German food retail group Metro says it has created a solid foundation for new growth in its first year since it stepped away from its non-food activities. The Benelux are still worrisome however.
Stable turnover, lower profit
Metro’s growth in its first year apart from non-food chains Media Markt and Saturn (now known as Ceconomy) is rather small: the 1.6 % turnover increase to 37.1 billion euro is mainly thanks to positive exchange rate fluctuations. On a like-for-like basis, turnover only grew 0.5 %.
Wholesale chain Metro generated the majority of this turnover and als achieved a 3 % turnover increase. Department store chain Real’s turnover continued to drop and it also closed stores. Metro itself also suffered in particular regions, with profitability down in Belgium, Russia and the Netherlands.
Excluding the exceptional turnover from the split, profit did reach 583 million euro, up from the 495 million euro from the year before. EBIT remained stable at 1.1 billion euro.
Ready for new growth after tumultuous year
Nevertheless, Metro is positive about its past year. The holding group, which now handles every food and supermarket activity from Real to Makro and Metro, has been through a transitional year in its broken fiscal year 2016/2017 and now wants to pick up the growth pace according to chairman Olaf Koch. “It was among the most eventful and strategically important years in the history of METRO. With the stock exchange listing of the new METRO, we created the foundation to deliver even more focus, innovation and growth. This ultimately also improves our operative earning power”, he said.
Koch forecasts a 1.1 % turnover growth for next year, although profitability also has to improve: he expects EBITDA excluding earnings contributions from real estate transactions to increase 10 %. An expanded service for hospitality customers and more focus on digitization should help achieve that goal.