Metro is going strong after ditching its Belgian branch. Staying in Russia paid off (briefly) for the German wholesale group, which recorded record sales growth despite a plummeting net profit. Next year will be far worse, though…
Difficult decisions pay off
The German group had to make some tough decisions this year: it finally got rid of its Belgian operations that had been a liability for years. Metro India was also put up for sale – a buyer has since been found for those operations.
But what about Russia? When that country invaded Ukraine, Metro took the controversial decision to stay there. It turned out to be a decision that is now paying off. Despite the impact of sanctions and limited product availability, sales there rose 7.9 % in its latest financial year, and gross profit rose from 197 million to 231 million euros.
Overall, sales rose more than 20 % to 29.8 billion euros for the full financial year. Physical shop sales grew by 13.3 %, while delivery sales rose by 53.4 % to and achieve a record sales share of 21 %. Although online sales doubled, Metro’s digital marketplace still only represents a fraction of all sales.
Growth slows in 2023
The sale of the Belgian branch to Bronze Properties cost Metro 125 million, which is a big part of the German wholesaler’s below-zero result: its net loss amounts to 331 million euros, up from 45 million last year. Still, CEO Steffen Greubel is satisfied, as the targets for the year were met: gross profit rose by over 200 million euros.
Metro expects significantly less from the upcoming 2022/23 financial year, predicting only a 5 to 10 % sales growth, compared to more than 20 % this year. Management thinks Russian sales will decline, while growth in Germany, Western Europe and Eastern Europe will slow down. Operating profit will also fall by around 75 to 225 million, partly due to the major cyber attack in recent weeks and, of course, cost inflation.
In the medium term, Metro is nevertheless raising its ambitions. By 2025, Metro is now counting on average annual revenue growth of 5 to 10 % and average EBITDA growth of 5 to 7 %.