Financial year 2023/24 was again notable for the implementation of the sCore strategy. 3 years ago, we embarked on a systematic growth path with a focus on food-based wholesale. With this strategy we achieved sales growth for the 3rd year in succession. Although we find ourselves in a difficult geopolitical situation and are facing cost inflation, we achieved both currency-, portfolio-adjusted growth and expanded our business in all channels and regions, while improving our market position. We have now entered a phase in which we increasingly focus on the topics of productivity and profitability, without losing sight of sustainable growth. We have singled these topics out as our priorities for the coming year: we will continue to invest into growth and increase our productivity in this process.
The core of our sCore strategy and our recipe for success is our multichannel business model. Why are we pursuing this approach?
- Our combination of wholesale stores, delivery service and online marketplace is unique and meets different customer needs.
- Our holistic, demand-driven offering gives us a competitive advantage in a highly fragmented market with structural growth.
- With our existing infrastructure as the basis, the transformation of wholesale stores into combined delivery locations enables us to achieve capital-efficient growth.
- Our business channels are providing synergy effects, as we are seeing disproportionately rapid sales growth among our multichannel customers.
For these reasons, we will continue to invest in our long-term growth in future, and we have already achieved further milestones:
- Customers: our customers are our priority, as our employees demonstrate every day. In addition, we support international culinary events. As the rise in the willingness to recommend our company (+10 percentage points in the Net Promoter Score compared with financial year 2020/21) shows, our strategy is working.
- Stores: we continued to roll out our volume-based ‘buy more, pay less’ pricing model (>120,000 articles since October 2022).
- Delivery: we have again expanded our sales force (+>700 employees) and further reduced our product range (by >400,000 articles). This has allowed us to reduce complexity and create delivery space (+42 locations in financial year 2023/24).
- Digital: at METRO MARKETS, we nearly doubled sales in 6 top HoReCa countries, which generate 60% of our HoReCa sales. We also rolled out the DISH POS payment system in Italy and Spain (total now 6 countries). We have developed DISH Pay and introduced it in Germany, Italy, France and Spain.
- Portfolio: following the acquisition of Johan i Hallen & Bergfalk (JHB) in the previous year, we successfully acquired 2 high-performance companies that promise to deliver synergies in our Scandinavian business: the food service distribution specialists Fisk Idag in Sweden and Donier Gastronomie in Finland. In addition, in Caterite Food and Wineservice in Great Britain, we found a suitable complement for Classic Fine Foods UK to allow us to operate countrywide.
- Sustainability: in the reporting period, 8 further photovoltaic plants were installed with a total additional capacity of 22,122 kWp.
These measures are paying off: with sales growth of 6%1, we reached the upper half of the outlook range in financial year 2023/24. Adjusted EBITDA declined by €67 million in line with expectations. The reasons are the continuous transformation requirements in wholesale, persistent cost pressure and the expiry of post-transaction effects. As described above, we currently focus in particular on productivity. In financial year 2023/24 alone, we increased productivity by 5%, especially by optimising our wholesale locations. We want to intensify our efforts in financial year 2024/25 and have initiated the corresponding measures.
The progress made regarding the strategic key performance indicators also speaks for itself:
- We have never been so wholesale: 76% of sales generated with strategic customers (versus 66% before implementing sCore), 24% own-brand sales share (versus 17% before implementing sCore); 97% stock availability (versus 95% before implementing sCore)
- We have never been so FSD: 26% food service distribution sales share (versus 17% before implementing sCore)
- We have never been so digital: 14% digital sales share (versus 6% before implementing sCore)
The reported earnings per share (EPS) are €−0.33 (2022/23: €1.21). The previous year’s earnings were to a significant extent influenced by the sale of part of the METRO Campus, the sale of the Indian business and non-cash currency effects in the net financial result. In accordance with our dividend policy (payout ratio of 45% to 55% of EPS), the Management Board and the Supervisory Board propose to the Annual General Meeting not to pay a dividend for financial year 2023/24.
We managed to refinance METRO on attractive terms this year. In February 2024, we successfully placed a bond of €500 million with a term of 5 years, followed by a promissory note loan of €300 million at the beginning of October 2024. As a result, METRO’s financing remains on a solid footing and the company has sufficient liquidity reserves.
We expect a total sales growth of 3% to 7% for financial year 2024/25. Operating performance continues to face rising costs, which we aim to control with our productivity measures. Accordingly, we expect adjusted EBITDA to increase slightly. We can see that our sCore strategy is working. However, we are faced with major cost-related challenges in this regard. Transformation costs of up to €150 million are planned for this purpose in financial year 2024/25. We are taking this step in order to achieve our sCore targets for 2030.
None of this would be possible without the tireless efforts of our employees. We are working with a great deal of commitment as ONE METRO. Together, we will achieve the targets we have set for ourselves by 2030. We are doing what we do best – multichannel wholesale. Dear shareholders, we sincerely thank you for your support.
Yours truly,
Dr Steffen Greubel
Chairman of the Management Board of METRO AG
The net promoter score (NPS) of strategic customers (HoReCa and Traders) in METRO countries is one of the core key figures that METRO uses to measure and verify the implementation status of the sCore strategy. The NPS is determined by subtracting the percentage of detractors from the percentage of supporters.
The own brand sales share is one of the core key figures that METRO uses to measure and verify the implementation status of the sCore strategy. It shows the share of own brand sales in total sales (based on the merchandise management system) excluding the segment Others.
1 Currency- and portfolio-adjusted.