The German Metro group has posted encouraging results in the past year: its Chinese operations have been sold, Real also found a buyer and like-for-like sales have increased by 2.4 %, the strongest growth in a decade.
"Wholesale is our future"
"Our origin is wholesale, wholesale is our future", chairman Olaf Koch said when explaining Metro’s new strategy. The German group wants to go back to its core business, now that the sale of the Real hypermarket chain to X+Bricks is on the home straight and partner Wumei is taking a majority stake in Metro China. Once these sales have been completed, 70 % of Metro's turnover will come from wholesale, including both hospitality and wholesale activities.
Comparable growth increased by 4.5 % in hospitality and catering and 5.1 % in the retail wholesale sector. Overall, comparable sales (including China but excluding Real) increased by 2.4 %. This is the biggest increase in the past ten years, Koch proudly reports, and Metro now sees itself achieving the top half of its own forecast of "1 % to 3 %". Including currency effects, total turnover went up by 1.5 % to 29.9 billion euros.
Profitability is the victim
However, Metro's operating profit decreased by 4.2 % to 1.17 billion euros, although the company points out that without 20 million euros in acquisition costs, the decrease would be "only" 2.6 %. The acquisition in China should also bring Metro approximately one billion in cash, and the sale of Real should result in another half a billion.
In the coming financial year, the wholesaler expects to record a like-for-like turnover increase of between 1.5 % and 3 %. Metro expects to grow at the same pace as this year in almost all regions, with the exception of Russia, where the group expects better margins due to the ongoing transformation plan. This transformation will cost between 20 and 30 million euros in gross profit, which would lead to a more or less stable EBITDA. On the other hand, Metro expects to see better profitability in Germany and Western Europe next year.