Financial management

Principles and objectives of financial activities

The financial management ensures the long-term liquidity of METRO, reduces financial risks where economically feasible and grants loans to group companies. METRO AG centrally performs and manages these activities for the entire group. The objective is to ensure that group companies can cover their funding requirements in a cost-efficient manner and, where possible, via the international capital markets. This applies to operating activities as well as to investments. Generally METRO AG bases its selection of financial products on the maturities of the underlying transactions.

Intra-group cash pooling allows the surplus liquidity of individual group companies to be used to cover the liquidity needs of other group companies. This reduces the amount of external financing and thus the interest expense. The financial activities are based on a financial budget for the group that covers all significant companies.

METRO AG’s current long-term investment grade rating of BBB– and short-term rating of A–3 by Standard & Poor’s support access to international financial and capital markets. We make use of this access for our commercial paper programme as well as our bond issuance programme as required.

We support our access to capital markets by engaging in regular dialogue with credit investors and analysts. The following principles apply to all group-wide financial activities:

• External presentation of METRO as a single financial unit
• Protection of our financial scope of action by limiting the volume of transactions with individual banks
• Centralised financial risk management
• Centralised risk monitoring
• Approval process for collaboration with contractual partners in the field of financial instruments
• Implemented separation of function

Rating

METRO AG has instructed Standard & Poor’s to assess and monitor its credit rating. Standard & Poor’s current rating for METRO is as follows:

Financing measures

The company’s medium-term and long-term financing needs are covered by an ongoing capital market bond programme with a maximum volume of €5 billion. On 13 February 2018, a maturing bond in the amount of €50 million with a coupon of 3.5% was repaid on time and on 11 May 2018, a maturing bond in the amount of €500 million with a coupon of 2.25% was repaid on time. On 6 March 2018, a bond of €500 million was placed with a coupon of 1.125%. As of 30 September 2018, the bond issuance programme utilised amounted to a total of €2,401 million.

Short-term financing requirements are covered through the Euro Commercial Paper Programme, which has a maximum volume of €2 billion. On average, the programme utilised €583 million during the reporting period. As of 30 September 2018, utilisation amounted to €497 million (30/9/2017: €754 million).

Bilateral credit facilities totalling €383 million were used as of 30 September 2018. As a cash reserve, 2 syndicated credit facilities worth €1,750 million and additional multi-year credit facilities worth €250 million were concluded. At no point during the reporting period were the syndicated credit facilities used.

In addition to the established issuance programmes, the group thus had access to sufficient liquidity at all times. The undrawn credit facilities are also shown in the notes, no. 37 – financial liabilities.