Overview of financial year 2017/18 and outlook

Earnings position

The following section will report on continuing and discontinued operations.

Like-for-like sales increased by 0.7%; reported sales declined by −1.6% to €36.5 billion (in local currency: 0.7%)
EBITDA excluding earnings contributions from real estate transactions amounted to €1,396 million (2016/17: €1,436 million); reported EBITDA reached €1,525 million (2016/17: €1,611 million)
Profit or loss for the period amounted to €348 million (2016/17: €345 million)
Earnings per share: €0.95 (2016/17: €0.89)

Financial and asset position

Net debt remained at the previous year’s level of €3,2 billion € (30.9.2017: €3,1 billion)
Investments amounted to €0.8 billion (2016/17: €0.8 billion)
Cash flow from operating activities reached €0.9 billion (2016/17: €1.0 billion)
Total assets amounted to €15.2 billion (30/9/2017: €15.8 billion)
Equity: €3.1 billion (30/9/2017: €3.2 billion); equity ratio: 20.5% (30/9/2017: 20.3%)
Long-term rating: BBB– (Standard & Poor’s)

Group business development

In financial year 2017/18, METRO’s like-for-like sales rose by 0.7%. This growth is attributable to a positive development at METRO Wholesale, while Real experienced a decline in this respect. In local currency, METRO sales increased by 0.7%. By contrast, reported sales decreased by 1.6% to €36.5 billion due to negative currency effects.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) excluding earnings contributions from real estate transactions totalled €1,396 million in 2017/18 (2016/17: €1,436 million). This decrease is mainly attributable to the decline in sales in Russia, negative currency development and a negative effect on earnings resulting from the termination of the future collective agreement at Real. Adjusted for currency effects, EBITDA excluding earnings contributions from real estate transactions rose by 1.2%.

Earnings contributions from real estate transactions totalled €129 million (2016/17: €175 million). EBITDA reached €1,525 million (2016/17: €1,611 million).

(XLS:) XLS

€ million	2016/17	2017/18	Change
Sales	37,140	36,534	−1.6%
EBITDA excluding earnings contributions from real estate transactions	1,436	1,396	−2.8%
Earnings contributions from real estate transactions	175	129	−26.5%
EBITDA	1,611	1,525	−5.3%
EBIT	852	740	−13.2%
Investments	827	811	−2.0%
Stores	1,041	1,048	0.7%
Selling space (1,000 m²)	7,249	7,152	−1.3%

The reconciliation from sales to like-for-like sales in local currency is shown in the following:

(XLS:) XLS

Continuing and discontinued operations

Continuing operations

€ million

2016/17

2017/18

Change

2016/17

2017/18

Change

¹	Sales in local currency of the previous year were calculated by converting reported sales of the previous year at the average exchange rate of the current financial year.
²	Not included in the like-for-like panel are, among others, new openings, stores in start-up phase, closures, service companies and major refurbishments.

Total sales in €

37,140

36,534

−1.6%

29,903

29,476

−1.4%

Total sales in local currency¹

36,285

36,534

0.7%

29,048

29,476

1.5%

Sales of stores that were not part of the like-for-like panel in 2017/18²

1,830

1,849

–

1,540

1,617

–

Like-for-like sales in local currency

34,455

34,685

0.7%

27,508

27,859

1.3%

(XLS:) XLS

Net financial result and taxes
€ million	2016/17	2017/18
Earnings before interest and taxes EBIT	833	823
Earnings share of non-operating companies recognised at equity	0	0
Other investment result	1	0
Interest income/expenses (interest result)	−128	−128
Other financial result	−32	−2
Financial result	−159	−130
Earnings before taxes EBT	674	693
Income taxes	−295	−235
Profit or loss for the period from continuing operations	379	458
Profit or loss for the period from discontinued operations after taxes	−34	−110
Profit or loss for the period	345	348

Net financial result

The net financial result from continuing operations primarily comprises the interest result of €–128 million (2016/17: €–128 million) and the other financial result of €–2 million (2016/17: €–32 million). Interest is at the level of the previous year. The improvement in the other financial result by €30 million to €–2 million is primarily the result of more favourable currency exchange rates and the reversal of a liability from contingent consideration in the context of an acquisition.

Taxes

The reported income tax expenses of €235 million (2016/17: €295 million) are €60 million lower than in the previous year.

During the reporting period, the group tax rate for continuing segment is 33.9% (2016/17: 43.8%). The group tax rate is the ratio between recognised income tax expenses and earnings before taxes. Besides positive effects from tax rate changes abroad and lower impairment losses on deferred taxes, the comparatively low rate in the current financial year was especially due to lower expenses for risk provisioning and other onetime effects. The high rate of the previous year was influenced by expenses associated with the demerger, which did not result in reduced tax-expenses.

Profit or loss for the period and earnings per share

The profit for the period from continuing operations reached €458 million in financial year 2017/18, amounting to €79 million more than the profit for the previous year’s period (2016/17: €379 million).

The profit for the period from METRO’s continuing and discontinued operations reached €348 million in financial year 2017/18, amounting to €3 million more than the profit for the previous year’s period (2016/17: €345 million).

Net of earnings per share of non-controlling interests, profit for the period attributable to the shareholders of METRO AG from continuing and discontinued operations amounts to €344 million (2016/17: €325 million). This represents an increase of €19 million. An improvement of €95 million resulted from continuing operations.

On this basis, METRO achieved a result of €0.95 per share from its continuing and discontinued operations in financial year 2017/18 (2016/17: €0.89), of which €1.25 came from continuing operations (2016/17: €0.99). The calculation for the reporting period was based on a weighted number of 363,097,253 shares. Profit for the period attributable to the shareholders of METRO AG was distributed according to this number of shares. There was no dilution from so-called potential shares in financial year 2017/18 or in the previous year.

This result forms the basis for the dividend recommendation.

(XLS:) XLS

Change

2016/17

2017/18

absolute

¹	After non-controlling interests.

Profit or loss for the period from continuing operations

€ million

379

458

20.9

Profit or loss for the period from discontinued operations after taxes

€ million

−34

−110

–

Profit or loss for the period

€ million

345

348

0.9

Profit or loss for the period attributable to non-controlling interests

€ million

−16

−79.2

from continuing operations

€ million

(20)

(4)

−16

−79.0

from discontinued operations

€ million

(0)

(0)

−95.1

Profit or loss for the period attributable to the shareholders of METRO AG

€ million

325

344

5.9

from continuing operations

€ million

(359)

(454)

26.4

from discontinued operations

€ million

(−34)

(−110)

−76

–

Earnings per share (basic = diluted)¹

€

0.89

0.95

0.05

5.9

from continuing operations

€

(0.99)

(1.25)

0.26

26.4

from discontinued operations

€

(−0.09)

(−0.30)

−0.21

–

Liquidity (cash flow statement)

Cash inflow from operating activities in financial year 2017/18 amounted to €874 million (2016/17: cash inflow of €851 million). Investing activities led to cash outflow of €296 million (2016/17: cash outflow of €457 million). Compared with the previous year’s period, this represents an increase in cash flow before financing activities of €184 million to €578 million.

Cash flow from financing activities showed cash outflows of €581 million (2016/17: cash outflow of €375 million). Total cash flow from discontinued operations amounts to €−133 million (2016/17: €−31 million).

For more information, see the Annual Report 2017/18 at www.metroag.de/we-are-on-the-move/earnings-position.

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.

Glossary

EPS (Earnings per Share)

See earnings per share

Glossary

Net debt

The net debt results from the balance of the financial liabilities (including liabilities from finance leases), cash and cash equivalents less financial investments. Financial investments include short-term bank deposits and short-term liquid debt instruments.

Glossary

Previous year

Period of 12 months, usually cited as reference for statements in an annual report.

Glossary

Rating

In the financial sector, ratings represent the systematic, qualitative assessment of creditworthiness. Ratings are expressed in various grades of creditworthiness. Renowned agencies that issue ratings are Standard & Poor’s, Moody’s and Fitch.

Glossary

Wholesale, METRO Wholesale

The METRO Wholesale segment comprises the METRO Wholesale sales line of METRO AG with more than 769 wholesale stores across 35 countries worldwide. This also includes the delivery business (Food Service Distribution) with companies like METRO delivery service and the delivery specialists Classic Fine Foods, Pro à Pro and Rungis Express.

Glossary

Currency effects

Currency effects result from situations where identical quantities of currency units are translated into another currency at differing exchange rates.

Glossary

EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation)

Glossary

Previous year

Period of 12 months, usually cited as reference for statements in an annual report.

Glossary

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.

Glossary