METRO GROUP continues positive trend in its operating business during the second quarter of the financial year 2014/15

• Like-for-like sales of METRO GROUP again with substantial increase: + 2.5% in Q2 2014/15 and +2.2% in H1 2014/15
• Online and delivery sales continue to show strong momentum
• EBIT before special items on previous year’s level in Q2 at €-40 million, reaches €984 million in H1 2014/15 (H1 2013/14: €1,033 million)
•  Negative impact on EBIT in Q2 2014/15 particularly from goodwill impairment (about €450 million) at Real
• Net debt reduced by around €800 million as of 31 March 2015 compared with the previous year
• Sales and earnings guidance confirmed for the financial year 2014/15

Düsseldorf, Germany, 2015-5-6 — /EPR Retail News/ — With like-for-like sales growth of 2.5%, METRO GROUP continued the positive trend in its operating business during the second quarter of the financial year 2014/15. In spite of very negative currency effects, reported group sales also increased by 0.3%. At €-40 million, EBIT before special items was unchanged from previous years’s. Adjusted for currency effects, EBIT before special items rose significantly compared with the previous year. With like-for-like sales growth of 2.2%, the group’s business also developed favourably during the first half of 2014/15, supported by the earlier Easter business compared with the previous year. “The rigorous realignment of our sales lines and our successful efforts to tap new retail channels and formats are increasingly paying off, particularly at METRO Cash & Carry and Media-Saturn. Both sales divisions are now experiencing sustained positive like-for-like sales growth,” said Olaf Koch, Chairman of the Management Board of METRO AG. “Real Germany also enjoyed a positive like-for-like sales trend. This shows that we are on the right track with our investments in the modernisation of the company and new concepts”.

METRO GROUP’s online retail and delivery businesses continued to gain momentum during the first half of 2014/15: Delivery sales grew by 10.5% to €1.4 billion (H1 2013/14: €1.3 billion). In Q2 2014/15, delivery sales also rose sharply by 10.2% to €0.7 billion. During the first half of 2014/15, METRO GROUP’s online sales totalled €1.0 billion, an increase of about 27% compared with the previous year’s period. Online sales also grew substantially during the second quarter of 2014/15, rising by 23% to €0.5 billion.

Adjusted for currency effects and portfolio changes, METRO GROUP posted sales growth of 2.8% during the first half of 2014/15 (1 October 2014 to 31 March 2015) compared with the previous year’s period. With €32,7 billion reported sales came in slightly below previous year’s level. This is due mostly to the disposal of Real in Eastern Europe as well as to significant negative currency effects in large parts of Eastern Europe, particularly Russia and Ukraine. On a like-for-like basis, sales increased markedly by 2.2%. In the second quarter (1 January to 31 March 2015), sales adjusted for currency effects and portfolio changes grew by 3.2%. Despite high negative currency effects, reported sales increased by 0.3% to €14.4 billion. Like-for-like sales in-creased by 2.5%, the strongest gain in 7 years. This positive development was supported by the earlier Easter business compared with the previous year.

In Germany, sales increased by 0.9% to €13.6 billion during the first half of 2014/15. During the second quarter, the strong development at Media-Saturn had a particularly positive effect on sales, which increased by 1.8%. The earlier Easter business also contributed to this development. International sales fell by 2.5% to €19.1 billion in H1 2014/15, due mostly to exchange rate developments. In spite of negative portfolio effects, currency-adjusted sales increased by 1.2%. Sales declined slightly by 0.8% in the second quarter, but increased by 2.0% in local currency.

In Western Europe (excluding Germany), sales rose by 1.0% to €10.0 billion in H1 2014/15. This is due to positive developments at Media-Saturn. In Q2 2014/15, sales climbed by 0.9%. In Eastern Europe, sales declined by 11.9% to €6.9 billion in H1 2014/15. The decrease primarily resulted from distinctly negative currency effects and the disposal of Real in Eastern Europe. Currency-adjusted sales increased by 0.6%. Sales fell by 11.3% in the second quarter of 2014/15, while sales in local currency increased by 2.7%. Sales in Asia/Africa grew markedly by 18.0% to €2.2 billion, supported by positive currency effects besides favourable operational developments. Measured in local currency, sales rose by 4.6%. On the back of stronger momentum, sales rose by 24.2% in Q2 2014/15 (in local currency: +6.0%).

During the first half of 2014/15, EBIT at METRO GROUP stood at €418 million (H1 2013/14: €861 million). This figure includes positive special items totalling €566 million (H1 2013/14: €172 million). EBIT before special items amounted to €984 million (H1 2013/14: €1,033 million). This decline is due, in particular, to foreign exchange losses of €90 million, primarily in relation to Russian rouble. As a result, EBIT before special items adjusted for currency effects increased in the reporting quarter. In Q2 2014/15, EBIT totalled €-590 million (Q2 2013/14: €-233 million). Special items totalling €550 million (Q2 2013/14: €193 million) primarily relate to a goodwill impairment at Real. EBIT before special items came in at €-40 million (Q2 2013/14: €-40 million). Adjusted for negative currency effects of about €30 million, EBIT before special items thus improved significantly.

In the first half of 2014/15, Earnings before tax amounted to €243 million (H1 2013/14: €541 million). Before special items, earnings before taxes totalled €799 million (H1 2013/14: €749 million). Reported tax expenses of €181 million (H1 2013/14: €299 million) correspond to a group tax rate of 74.6% (H1 2013/14: 55.2%). The tax rate before special items stands at 45.2% (H1 2013/14: 45.2%). In the first half of 2014/15, net profit for the period amounted to €62 million (H1 2013/14: €242 million). Net profit for the period before special items improved to €438 million from €411 million. In the first half of 2014/15, earnings per share amounted to €0.03 (H1 2013/14: €0.56). Adjusted for special items, earnings per share amounted to €1.16, after €1.07 in the previous year’s period. In Q2 2014/15, earnings per share came to €-1.21 (Q2 2013/14: €0.82). Adjusted for special items, earnings per share in Q2 2014/15 stood at €-0.21 (Q2 2013/14: €-0.28).

Net debt of METRO GROUP amounted to €5.6 billion on 31 March 2015, a drop of around €800 million compared with the total on 31 March 2014.

Outlook

The forecast is based on the current group structure and refers to currency-adjusted figures. In addition, it is based on the assumption of an unchanged geopolitical situation from the quarterly report for Q1 2014/15.

For the financial year 2014/15, METRO GROUP expects to see a slight rise in overall sales, despite the persistently chal-lenging economic environment. In like-for-like sales, METRO GROUP foresees a slight in-crease that will follow the 0.1% gain in the previous year. In the financial year 2014/15, earnings development will also be shaped by the persistently challenging economic environment. Given the progress made so far, METRO GROUP will continue to realign its business models with a focus on efficient structures and strict cost control. For these reasons, METRO GROUP expects EBIT before special items adjusted for currency effects with a difference development in the individual sales lines to rise slightly above the €1,727 million produced in the financial year 2013/14, including typical levels of income from real estate sales.

METRO Cash & Carry

Overall, METRO Cash & Carry continued its very positive development, recording the seventh consecutive quarter of like-for-like sales growth at 1.1%. Due to exchange rate factors (primarily Russian rouble), however, sales in euro decreased by 3.1% to €14.9 billion in the first half of 2014/15. By contrast, sales in local currency declined by 0.6%. In Russia the sales line recorded double-digit like-for-like growth. Sales fell by 2.5% in the second quarter of 2014/15, while sales in local currency increased by 0.3%. Delivery sales continued their positive trend, rising by 10.5% to €1.4 billion in the first half of 2014/15. Delivery sales now account for 9.3% of METRO Cash & Carry sales. Sales from the delivery business continued their upward trend in Q2 2014/15, rising by 10.2% to €0.7 billion.

During the first half of 2014/15, EBIT amounted to €504 million (H1 2013/14: €451 million) and included special items of €15 million. These concern, in particular, a goodwill impairment at METRO Cash & Carry in Pakistan. EBIT before special items amounted to €519 million (H1 2013/14: €583 million). This decline is due mostly to very negative year-over-year currency effects of about €90 million in Russia. As a result, METRO Cash & Carry’s EBIT improved in local currency terms. In Q2 2014/15, EBIT before special items came to €37 million (Q2 2013/14: €43 million). This figure includes negative currency effects of about €30 million. As such, EBIT actually improved significantly in currency-adjusted terms.

Media-Saturn

Media-Saturn continued and accelerated its positive sales trend during the past quarter. In Q2 2014/15, like-for-like sales jumped by 5.2%. Overall, sales increased by 4.8% to €12.0 billion during the first half of 2014/15. Partly as a result of the expansion, sales in local currency even grew by 6.1%. Like-for-like sales in-creased by 4.4%. All regions contributed to the positive sales development. Sales grew by 5.7% in the second quarter and by as much as 6.9% in local currency. Like-for-like sales increased by 5.2%. In tandem with the positive sales development, Media-Saturn managed to expand its market share in several countries. In Germany, sales increased by 7.0% to €2.4 billion. Like-for-like sales increased by 5.9%. Several successful marketing activities contributed to this positive development. In addition, as market leader, Media-Saturn benefited from positive broad market developments. Following exceptionally strong growth in Russia resulting from strong pull-forward effects during the first quarter, business slowed somewhat during the second quarter. Business developments were particularly favourable in Hungary and Poland.

Media-Saturn continued to forge ahead with the rigorous expansion of its online business and the dovetailing of its sales channels during the first half of 2014/15. As a result, online sales rose markedly by about 25% to €0.9 billion, accounting for nearly 8% of Media-Saturn’s total sales. Online sales also grew during the second quarter, rising by more than 20% to €0.4 billion. In the meantime, the multi-channel offering established as an integral part of Media-Saturn’s business. The online product range was expanded once again. At the end of March 2015, it comprised more than 110,000 products at Mediamarkt.de and more than 100,000 at Saturn.de.

EBIT of Media-Saturn jumped sharply in the first half of 2014/15, rising to €332 million (H1 2013/14: €266 million). This figure includes positive special items totalling €38 million (H1 2013/14: €9 million), which mostly relate to store-related restructuring measures. EBIT before special items amounted to €369 million (H1 2013/14: €275 million), a significant improvement of 34.5%. The strong increase was largely due to good like-for-like sales growth. In Q2 2014/15, EBIT before special items improved markedly to €20 million from a negative result of €-14 million in the previous year’s quarter.

Real

As a result of the disposal of Real Eastern Europe, sales at Real declined from €4.5 billion to €4.1 billion in the first half of 2014/15. The figure for the previous year’s period still included sales of Real in Poland and Turkey. Due to store closures, sales of Real Germany declined by 0.7% to €4.1 billion in the first half of 2014/15. In turn, like-for-like sales increased by 1.0%. In Q2 2014/15, sales decreased by 0.7%. Like-for-like sales increased by 1.1%, helped by the earlier Easter business. Deflationary developments, particularly in the ultra-fresh produce area, as well as a late start to the gardening season prevented an even better development. Sales of Real Online developed favourably. Online sales doubled to €10 million during the second quarter of 2014/15.

In H1 2014/15, EBIT of Real stood at €-432 million (H1 2013/14: €34 million). This figure includes special items totalling €480 million (H1 2013/14: €23 million). Against the backdrop of earnings developments, this relates to goodwill impairments, in particular. Following a sustainable repositioning, Real has carried out impairments for goodwill resulting from company acquisitions that were completed 17 years ago. EBIT before special items amounted to €48 million, compared with €56 million in the previous year’s period. The decline was driven by increased general cost, but also especially caused by activities for a sustainable improvement of customer perception and competitiveness. Thus, the marketing activities were intensified in H1 2014/15 and expenditures for store remodelling were increased in order to align more stores with the new concept. In Q2 2014/15, EBIT before special items came to €-36 million (Q2 2013/14: €-41 million). This result also includes the earlier Easter business.

Galeria Kaufhof

During the first half of 2014/15, sales at Galeria Kaufhof fell by 1.0% to €1.7 billion. Like-for-like sales decreased by 1.1%. This trend improved slightly during the second quarter of 2014/15, with like-for-like sales declining by 0.6%. As a result, Galeria Kaufhof outperformed the textile market in several segments, thereby expanding its market share.

In H1 2014/15, EBIT stood at €115 million (H1 2013/14: €157 million). Special items amounted to €11 million. This concerns primarily store-related restructuring expenses. EBIT before special items dropped to €126 million (H1 2013/14: €157 million). The decline is due mostly to the fact that winter items had to be sold at a discount as the seasonal business progressed. In Q2 2014/15, EBIT before special items came to €-13 million (Q2 2013/14: €-2 million). Discounts and diminishing like-for-like sales resulted in this decrease.