Sales and earnings development of the segments

At the beginning of financial year 2017/18, METRO started presenting the segment reporting as described below.

The operating segments METRO Wholesale Germany, METRO Wholesale Western Europe (excluding Germany), METRO Wholesale Russia, METRO Wholesale Eastern Europe (excluding Russia), METRO Wholesale Asia, Real and Others were represented in the notes to the consolidated financial statements as reportable segments pursuant to IFRS 8. The Others segment includes all METRO Wholesale companies and other activities that cannot be allocated to the other companies. In addition to the centralised activities of METRO, these include, among others, the following: the procurement organisation in Hong Kong, which also operates on behalf of third parties, logistics services and the real estate activities of METRO PROPERTIES – provided that they are not attributed to any sales lines (that is speciality stores, warehouses, head offices, etc.) – and Hospitality Digital. Separate reporting by regions is omitted.

The combined management report, on the other hand, includes the operating segments METRO Wholesale Germany, METRO Wholesale Western Europe (excluding Germany), METRO Wholesale Russia, METRO Wholesale Eastern Europe (excluding Russia), METRO Wholesale Asia and METRO Wholesale Others, which are aggregated as ‘METRO Wholesale’ taking account of consolidations. Unlike the segment reporting pursuant to IFRS 8, the other METRO Wholesale companies (for example international trading offices) fall under the METRO Wholesale Others segment. The combined management report also covers the Real and Others segments.

METRO Wholesale

Like-for-like sales of METRO Wholesale increased by 1.3% in financial year 2017/18. The growth was particularly pronounced in Eastern Europe (excluding Russia) and Asia. Sales in local currency rose 1.5%. As a result of unfavourable exchange rate developments especially in Russia, Asia and Eastern Europe, reported sales decreased by 1.4% to €29.5 billion.

In Germany, like-for-like sales in financial year 2017/18 rose by 0.8%, while reported sales rose by 0.1%.

In 2017/18, like-for-like sales in Western Europe (excluding Germany) decreased by 0.4%. Reported sales increased by 1.7% to €10.6 billion. The acquisition of Pro à Pro in the first half of the year, which has been contributing to the overall sales since 1 February 2017, was particularly noticeable here.

In Russia, like-for-like sales in financial year 2017/18 declined significantly by 7.0%, corresponding to a decline of 8.0% in local currency. Following challenges in the first half of the year, the initiated business transformation measures started bearing fruit in the second half. As a result of negative currency effects, the reported sales decreased by 16.3%.

In Eastern Europe (excluding Russia), like-for-like sales in the financial year were clearly positive with an increase of 6.1%. Ukraine, Turkey and Romania especially contributed to this with 2-digit growth rates each. In local currency, sales grew by 5.6%. Due to negative currency effects, especially in Turkey, reported sales increased solely by 1.0%.

Like-for-like sales in Asia increased by 4.0% in financial year 2017/18. All countries of the segment contributed to this. Sales in local currency rose 4.4%. As a result of unfavourable exchange rate developments, reported sales decreased by 1.4%.

METRO Wholesale’s delivery business showed a very positive momentum, with sales rising by approximately 14% to €5.3 billion in financial year 2017/18. In particular, the acquisition of Pro à Pro in the previous year contributed to this increase. As a result, the delivery business now accounts for 18% of total sales.

As of 30 September 2018, the store network comprised 769 locations (30/9/2017: 759 locations). 14 stores opened in financial year 2017/18 (1 store each in Belgium and France, 3 in India, 4 in Russia, 5 in China), and 4 stores closed (1 store each in China, Germany, Italy and Poland).

The EBITDA excluding earnings contributions from real estate transactions reached a total of €1,321 million in financial year 2017/18 (2016/17: €1,413 million). This corresponds to a change adjusted for currency effects of €−35 million compared to the same period in the previous year. The decline in Russia in the amount of €79 million (€−46 million after adjustment for currency effects) is predominantly attributable to sales and margins and includes a positive once-off effect in the amount of approximately €10 million. The positive development in Western Europe and Germany partially offset this decline. Adjusted for currency effects, Eastern Europe (€+11 million) and Asia (€+8 million) also developed positively. In the METRO Wholesale Others segment, increased IT expenses during the current financial year and income from the reversal of provisions in the previous year were the main reasons for the result (€−36 million adjusted for currency effects).

The earnings contributions from real estate transactions declined by €57 million compared with the previous year. While in financial year 2016/17 a major transaction took place in China, a real estate transaction in Spain contributed particularly to the result. In total, EBITDA fell to €1,380 million (2016/17: €1,528 million).

Real

Real’s like-for-like sales declined by 1.7% in financial year 2017/18. This decline is in particular attributable to persistent warm weather and a temporarily limited availability of goods in the second half of the year. Reported sales decreased by 2.3% to €7 billion due to 3 market closures, some of which were temporary.

Online sales continued to develop very positively. In financial year 2017/18, they increased by around 35% and achieved a share of sales of approximately 2%.

The EBITDA excluding earnings contributions from real estate transactions reached a total of €143 million in financial year 2017/18 (2016/17: €154 million). The previous year included restructuring expenses of €60 million. The result was negatively affected in the amount of around €50 million by the termination of the future collective agreement that took place in the current financial year. Earnings contributions from real estate transactions amounted to €12 million (2016/17: €6 million). EBITDA amounted to €155 million (2016/17: €159 million).

As part of the required annual impairment test, goodwill of €64 million attributed to Real was written down in full. This is the primary reason for the considerable increase in impairment losses compared to the previous year.

As of 30 September 2018, the store network spanned 279 individual stores (2016/17: 282 stores), 3 less than on the reporting date in the previous year (of which 2 were temporary closures due to renovation work).

Others

The Others segment comprises, among others, the centralised activities of METRO, the procurement organisation in Hong Kong, which also operates on behalf of third parties, logistics services and real estate activities of METRO PROPERTIES which are not attributed to any sales lines (that is speciality stores, warehouses, head offices, etc.) and Hospitality Digital.

In financial year 2017/18, sales in the Others segment decreased by €20 million to €7 million (2016/17: €27 million). This decline is mainly attributable to the fact that in the first quarter of the previous year, sales still included the 4 Real stores in Romania that have since been sold.

The EBITDA excluding earnings contributions from real estate transactions amounted to €−63 million in financial year 2017/18 (2016/17: €−133 million). While the result in the first half-year was supported by reversals of provisions and once-off income in relation to the settlement of earlier acquisitions, the third quarter was affected by start-up costs for the new warehouse structure in Germany and expenses incurred in relation to the resignation of a member of the Management Board. The result in the fourth quarter of 2016/17 suffered from one-off expenses in a high 2-digit range, which were related to the demerger. Earnings contributions from real estate transactions amounted to €58 million (2016/17: €60 million). EBITDA amount to €−5 million (2016/17: €−73 million).