Outlook of METRO
The Management Board of METRO AG expects a return to sustainable sales and earnings growth after the Covid-19 pandemic and confirms the clear ambition to improve METRO’s competitive position and to gain further market share. This conviction is backed by a continuously strong financial profile, learnings taken from the first wave of Covid-19, the ability to preempt the needs of the customers and to be a leading player in the expected consolidation of the wholesale industry.
For financial year 2020/21, however, METRO’s financial performance will be impacted by the development of the Covid-19 pandemic. First, there is an impact of Covid-19-related governmental restrictions to public life, which is difficult to estimate. Duration and intensity of those restrictions determine that impact but are yet unknown. Second, there is an upside potential, which would result from an earlier than expected widely available vaccination. The Management Board therefore plans with different scenarios and updates them regularly.
Based on stable exchange rates and no adjustments to the portfolio METRO currently expect sales (both total sales and like-for-like) to be slightly below previous year. EBITDA adjusted is expected to decline by a mid-double-digit million euro amount. This outlook thereby assumes governmental restrictions to public life to last partially until mid Q2 of financial year 2020/21 and a fast and substantial recovery of the hospitality and tourism industry thereafter. Experiences gained from managing the first wave of Covid-19 will, along with cost efficiency and proven measures to protect the business, allow METRO to mitigate the impact on METRO’s operations compared to spring 2020. In line with observations in November 2020, the Management Board expects one month of full lockdown in the entire country portfolio will result in average sales losses of around €400 million equalling sales losses of approximately 1.5 percentage points of sales growth compared to previous year.
The sensitivity of sales and earnings to the duration and severity of governmental restrictions is likely to follow the same pattern as in the previous year, with the by far highest impact in HoReCa driven regions, esp. in the segment Western Europe. In contrast, the segments Russia and Asia are expected to perform better than the group. On group level, the Management Board generally expect a back end-loaded performance, given the high comparison base in H1 (little to no Covid-19 impact on group level in previous year) and an expected more favourable business environment from spring 2021 onwards.
Given the uncertainty regarding the further development of Covid-19, the operational business keeps on following the “Protect-Preserve-Grow” strategy, which has proven to be effective in financial year 2019/20. This strategy was key for the continuous market outperformance and the rapid recovery METRO has shown during and after the first wave of Covid-19 and it includes,
- ensuring safety of employees and customers,
- optimising the cost base by adjusting capacities and scaling back discretionary capital expenditures,
- leveraging flexible store and delivery operations
- fostering strong customer relationships by being an uncompromising business partner.