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 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 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
  • For more information about the risks stemming from financial instruments and hedging relationships, see the notes to the consolidated financial statements in no. 44 – management of financial risks.

Rating

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

Category

2019

1

The outlook was temporarily lowered by Standard & Poor to ‘CreditWatch negative’, particularly in light of the EP Global Commerce takeover bid. On 25 October 2019, the outlook was confirmed as stable again.

Long-term

BBB−

Short-term

A-3

Outlook

stable1

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.

  • For more information about financing programmes and credit facilities, see the notes to the consolidated financial statements – in no. 36 – financial liabilities.
Undrawn credit facilities by METRO

 

30/9/2018

30/9/2019

 

 

Remaining term

 

Remaining term

€ million

Total

up to 1 year

over 1 year

Total

up to 1 year

over 1 year

Bilateral credit facilities

633

318

315

609

279

330

Utilisation

−383

−318

−65

−359

−279

−80

Undrawn bilateral credit facilities

250

0

250

250

0

250

Syndicated credit facilities

1,750

0

1,750

1,750

0

1,750

Utilisation

0

0

0

0

0

0

Undrawn syndicated credit facilities

1,750

0

1,750

1,750

0

1,750

Total credit facilities

2,383

318

2,065

2,359

279

2,080

Total utilisation

−383

−318

−65

−359

−279

−80

Total undrawn credit facilities

2,000

0

2,000

2,000

0

2,000

Rating
In the financial sector, ratings represent the systematic, qualitative measurement of creditworthiness. Ratings are expressed in various grades of creditworthiness. Renowned agencies that issue ratings are Standard & Poor’s, Moody’s and Fitch.
Glossary
Commercial Paper Programme
Ongoing capital market programme typical of money markets that covers short-term financing needs. It facilitates the issuance of commercial papers (CP) as discounted, unsecured bearer bonds without standardised terms of maturity.
Glossary
Rating
In the financial sector, ratings represent the systematic, qualitative measurement of creditworthiness. Ratings are expressed in various grades of creditworthiness. Renowned agencies that issue ratings are Standard & Poor’s, Moody’s and Fitch.
Glossary