Letter to the shareholders

Dear Ladies and Gentlemen (handwriting)

The past financial year was unusual and challenging in many ways. After our successful portfolio transformation during the previous years back to being a pure wholesaler, we focused in financial year 2020/21 on strengthening the operational wholesale business. The Covid-19 pandemic presented our customers and us with challenges, but also provided us with new opportunities. We used the time wisely to refine our wholesale profile and streamline our business to be even more aligned with the needs of our customers. We are focusing on expanding the multichannel approach with the synergistic combination of wholesale and delivery. We are also continuing to develop digital tools to support hospitality customers. In collaboration with our customers, we have done everything we can to emerge from the pandemic stronger. I am convinced that we have succeeded in this effort. It will serve as the foundation for our growth course in the coming years. The strategy for this is currently being developed with energy and commitment at METRO and will be presented at the Capital Markets Day on 26 January 2022.

Steffen Greubel – Chairman of the Management Board (Photo)

Investing in future growth during the pandemic

In addition to taking protective measures for our employees and customers in the beginning of the Covid-19 pandemic, we immediately took appropriate steps to support our customers in an environment burdened by significant restrictions and, as much as possible, to operate our business without constraints. Our multichannel approach was a clear advantage in this regard. The flexibility of our wholesale stores (for example, no minimum order quantity, no lead time on orders) became increasingly important to customers during the lockdowns. The store-based part of our business moved more and more into the centre of attention. METRO’s motivated teams quickly adapted to the new circumstances. Ensuring the highest possible product availability was one of the top priorities. The , with traditionally larger order volumes, was able to recover quickly after significant temporary losses.

Investments in digitalisation, the multichannel approach and proximity to customers resulted in increased trust and customer retention. We have refined and expanded the combination of our store-based business and Food Service Distribution (FSD). We now deliver out-of-store from 563 stores and 67 dedicated depots. In financial year 2020/21, we expanded out-of-store delivery by 10 stores and opened a new depot in Rome. We expanded our store network by 3 stores to 681. Rest assured that we will continue to grow and expand our network in the coming years.

With 4 acquisitions in the hospitality sector since calendar year 2020 (Filpromer in France, Aviludo in Portugal, Davigel in Spain and C & C Abholgroßmärkte [AGM] in Austria [under competition law review]), we increased the range of services we offer to our customers and further extended our reach – in both our store-based and delivery business. As a result of these transactions, we are offering real added value in products and services and further strengthening our wholesale position in Western Europe. At the same time, we decided to exit the operational business in Japan and Myanmar due to a lack of growth prospects.

We have also invested more in the expansion and excellence of our sales force. The team now consists of 6,385 employees (2019/20: 6,251) and will continue to grow. We have intensified our contact with our customers and kept it active even during the toughest lockdown periods. The entire sales force was available to offer advice and support to restaurateurs and , from setting up ordering websites to advising on formal applications for government support.

All the hard work was rewarded by our customers in financial year 2020/21:

  • More new customers: around 250,000 new customers (gross) added
  • Very good sales recovery across all channels in the second half of the year: positive growth in wholesale stores (+4.7%) and the delivery business (+47%); with a sales share of 19%, the delivery business was already back to pre-pandemic levels
  • Hospitality Digital on track for success: 15,000 new customers use digital solutions
  • Several all-time sales records in individual months:
    • France, Germany, Netherlands and Russia achieved the highest FSD sales ever
    • Poland and Croatia achieved the highest HoReCa sales ever
    • Turkey and Ukraine recorded the highest number of buying customers in the FSD business
  • Further franchise expansion: METRO Slovakia opened its 673rd store, METRO Romania surpassed 1,609 franchise stores
  • Strong development above HoReCa market level: outperformance in important HoReCa markets in Germany, Spain, Italy and France as well as in Russia

Strong business development especially in the second half of the financial year

Thanks to intensified customer relationships and investments in the expansion and digitalisation of the business model, the group enjoyed an above-average benefit from the recovery of the hospitality industry upon the easing of government restrictions. In financial year 2020/21, we achieved the following targets:

  • Sales and EBITDA at the upper end of the outlook range
    • Sales development in local currency at previous year’s level (0.0%) or −0.4% adjusted for initial consolidations1Outlook view: constant portfolio, adjusted for initial consolidation of the Aviludo Group and Davigel Spain.. Like-for-like sales decreased slightly by −0.4%. (Outlook: −0.5% to −3.5%)
    • Adjusted EBITDA reached €1,171 million (2019/20: €1,158 million). Adjusted for (outlook view), adjusted increased by €65 million excluding Aviludo and Davigel Spain compared to the same period last year (Outlook: €+50 million to €−75 million compared to the previous year)
  • Multichannel focus proved successful: strong recovery in Western Europe, combination of sales channels with wholesale stores, delivery business and digitalisation
  • Earnings per share: reported (EPS) are €−0.15 (2019/20: €−0.40)

In line with METRO’s dividend policy (payout ratio of 45% to 55% of EPS), there are no planned dividend distributions in financial year 2020/21 for ordinary shares or preference shares. Last year, the Management Board and the Supervisory Board had proposed a dividend of €0.70 to the Annual General Meeting despite a negative EPS in continuing operations, since the reported EPS including discontinued operations actually amounted to €1.27 due to the positive transaction proceeds (sale of majority stake in METRO China and the Real hypermarket business). Since no significant transaction proceeds were received this year and the ongoing Covid-19 pandemic continues to cause uncertainties, the Management Board and the Supervisory Board consider this proposal to be appropriate.

Customer story: Guts and Get-Up-and-Go

With sales down by almost 90%, coronavirus had brought Frank Schwarz’s catering business to the brink of ruin. Did he sit around feeling sorry for himself? Not an option for the METRO customer from Duisburg.


Carbon neutrality as an important corporate goal

We are food experts with more than 55 years of experience. Climate change and its consequences pose risks for all companies – but especially for those whose business model is based on natural resources. As an international wholesaler with millions of customers in the hospitality industry and retail sectors, we have a great deal of leverage to initiate sustainable change – not only for ourselves, but also for our customers and partners. We can contribute to a more sustainable value chain with a resource-friendly business operations and more efficient processes. To lead by example, we tightened our existing climate target in July 2021 and now aim to become carbon neutral by 2040 in our global business operations mainly through own initiatives (with the exception of logistics, which will be managed in a separate target). To achieve this goal, we will invest around €1.5 billion in technology and innovation.


The Management Board expects a total sales growth of 3% to 7% (2020/21: 0.0% with Japan and Myanmar, 0.1% without Japan and Myanmar) for financial year 2021/22, hence reaching the pre-pandemic level2On a comparable, operational level. The HoReCa business is expected to be the main growth driver, especially due to high momentum in delivery. All segments will contribute to the growth. For Western Europe (excl. Germany), a significantly overproportionate growth is expected. Germany is expected to grow below the group range, also due to the reduction of the tobacco business.

The Management Board further expects an EBITDA adjusted on the level of the past financial year 2020/21 (€1,187 million without Japan and Myanmar). For Western Europe (excl. Germany), a significant growth is expected. The segment Others was supported by one-time effects in the mid double-digit million euro range in financial year 2020/21. Due to this and further digitalisation efforts, it will therefore be noticeably below the level of the previous year.

The outlook is based on the assumption of stable exchange rates and no further adjustments to the portfolio.

Time for growth – let’s do this

Dear shareholders, I would like to take this opportunity to thank you very much for your continued trust and support, even in challenging times. Our employees supported our customers with tremendous energy, effort and dedication in this unique situation. Therefore, my particular gratitude and appreciation go out to the strong METRO team. In my first 8 months as CEO I have visited almost all METRO countries to get an up-close, detailed picture of the operational business and talked to many employees and customers. METRO continues to develop and drive its strategy forward with great energy. After long years of portfolio transformation and restrictions due to the pandemic, we have returned to our roots: wholesale. Now is the time for growth. Join us on an exciting and promising journey: Let’s do this.

Yours truly,

Signature Steffen Greubel (handwriting)

Dr Steffen Greubel
Chairman of the Management Board of METRO AG

What drives you?

Continuing to grow, becoming better, achieving goals – each of us is driven by something. That’s true at METRO, too: for our customers, our employees and our partners. So we asked: what drives you?

Read MORE at mpulse.DE

1 Outlook view: constant portfolio, adjusted for initial consolidation of the Aviludo Group and Davigel Spain.

2 On a comparable, operational level

Delivery (Food Service Distribution, FSD)
Delivery service for professional customers. The delivery segment includes transactions without customers having contact with a METRO store. Customers order items online or by phone and receive their order delivered at the agreed time. In recent years, this type of purchasing has gained much more momentum.
The term ‘Traders’ at METRO refers to the customer group of independent resellers such as operators of small grocery stores and kiosks.
Short for hotel, restaurant and catering businesses. The HoReCa segment is an important customer group for METRO.
Contractually regulated form of organisation in which the franchisor grants the independent franchisees from the Traders segment the right to distribute certain goods or services using a name or trademark of the franchisor. METRO offers a variety of franchise concepts in different countries.
Currency effects
Currency effects arise when the same number of currency units is converted into another currency at different exchange rates.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation)
Profit or loss before financial 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 share attributable to the shareholders of METRO AG by the weighted average number of shares in circulation. The earnings per share (diluted) also take into account the effect of so-called potential shares, for example due to issued stock options.

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