q3 2014/15 results presentation - metro …/assets/mag/documents/...metro group, q3 2014/15 results...

Q3 2014/15

RESULTS PRESENTATION 6 August 2015

METRO GROUP, Q3 2014/15 Results Presentation

6 August 2015 | © METRO AG 2015 1

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 expectations and assumptions at the time of publication of this presentation and 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 GROUP’s ability to control or estimate precisely. The risks and uncertainties to which these forward-

looking statements may be subject include (without limitation) future market and economic conditions, the behaviour of other market participants, investments in innovative

sales formats, expansion in online and multichannel sales activities, integration of acquired businesses and achievement of anticipated cost savings and productivity gains,

and the actions of government regulators. Readers are cautioned not to place too much reliance on these forward-looking statements. See also “Risk and Opportunity

Report” on pages 145 - 167 of the METRO GROUP Annual Report 2013/14 for risks as of the date of such Annual Report. METRO GROUP 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. It is not intended as an offer for sale, or as a solicitation of an offer to purchase, any securities in any jurisdiction.

This presentation may not be reproduced, distributed or published without prior written consent of METRO AG.

All numbers are before special items, unless otherwise stated.

The consolidated financial statements have been prepared in euros. All amounts are stated in million euros (€ million) unless otherwise indicated. Amounts below €0.5

million are rounded and reported as 0. Since 2012, only the amounts in the income statement, the reconciliation from profit or loss for the period to total comprehensive

income, the balance sheet, the statement of changes in equity and the cash flow statement were rounded to produce the respective totals. In all other tables, the individual

amounts and the totals were rounded separately. This may entail rounding differences.

Due to the sale to Hudson’s Bay Company, Galeria Kaufhof will no longer be shown as a separate segment, but as a discontinued operations. Accordingly,

METRO GROUP's financials have been recalculated to account for the disposal of Galeria Kaufhof and the previous year's figures have been adjusted. The sale is

scheduled to close in September 2015.


6 August 2015 | © METRO AG 2015 2

STRATEGIC PRIORITIES CLEARLY IDENTIFIED IN 2012

CUSTOMER VALUE

OPERATIVE

EXCELLENCE

FOCUS

1

2

3

Field Trip

May 6th

2015


6 August 2015 | © METRO AG 2015 3

OUR FRAMEWORK

PORTFOLIO OPTIMIZATION / EXTENSION

METRO GROUP STRATEGY

PARENTING

ADVANTAGE /

JOINT ASSETS

1

3

NEW BUSINESS

MODELS

SALES LINE

TRANSFORMATION

2 4

Business Innovation ACCELERATOR Business Building [!] [!]

Field Trip

May 6th

2015


6 August 2015 | © METRO AG 2015 4

GALERIA KAUFHOF: KEY TRANSACTION FACTS

Disposal of department store operations in Germany

and Belgium together with the related real estate

portfolio to Hudson’s Bay Company

Enterprise value of €2.825bn

Substantial assurances for around 21,500 employees,

HQ and stores

Significant reduction in rating-relevant1 net debt by

c.€2.7bn, including cash inflow of c. €1.6bn

Net book gain on sale of c. €0.7bn

Closing expected by end of FY 2014/15

Germany

Belgium

Total € million

FY Sales 2013/14 2,920 178 3,099

FY EBIT 2013/142 193

Stores per 31/3/2015 119 16 135 1Standard & Poor‘s methodology

2 before special items


6 August 2015 | © METRO AG 2015 5

Increase overall capex budget to ca. €2bn over the

next few years

Intensify investment activity

▪ Growth countries (METRO Cash & Carry and Media-

Saturn)

▪ Store remodellings and new store formats in inner

city locations (METRO Cash & Carry and Media-

Saturn)

▪ Complementary assets to accelerate growth in Cash

& Carry (FSD) and Media-Saturn (multi-channel)

Digital penetration of the HoReCa sector

(METRO Cash & Carry)

Strengthen financial profile

GALERIA KAUFHOF: USE OF PROCEEDS FROM SALE

RoCE* 2013/14 vs. Cost of Capital

* lease-adjusted


6 August 2015 | © METRO AG 2015 6

Q3 2014/15 PUT IN PERSPECTIVE

Reporting focus on continuing operations

LfL sales grew 0.3% if adjusted for calendar effect (mainly Easter)

EBIT above PY if adjusted for negative FX, lower real estate gains,

Easter and FIFA World Cup last year

METRO GROUP after Q3 and 9M fully on track to achieve FY guidance


6 August 2015 | © METRO AG 2015 7

Q3 2014/15 HIGHLIGHTS

METRO Cash & Carry: 8th consecutive quarter with LfL

sales growth

Media Saturn: 4th consecutive quarter with LfL sales growth

Real: Solid bottom-line performance

Transformation progress continued

▪ Delivery sales: €0.8bn (+15%)

▪ Online sales: €0.4bn (+26%)

Net debt reduced by €0.4bn to €5.1bn

Q3

13,967

Q2

13,692

Q1

17,318

Q4

14,405

Q3

14,168

Q2

13,645

Q1

17,718

2013/14 2014/15

Sales Development in € million

209

891

404253

-40

913

-24

2013/14 2014/15

EBIT in € million

Q1 Q2 Q3 Q4 Q1

-0.2

Q1

-0.4

2.7

Q2 Q3 Q1

2.3

Q4

0.6

Q3

1.7

Q2

-1.8

2013/14 2014/15

Like-for-Like Sales Development in %

Q2 Q3


6 August 2015 | © METRO AG 2015 8

APPRECIATION OF EBIT Q3 2014/15

175

253

171

Q3 2014/15

(Before

Special Items)

209

Special Items

35

Q3 2014/15

(Reported)

Q3 2013/14

(Comparable

Before

Special Items)

~243

Negative

FX Impact

~-10

Q3 2013/14

(Before

Special Items)

Special Items

83

Q3 2013/14

(Reported)

in € million -34

~601)

~301)

1) Real Estate Gains from Divestments


6 August 2015 | © METRO AG 2015 9

APPRECIATION OF EBIT 9M 2014/15

487

872

590

255

1,127

Special Items 9M 2013/14

(Reported)

Negative

FX Impact

~-100

9M 2013/14

(Before

Special Items)

9M 2014/15

(Before

Special Items)

~301)

9M 2014/15

(Reported)

Special Items 9M 2013/14

(Comparable

Before

Special Items)

~601)

in € million +49

1) Real Estate Gains from Divestments

~1,027 1,076


6 August 2015 | © METRO AG 2015 10

Q3 2014/15: SALES AND EBIT BY DIVISION

Germany and Western Europe with improved LfL sales development vs. Q2; EBIT down due to Easter shift

Positive LfL sales growth despite FIFA World Cup last year supported by good development in Eastern Europe; EBIT further improved

LfL sales development needs to be seen in the context of a strong Q3 2013/14 (+5.1%); EBIT positive driven by strict cost control and sound margin development in some categories

Others Lower gains from real estate disposals vs. last year

€ million

METRO Cash & Carry 7,449 -1.3% 0.1% 281 266 262 -4

Media-Saturn 4,620 1.2% 0.2% -70 -66 -60 6

Real 1,885 -8.2% -3.7% -3 -3 5 8

Others/Consolidation 14 - - 45 45 2 -43

METRO GROUP 13,967 -1.4% -0.4% 253 ~243 209 -34

Δ

Q3 2014/15

vs Q3 2013/14

comparable

Sales

Q3 2014/15 Change

Like-for-Like

Change

EBIT

Q3 2013/14

EBIT

comparable

Q3 2013/14

EBIT

Q3 2014/15


6 August 2015 | © METRO AG 2015 11

9M/Q3 2014/15 INCOME STATEMENT (EBIT TO EPS)

Ongoing improvement of net financial result driven by lower net debt and interest level

The high tax rate in Q3 results from our integral approach thus the adjustments for the

9M period affect Q3

Tax rate for continuing operations of 56.6% in 9M 2014/15 (9M 2013/14: 56.8%) in line

with expectations

€ million

Q3 2013/14

Q3 2014/15

9M 2013/14

9M 2014/15

EBIT 253 209 1,127 1,076

Net financial result -102 -94 -376 -269

EBT 151 115 751 807

Income Taxes -73 -113 -426 -456

Profit or loss for the period from continuing operations 78 2 325 351

Profit or loss for the period from disconinued operations 17 5 181 94

Profit or loss for the period 95 7 506 445

EPS in € from continuing operations 0.27 0.05 0.84 0.94

EPS in € 0.32 0.07 1.39 1.23


6 August 2015 | © METRO AG 2015 12

9M 2014/15: OTHER KEY FINANCIALS

Net debt further reduced by around €0.4bn to €5.1bn due to portfolio optimization and real estate

divestments

Net working capital and cash flow from operating activities impacted by FX and negative NWC

development at Media-Saturn, cash flow additionally impacted by higher tax cash out

Capex of €656m mainly invested in modernisation, expansion and remodellings

€ million

9M 2014/15 Change

Net debt (as at 30/06) 5,795 5,530 5,130 -400

Net working capital (as at 30/06) -1,776 -1,982 -1,700 282

Change in net working capital

(cash flow impact)-456 -403 -682 -279

Cash flow from operating activities 958 791 474 -317

Capex 701 558 656 98

Number of new store openings 57 57 42 -15

9M 2013/14

reported

9M 2013/14


6 August 2015 | © METRO AG 2015 13

METRO CASH & CARRY: HIGHLIGHTS Q3 2014/15

8th consecutive quarter with LfL sales growth

▪ Germany improved vs. Q2 despite shift of Easter

business

▪ Western Europe: Italy and Spain with positive LfL

sales growth

▪ Eastern Europe: esp. Russia and Turkey with positive

LfL sales development

▪ Asia: China LfL sales development impacted by giving

up low-margin volume business

Delivery sales increased by 15% (representing more

than 10% of total Cash & Carry sales)

7 new store openings, 2 store closures

Sale of METRO Cash & Carry Vietnam on track

Q3 Q2

1.1

Q1

1.4

Q4

0.1

Q3

2.0

Q2

0.8

Q1

0.9 0.1

2013/14 2014/15


Q3 Q2

10.1

Q1

8.6

Q4

10.0

Q3

9.4

Q2

9.4

Q1

7.9 10.9

2013/14 2014/15

Delivery Sales Share in %


6 August 2015 | © METRO AG 2015 14

METRO CASH & CARRY: STRATEGIC UPDATE

Implementation of the New Operating Model to foster

entrepreneurship well on track

▪ New organizational structure “live” since 1 July 2015, teams

almost fully staffed

▪ Pieter Boone took his office as member of the Management Board

of METRO AG

▪ Countries currently working on the Value Creation Plans (VCPs)

together with their Operating Partners (OPs)

▪ Full implementation of the New Operating Model by October 2016

Techstars METRO Accelerator well on track

METRO Cash & Carry business in Russia under control

METRO Cash & Carry Germany

▪ Improved development of important HoReCa customer group

▪ Upgrading and rebranding of Schaper stores to METRO GASTRO

started

▪ First promising results from FSD pilot in Weiterstadt


6 August 2015 | © METRO AG 2015 15

OUR AIM AT METRO CASH & CARRY:

CAPTURE SIGNIFICANT ADDITIONAL POTENTIAL

FUTURE

System Partner

Contractual/System Partner

Emotional relationship

Significant added value through

additional services and eco-system

TODAY

Transactional

Transactional

Low switching cost

Limited value add beyond product

Franchise Innovation Expansion &

Remodelling FSD

Field Trip

May 6th

2015


6 August 2015 | © METRO AG 2015 16

METRO CASH & CARRY: ACQUISITION OF CLASSIC FINE FOODS,

AN FSD PLAYER IN THE PREMIUM SEGMENT IN ASIA (I)

UK

France

UAE

China KoreaJapan

Hong Kong

Vietnam

Thailand Philippines

MalaysiaSingaporeIndonesia

Leading FSD player in the high-margin premium segment:

Access to high growth markets

Unique service offering

Highly niche premium product portfolio

Presence in 25 mainly Asian cities across 14 countries

~6,000 active customers with focus on HoReCa customer

group

c. 800 full-time employees

Financials 2014: sales US$219m

EBITDA US$18m (margin 8%)


6 August 2015 | © METRO AG 2015 17

2. EXPANDING WHOLESALE OPERATIONS FROM 26 TO 36 COUNTRIES

FUELLING FUTURE SALES AND EARNINGS GROWTH


AN FSD PLAYER IN THE PREMIUM SEGMENT IN ASIA (II)

Superior sales growth (CAGR FY 10-14: 15%) and EBITDA margin (8%) compared

to FSD peers and Cash & Carry segment

1. HIGHLY ATTRACTIVE PREMIUM FSD BUSINESS MODEL FOR STRONG

IMPROVEMENT OF FSD COMPETENCE

CFF sales (in US$m)

118

208

0k

0k

0k

0k

0k

0k

2010A 2011A 2012A 2013A 2014A

Source: Company Information

Hotel Restaurants Others

CFF extends METRO’s FSD capabilities to widen service for its HoReCa customers

3. TOP MANAGEMENT TEAM TO LEVERAGE SYNERGY POTENTIAL

Further growth potential by expanding CFF in selected European MCC markets

219

126


6 August 2015 | © METRO AG 2015 18

Deal rationale for MCC Valuation and deal structure

Acquire full FSD capabilities

Accelerate growth in the HoReCa sector

Expand into additional countries

Add strong management capabilities

Capture additional value through

▪ Strengthened access to exclusive

assortment

▪ Support of international expansion

▪ Capture opportunities for selected store

operations in new regions

Seller: Klassisk Holding Limited (EQT)

Share deal

Enterprise value of US$290m + earn-out

Valuation multiple of 11.6x (EV/2015E EBITDA)

in line with peers (MARR1)12.3x; Sysco1)10.1x)


AN FSD PLAYER IN THE PREMIUM SEGMENT IN ASIA (III)

1) Valuation as at 28 July 2015 based on factset


6 August 2015 | © METRO AG 2015 19

MEDIA-SATURN: HIGHLIGHTS Q3 2014/15

4th consecutive quarter with positive LfL sales growth

▪ Germany impacted by missing sales from FIFA

World-Cup last year

▪ Western Europe: All major countries grew

▪ Eastern Europe: Positive despite Russia suffering

from crisis

Continued strong growth in online sales of +24%

(representing 9% of total Media-Saturn sales)

Internet product offering further increased to

▪ about 130,000 SKUs at www.mediamarkt.de

▪ about 120,000 SKUs at www.saturn.de

4 new store openings, 5 store closures

Q3

0.2

Q2

5.2

Q1

3.8

Q4

1.7

Q3

-0.2

Q2

-3.7

Q1

-1.0

2013/14 2014/15


404436512

353328358398

Q3 Q2 Q1 Q4 Q3 Q2 Q1

2013/14 2014/15

Online Sales in € million

1 1

1Adjusted for Redcoon Denmark and France


6 August 2015 | © METRO AG 2015 20

MEDIA-SATURN: STRATEGIC UPDATE

Business transformation well on track

▪ European market leadership extended by 0.6%pt to 13.4% (highest market share ever!)

▪ Market leadership in 9 countries, market share increased in 11 countries

▪ Market share gains in all categories

▪ All countries contribute to improved operating performance

Implementation of electronic shelf labelling (ESL)

Further roll-out of city center formats to meet customer needs

Ongoing portfolio optimisation

(space reductions / store closings)


6 August 2015 | © METRO AG 2015 21

MEDIA-SATURN LAUNCHES NEW ENTERTAINMENT PORTAL JUKE

German launch of JUKE (joint digital entertainment platform)

on 3rd August 2015

Strategic expansion of Media-Saturn’s digital business through

comprehensive digital offering:

▪ >30 million songs

▪ >15,000 movies and TV series

▪ 1.5 million e-books

▪ 2,400 PC games

▪ 2,400 PC software applications

Free JUKE app pre-installed on various devices and available for

download on Google Play and iOS App Store


6 August 2015 | © METRO AG 2015 22

REAL GERMANY: HIGHLIGHTS Q3 2014/15

+1.4% LfL sales growth over two years

Good performance of fruit & vegetables as well as

household goods

Online sales with strong improvement

EBIT with stable development driven by tight cost

control and sound margin development in some

categories

Joint venture with Carlton Investment to further

enhance attractiveness and footfall of 10 Real

hypermarkets

1 store closure

0.9

Q2 Q3 Q1

5.1

0.2

Q4

-6.6

Q2 Q1

1.1

-2.1

Q3

-3.7

2013/14 2014/15

Like-for-Like Sales Development in Germany in %


6 August 2015 | © METRO AG 2015 23

REAL GERMANY: STRATEGIC UPDATE

Additional initiatives to further improve performance

▪ Service agreement with Markant for complete settlement

▪ Striving for in-house collective agreement

Commercial Model will drive top-line performance

▪ 82 stores already remodeled, 25 to follow in Q4 2014/15

▪ Remodeled stores continue to outperform the other stores by round

about 2%

Supply chain optimization moving forward


6 August 2015 | © METRO AG 2015 24

OUTLOOK 2014/15: FINANCIAL TARGETS

€ billlion

Reported

FY 2013/143

Guidance

FY 2014/15

Sales growth1.2 +1.3% >0%

LFL sales growth +0.1% >0%

EBIT before special items 1,531 >1,5312

Capex 1.0 ~1.5

Net debt 4.7flat <3.2

Number of new store openings 68flat ~501Adjusted for portfolio changes 2Based on constant foreign exchange rates3Adjusted for Galeria Kaufhof


6 August 2015 | © METRO AG 2015 26

CONTACT

Investor Relations

Metro-Straße 1

40235 Duesseldorf

Germany

Tel.: +49 (0)211 6886-1051

Fax: +49 (0)211 6886-3759

Email: [email protected]

Internet: www.metrogroup.de

BACK-UP


6 August 2015 | © METRO AG 2015 28

9M 2014/15: SALES AND EBIT BY DIVISION

8th consecutive quarter with LfL growth; EBIT above PY level if adjusted for FX

4th consecutive quarter with LfL growth; significant EBIT improvement driven by operating leverage and cost control

LfL sales impacted by intense competition; EBIT development influenced by targeted marketing investments and costs for store remodellings.

Others Higher rental costs and lower gains from real estate disposals vs. last year

Change

Like-for-Like

Change

€ million

METRO Cash & Carry 22,338 -2.5% 0.9% 864 ~754 781 +27

Media-Saturn 16,655 3.8% 3.2% 205 ~215 309 +94

Real 5,944 -9.4% -0.6% 54 54 53 -1

Others/Consolidation 40 - - 5 5 -66 -71

METRO GROUP 44,977 -1.2% 1.6% 1,127 ~1,027 1,076 +49

Sales

9M 2014/15EBIT

reported

9M 2013/14

EBIT

comparable

9M 2013/14

EBIT

reported

9M 2014/15

Δ

9M 2014/15

vs 9M 2013/14

comparable


6 August 2015 | © METRO AG 2015 29

SPECIAL ITEMS

€ million

Q3 2013/14

Q3 2014/15

9M 2013/14

9M 2014/15

Portfolio Optimisation Measures -18 11 -13 11

Restructuring and Efficiency-

Enhancing Measures-60 -42 -149 -95

Goodwill-Impairments 0 0 -88 -470

Others -5 -3 -6 -35

METRO GROUP -83 -35 -255 -590


6 August 2015 | © METRO AG 2015 31

“FAST FORWARD” WITH THE TECHSTARS METRO ACCELERATOR

Seeking the best digital innovations for hotels

and restaurants

Intensive start-up-bootcamp

Broad network of experienced mentors

3 prestigious partners

10 companies to be chosen

techstars METRO ACCELERATOR with R/GA

Berlin – 2015/2016


6 August 2015 | © METRO AG 2015 32

WE SEE GREAT INTEREST IN OUR ACCELERATOR PROGRAMME,

ESPECIALLY IN OUR HORECA FOCUS COUNTRIES

As of July 28th


6 August 2015 | © METRO AG 2015 33

FROM PUSH TO PULL TO CURATED PUSH

TRADITIONAL RETAIL

“We have PRODUCTS. Let’s FIND

customers who want to buy them!”

…highly interactive, social shopping, shared

economy

and target group specific marketplaces

…to selling services

…to growing share-of-wallet with existing

customers based on analytical insights

…to offering the best solution

Profit pools shift from selling products…

Growth potential shifts from conquering new markets

and market shares…

Our USP shifts from offering best prices...

Customer preferences shift from anonymous

shopping and consumption to…

MODERN RETAIL

“We have CUSTOMERS. We understand

and fulfill their NEEDS!”

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