MADE TO TRADE. Investor Update Investor Relations: September 2014 METRO AG 2014
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, 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. See also Presentation of the Risk Situation on pages 164-178 of the METRO GROUP Annual Report 2013 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. To enable better comparability following the change of the financial year, Q2 2013 is referred to in this report as Q3 2012/13. 9M 2012/13 consists of Q4 2012, Q1 2013 and Q2 2013. Additionally, the previous year figures are updated according to the new segment structures. Please note that new accounting standards have been applied. More information regarding the application of group accounting principles and methods refer to the corresponding chapter in the notes to the Annual Report 2013. 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. In contrast to the practice of past years, 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. 1
Agenda 1 METRO GROUP at a Glance 3 2 Strong Progress Made in 2013 7 3 Four Market Leading Sales Lines 10 4 Performance in Q3 2013/14 & Outlook FY 2013/14 24 5 METRO a Compelling Investment 28 2
One of the Largest Retailers Worldwide Sales: 65.7bn EBIT: 2.0bn Stores: 2,221 Countries: 32 Employees: 265,000 / 180 nations Pro-forma 2012/13 3
Four Market Leading Sales Lines METRO AG Pro-forma 2012/13 The world s leading player in the cash & carry sector Europe s No. 1 consumer electronics Retailer One of the leading operators of hypermarkets in Germany One of Europe s leading department store operators 2012/13 Sales Share 2012/13 EBIT Share* * Pre Other and consolidation 4
Strong International Presence Germany Western Europe Eastern Europe Asia/Africa METRO GROUP Countries 1 11 14 6 32 Pro-forma 2012/13 2012/13 Sales Share 39% 29% 26% 6% We generate nearly one third of Group sales in emerging markets 5
Agenda 1 METRO GROUP at a Glance 3 2 Strong Progress Made in 2013 7 3 Four Market Leading Sales Lines 10 4 Performance in Q3 2013/14 & Outlook FY 2013/14 24 5 METRO a Compelling Investment 28 6
We Have Taken Action Customer Relevance Increased Improved product ranges Extended sales channels Introduced new store formats New services Competitiveness improved Sales up by 0.9% 1 Cost Focus Continued Headquarters Operations EBIT up by 3.0% Active Portfolio Steering / Focus on Cash Flow Sale of non-core / underperforming assets Disciplined capex Net debt down by 2.3bn METRO is today significantly better positioned, both financially as well as strategically 1 Adjusted for portfolio changes and FX 7
Active Portfolio Management Sale of MAKRO Cash & Carry UK concluded in July 2012 Media Markt exit China concluded in February 2013 Disposal of Real Eastern Europe concluded in February 2014 Selective store closures 1 METRO Cash & Carry 14 Media-Saturn (including 7 closedowns in China) 41 Real (including 39 disposals in Eastern Europe) Disposal of Real Turkey concluded in July 2014 Disposal of METRO Cash & Carry Vietnam ( ) signed in August 2014 Disposal of Booker shareholding concluded in September 2014 Review partial IPO of METRO Cash & Carry Russia Freeing up cash to grow the core business and strengthening the balance sheet 8
Agenda 1 METRO GROUP at a Glance 3 2 Strong Progress Made in 2013 7 3 Four Market Leading Sales Lines 10 4 Performance in Q3 2013/14 & Outlook FY 2013/14 24 5 METRO a Compelling Investment 28 9
The World s Leading Player in the Cash & Carry Sector Focused on B2B self-service wholesaling to 3 customer groups: HoReCa (hotels, restaurants, caterers), Trader and SCO (small companies, offices) High performance internationally replicable concept Matchless emerging markets footprint: International share of sales over 80% 761 stores in 28 countries, of which 8 focus countries Profitable Growth Drivers: USP: Outstanding freshness & quality in food Business model transformation Dedicated sales force Innovative store concepts 2.0bn delivery sales (8.9% of sales) in 9M 2013 3.8bn own brand sales (17% of sales) in 9M 2013 New expansion focus on India besides Russia, China and Turkey million FY 2012/13 Sales 31,165 EBIT 1,379 EBIT margin 4.4% ROCE 16.0% Pro-forma 2012/13 10
METRO Cash & Carry Ambition Market Leadership in well defined sectors through unique product ranges and strong focus on B2B solutions that make our customers more competitive Business model To be fully adjusted to most relevant target groups Category strategies tailored to create additional value for customers Services to be enhanced and customer relevance increased Formats to be adjusted accordingly Cost discipline as a mandatory core element Organisational adjustments Managing Director empowered with full authority to adjust local business model Administration streamlined Non-food integrated into a group-wide structure Chief Restructuring Officer organisation installed Shared service centre operations well established and to be extended 11
Strategic Focus Areas Strong differentiation through exceptional food competence New non-food procurement and sales strategy Delivery strategy Further roll-out of new store concepts 50 years METRO Cash & Carry Further stock streamlining Ongoing cost structure review Exploring accelerated growth opportunities New marketing campaign (YOU&METRO) 12
Europe s No. 1 in Consumer Electronics Retailing Pan-European market leader with 975 stores in 15 countries and online presence Large-scale, full assortment store base with entrepreneurial store managers Very competitive EDLP pricing strategy Innovative merchandising and marketing concepts Profitable Growth Drivers: Business model transformation Omnichannel sales activities in 13 countries 0.8bn online sales in 9M 2013 (+75%) Four own brands Expansion focus on Russia and Turkey million FY 2012/13 Sales 21,053 EBIT 299 EBIT margin 1.4% ROCE 15.5% Pro-forma 2012/13 13
Media-Saturn Ambition Media Markt and Saturn: Europe s leading seamless shopping experience in consumer electronics -> no-line commerce Redcoon: Europe s leading consumer electronics online pure player with a big product range and the lowest prices Business model Media Markt and Saturn Large product range online (150,000+ SKUs targeted) with selected products in stores (20,000 SKUs targeted) Hardware and (digital) content Competitive price position Value added services Playing all channels, using the benefit of the store base as an asset Continued effort to improve cost position Business model Redcoon The new Media Markt -> the positioning of Media Markt in the 90 s: biggest choice, lowest price Large product range online (150,000+ SKUs targeted) - > no department store or market place Lowest costs Sharing purchasing and logistics with Media Markt and Saturn 14
Strategic Focus Areas Continue transformation to absolute customer centricity Further enhance Omnichannel approach (Front-end design, additional SKUs, connectivity in the store, online services etc.) Intensification of engagement in digital content Additional cost cutting initiatives Rightsizing wherever necessary Enhanced supplier relationship management 15
Leading Operator of Hypermarkets in Germany Following the divestment of activities in Eastern Europe (ex Turkey) focus is on Germany with 309 stores Food accounts for approx. 75% of sales Comprehensive product range of 80,000 different articles Member of Germany s leading loyalty card programme PAYBACK Profitable Growth Drivers: Business model transformation 1.0bn own brand sales in 9M 2013 (14% of sales) with almost 5,000 products (Tip, Real Quality, Real Bio, Real Selection) and new sub-price-entry own brand range Entrepreneurial store management Multichannel: Webshop www.real-onlineshop.de with more than 10,000 products; Drive concept million FY 2012/13 Sales 10.366 EBIT 145 EBIT margin 1.4% ROCE 5.6% Pro-forma 2012/13 16
Real Ambition Unique choice and quality in food retail complemented by a compelling nonfood range. Well-adjusted to serve our key customer groups. Enhanced through multichannel Business model Widest range in the B2C market Leading position in fresh and ultra-fresh categories Very price competitive including aggressive price-entry product range National strength of sizable volume but local adoption of formats to regional needs More decentralised leadership model empowerment of the store manager New marketing approach Organisational adjustments Three regions fully installed (formerly seven regions) Decentralised leadership model initiated (first 30 stores) Headquarters restructuring broadly completed 17
Strategic Focus Areas Further rollout of territorial strategy to better canvas catchment area Strengthening of entrepreneurial store management Strict cost control Fruit and Vegetables: Accelerated rollout of concept module to >160 stores Strong meat and sausage competence to be further emphasized Destination category Capture growth potential Clear competitor differentiation Flagship store concept in Essen successfully rolled-out in further 30 stores Active nationwide location search for Drive concept rollout 18
One of Europe s Leading Department Stores Market leader in Germany and Belgium with 137 stores in total Powerful international product ranges and high-quality own-brand products Strong cost and stock management 19% own brand share Optimisation of space allocation (consumer electronics vs apparel and accessories) Profitable Growth Drivers: Focus on mid-market and lifestyle orientation (sharper brand and own brand portfolio) Consistent trading-up strategy Multichannel: Webshop www.galeriakaufhof.de with >50,000 products New category management based on loyalty card data million FY 2012/13 Sales 3.082 EBIT 229 EBIT margin 7.4% ROCE 12.8% Pro-forma 2012/13 19
Galeria Kaufhof Ambition Market and concept leadership for department stores in Germany and Belgium. Absolutely customer-driven providing a meaningful and compelling offer for our customers Business model Product range and formats fully tailored to our core target groups Store remodelling and space allocation to improve attractiveness for core target groups Multichannel presence to allow seamless access for customers Strong service level Decentralised store leadership model Organisational adjustments New Head of Sales as of June 2013 20
Strategic Focus Areas Optimising store network and real estate use in Germany Further development of multichannel retailing activities Improving cost structures Introducing new brands New store opening in Belgium and market entry into Luxemburg 21
Most International Portfolio in Retail and Wholesale GERMANY 1.2 million sqm sales area owned WESTERN EUROPE 0.9 million sqm sales area owned EASTERN EUROPE 2.1 million sqm sales area owned ASIA / AFRICA 0.5 million sqm sales area owned 21% 32% 62% 70% 37% Gross self-owned floor area MISC (rented to third parties, HQ, department stores) 1.3 million sqm sales area owned METRO GROUP TOTAL 4.7 million sqm sales area owned 565 owned stores in 28 countries with a book value of c. 6bn and a market value exceeding 10bn 22
Agenda 1 METRO GROUP at a Glance 3 2 Strong Progress Made in 2013 7 3 Four Market Leading Sales Lines 10 4 Performance in Q3 2013/14 & Outlook FY 2013/14 24 5 METRO a Compelling Investment 28 23
Q3 2013/14 Highlights Strong Group LfL sales growth of 1.7% driven by food LfL sales growth at METRO Cash & Carry, Real and Galeria Kaufhof; Media-Saturn on PY level Transformation progress continued: Own brand share at 12.1% of sales Delivery sales: 0.7 billion (+4.5%) Online sales: 0.3 billion (~+20%) Sales Development in million 2012/13 2013/14 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Like-for-Like Sales Development in % 2012/13 2013/14 EBIT on prior year s level Net debt further reduced by 0.5 billion to 5.8 billion Sale of Real Turkey closed Q1 Q2 Q3 Q4 Q1 Q2 Q3 EBIT in million 2012/13 2013/14 Q1 Q2 Q3 Q4 Q1 Q2 Q3 24
Outlook FY 2013/14 billlion FY 2012/13 FY 2013/14 Sales growth 1,2-1.4% >0% LfL sales growth -1.3% ~0% EBIT before special items² 2.0 2.0 Adjusted EBIT before special items², ³ 1.7 ~1.75 Capex 1.2 <1.4 Net debt 5.4 <5.4 Number of new store openings 91 ~70 1 Adjusted for portfolio changes ² Based on stable FX ³ Adjusted for significant real estate transactions and portfolio changes 25
Agenda 1 METRO GROUP at a Glance 3 2 Strong Progress Made in 2013 7 3 Four Market Leading Sales Lines 10 4 Performance in Q3 2013/14 & Outlook FY 2013/14 24 5 METRO a Compelling Investment 28 26
METRO A Compelling Investment Leading market positions in wholesale & retail Unique emerging markets footprint Strong focus on customer centricity Growing multichannel activities Clear strategy of sustainable profitable growth Generating high cash flow and further strengthen balance sheet Valuable real estate asset backing 27
MADE TO TRADE. Appendix July/August 2014 METRO AG 2014
Derivation of Comparable EBIT Q3 2012/13 in million 276 EBIT-impact from portfolio changes ~-5 Negative FX impact ~-15 ~255 276 Q3 2012/13 Q3 2012/13 (comparable) Q3 2013/14 29
Q3 2013/14: Sales and EBIT by Division Δ Sales Like-for-Like EBIT EBIT Q3 2013/14 Q3 2013/14 Change Change reported comparable EBIT vs Q3 2012/13 million METRO Cash & Carry 7,549-2.2% 2.0% Q3 2012/13 296 Q3 2012/13 ~272 Q3 2013/14 281 comparable +9 Media-Saturn 4,563 0.9% -0.2% -94 ~-87-70 +17 Real 2,053-13.0% 5.1% 6 ~0-3 -3 Galeria Kaufhof 694 2.2% 2.2% 26 26 22-4 Others 3-5.3% - 44 ~46 47 +1 Consolidation 0 - - -2-2 -2 0 METRO GROUP 14,862-2.7% 1.7% 276 ~255 276 +21 METRO Cash & Carry: 4 th consecutive quarter with LfL growth; EBIT burdened by FX and higher marketing costs Media-Saturn: LfL benefited from Football World Cup but still suffered from general market weakness; EBIT improvement driven by better cost control Real: LfL boosted by Easter shift; EBIT burdened by targeted price investments and costs for relaunch of 30 remodelled stores Galeria Kaufhof: Strong LfL sales growth; EBIT slightly below PY mainly due to further investments in online growth Others: Includes gain from HQ sale and lease back transaction 30
Q3 2013/14: Income Statement (EBIT to EPS) million Q3 2012/13 Q3 2013/14 EBIT 276 276 Net financial result -184-108 EBT 92 168 Income Taxes -91-73 Profit or loss for the period 1 95 Non-controlling interests -18-11 EPS in 0.06 0.32 Net financial result strongly improved due to better interest result and substantial improvement in other financial result Tax rate of 44.8% in 9M 2013/14 in line with FY guidance 31
Other Key Financials: 9M 2013/14 million 9M 2012/13 9M 2013/14 Net debt (as at 30/06) 6,319 5,795 Net working capital (as at 30/06) 1,825 1,776 Change in net working capital -45-456 Cash flow from operating activities 1,571 958 Capex 780 701 Number of new store openings 79 57 Net debt reduced by 0.5 billion to 5.8 billion vs PY Net Working Capital stabilized on PY level Change in Net Working Capital and cash flow from operating activities impacted by higher trade receivables due to a change in timing of settlements related to the financial year change Higher efficiency and fewer new store openings main reasons for lower capex 32
METRO Cash & Carry: Q3 2013/14 LfL sales grew by 2.0% especially food with 3.2% Germany with positive LfL for the first time in 9 quarters Southern Europe with positive development Eastern Europe (driven by Russia) and Asia growing Delivery sales increased by 10.2% in local currency Own brand sales share on PY level (17.4%) Like-for-Like Sales Development in % 2012/13 2013/14 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Delivery Sales in million 2012/13 2013/14 Q1 Q2 Q3 Q4 Q1 Q2 Q3 33
Strategic Update: METRO Cash & Carry Organization further strengthened: New Chief Customer & Marketing officer Assortment enhancement ongoing strong progress in Food offer, Non Food redefinition on track Relevance for core target groups strengthened further Joint Business Planning effort with FMCG companies extended Expansion acceleration in India New Food Service Distribution (FSD) hub in Frankfurt our enhanced approach on Delivery Franchise framework redefined master shops to be opened in Romania, Bulgaria and Poland 34
50th Anniversary Campaign Strong efforts to leverage the 50 th anniversary commercially with a large variety of activities across all countries METRO Cash & Carry celebrates this anniversary with its customers, featuring around 700 international offers Worldwide promotion campaign 50 days 50 deals to thank our customers for their loyalty Involved are 28 countries 763 stores 20 million customers 110,000 employees 35
Market developement vs. previous year Media-Saturn: Q3 2013/14 Like-for-Like Sales Development in % Business partially benefitting from FIFA World Cup but overall market conditions remain challenging Online sales increased to 7.2% of sales Internet product offering to be increased to >100,000 items long-term 2012/13 2013/14 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Online Sales in million 2012/13 2013/14 Market share gains in 11 out of 15 markets Grown recognition regarding our distribution power ( distribution partner of choice ) Q1 Q2 Q3 Q4 Q1 Q2 Luxembourg Hungary Turkey Greece Spain Italy Poland Belgium Austria Netherland Russia Switzerland Portugal Germany Sweden Q3 36
Strategic Update: Media-Saturn More efficient cost structure: NSOs with smaller size Reduction of existing selling space Discontinuation of double-brand strategy in Italy and the Netherlands Restructuring of headquarters in progress Improving EBIT trends in 9M in Sweden, Spain and Turkey Advanced product offering 37
Real: Q3 2013/14 Strong LfL sales growth of 5.1% Own brand sales share in Germany 15.7% Like-for-Like Sales Development in Germany in % 2012/13 2013/14 Following the success of 30 remodeled stores concept roll-out to further 20 stores High investments in focused marketing campaigns Q1 Q2 Q3 Q4 Q1 Q2 Q3 Further cost optimisation: Streamlining of supply chain 38
Galeria Kaufhof: Q3 2013/14 Remarkable LfL sales growth of 2.2% 135 th anniversary in preparation Webshop with continued strong growth of 65% and long-term sales share target of 10% Roll-out of multichannel-supporting tablets in all stores in Germany Like-for-Like Sales Development in % 2012/13 2013/14 Q1 Q2 Q3 Q4 Q1 Q2 Q3 9M Implementation of professional cooperation between operating business and property portfolio management 39
Derivation of Comparable EBIT 9M 2012/13 in million 1,563 ~-140 ~-70 ~-65 ~1,287 1,309 EBIT-gain from sale and leaseback transactions EBIT-impact from portfolio changes Negative FX impact 9M 2012/13 9M 2012/13 (comparable) 9M 2013/14 40
9M 2013/14: Sales and EBIT by Division EBIT EBIT EBIT Δ Sales Like-for-Like reported comparable 9M 2013/14 9M 13/14 vs 9M 2013/14 million Change Change 9M 2012/13 9M 2012/13 comp. 9M 12/13 METRO Cash & Carry 22,918-2.1% 1.2% 992 ~807 864 +57 Media-Saturn 16,045-1.3% -1.6% 224 ~243 205-38 Real 6,561-19.0% -1.1% 133 ~50 54 +4 Galeria Kaufhof 2,378 0.3% 0.4% 213 ~186 179-7 Others 8-19.9% - -5 ~-4 7 +11 Consolidation - - - 5 5 0-5 METRO GROUP 47,909-4.4% -0.1% 1,563 ~1,287 1,309 +22 METRO Cash & Carry: Good LfL sales growth and significant comparable EBIT improvement Media-Saturn: LfL sales and EBIT suffered from general market weakness Real: LfL sales impacted by intense competition and price deflation; EBIT benefited from more efficient cost structures Galeria Kaufhof: Strong LfL sales growth, EBIT almost stable Others: EBIT includes gains from sale of real estate in both 9M 2012/13 and 9M 2013/14 41
Special Items million Q3 2012/13 Q3 2013/14 9M 2012/13 9M 2013/14 Portfolio Optimisation Measures 142-38 -28-117 Efficiency-Enhancing Measures 5-40 -30-45 Goodwill- Impairments -16 0-86 -88 Others -45-5 -70-6 METRO GROUP 86-83 -214-255 42
Number of Stores by Division & Country 43
Contact Investor Relations Metro-Straße 1 40235 Düsseldorf Germany Tel.: +49 (0)211 6886-1051 Fax: +49 (0)211 6886-3759 Email: Internet: investorrelations@metro.de www.metrogroup.de 44