Letter to the shareholders

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Our origin is wholesale, wholesale is our future. We have consistently aligned our company in that direction in recent years. Since 2012, we have focused all our efforts on wholesale while simultaneously modernising and localising our business models. The restructuring of the group took high priority. For example, with more than one major annual transaction in the area of mergers and acquisitions, we have demonstrably forged ahead with portfolio simplification. This allowed us to reduce the company’s debt by around €5 billion. At the same time, we have been expanding our core business, wholesale. With a consistent focus on the 2 core customer groups (hotels, restaurants and catering companies) and (independent grocery stores) we were once again able to report noticeable sales growth in the past financial year. This enabled us to create the foundation for further growth and to identify new business opportunities. All things considered, we are much more vital and agile today than at the beginning of our transformation. This also puts us in a position to respond much faster to an increasingly dynamic market environment. As a shareholder, you join us in the implementation of our strategy. During the group restructuring phase we were able to distribute more than €2 billion to our shareholders. Thank you for supporting us on this path.

In financial year 2018/19, we made great progress with our transformation strategy once again:

  • The sale of the hypermarket business is well advanced. We are in the final stages of negotiations and are working with the potential buyer on the future concept for Real, which includes retaining part of the core business and passing on some store networks to competitors. Moreover, the early involvement of the antitrust authorities has increased transaction security. Therefore, we are confident that we will be able to sign off on the transaction in the very near future.
  • In October 2019, we signed an agreement to sell a majority stake in METRO China to Wumei. As a result of the sale, the global share of sales of the core customer groups HoReCa and Traders will increase significantly, while METRO’s 20% stake will open up various strategic partnership opportunities with Wumei. We expect this transaction to result in a net cash inflow of more than €1 billion, after deduction of debt, taxes and other transaction costs. These proceeds will provide room and flexibility for future growth initiatives. As a result of the sale, METRO China is reported as a discontinued operation as of 30 September 2019 in accordance with IFRS 5. However, selectively it is still included in this annual report for the purpose of comparison with the outlook for the past financial year and as the basis for the dividend proposal.
  • Group-wide, we achieved like-for-like sales growth of 2.4% including METRO China. This is the highest growth in the last decade for METRO Wholesale. This clearly shows how our strategic approach Wholesale 360 increases customer relevance and consequently our sales.
  • As expected, from operating activities of the group as a whole declined by −4.2% due to higher investments in IT and digitalisation as well as the ongoing macroeconomic challenges in Russia. By contrast, EBITDA grew in the Western Europe, Germany and Asia segments.
  • Supplemented by income from real estate transactions in the amount of €388 million which clearly exceeded expectations, a largely stable tax rate and a significantly improved financial result, we considerably increased from 1.22 to 1.44 (including METRO China). On this basis, we will propose a dividend of €0.70 per share to the Annual General Meeting of METRO AG. This dividend proposal corresponds to 49% of earnings per share (including METRO China) and is thus in line with our dividend policy.

With the completed reduction of the conglomerate, the focus on the wholesale business and the expansion of service offerings for our customers, we will succeed in further increasing the value of the company. As part of the voluntary takeover offer by EP Global Commerce (EPGC), whom we welcome among our shareholders, you, our current shareholders, have held onto a majority of your shares. By doing so, you have confirmed your confidence in METRO’s strategy and we thank you for that.

Focus on wholesale

Let me take this opportunity to explain in more detail why the wholesale business offers so many opportunities for us. METRO operates in attractive and constantly growing markets. The addressable HoReCa and Traders markets comprise more than €650 billion and more than €850 billion, respectively, for our country portfolio. Growth rates in these markets continue to rise, driven primarily by increasing disposable income and more people eating out. Our clear focus on added value for professional customers will further increase our relevance for these target groups. Consequently, growth rates in our core business will also continue to develop positively. Market consolidation offers another opportunity for growth in wholesale. We operate in very fragmented markets with plenty of opportunities for additional dynamic growth through acquisitions. We intend to make greater use of this opportunity in the coming years, particularly in our European countries.

We strive for long-term customer relationships characterised by a high level of loyalty. Currently, 78% of our sales are generated by customers who purchase goods and services from us on a regular basis. Moreover, orders from HoReCa and Traders customers average approximately €225, while purchases from retail consumers only come in at around one tenth of this value.

Our strong localisation efforts have made us a preferred partner for professional customers in many countries. This wealth of data enables us to better understand the needs of our customers and accommodate them even better. At the same time, we are constantly working on improving the efficiency of our operations, because we know that with every saving that we get, we can invest into generating additional value for our customers. This also includes further development of our own brands. In 2017, we joined forces with professional chefs to align our brand image and product range with the wholesale sector. In 2018 we rolled out this product mix in all countries, and like-for-like sales of own-brands grew by 3% in financial year 2018/19. The sales share is now 16%. We still see a lot of potential here beyond the current successes – especially with HoReCa customers and in the delivery business.

In order to consistently align ourselves to the needs of our customers, we continually ask them for their opinion. With the , we frequently collect feedback and measure customer satisfaction in order to identify improvement potential and prioritise operational projects. The Net Promoter Score has been introduced worldwide in all METRO stores and distribution centres, with all countries exhibiting positive NPS ratings. So far, METRO has received feedback from roundly 2.2 million customers and more than 610,000 callbacks have already taken place.

METRO is well positioned to play a leading role in the HoReCa and Traders sector and is increasingly exploiting this opportunity: once the sale of the majority stakes of METRO China is completed, the core customer groups will account for 70% of total sales. This is more than 10 percentage points above the level of about 10 years ago. Like-for-like sales growth for these 2 target groups in financial year 2018/19 was 4.2% for HoReCa sales and 5.1% for Traders sales in the focus countries.

On the way to becoming a complete solution partner – the Wholesale 360 approach

We have laid the foundation for a successful future, but what happens next? How can we build on the accelerating growth to further increase customer relevance and capture additional market share? The answer lies at the heart of our strategy. Since 2012, we have been working continuously to contribute to the success of our professional customers. We are accomplishing this with tailor-made product assortments, improved sales channels and, increasingly, also by inspiring and training our customers. Our goal is to be the preferred partner for our professional customers. How can we assert this claim even more? Only by putting ourselves completely in the shoes of our customers and identifying the challenges they face. And there are many. Rising costs, higher regulatory requirements, increasing competitive pressure and staff shortages are just a few examples. The reality in our customers’ operations is often very similar: a great deal of passion but very little support. We want to change that by supporting them with digital tools, advice and services. Our goal is to offer our customers added value in as many areas as possible. We call this Wholesale 360. Of course, we will not be able to do this on our own. Rather, we will focus on targeted partnerships. We are convinced that this approach will help us make our customers even more successful. We are aspiring to intensify our customer relationships and are already seeing the fruits of our work today as these initiatives are leading to the acquisition of many new customers. Service quality in the core business is and remains a key component. In financial year 2018/19, we were able to further increase these in various countries.

The delivery business continued to grow strongly at around 10% and thus accounted for a share of 17% of total sales. The delivery companies Classic Fine Foods in Asia, Pro à Pro in France and Rungis Express in Germany and Switzerland significantly contributed to this growth. This development was also facilitated by the roll-out of our online ordering system, which significantly simplifies and accelerates recurring ordering processes for HoReCa customers in particular. As a result, the average order ticket rose by up to 18%. In financial year 2018/19, we processed approximately 5.3 million orders using this tool. In March 2019, METRO also supported thedelivery business by entering the Myanmar market. In contrast to other countries, METRO does not operate any store-based wholesale stores in Myanmar, but offers customers a purchasing experience with a virtual one-stop shop solution that combines online wholesale with delivery service.

In the Traders segment, we continued to roll out and optimise our franchise system, which is primarily represented in Eastern Europe under various names. We provide our customers with a comprehensive range of support services that enable them to compete with retail chains. Today we already have 7,460 franchisees as METRO partners and we are determined to provide additional solutions. This includes various digital tools and an online ordering system that already significantly simplifies the ordering process thus ties our customers more closely to METRO.



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For HoReCa customers, we want to continuously expand our range of services. One of our goals is to provide the widest range of products. To this end, we created a new platform: METRO MARKETS. In September 2019, we launched the online B2B marketplace developed especially for wholesale business, which builds on the experience of Real’s highly successful marketplace. We sell our own goods via this platform, but at the same time also work together with strong trading partners. We make our brand and our reach available to HoReCa specialists from all over the world. METRO MARKETS is clearly aimed at HoReCa customers and offers a wide range of non-food products tailored to the hospitality industry. After only 2 months, the marketplace already offered around 87,000 non-food articles for the hospitality industry through 110 partners. In just a few months, we will multiply the assortment range and depth and thus offer restaurateurs further significant added value.

We have also made good progress in the digitalisation of the hospitality industry. In particular, our proprietary digital tools have received a very good response. The DISH platform connects restaurateurs online and offers them digital tools for more efficient operation of their businesses. Today, it already has more than 170,000 customers who use digital services such as a fully comprehensive online presence or the reservation tool. Our goal is to make the data the best ingredient in the hospitality industry. With our MenuKit, we digitalise the menus of our customers. The data obtained through this method offer a variety of insights, which we communicate to our customers through our specialist advice. This allows us to significantly increase their entrepreneurial success and in turn open up new potential for METRO. A similarly strong potential is offered by the analysis of POS data. The specially designed cockpit increases the transparency of economic relationships even more, so that restaurateurs can use this tool as a ‘control centre’ for their business decisions. All these examples show that the digitalisation of the hospitality industry can open up considerable economic potential. METRO is ideally positioned to drive this trend forward and further increase its relevance for professional customers.

The collected data continuously open up new possibilities. By analysing the ingredients of a meal, ideas can be developed as to how work steps can be further optimised with modern equipment. Does this mean that METRO wants to fully dive into this sector? No, but it has inspired us to look for ways to target this opportunity. In July 2019, we entered into a cooperation with Pentagast, Germany’s largest association of 24 hospitality and canteen kitchen suppliers. The goal of this partnership is to offer restaurateurs tailor-made solutions from a single source and to merge the 2 industry competences of food and technology. For example, restaurateurs will be able to acquire tailor-made offers for efficient and economical kitchen solutions in the future under the name SMART & EASY. Showrooms are also planned in selected METRO stores in order to exhibit a selection of the Pentagast product range in the non-food assortment on an area of approximately 100 m². Additional partnerships of this kind are in the works, for example to support our customers with customised financing.

We have also made considerable progress this year when it comes to our sustainability initiatives. In addition to its renewed certification as the best in the industry in the Europe, METRO is also listed as a member of the sustainability stock market index FTSE4Good. This is an enormous sign of appreciation of our work.

With our focus on the food sector, we rely on 3 main topics:

  • We want to make our range of products and services more sustainable by positively influencing the availability, quality and health as well as the social and environmental safety of food.
  • We promote more conscious consumption, especially through the use of alternative proteins.
  • By pooling our partnership strengths, we are fighting against food waste.

reduced food waste by 2025

In financial year 2018/19, for example, METRO was the first retail company in Germany to have its climate targets confirmed by the Science Based Targets initiative (SBTi). Based on estimates of the Science Based Target initiative, METRO is working towards a climate target of ‘well below 2 °C’ by 2030 by reducing the submitted commitments in category 1 (for example fluorinated gases from cooling in wholesale stores) and category 2 (for example emissions from acquired electricity) by 60% per square metre of selling and delivery space compared to the base year 2011. METRO's climate targets are thus in line with the reductions required to keep global warming well below 2 °C. Furthermore, as part of its commitment to the New Plastics Economy of the Ellen MacArthur Foundation, METRO has set the goal of reducing another 300 tonnes of plastic packaging by September 2023 (basis: October 2018). As a member of the Consumer Goods Forum, METRO has also undertaken to reduce food waste in its own operations by 50% by 2025 compared to 2016.


Financial year 2018/19 was a successful year across the entire METRO organisation. Including METRO China, METRO increased like-for-like sales by 2.4% in financial year 2018/19 and thus significantly increased the growth momentum. Reported sales of €29.9 billion were €0.4 billion higher than in the previous year’s figures. EBITDA excluding earnings contributions from real estate transactions amounted to €1,173 million. Adjusted for currency effects, EBITDA excluding earnings contributions from real estate transactions was down €52 million or −4.2% compared to the previous year’s figures. METRO has thus achieved its targets for financial year 2018/19.

In this annual report, our hypermarket business and METRO China are reported as discontinued operations. We expect both transactions to be closed shortly. Therefore, the outlook for financial year 2019/20 only covers our continuing operations.

For financial year 2019/20, based on the assumption of stable exchange rates and no further adjustments to the portfolio, we expect total sales and like-for-like sales to grow by 1.5% to 3%. This includes a further trend improvement in Russia and a flat sales development in Germany. Western Europe (excluding Germany), Eastern Europe (excluding Russia) and Asia are expected to grow at the previous year’s level. Across all segments, the Management Board sees the FSD business in particular and the synergetic interaction of the various channels as well as the focus on HoReCa and Traders customers as growth drivers.

An important focus of METRO is on increasing operating efficiency and portfolio simplification. Against this background, the Management Board announced to adopt efficiency measures on 19 November 2019. In financial year 2019/20, the Management Board expects this to result in non-recurring transfomation costs of €60 million to €80 million.

Before transfomation costs for these efficiency measures, the Management Board expects EBITDA excluding earnings contributions from real estate transactions to be roughly at the level of the past financial year (2018/19: €1,021 million). Earnings in Russia are expected to decline by between €20 million and €30 million as a result of the ongoing repositioning. Earnings growth in Germany and Western Europe (excluding Germany) is expected to compensate for this. For the remaining segments EBITDA is expected to remain roughly at the previous year's level.

The transformation of our company is progressing steadily. This requires the full commitment of all parties involved. In the wholesale segment, the key success factor is our team. Our team members are in daily contact with our customers, procure unique products, develop new concepts and ensure high efficiency of our company. We would therefore like to express our sincere gratitude to all our employees for their commitment and motivation. Their commitment is the foundation for future success. Therefore, we assess the satisfaction level of our employees several times a year by means of an employee survey. This year we were able to record a commitment value of 74%. Thus, we are once again well above average for the retail sector, which is 65% worldwide.

Dear shareholders, I want to take this opportunity to thank you very much. In financial year 2018/19, you once again proved that you believe in METRO and our future success. We find ourselves in a stronger position than a year ago. Our core business is getting better and better; our profile as a focused wholesaler is becoming ever clearer; our opportunities to open up new wholesale business areas are growing continuously; and our motivation to constantly work on new ideas in order to provide even better solutions for our customers has never been as high. In addition, the transaction in China will significantly boost our balance sheet and increase our strategic ability to act.

My colleagues and I look forward to another exciting financial year in which we intend to further enhance our performance profile in order to firmly establish a clear image in the eyes of our customers: METRO is my partner – unmatched in quality, service and innovation.

Yours truly,

Olaf Koch
Chairman of the Management Board of METRO AG

Short for hotel, restaurant and catering businesses. The HoReCa segment is an important customer group for METRO Wholesale.
The term ‘Traders’ at METRO Wholesale refers to the customer group of independent resellers such as operators of small grocery stores and kiosks, street food vendors, gas stations and wholesalers.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation)
Profit or loss before interest result, income taxes, depreciation/amortisation/impairment losses/reversals of impairment losses on property, plant and equipment, intangible assets and investment properties. This key figure serves the purpose of comparing companies with accounting systems that follow different accounting rules.
Earnings per share (basic/diluted)
The earnings per share (basic) are calculated by dividing the profit or loss attributable to the shareholders of METRO AG by the weighted average of shares in circulation. The earnings per share (diluted) give additional consideration to the effect of so-called potential shares, such as those issued in the context of stock options.
Net Promoter Score (NPS)
Key figure that is used to provide information regarding the performance and customer satisfaction of a company. A standardised customer survey provides rating and feedback from customers that can be used to calculate a comparable cross-company measured value.
Dow Jones Sustainability Index (DJSI)
An index family that measures the sustainability of the company. The measurement is comprised of economic, environmental and social criteria. The measured criteria for listed companies include, among others, corporate management, workforce policy, transparency, human rights and risk management. Among all sustainability indices, the DJSI family carries a particular cachet in terms of quality.