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 controls these activities for all group companies. 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 objective will be pursued with regard to operating business as well as investment activities. The selection of financial products is based in principle on the maturities and terms of the underlying transactions.

Intra-group cash pooling allows the surplus liquidity of individual group companies to be used for providing internal finance to other group companies. This reduces the group’s amount of debt and thus its interest expenses. The financial activities are based on a financial budget for the group, which covers all relevant companies.

METRO’s current long-term investment grade rating of BBB- and short-term rating of A-3 by Standard & Poor’s both ensure access to international financial and capital markets. We are utilising this access within the scope of our Commercial Paper Programme as well as our ongoing capital market programme as required. Frequent dialogue with credit investors and analysts always takes place.

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 functional separation

Rating

METRO AG has instructed Standard & Poor’s to assess and monitor its credit rating. Standard & Poor’s current assessment of METRO’s credit rating 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 1 March 2019, a due bond of €500 million was repaid with a coupon of 3.375%. As of 30 September 2019, the utilised bond issuance programme amounted to a total of €1,901 million.

Short-term financing requirements are covered through the Euro Commercial Paper Programme with a maximum volume of €2 billion. On average, the programme was used at €785 million during the reporting period. As of 30 September 2019, the utilisation amounted to €387 million (30/9/2018: €497 million).

Bilateral credit facilities totalling €359 million were used as of 30 September 2019. As a cash reserve, 2 syndicated credit facilities worth €1,750 million and additional multi-year bilateral credit facilities worth €250 million were concluded. At no point during the reporting period were the syndicated credit facilities used.