Germany-based Metro reported like-for-like sales increased by 3.4%, while total sales rose by 2.8% to €7.6bn (US$8.47bn) in its third quarter. The company said the growth was driven by all regions, excluding Russia. EBITDA, excluding earnings contributions from real estate transactions, totalled €316m (US$351.2m) in the same period, a rise of €11m on the previous year.
Delivery sales account for 20% of total sales
Metro highlighted the performance of its HoReCa business. It reported the area saw an increase of 4.9% in like-for-like sales for the period. Delivery sales also increased ‘by around’ 9% and accounted for 20% of Metro’s total sales by the end of Q3.
The company said digitalisation of the core business is making progress with the digital ordering process available for professional customers in 18 countries. It records on average 170,000 orders per week.
As of 30 June 2019, the store network comprised 773 stores, an additional four stores than the previous year. Net debt in continuing operations remained stable, at €3.4bn (US$3.79bn), as of 30 June 2019.
Performance differing by region
Metro said in Q3 2018/19, by reporting segment, that:
- Germany: total sales grew by 3%, while like-for-like sales increased by 3.6% due to the timing of Easter, which benefited the quarter
- Western Europe (excluding Germany): both total sales and like-for-like sales rose by 2.2%. This is attributed to the performance in nearly all countries as well as the timing of Easter
- Russia: total sales fell by 3.2%, in local currency terms, while like-for-like sales decreased by 4.8%. It said the decline was “partly attributable to declining low-margin volume business”. The sales were also impacted by the 2018 FIFA World Cup, which Russia hosted, thus boosting the previous year’s performance. It noted that ‘the initiated measures, such as price investments, continue to take effect, although they were slower than expected’. Metro said the market continues to evolve and is expected to remain challenging in the medium term
- Eastern Europe (excluding Russia): total sales rose by 7.3%, in local currency terms, while like-for-like sales grew by 7.1%. Metro said “double-digit growth rates in Turkey, Romania and Ukraine contributed notably to this”
- Asia: total sales grew by 6.8%, in local currency times, while like-for-like sales increased by 5.5%, driven by almost all countries
Real boosted by shift in Easter’s timing
As of 30 September 2018, Metro’s hypermarket business is reported as discontinued operations. Real reported a 2.3% increase in total sales to €1.7bn in Q3, while its like-for-like sales rose by 3.3% due to the Easter business. The online business, real.de, grew by 46% to a Gross Merchandise Value of €142m in the same period.
Chairman of Metro’s management board, Olaf Koch, said, “The exclusive negotiations with redos regarding the sales process for Real are progressing very well and exclusivity will be continued.” Metro said the exclusivity of discussions with redos had been extended to mid-September.
Metro Management Board and Supervisory Board rejects EPGC offer
As part of the results announcement, Metro set out its defence of its current strategy and explained why it believed shareholders should reject the takeover offer from EPGC. It said that it believed its current strategy would continue to create ‘sustainable and profitable growth for METROs future’. Metro said it believed it was ‘well positioned to play a leading role in the HoReCa and Trader sector in a dynamically changing market environment.’
Looking the future, Metro said it will update in Q3 on the possible sale of a stake in its business in China, which could generate about €1.0 bn. It said it would use the money generated by the process to pay off debt and invest in the wider business. It said it believed the sale of a stake in its China-based business could provide opportunities for longer-term growth and enable it to take learnings from innovations in the country.
Metro said it had put its operations in Belgium and Netherlands under review due to their weak performances. If sold, it would continue Metro’s slow global retreat from countries where it is unable to generate a sizeable profit and help it to free investment in markets where it continues to win or sees longer-term potential. As of the end of July 2019, Metro operated in 26 countries globally.
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