MADE TO TRADE. Investor Update Investor Relations: May 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, the comparable Christmas quarter period, Q4 2012, is called Q1 2012/13 as well as Q1 2013 is referred to as Q2 2012/13. H1 2012/13 consists of Q4 2012 and Q1 2013. Additionally, the previous year figures are updated according to the new segment structures. Reported figures for April 2014 are unaudited and preliminary. 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 Q2 2013/14 & Outlook 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 MADE TO TRADE. Commerzbank German Investment Seminar 2014 13 January 2014 METRO AG 2014 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 Q2 2013/14 & Outlook 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 Review partial IPO of METRO Cash & Carry Russia 1 METRO Cash & Carry 14 Media-Saturn (including 7 closedowns in China) 41 Real (including 39 disposals in Eastern Europe) 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 Q2 2013/14 & Outlook 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 Q2 2013/14 & Outlook 2013/14 24 5 METRO a Compelling Investment 28 23
Q2 2013/14 Put in Perspective LFL sales on PY level (adjusted for calendar effect, mainly Easter shift) Strong LFL growth of 4.7% in April Reported sales additionally burdened by negative FX effect (2.8%) and portfolio changes (4.1%) Slightly positive EBIT (if adjusted for FX, portfolio changes and Easter shift) Q2 (Jan-Mar) generally the quarter with the smallest contribution to FY sales and EBIT METRO GROUP after Q2 and H1 fully on track to achieve FY guidance MADE TO TRADE. H1/Q2 2013/14 Results Presentation Investor Relations: 8 May 2014 METRO AG 2014 24
Q2 2013/14 Highlights METRO Cash & Carry with strong performance Sales Development in million 2012/13 2013/14 Transformation progress continued: Own brand sales share increased by 60 bps to 11.6% Delivery sales: 0.6 billion (+9.4%) Online sales: 0.4 billion (+27%) Net debt reduced by 0.9 billion to 5.6 billion (31/03 vs PY) Q1 Q2 Q3 Q4 Q1 Q2 Like-for-Like Sales Development in % 2012/13 2013/14 Q1 Q2 Q3 Q4 Q1 Q2 EBIT in million 2012/13 2013/14 Q1 Q2 Q3 Q4 Q1 Q2 25
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 <1.6 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 26
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 Q2 2013/14 & Outlook 2013/14 24 5 METRO a Compelling Investment 28 27
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 28
MADE TO TRADE. Appendix May2014 METRO AG 2014
Excursus: Derivation of Comparable EBIT Q2 2012/13 in million 14 EBIT-impact from portfolio changes ~-36-40 Negative FX impact ~25 ~25 Q2 2012/13 Q2 2012/13 (comparable) Q2 2013/14 30
Q2 2013/14 Sales and EBIT by Division Sales Q2 2013/14 Like-for-Like April 2014 Like-for-Like EBIT reported EBIT comparable EBIT Q2 2013/14 million METRO Cash & Carry 6,861 Change -3.1% Change 0.8% Change 4.9% Q2 2012/13 43 Q2 2012/13 ~18 43 Media-Saturn 4,881-4.0% -3.7% 0.3% -14-14 -14 Real 1,900-28.0% -6.4% 14.2% 11 ~-14-41 Galeria Kaufhof 682-1.9% -1.9% 4.6% -3-3 -2 Others 2-29.3% - - -26-26 -27 Consolidation - - - - 3 3 2 METRO GROUP 14,326-7.6% -1.8% 4.7% 14 ~-36-40 METRO Cash & Carry: 3 rd consecutive quarter with positive LFL growth and significant comparable EBIT improvement despite Easter shift Media-Saturn: LFL suffered from market weakness and low performance in Germany; EBIT almost stable driven by better cost and margin management Real: LFL and EBIT impacted by a combination of intensified competition, Easter shift and store remodellings Galeria Kaufhof: 5 th consecutive quarter with LFL growth if adjusted for Easter shift; EBIT stable despite missing Easter business 31
Q2 2013/14: Income Statement (EBIT to EPS) million Q2 2012/13 Q2 2013/14 EBIT 14-40 Net financial result -123-144 EBT -109-184 Income Taxes 106 92 Profit or loss for the period -3-92 Non-controlling interests 1 0 EPS in -0.01-0.28 Net financial result declined due to unfavourable FX movements partly compensated by improved interest result due to lower net debt Tax rate of 45.2% in H1 2013/14 in line with FY guidance 32
Other Key Financials: H1 2013/14 million H1 2012/13 H1 2013/14 Net debt (as at 31/03) 6,476 5,588 Change in net working capital 149-538 Cash flow from operating activities 1,593 683 Capex 616 438 Number of new store openings 70 42 Net debt reduced by 0.9 billion to 5.6 billion vs PY Net working capital and cash flow from operating activities mainly impacted by higher inventories (Easter business) and higher trade receivables due to change in timing of settlements related to the financial year change Fewer new store openings main reason for lower capex 33
METRO Cash & Carry: Q2 2013/14 Solid LFL growth driven by Eastern Europe and Asia/Africa Signs of stabilization in Western Europe; Spain and Italy with positive LFL growth Strong EBIT improvement in Germany 10 new store openings (6 in China, 3 in Russia and 1 in India) Remodelled stores with good sales rampup Delivery sales increased by 17.5% Own brand sales share grew to 16.3% Number of Trader franchisees increased to more than 6,000 Both MAKRO Cash & Carry stores in Egypt closed down Like-for-Like Sales Development in % 2012/13 2013/14 Q1 Q2 Q3 Q4 Q1 Q2 Delivery Sales in million 2012/13 2013/14 Q1 Q2 Q3 Q4 Q1 Q2 34
METRO Cash & Carry Germany on Track LFL sales without Easter business -2.0% strong performance in April: ~+9% Positive development of core customer groups HoReCa and Trader Cost structures improved 50 th Anniversary New marketing campaign (YOU & METRO) successfully started Like-for-Like Sales Development in % 2012/13 2013/14 Q1 Q2 Q3 Q4 Q1 Q2 Position des ersten Bildes immer linke untere Ecke 35
2013/14 ytd (new business year) including February Media-Saturn: Q2 2013/14 Germany and Western Europe suffering from continuing challenging market environment, but Media-Saturn is winning market shares in general Eastern Europe with stable LFL development - double digit growth rates in Hungary and Turkey Further dynamic growth in online sales of +27% Joint procurement of assortment in Germany (Media-Markt and Saturn) Like-for-Like Sales Development in % 2012/13 2013/14 Q1 Q2 Q3 Q4 Q1 Q2 Online Sales in million 2012/13 2013/14 Q1 Q2 Q3 Q4 Q1 Q2 Source: GfK MSH including Redcoon 36
Strategic Update: Media-Saturn Strategic and organisational realignment of Media- Saturn with the target to strengthen our No. 1 position as Europe s leading multi-channel retailer in consumer electronics METRO AG Board Member Pieter Haas has already been delegated as Deputy Chairman of Media-Saturn- Holding management board to continue the successful path of Horst Norberg All multi-channel activities of Media-Saturn will be bundled in the company Media-Saturn E-Business GmbH Further strategic development of all offerings of its retail brands and all channels to adapt to changing market conditions and purchasing behaviour of customers 37
Real: Q2 2013/14 LFL sales decline in Germany mainly due to the shift of Easter business as well as continued competitive market conditions Range of new sub-price-entry own brand products extended to more than 100 items (33 Food and 68 Non-Food) Own brand sales share in Germany improved to 17.2% Streamlining store portfolio: Closing 8 non-profitable stores until end of FY 2014/15 Like-for-Like Sales Development in Germany in % 2012/13 2013/14 Q1 Q2 Q3 Q4 Q1 Q2 38
Strategic Update: Real Flagship store concept in Essen successfully rolled-out in 30 further stores Capex of 19m 30 markets represent ~10% of total Real stores in Germany, 15% of sales and an even higher share of EBIT Remodeled stores opened on 3 April 2014 Strong outperformance of existing stores since opening Sales +7% Frequency +6% 39
Galeria Kaufhof: Q2 2013/14 Notable LFL sales growth of approx. 1% (adj. for calendar effect) 135 th anniversary Webshop with continued strong growth of 61% and long-term sales share target of 10% Introduction of 1,100 tablets in all department stores to support multichannel approach New management structure for real estate portfolio and multi-channel business Like-for-Like Sales Development in % 2012/13 2013/14 Q1 Q2 Q3 Q4 Q1 Q2 40
LFL Sales Development in April 2014 million Like-for-Like Change 4.9% 0.3% 14.2% 4.6% 4.7% 41
Excursus: Derivation of Comparable EBIT H1 2012/13 in million 1,287 ~140 ~65 ~50 ~1,032 1,033 EBIT-gain from sale and leaseback transactions EBIT-impact from portfolio changes Negative FX impact H1 2012/13 H1 2012/13 (comparable) H1 2013/14 42
H1 2013/14: Sales and EBIT by Division million METRO Cash & Carry 15,369 Change -2.0% Change 0.9% H1 2012/13 697 H1 2012/13 ~535 583 Media-Saturn 11,482-2.1% -2.2% 318 ~330 275 Real 4,507-21.5% -3.9% 127 ~50 56 Galeria Kaufhof 1,684-0.4% -0.4% 187 ~160 157 Others 5-26.2% - -48 ~-50-41 Consolidation - - - 7 7 2 METRO GROUP 33,047-5.2% -0.9% 1,287 ~1,032 1,033 METRO Cash & Carry: Satisfactory LfL growth and significant comparable EBIT improvement despite Easter shift Media-Saturn: LfL and EBIT suffered from market weakness and low performance in Germany Real: LfL impacted by Easter shift and intensified competition; EBIT benefited from more efficient cost structures and high provisions in PY Galeria Kaufhof: Continued LfL growth if adjusted for Easter shift, EBIT almost stable Sales H1 2013/14 Like-for-Like EBIT reported EBIT comparable EBIT H1 2013/14 43
Special Items million Q2 2012/13 Q2 2013/14 H1 2012/13 H1 2013/14 Portfolio Optimisation Measures -14-88 -170-75 Efficiency-Enhancing Measures 1-13 -35-9 Goodwill- Impairments - -88-70 -88 Others - -4-25 -1 METRO GROUP -13-193 -300-172 44
Number of Stores by Division and Country H1 2013/14 31/03/2014 H1 2013/14 31/03/2014 H1 2013/14 31/03/2014 H1 2013/14 31/03/2014 H1 2013/14 31/03/2014 Germany 107 8 413-1 309 122 7 951 Austria 12 47 59 Belgium 13 22 15 50 Denmark 5 5 France 93 93 Italy 49 115 164 Luxemburg 2 2 Netherlands 17 2 45 2 62 Portugal 10 9 19 Spain 37 2 72 2 109 Sweden -1 28-1 28 Switzerland 25 25 Western Europe (excl. Germany) METRO Cash & Carry Media-Saturn Real Galeria Kaufhof METRO GROUP 236 3 365 15 3 616 Bulgaria 14 14 Croatia 7 7 Czech Republic 13 13 Greece 9 10 19 Hungary 13 21 34 Kazakhstan 8 8 Moldova 3 3 Poland 41 5 71-57 -52 112 Romania 32 4 36 Russia 3 73 7 57-1 9 130 Serbia 10 10 Slovakia 6 6 Turkey 27 4 38 12 4 77 Ukraine 33 33 Eastern Europe 3 289 16 197-58 16-39 502 China 7 76 7 76 Egypt -2-2 India 1 16 1 16 Japan 9 9 Pakistan 9 9 Vietnam 19 19 Asia/Africa 6 129 6 129 Total 9 761 27 975-59 325 0 137-23 2.198 45
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 46