19.11.2020 © METRO AG.
MANAGEMENT BOARD
Olaf Koch | Christian Baier | Andrea Euenheim | Rafael Gasset | Eric Poirier |
Chairman of the | Chief Financial Officer | Chief Human Resources | Chief Operating Officer | Chief Operating Officer |
Management Board | Officer and Labour | (Trader Cluster) | (HoReCa Cluster) | |
(Chief Executive | Director | |||
Officer) |
Chairman of the | Member of the | Member of the |
Management Board of | Management Board of | Management Board and |
METRO AG since 2 March | METRO AG since | Labour Director of METRO |
2017 | 11 November 2016 | AG since 1 November |
2019 |
Member of the Management Board of METRO AG since 1 April 2020
Member of the Management Board of METRO AG since 1 April 2020
Term ending:
31 December 2020 >10 years in METRO Owns 370,000 Shares
Term ending: | Term ending: | Term ending: | |
30 September 2025 | Term ending: | 31 March 2023 | 31 March 2023 |
>8 years in METRO | 31 October 2022 | >10 years in METRO | 20 years in METRO |
Owns 2,850 shares |
5 19.11.2020 © METRO AG.
02 Q3 2019/20
SHOWING RESILIENCE IN
THE LIGHT OF COVID-19
6 19.11.2020 © METRO AG.
Q3 2019/20 IN A NUTSHELL - OPERATIONS
"PROTECT"
"PRESERVE"
"GROW"
- Ensuring safety of our employees and customers
- Making sure that stores provide safe shopping experience without compromising on high service
- Our teams responded with extraordinary resilience, determination and commitment
- Our country operations were quick and proactive when it came to handling this backdrop. Flexible C&C operations and strong customer relationship is very valuable in times of crisis
- Proximity to our customers was key. Various support measures were launched in order to help them in these unprecedent times
- The entrepreneurial culture and accountability accelerated performance which started before COVID-19
- Diversified customer base and flexible operations cushion the COVID-19related decline in HoReCa and FSD
7 19.11.2020 © METRO AG.
Q3 2019/20 IN A NUTSHELL - FINANCIALS
Portfolio diversification and operations flexibility
EBITDA to EPS
Acceleration
Advancing
wholesale agendaStrong
reported EPS and net debt reduction
- Sales driven by stable accelerated growth with Trader and SCO while HoReCa is affected by lockdowns in Q3
- Flexible C&C + FSD + Services model provides channel optionality, welcomed by HoReCa
- Diverse performance across geographies depending on lockdown sequence
- EBITDA impacted in line with sales development; countered by intense and successful efforts to save costs across countries
- Continuous improvement in the interest and investment result
- Sale of China and Real closed in Q3, leading to €0.5 bn positive transaction result and €1.9 bn net cash proceeds1
- Q3 reported EPS growth to €1.41; basis for dividend continuity
- €1.8 bn net debt reduction driven by resilient business model and successful execution of transformation transactions
1Sale of the majority stake in METRO China was closed on 23rd April and Sale of real was closed on 25th June except for 6 remaining properties to be closed in late summer
8 19.11.2020 © METRO AG.
CRISIS-PROOF BUSINESS MODEL
April: ~75% of sales level | May: ~80% of sales: | June: ~95%1 |
Broad spread of COVID-19 & | Initial easing of governmental | Broader loosening of governmental |
governmental restrictions | restrictions | restrictions |
- Portfolio diversification partially compensates HoReCa decline as operations were strongly limited
- Broad counter measures initiated
- Resilient Trader with limited volatility
- SCO with mid/low double-digit inflow
- HoReCa restarting; strong positioning due to flexibility of C&C channel
- Trader stayed on low single-digit growth aided by online and trader franchise
- SCO's basket and frequency were still high
- HoReCa recovery was supported by opening of borders
- Trader continued to improve across majority of regions
- SCO was at high single-digit percentage growth; aim to retain new customers
HoReCa | Trader2 | SCO 1 Break-even achieved first week of July 2 Full Trader sales |
9 19.11.2020 | © METRO AG. |
REGIONAL SALES DEVELOPMENT
Simplified view
Customers split | Lockdown | Intensity of | LfL sales | ||||
(rounded, in %, FY 18/19) | Start | Duration | Q3 19/20 | July LfL1 | |||
measures |
HoReCa Trader SCO
Russia | 16 % | 30 % | 54 % | Late March | 6 - 8 weeks | + 6.0% | ~16% | |||||||
lockdown | ||||||||||||||
Eastern | Mid March | 6 - 8 weeks | - 7.4% | ~3% | ||||||||||
37 % | 31 % | 32 % | ||||||||||||
Europe | lockdown | |||||||||||||
Germany | Mid March | 6 - 8 weeks | - 9.5% | ~3% | ||||||||||
46 % | 13 % | 41 % | ||||||||||||
lockdown | ||||||||||||||
Western | ~10 weeks | - 32.8% | ~-2% | |||||||||||
65 % | 16 % | 20 % | Mid March | |||||||||||
Europe | lockdown | |||||||||||||
Asia | January, second | Ongoing | - 19.2% | ~-11% | ||||||||||
40 % | 31 % | 28 % | wave in March | |||||||||||
1 July: Preliminary unaudited figures, including 1.7% calendar support
10 19.11.2020 © METRO AG. | Medium/low | Medium | Medium/High | High |
GRADUAL WEEK BY WEEK IMPROVEMENT
April | May | June | July |
~75% of sales | ~80% of sales | ~95% of sales | On PY level |
% LFL Sales - all customer groups
15 | Easter: |
Avg. ~€-150 m per week | |
0 |
-15
-30
-45
Weekly %-Change vs. PY
Weekly %-Change vs. PY
CW 14 | CW 15 | CW16 | CW17 | CW18 | CW19 | CW20 | CW21 | CW22 | CW23 | CW24 | CW25 | CW26 | CW27 | CW28 | CW29 | CW30 | CW31 |
LFL Sales - HoReCa
25
0
-25
-50
-75
April | May | June | July |
11 19.11.2020 © METRO AG.
VIEW ON SECTOR CONFIRMED WITH Q3 PROOF POINTS
COVID-19 had a significant short-term impact on HoReCa
However: High quality Food remained and will remain a high priority among consumer preferences
General desire to eat out and enjoy excellent food is strong | ü |
Vast majority of restrictions have been lifted |
HoReCa sales are largely on pre COVID-19 levels
Flexible structures will be essential to serve "New HoReCa demand pattern"
C&C + FSD/Franchise + WS360 ideal combination
Tactical complementary business important to cushion volatility
OUR ORIGIN IS
WHOLESALE
IS OUR FUTURE
-
July LfL
sel.
+1.5%1
1 Preliminary unaudited figures; calendar support of 1.7%
12 19.11.2020 © METRO AG.
03 FY TRADING STATEMENT 2019/20
13 19.11.2020 © METRO AG.
SALES AND EBITDA GUIDANCE FOR 2019/20 ACHIEVED
METRO Sales
METRO | 12M 2018/19 | 12M 2019/20 | Q4 2018/19 | Q4 2019/20 |
Sales (€ billion) | 27.1 | 25.6 | 6.9 | 6.5 |
Change (€) | 1.1% | -5.4% | 3.3% | -5.1% |
Change (local | 2.2% | -4.0% | 2.2% | -0.6% |
currency) | ||||
Like-for-like (local | 2.1% | -3.9% | 2.1% | -0.5% |
currency) |
FY 2019/20
- Sales growth at the upper end of the guidance range (-3.5% to -5%)
- This reflects the rapid and significant recovery of METRO's HoReCa business, also supported by continued market share gains, incl. in Germany, France and Italy; Trader and SCO customer groups also achieved clearly positive sales growth in Q4
- Like-for-likesales development was positive in Russia (3.8%) and Eastern Europe (excl. Russia) (2.2%); Germany roughly matching the prior year's level (-0.8%)
- Western Europe (excl. Germany) (-10.6%) and Asia (-7.0%) reported significantly negative like-for-like sales growth
Q4 2019/20
- Stabilisation like-for-like sales development at -0.5%
- Positive contributions from Germany (2.7%), Russia (8.2%) and Eastern Europe (excl. Russia) (2.0%)
- Western Europe (excl. Germany) (-3.6%) and Asia (-12.2%) showed significant improvement compared to Q3 as well
14 19.11.2020 © METRO AG.
SALES METRO WHOLESALE
(1/5)
METRO Wholesale Germany
METRO | 12M 2018/19 | 12M 2019/20 | Q4 2018/19 | Q4 2019/20 |
Sales (€ billion) | 4.7 | 4.7 | 1.2 | 1.2 |
Change (€) | -0.5% | -0.8% | 0.0% | 2.7% |
Change (local | -0.6% | -0.8% | 0.0% | 2.7% |
currency) | ||||
Like-for-like (local | 0.3% | -0.8% | 0.6% | 2.7% |
currency) |
15 19.11.2020 © METRO AG.
SALES METRO WHOLESALE
(2/5)
METRO Wholesale Western Europe (excl. Germany)
METRO | 12M 2018/19 | 12M 2019/20 | Q4 2018/19 | Q4 2019/20 |
Sales (€ billion) | 10.8 | 9.6 | 2.7 | 2.6 |
Change (€) | 1.3% | -10.7% | 2.0% | -3.5% |
Change (local | 1.3% | -10.7% | 2.0% | -3.5% |
currency) | ||||
Like-for-like (local | 1.3% | -10.6% | 2.2% | -3.6% |
currency) |
16 19.11.2020 © METRO AG.
SALES METRO WHOLESALE
(3/5)
METRO Wholesale Russia
METRO | 12M 2018/19 | 12M 2019/20 | Q4 2018/19 | Q4 2019/20 |
Sales (€ billion) | 2.7 | 2.6 | 0.6 | 0.5 |
Change (€) | -5.4% | -0.7% | 2.2% | -12.7% |
Change (local | -3.3% | 4.2% | -5.2% | 8.4% |
currency) | ||||
Like-for-like (local | -4.3% | 3.8% | -6.3% | 8.2% |
currency) |
17 19.11.2020 © METRO AG.
SALES METRO WHOLESALE
(4/5)
METRO Wholesale Eastern Europe (excl. Russia)
METRO | 12M 2018/19 | 12M 2019/20 | Q4 2018/19 | Q4 2019/20 |
Sales (€ billion) | 7.2 | 7.1 | 1.9 | 1.8 |
Change (€) | 3.4% | -0.9% | 7.0% | -5.5% |
Change (local | 6.4% | 2.2% | 5.4% | 1.9% |
currency) | ||||
Like-for-like (local | 6.3% | 2.2% | 5.2% | 2.0% |
currency) |
18 19.11.2020 © METRO AG.
SALES METRO WHOLESALE
(5/5)
METRO Wholesale Asia
METRO | 12M 2018/19 | 12M 2019/20 | Q4 2018/19 | Q4 2019/20 |
Sales (€ billion) | 1.7 | 1.5 | 0.4 | 0.3 |
Change (€) | 5.2% | -9.3% | 7.0% | -19.8% |
Change (local | 7.3% | -6.7% | 6.4% | -11.9% |
currency) | ||||
Like-for-like (local | 5.3% | -7.0% | 4.9% | -12.2% |
currency) |
19 19.11.2020 © METRO AG.
04 STRATEGIC UPDATE
20 19.11.2020 © METRO AG.
REINFORCING OUR STRATEGIC APPROACH
Q3 2018/19
21 19.11.2020 © METRO AG.
Convenience & out-of- home consumption
Supported overall quick rebound
Connected consumer
Fast ramp-up of B2B2C and e-commerce via M:SHOP for Trader and SCO
Hospitality digitalization
COVID-19 disruption leads to stronger demand for new solutions. The crisis has turned into a catalyst for modernization.
ü
ü
ü
HORECA: TRUE PARTNERSHIP IS KEY
HoReCa:
- SMEs: ~1.7m Volume: ~€600 bn1 Highly fragmented supply base
- Short term impact through lockdowns not seen as long-lastingchange in trends
- OOHC still expected to grow due to preferences and habits
- Business models however need to be adjusted
Operational excellence to support customers in difficult times (focus on product availability, stores remained open etc).
Fair pricing to ensure predictability for our customers
Support and advise to adjust the business and to apply for government aid packages.
Controlled support on payment terms
Support of public campaigns to address the needs of the sector. Contribution to #restartGastro concepts (whitepapers)
As a result we observed above market performance due to beneficial setup and clear customer focus leading to an up to 40%-pts outperformance in some countries
1EURb, sell-out value 2018, MCC countries .WE incl. DE, EE incl. RU, Asia without CN; MCC countries excl. countries with pure play FSD operations (e.g. CFF) HoReCa market according to Euromonitors definition excluding social foodservice Source: Euromonitor
22 19.11.2020 © METRO AG.
HORECA: EXTENSION OF SERVICES
During the last months we intensified our efforts to support our customers in adjusting their business the new circumstances. We launched and activated several additional services:
- Online meal ordering
§ Collaboration with car rental companies
- Voucher sales
§ Digital Check-In Tool
- Digital Menu Tool
At the same time our digital base continued to grow:
~200.000 Dish accounts, >30.000 reservation sites, etc.
Leading to positive business impact. Digital tools have helped customer acquisition. Furthermore we have clear evidence that digital accounts have 2x purchasing frequency than non-digital accounts
1EURb, sell-out value 2018, MCC countries .WE incl. DE, EE incl. RU, Asia without CN; MCC countries excl. countries with pure play FSD operations (e.g. CFF) HoReCa market according to Euromonitors definition excluding social foodservice Source: Euromonitor
23 19.11.2020 © METRO AG.
HORECA: ABOVE MARKET PERFORMANCE
FOCUS DRIVES GROWTH
FOR HORECA
Compared to CW3-8 average sales level
HoReCa sales came back quickly to above market
% | CY Sales | PY Sales | ||||
150 | ||||||
100 | ||||||
50 | ||||||
0 | CW | CW | CW | CW | CW | CW |
CW | ||||||
8 | 12 | 16 | 20 | 24 | 28 | 31 |
Taking advantage of
channel flexibility
% | Total | FSD | ||||
150 | C&C | |||||
100 | ||||||
50 | ||||||
0 | CW | CW | CW | CW | CW | CW |
CW | ||||||
8 | 12 | 16 | 20 | 24 | 28 | 31 |
Portfolio skewed to
customers that recover first
- Sales Top 3 CY
150 | Sales Top 3 PY | |||||
100 | ||||||
50 | 28 % | Top 3 | ||||
other | ||||||
72 % | ||||||
0 | CW | CW | CW | CW | CW | CW |
CW | ||||||
8 | 12 | 16 | 20 | 24 | 28 | 31 |
Up to 40%-pts outperformance of | Up to ~15%-pts outperformance | High exposure to resilient customers2 | |
market in e.g. FR, DE and IT1 | of store over FSD | in resilient countries3 with low | |
dependency on inbound tourism4 | |||
1 FR: Market assessment based independent market size by Food Service Vision DE: Market assessment based on DWH, npdgroup CREST Panel (total out-of-home consumption; n≈ 12.000 | |||
24 19.11.2020 | © METRO AG. participants) IT: Market assessment based on estimated data (calculated by combining different sources NPD / FEDERALBERGHI / ISTAT) 2 >70% of sales with Restaurants, cafés, fast food; | ||
compared to lagging CTGs (hotels, caterers, canteens). 3 Germany, France and Italy >50% of sales, based on sales FY2018/19 incl FSD companies | 4 Based on internal analysts and |
Euromonitor 2019 data. For DE, FR and IT tourism spending is coming mostly from local demand, therefore those countries are less dependent on foreign travel.
GERMANY: GOING THE EXTRA MILE!
FOCUS DRIVES GROWTH ABOVE MARKET | ü |
July LfL sel. | |
IN GERMANY | ~3%1 |
A robust business model appreciated
by our customers
100% of stores remained opened
100% Sales Force employment and 100% of hours
97% Food stock availability (stable to pre COVID-19)
> NPS to PY in June and July
+28% reactivated SCO customers during COVID-19
USP through various extensions
- Webinars
- One-timeCrisis Rebates
- Payment terms
- Reservation Tool
- Check-InTool
- …
1 Preliminary unaudited figures; calendar support of 1.7% on total group. METRO Germany LFL sales include results from Rungis Express, a pure Horeca FSD player, which is still under pressure
25 19.11.2020 © METRO AG.
TRADER: TRUE PARTNERSHIP IS KEY
Trader
- SMEs: ~1.3m Volume: ~€1,000 bn1 fragmented independent retail market
Operational excellence to support customers in difficult times (focus on product availability, stores always open)
Ramping up diverse online solutions and partnering with e-commerceplayers to target end consumer demands - B2B2C
Pre-existing some countries; quickly set up in others:
5 countries | 4 countries | 7 countries |
Offer B2B2C delivery | Run pilots | Evaluate entering |
Trader franchise continues to grow and proves even more resilient than normal trader
1EURb, sell-out value 2018, MCC countries .WE incl. DE, EE incl. RU, Asia without CN; MCC countries excl. countries with pure play FSD operations (e.g. CFF) Trader market including traditional grocery retailers, forecourt and CVS Source: Euromonitor
26 19.11.2020 © METRO AG.
TRADER: FRANCHISE SUCCESS ACCELERATES
FOCUS DRIVES GROWTH
IN TRADER
Supporting independent
entrepreneurs
Increased engagement and support for our partners during crisis
Home delivery solution from trader to end consumer
- Running in Romania and Czech Republic for 80 partner stores
Trader Sales Force
- Further development of partner management approach is planned
Developing digital
solutions
1/3 of franchisees search for click & collect/Delivery options:
M|SHOP Trader
- Front end solution for delivery, running in Russia and Romania
- +15% in basket size
- +100.000 orders in Q3 19/20
B2B and B2C solutions
- Launching B2B & B2C solutions in next financial year
Growing our business
through franchise
Achieving recurring revenues through partnership
+24% | 2.5x |
Q3 total sales | higher basket |
to PY | than average Trader |
- 10 countries with Trader Franchise model
- +200 new partners in Q3
- ~8,000 partners in total
27 19.11.2020 © METRO AG.
RUSSIA: BACK TO OUTPERFORMANCE
FOCUS DRIVES GROWTH | ü | ||
July LfL sel. | |||
IN RUSSIA | ~16%1 | ||
Operational excellence
Store adjustment
Change to a warehouse feel: more pallet placement for higher availability, wider isles for easy navigation, lower racks in NF for better visibility
People management
High and improving team engagement, especially at store level, despite recent headcount optimization and
COVID
Customer management
More efficient acquisition: +25% in new SCO vs PY, higher sales per visit of new vs lost customers
1 Preliminary unaudited figures; calendar support of 1.7% on total group
Growing our business
Partnership with Sbermarket [B2B2C]
Leveraging logistics infrastructure, outsourcing non-core tasks to partner
50+ cities | 8% of sales Share May '20
Fasol development
Continued expansion despite COVID restrictions +135 new in Q3
Successful territory approach and contact model
"HoReCa Renaissance" development and execution start, incl. Metro-Partner
28 19.11.2020 © METRO AG.
05 WRAP-UP & OUTLOOK
29 19.11.2020 © METRO AG.
OUR MISSION: YOUR SUCCESS IS OUR BUSINESS
DEFINED MEASURES RESULTED IN RESILIENCE AND QUICK RECOVERY
HoReCa under pressure in Q31 but with rapid recovery due to incessant customer service and focus on product availability. Agility of hybrid model (stores + FSD + services) proved to be advantageous
Trader with accelerated growth above pre-COVID levels (+10.3%2 Q3 19/20) driven by Russia turnaround, acceleration of e- commerce and trader franchise
SCO grew due to strong customer reactivation (+16% Q3 19/20)3. Main drivers were food quality, availability and superior safety
Grow: your success is our
business
Overall sales at 75% of PY in April, recovery to 80% in May and recovery to 95% in June
Sales in July +1.5%4
- HoReCa declined by -47% in Q3 2019/20. 2 Trader countries: Bulgaria, Czech Republic, India, Pakistan, Poland, Romania, Russia, Serbia, Slovakia. 3 LfL SCO customer sales 4 Preliminary unaudited figures; calendar support of 1.7%
30 19.11.2020 © METRO AG.
METRO - A FULLY FOCUSED WHOLESALER
More profitable, cash-generativeand less levered
METRO FY2018/19 Guidance view, excluding Real
+0.6%-pts | ~+€250 m |
EBITDA-margin1 | FCF p.a.2 |
€1.9 bn
Balance sheet strength
in net cash proceeds3 | Firepower to drive consolidation |
Transformation into a pure wholesaler | Participate in the upside potential | |
completed | 20% | |
Put option with full flexibility | ||
stake in METRO China | ||
Outperformance vs. market during COVID-19 |
- EBITDA-marginpost IFRS 16 and excl. gains from real estate transactions 2 FCF defined as EBITDA reported - capex excluding finance lease extensions and M&A +/- change in NWC
- Sale of the majority stake in METRO China was closed on 23rd April and Sale of real was closed on 25th June except for 6 remaining properties to be closed in late summer
31 19.11.2020 © METRO AG.
RESILIENCE + ABILITY TO ACT
Strong disruption throughout the | Portfolio transformation towards a pure |
industry created an opportunity to act, | wholesaler is complete and results in |
and we did. Market share gains in | substantially improved financial profile |
various countries. Sales back to | |
previous year's level |
1. Includes transaction related cash flow from investing activities of discontinued operations of €1.3 bn. Comprises of €1.9 bn total purchase price less cash and cash equivalents -€0.6 bn
€1.41
Q3 EPS reported
~+1.8 bn
improvement in Net
Debt 1
Strong financial profile
basis for M&A and dividend
continuity
32 19.11.2020 © METRO AG.
WE PRIORITIZE REINVESTING INTO BUSINESS AND MAXIMIZING RETURNS TO SHAREHOLDERS
Capital allocation framework
1 Investment in business
Reshaping the portfolio, accelerating organic growth and complementary strategic M&A
Goal: accelerate sales growth, drive sustainable EBITDA growth
Q3 Update
ü
Consolidation will be accelerated by pandemic Several projects across the portfolio in late stage
2 Returns to shareholders
Ongoing dividends (45-55% of EPS payout ratio)
Goal: sound shareholder return in balance with operational needs
3 Deleverage
Ensure investment grade rating
Goal: funds from operations (FFO) / Adj. net debt ≥ 21%1
ü
Strong Q3 EPS and cash flow
Foundation for dividend continuity in 2019/20
-
Net Debt/EBITDA at ~3.1x2
S&P May '20: Investment grade, negative outlook
1 S&P threshold; at minimum required to be in line with expectations to maintain credit rating.
Funds from operations (FFO) as per S&P methodology mainly includes: EBITDA + fictitious depreciation share of operating lease expense + interest expense + income taxes + minor further adjustments
Adjusted net debt as per S&P methodology mainly includes: financial debt - cash & cash equivalents (after a haircut on trapped cash) + NPV of operating leases (at 7.0%) + pensions (net of deferred taxes applicable) + minor further adjustments 2 Net debt Q3 is €4.4 bn. EBITDA excl RE FY 2018/19 is €1.4 bn
33 19.11.2020 © METRO AG.
OUTLOOK FOR 2019/20
Guidance1 | In addition: |
9M 2019/20 | FY 2019/20 |
Sales
growth in local-5%decline 3.5-5% currency
LfL growth | -5% | decline 3.5-5% |
Adj.EBITDA2 | €834 m | decrease by €200 |
-€192 m to PY | to €250 m | |
Regional Development for 2019/20
- Russia and Eastern Europe: significantly better than group average
- Western Europe and Asia: weaker than group average
- Others: continuation of positive 9M development, among others supported by the efficiency program and license fee from the cooperation with Wumei3
P&L
- Real estate gains: c. €10 m (€339 m in 18/19)
- D&A: c. €-840 m (€-774 m in 18/19)
- Net financial result: c. €-265 m4 (€-230 m in 18/19)
- Tax expense: c. €-130 m (€-301 m in 18/19)
- EPS: additional ~€0.15 from remaining property closings from Real transaction
- Reported EPS: Strong basis for dividend continuity in line with payout ratio (45-55% of EPS) in unprecedented year
1 At constant FX and before transformation costs, portfolio measures and post IFRS16. Outlook based on the assumption of stable exchange rates and no further adjustments to the portfolio and only covers METRO's continuing operations. Furthermore, the outlook is based on the assumption that negative impacts of the COVID-19 pandemic will not surge again in countries relevant for METRO and that the stable recovery of the HoReCa sector continues 2 Adj. EBITDA - EBITDA pre transformation costs and real estate gains
gains 3 Part of the transaction includes the license fee paid by Wumei for use of brand over the next three years; reported in 'Others'' 4 At current exchange rate
34 19.11.2020 © METRO AG.
APPENDIX
Q3 2019/20
FINANCIALS
35 19.11.2020 © METRO AG.
SALES TO EBITDA - GROUP
€m / % | Q3 2018/19 | Q3 2019/20 |
Like-for-like growth | 3.1% | -17.5% |
thereof Food | 3.9% | -18.3% |
Reported growth | 2.4% | -19.8% |
Growth in local currency | 3.2% | -17.4% |
Delivery Sales Share | ||
18% | 12% | |
Adj. EBITDA1 | 373 | 175 |
thereof FX | -12 | |
Adj. EBITDA margin | 5.4% | 3.1% |
Transformation costs | 0 | -1 |
Real estate gains | 32 | 2 |
2 | 404 | 176 |
Reported EBITDA |
Sales growth
- Sales development driven by mix of
- Stable accelerated growth with Trader & SCO
- HoReCa sales affected by lockdowns but steep recovery
- HoReCa customers with clear preference for store; putting temporary pressure on FSD
- Reported sales growth affected by negative currency development in Eastern Europe, especially Turkey
EBITDA and EBITDA margin
- EBITDA impacted in line with sales development; countered by intense and successful efforts to save costs across countries
- Structures made flexible to react quickly to pandemic development
- "Others": costs savings from efficiency measures and license fee from Wumei3
- Continuous trend improvement throughout Q3 as lockdowns were released and sales trend improved
-
EBITDA to PY in constant currency:
April -€99 m, May ~ -€60 m and June ~ -€26 m
1Adj. EBITDA - EBITDA pre transformation costs and real estate gains 2 Reported EBITDA - Including transformation costs and real estate gains 3 Part of the transaction includes the license fee paid by Wumei for use of brand over the next three years; reported in 'Others'
36 19.11.2020 © METRO AG.
EBITDA TO EPS
€m / % | Q3 2018/19 | Q3 2019/20 |
Reported EBITDA | 404 | 176 |
D&A | -192 | -197 |
EBIT | 212 | -21 |
Interest and investment | -61 | -52 |
result | ||
Other financial result | 2 | 14 |
Net financial result | -59 | -38 |
EBT | 153 | -59 |
Tax expense | -61 | -78 |
Net income | 92 | -137 |
EPS in € | 0.25 | -0.38 |
EBIT
- Decrease due to governmental restrictions affecting top line and lower real estate gains
Net financial result
- Improvement in the interest and investment result due to lower financing costs
- Other financial result positively affected by appreciation of currencies in CEE countries with EUR based lease contracts
Tax
- Tax expense is calculated based on expected tax expense for FY 19/20
- Q3 is impacted by a tax catch-up effect to match the expected tax expense for the full year
- Implied tax rate not meaningful due to low negative EBT and resulting high & volatile tax rate
EPS
- EPS decrease driven by a combination of operating deleverage, low real estate gains and FX volatility
37 19.11.2020 © METRO AG.
Q3 REPORTED EPS GROWTH
€m / % | Q3 2018/19 | Q3 2019/20 |
Net income cont. Ops. | 90 | -140 |
Transaction result China1 | n.a | 943 |
Transaction result Real1 | n.a | -401 |
non-cash provisions and | -361 | |
impairments | ||
Transaction results | 542 | |
Net income disc. ops. | 25 | 652 |
Net income reported2 | 115 | 512 |
EPS reported | 0.32 | 1.41 |
Transaction result China
- €0.9 bn transaction result, reflective of a very value-creating transaction
- Additional upside potential from 20% stake
Transaction result Real
- Cash-positiveexit of loss-making business; transaction result impacted by
- non-cashimpairment
- contract liability to address excess capacity in service companies3
- ~€0.15 EPS to come in Q4 from remaining property closings
EPS reported
- Q3 reported EPS is at €1.41 with significant growth to 18/19 driven by successful execution of transformational transactions and resilient business model
1 Gains/losses from the remeasurement or disposal of discontinued operations after taxes 2 Attributable to the shareholders of METRO AG 3 As per ad hoc related to sale of Real on conclusion of purchase agreement with SCP Group
38 19.11.2020 © METRO AG.
FCF IN Q3 2019/20
€m / % | Q3 2018/19 | Q3 2019/20 |
Adj EBITDA1 | 373 | 175 |
Change in NWC | 130 | 6 |
Cash Investments2 | -92 | -75 |
FCF | 410 | 106 |
Net debt (30 June) | 6,164 | 4,408 |
Change in NWC
- Smaller positive contribution is driven by negative effects from COVID-19 especially in Eastern Europe
Cash Investments
- Savings due to reduced investment in light of COVID-19
Net debt
€bn / %
Cash Flow from disinvestments (disc. ops) as per cash flow
plus Cash in disc. ops.
Net proceeds (=reduction in net debt)
Q3 2019/20
1.3
0.6
1.9
- €1.8 bn improvement in net debt is
- particularly due to the disposal of the majority stake in METRO China (€1.6 bn) and the hypermarket business (€0.3 bn)
- while the operating business showed resilience
- Including the M&A transactions, Net Debt/EBITDA FY2018/19 is ~3.1x3
1Adj. EBITDA - EBITDA pre transformation costs and real estate gains. 2 Cash Investments = Capex (excl. M&A) - Right of Use Assets + Financial Assets + Down payments/Prepayments. Cash investments definition has been changed due to IFRS 16 to reflect the cash view. 3 Net debt Q3 is €4.4 bn. EBITDA excl RE FY 2018/19 is €1.4 bn
39 19.11.2020 © METRO AG.
REGIONAL PERFORMANCE
HoReCa | Trader | SCO | 1 | 1 | |||||||||||||||||||||
Germany | Western Europe | ||||||||||||||||||||||||
€m / % | Q3 2019/20 | €m / % | Q3 2019/20 | ||||||||||||||||||||||
Sales | 1,092 | 3,1% | 3,9% | Sales | 1,869 | ||||||||||||||||||||
Like-for-like growth | -9.5% | Like-for-like growth | -32.8% | ||||||||||||||||||||||
Q3 2018/19 | Q3 2019/20 | ||||||||||||||||||||||||
Reported growth | -9.4% | ||||||||||||||||||||||||
Reported growth | -32.9% | ||||||||||||||||||||||||
Adj. EBITDA2 | 31 | ||||||||||||||||||||||||
Adj. EBITDA2 | 18 | ||||||||||||||||||||||||
EBITDA margin | 2.8% | -17,5%-18,3% | |||||||||||||||||||||||
EBITDA margin | 1.0% | ||||||||||||||||||||||||
Constant FX to PY | -9 | ||||||||||||||||||||||||
Like-for-like growth | thereof Food | Constant FX to PY | -168 | ||||||||||||||||||||||
1 | 1 | 1 | |||||||||||||||||||||||
Russia | Eastern Europe | Asia | |||||||||||||||||||||||
€m / % | Q3 2019/20 | €m / % | Q3 2019/20 | €m / % | Q3 2019/20 | ||||||||||||||||||||
Sales | 646 | Sales | 1,620 | Sales | 331 | ||||||||||||||||||||
Like-for-like growth | 6.0% | Like-for-like growth | -7.4% | Like-for-like growth | -19.2% | ||||||||||||||||||||
Reported growth | -3.7% | Reported growth | -12.2% | Reported growth | -22.5% | ||||||||||||||||||||
Adj. EBITDA2 | 53 | Adj. EBITDA2 | 75 | Adj. EBITDA2 | -6 | ||||||||||||||||||||
EBITDA margin | 8.2% | EBITDA margin | 4.6% | EBITDA margin | -1.8% | ||||||||||||||||||||
Constant FX to PY | -2 | Constant FX to PY | -17 | Constant FX to PY | -14 | ||||||||||||||||||||
1Like for like sales shares FY 2018/19 2Adj. EBITDA - EBITDA pre transformation costs and real estate gains | |||||||||||||||||||||||||
Note: Transformation costs affect segment "others" | |||||||||||||||||||||||||
40 19.11.2020 | © METRO AG. |
SALES TO EBITDA - SEGMENTS
(1/3)
METRO Germany | METRO Western Europe | |
€m / % | Q3 2018/19 | Q3 2019/20 | €m / % | Q3 2018/19 | Q3 2019/20 | |
Sales | 1,205 | 1,092 | Sales | 2,784 | 1,869 | |
Like-for-like growth | 3.6% | -9.5% | Like-for-like growth | 2.2% | -32.8% | |
Reported growth | 3.0% | -9.4% | Reported growth | 2.2% | -32.9% | |
Adj. EBITDA | 40 | 31 | Adj. EBITDA | 186 | 18 | |
EBITDA margin | 3.3% | 2.8% | EBITDA margin | 6.7% | 1.0% | |
Real estate gains | 0 | 0 | Real estate gains | 29 | 0 | |
Reported EBITDA | 40 | 31 | Reported EBITDA | 215 | 18 | |
41 19.11.2020 © METRO AG.
SALES TO EBITDA - SEGMENTS
(2/3)
METRO Russia
€m / % | Q3 2018/19 | Q3 2019/20 |
Sales | 671 | 646 |
Like-for-like growth | -4.8% | 6.0% |
Reported growth | -0.8% | -3.7% |
Adj. EBITDA | 60 | 53 |
thereof FX | -6 | |
EBITDA margin | 9.0% | 8.2% |
Real estate gains | 0 | 0 |
Reported EBITDA | 60 | 53 |
METRO Eastern Europe
€m / % | Q3 2018/19 | Q3 2019/20 |
Sales | 1,846 | 1,620 |
Like-for-like growth | 7.1% | -7.4% |
Reported growth | 3.4% | -12.2% |
Adj. EBITDA | 96 | 75 |
thereof FX | -4 | |
EBITDA margin | 5.2% | 4.6% |
Real estate gains | 0 | 2 |
Reported EBITDA | 96 | 77 |
42 19.11.2020 © METRO AG.
SALES TO EBITDA - SEGMENTS
(3/3)
METRO Asia | Others | |
€m / % | Q3 2018/19 | Q3 2019/20 | €m | Q3 2018/19 | Q3 2019/20 | |
Sales | 427 | 331 | Sales | 8 | 11 | |
Like-for-like growth | 3.8% | -19.2% | ||||
Reported growth | 4.5% | -22.5% | ||||
Adj. EBITDA | 9 | -6 | Adj. EBITDA | -18 | 6 | |
thereof FX | -1 | thereof FX | -2 | |||
EBITDA margin | 2.1% | -1.8% | Transformation costs | -1 | ||
Real estate gains | 0 | 0 | Real estate gains | 2 | 0 | |
Reported EBITDA | 9 | -6 | Reported EBITDA | -16 | 5 | |
43 19.11.2020 © METRO AG.
CASH FLOW STATEMENT
€ million | Q3 18/19 | Q3 19/20 |
EBIT | 212 | -21 |
Depreciation/amortisation/impairment losses/reversal of impairment losses of assets excl. | 192 | 197 |
financial investments | ||
Change in provisions for post- employment benefits plans and other provisions | -6 | 11 |
Change in net working capital | 130 | 6 |
Income taxes paid | -46 | -8 |
Reclassification of gains (-) / losses (+) from the disposal of fixed assets | -37 | -2 |
Other | 31 | 124 |
Cash flow from operating activities of continuing operations | 476 | 307 |
Cash flow from operating activities of discontinued operations | - 78 | - 20 |
Cash flow from operating activities | 399 | 326 |
Acquisition of subsidiaries | 0 | 0 |
Investments in property, plant and equipment and in investment property (excl.usufructuary | -48 | -38 |
rights from leases) | ||
Other investments | -48 | -49 |
Investments in monetary assets | 0 | -8 |
Disposals of subsidiaries | 0 | 0 |
Divestments | 75 | 2 |
Disposal of financial investments | 0 | 0 |
Cash flow from investing activities of continuing operations | -21 | -93 |
Cash flow from investing activities of discontinued operations | - 66 | 1,240 |
Cash flow from investing activities | -87 | 1,147 |
Dividends paid | 0 | 0 |
Redemption of liabilities from put options of non-controlling interests | - 12 | 0 |
Proceeds from new borrowings | 1,919 | 591 |
Redemption of borrowings | -2,068 | - 1,010 |
Interest paid | - 68 | - 64 |
Interest received | 8 | 7 |
Other financial activities | -7 | 18 |
Cash flow from financing activities of continuing operations | -228 | -458 |
Cash flow from financing activities of discontinued operations | - 99 | -106 |
Cash flow from financing activities | -327 | -602 |
Total cash flows | -16 | 871 |
Transaction effects included in investing cash flow from investments of disc. operations
Desinvestment-cash flow according to cash flow statement (from discontinued operations) in € billion
METRO China | 1.1 |
Hypermarket business | 0.2 |
Cash flow from transactions 1 | 1.3 |
In addition cash and cash equivalents of the disposal | |
group | |
METRO China | 0.5 |
Hypermarket business | 0.1 |
Cash and cash equivalents disposal group total | 0.6 |
Net cash inflow in continuing operations | |
= transaction related reduction of net debt | |
METRO China | 1.6 |
Hypermarket business | 0.3 |
Net cash inflow | 1.9 |
1The total cash flow from investing activities of discontinued operations amounts to €1.2 billion and also includes the current investment cash flow of the disposal group until the disposal.
44 19.11.2020 © METRO AG.
CONTACT
Investor Relations
METRO AG
Metro-Straße 1
40235 Düsseldorf
Germany
T +49 211 6886-1280
F +49 211 6886-73-3759
-
investorrelations@metro.de
www.metroag.de
45 19.11.2020 © METRO AG.
46 19.11.2020 © METRO AG.
Attachments
- Original document
- Permalink
Disclaimer
Metro AG published this content on 30 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 November 2020 17:22:04 UTC