Presentation of opportunities

METRO has numerous opportunities to ensure a sustainable positive development of its business. These opportunities mainly arise from our efforts to align our business to the needs of consumers and commercial customers. Our key goal is to create additional value for our customers. We do so by developing new sales channels and by seizing the opportunities resultant from demographic trends and the increasing differentiation of the mature markets in Western Europe, as well as population growth in developing and emerging countries. We analyse the relevant global and national trends and make decisions aimed at systematically seizing future opportunities and to carve out competitive advantages.

Opportunities from the development of business and political conditions

An unexpected improvement of the economic and political framework conditions in one of the METRO countries or on a global scale as well as improvements in free trade could potentially improve sales, costs and income performance. METRO operates in a large number of markets where we could potentially benefit from this development. Opportunities could arise from a sustained positive geopolitical and macroeconomic development in Southern Europe, Turkey and the Russia/Ukraine region – for example, in the form of a recovery of foreign exchange rates.

Opportunities from increases in value

Significant potential for additional increases in value may arise from the acquisition of selected companies, particularly in business segments of strategic importance or sales of non-strategic assets. We see opportunities in the further development of our delivery sales and in reinforcing our B2B e-commerce activities.

The existing minority interests held by METRO offer the opportunity for additional increases in value if those companies, for example start-up companies, were to develop faster and better than expected. We also intend to solidify and expand the leading position our company has already attained in numerous markets. Weaker market players in countries where the macroeconomic situation has deteriorated, for example in Russia or Ukraine, have retreated from the market. We aim to fill the resultant gaps in these markets or acquire individual local outlets where expedient for our purposes. The fact that competitors are retreating from the market may also result in METRO increasing its own market share.

We see additional potential for value increases in possible development projects for our existing real estate assets and other properties as well as an optimised facility management.

Innovations and the digitalisation are areas with excellent potentials for realising increases in value. We are convinced that the consistent implementation of innovative ideas relating to the progressing digitalisation will increasingly shape the future of the wholesale and retail industry. This may give rise to new business models, which in turn may present a variety of opportunities.

By establishing the Hospitality Digital business unit, we have prepared ourselves for taking advantage of significant opportunities arising from a potentially faster than expected digitalisation in the HoReCa segment and other business segments. Our METRO Accelerator programme powered by Techstars is a cooperation project with US-based company Techstars and allows us to monitor trends worldwide and to promote digital solutions for the hospitality, wholesale and retail segments offered by innovative start-up companies.

Furthermore, by using existing customer relationships, new business opportunities can be developed, for example new service offers in the hospitality sector. Similarly, joint ventures and the development of collaborations can provide access to new business opportunities.

Opportunities from efficiency improvements

For several years, METRO has increased its focus on its international wholesale business. It intends to intensify this strategy in the future. In consideration of this, the Management Board decided in its meeting on 13 September 2018 to sell the hypermarket business including the 80 real estate properties that are being used for it. Most of them are owned by Real. As described in risk 7, the transaction is expected to be carried out in financial year 2018/19. The sale of the hypermarket business could lead to accelerated increases in efficiency due to the intensified focus on wholesale.

In addition to the focus on wholesale and the development of new business areas, the expansion of joint ventures and cooperation projects could potentially result in reduced operational expenses. An unexpected positive development of our cost base (for example by reduced energy costs) could result in further cost savings. The continuous improvement of workflows could potentially have a positive effect on the development of our business along the entire value chain sooner than expected.