METRO AG

Quarterly Report • Feb 14, 2019

CONTENT

• 3 Summary
• 4 Overview
• 5 Sales, earnings and financial position
• 6 METRO Segments
• 8 Report on events after the closing date and outlook
• 9 Store network
• 10 Income statement
• 11 Balance sheet
• 13 Cash flow statement
• 14 Segment reporting
• 15 Notes
• 16 Financial calendar and imprint

SLIGHT DECLINE IN EARNINGS WITH INCREASING LFL SALES

Like-for-like sales increased by 2.3%; in local currency, sales grew by 2.1%, reported sales declined by -0.6% to €8.0 billion

EBITDA excluding earnings contributions from real estate transactions stood at €470 million (Q1 2017/18: €504 million); reported EBITDA reached €472 million (Q1 2017/18: €504 million)

EBITDA excluding earnings contributions from real estate transactions adjusted for currency effects was -3.4% lower than previous year

The profit or loss for the period attributable to the shareholders of METRO amounted to €181 million (Q1 2017/18: €180 million)

Earnings per share: €0.50 (Q1 2017/18: €0.50)

Net debt stood at €2.4 billion (31 December 2017: €2.8 billion, thereof €2.4 billion in continuing operations)

Outlook for financial year 2018/19 confirmed

OVERVIEW

Q1 2018/19

million	Q	Q	Change
Sales			-
EBITDA excluding earnings contributions from real estate transactions			-
Earnings contributions from real estate transactions			-
EBITDA			-
EBIT			-
Earnings before taxes EBT			-
Profit or loss for the period from continuing operations²
Earnings per Share from continuing operations ()²
Profit or loss for the period²			-
Earnings per Share ()			-

Adjustment of previous year due to discontinued operations and according to explanation in notes attributable to METRO shareholders

SALES, EARNINGS AND FINANCIAL POSITION

All following explanations of the business development focus on the continuing operations unless otherwise stated.

Sales

Like-for-like sales at METRO rose by 2.3% in Q1 2018/19. This growth is mainly attributable to the very positive like-for-like sales development in Eastern Europe excluding Russia and Asia. It was further supported by a slightly positive day effect. In local currency, METRO sales increased by 2.1%. Reported sales decreased by - 0.6% to €8.0 billion mainly due to the negative development of the Russian and Turkish currency.

Earnings

The earnings before interest, taxes, depreciation and amortisation (EBITDA) excluding earnings contributions from real estate transactions of METRO reached a total of €470 million in Q1 2018/19 (Q1 2017/18: €504 million). This decrease is mainly attributable to the negative development of the Russian and Turkish currency as well as the operational development in Russia. Adjusted for currency effects EBITDA excluding earnings contributions from real estate transactions decreased by €-16 million (-3.4%).

Earnings contributions from real estate transactions totaled €2 million (Q1 2017/18: €0 million). EBITDA in Q1 2018/19 amounted to €472 million (Q1 2017/18: €504 million).

The financial result in Q1 2018/19 stood at €-40 million (Q1 2017/18: €-31 million). This change is mainly attributable to currency fluctuations in the Turkish Lira.

Earnings before taxes amounted to €296 million in Q1 2018/19 (Q1 2017/18: €333 million).

For the continuing operations a tax rate of 37.9% is expected for the financial year 2018/19. This results in

income tax expenses of €112 million (Q1 2017/18: €149 million) for an EBT of €296 million (Q1 2017/18: €333 million). The group including discontinued operations shows a tax rate on prior year level of 39.6% (Q1 2017/18: 40.0%).

The profit or loss for the period from continuing operations attributable to METRO shareholders amounted to €181 million (Q1 2017/18: €180 million).

The profit or loss for the period from continuing and discontinued operations attributable to METRO shareholders amounted to €202 million in Q1 2018/19 (Q1 2017/18: €232 million).

Earnings per share from continuing operations reached €0.50 (Q1 2017/18: €0.50). Earnings per share from continuing and discontinued operations reached €0.56 (Q1 2017/18: €0.64).

Financial position

The reported net debt, after netting cash and cash equivalents as well as financial investments with financial liabilities (including finance leases), totaled €2.4 billion as of 31 December 2018 (31 December 2017: €2.8 billion, thereof €2.4 billion in continuing operations).

Cash flow

Cash flow from operating activities recognizes a cash inflow of €0.4 billion in Q1 2018/19 (Q1 2017/18: €0.4 billion cash inflow).

Cash flow from financing activities came in at €-0.1 billion (Q1 2017/18: €-0.1 billion) and is mainly attributable to investments in property, plant and equipment. The other investments include payouts for intangible assets and financial assets.

Cash flow from financing activities recognizes a cash outflow of €0.4 billion (Q1 2017/18: €0.7 billion cash outflow).

METRO SEGMENTS¹

	Sales ( million)		Change ()			Currency effects		Change (local currency)		Like-for-like (local currency)
	Q	Q	Q	Q	Q	Q	Q	Q	Q	Q
Total				-	-	-
Germany				-				-		-
Western Europe (excl Germany)
Russia			-	-	-	-	-	-	-	-
Eastern Europe (excl Russia)					-	-
Asia			-		-	-
Others			-	-	-		-	-	-	-

see notes for segment reporting

METRO's like-for-like sales rose by 2.3% in Q1 2018/19. This growth is mainly attributable to the very positive like-for-like sales development in Eastern Europe excluding Russia and Asia. It was further supported by a slightly positive day effect. In local currency, METRO sales increased by 2.1%. Reported sales decreased by - 0.6% to €8.0 billion mainly due to the negative development of the Russian and Turkish currency.

In Germany, like-for-like sales slightly declined by -0.2% in Q1 2018/19 against high comparison base. However, reported sales declined by -1.3% amongst others due to one store closure.

Like-for-like sales in Western Europe (excluding Germany) rose by 1.0% in Q1 2018/19. France, Italy and Spain particularly contributed to the development. Reported sales grew by 1.2% to €2.9 billion. The reported sales growth in Q1 2017/18 was mainly supported by the acquisition of Pro à Pro, which contributes to reported sales as of 1 February 2017.

In Russia, the rolled out measures showed positive results and like-for-like sales have decreased only by - 2.4%. Sales in local currency decreased by

-2.8%. As a result of the negative currency effects, the reported sales decreased by -11.9%.

In Q1 2018/19, the like-for-like sales in Eastern Europe (excl. Russia) grew measurably by 6.4%. Almost all countries have contributed to this growth. Sales rose by 6.3% in local currency. Due to negative exchange rate developments, mainly coming from Turkish Lira, the reported sales increased by only 0.8%.

Like-for-like sales in Asia increased in Q1 2018/19 by 5.9%. All countries have contributed to this development. Sales in local currency increased by 6.9%. Due to negative currency effects, reported sales increased by only 3.3%.

The delivery business of METRO continued to grow dynamically and sales in Q1 2018/19 increased by about 9% to €1.4 billion. As a result, the delivery business accounts for 18% of total sales. The sales growth reported in Q1 2017/18 was also supported by the acquisition of Pro à Pro.

As of 31 December 2018, the store network comprised of 771 stores (31 December 2017: 760 stores). In Q1 2018/19 2 stores were opened (1 in China, 1 in Turkey).

	EBITDA excluding earnings contributions from real estate transactions		Earnings contributions from real estate transactions EBITDA				EBIT	Investments
	Q	Q	Change ()	Q	Q	Q	Q	Q	Q	Q	Q
Total			-
Germany
Western Europe (excl
Germany)
Russia			-
Eastern Europe (excl Russia)			-
Asia
Others		-	-				-	-	-

The earnings before interest, taxes, depreciation and amortisation (EBITDA) excluding earnings contributions from real estate transactions of METRO reached a total of €470 million in Q1 2018/19 (Q1 2017/18: €504 million). This decrease is mainly attributable to the negative development of the Russian and Turkish currency as well as the operational development in Russia. EBITDA excluding earnings contributions from real estate transactions decreased by €-16 million (-3.4%) adjusted for currency effects.

In Germany, EBITDA excluding earnings contributions from real estate transactions reached €68 million (Q1 2018/19: €66 million).

In Western Europe (excluding Germany), EBITDA excluding earnings contributions from real estate transactions reached €175 million (Q1 2017/18: €170 million).

EBITDA excluding earnings contributions from real estate transactions in Russia reached €79 million (Q1 2017/18: €108 million). Adjusted for currency effects, the decline amounts to €-18 million and is mainly margin related.

In Eastern Europe (excl. Russia), EBITDA excluding earnings contributions from real estate transactions reached €113 million (Q1 2017/18: €123 million). This decrease is mainly attributable to the negative currency development. Adjusted for currency effects, the decline only amounts to €-4 million.

EBITDA excluding earnings contributions from real estate transactions in Asia came in on prior year level (currency adjusted €+1 million).

In the segment Others, EBITDA excluding earnings contributions from real estate transactions reached €-2 million (Q1 2017/18: €2 million). Income from onetime damage compensations in a low double digit million Euro amount, mainly incurred in the Others segment, overcompensated investments into digital solutions/IT.

However, EBITDA excluding earnings contributions from real estate transactions still decreased by €-4 million due to a one-time gain in the prior year.

Discontinued operations

Like-for-like sales of the discontinued operations in Q1 2018/19 decreased slightly by -0.6%. Reported sales declined by -1.7% due to two temporary store closures. The online business real.de continued to develop dynamically. GMV (Gross Merchandise Value) grew by 65% to €171 million.

The EBITDA excluding earnings contributions from real estate transactions reached a total of €52 million (Q1 2017/18: €104 million). This decrease is mainly attributable to a negative effect on earnings resulting from the termination of the future collective agreement as well as expenses for future store closures.

As a result of reporting as discontinued operations and according to IFRS 5, depreciation and amortisation on fixed assets of €43 million have been suspended.

REPORT ON EVENTS AFTER THE CLOSING DATE AND OUTLOOK

Report on events after the closing date

In January 2019 METRO concluded the sale of a property in Bangalore/India. The sale led to a profit amounting to a low double digit million Euro amount.

OUTLOOK

Outlook for METRO

The outlook is based on the assumptions of stable exchange rates and no further adjustments to the portfolio and is given only for the continuing operations of METRO. Our reporting also assumes a continuously complex geopolitical situation.

Sales

Despite the persistently challenging economic environment in particular in Russia, METRO expects to see an increase in overall sales in the range of 1–3% for financial year 2018/19, mainly driven by Eastern Europe (excluding Russia) and Asia. For Russia, a measurable trend improvement is expected.

METRO equally expects an increase in like-for-like sales in the range of 1–3% in financial year 2018/19, also mainly driven by Eastern Europe (excluding Russia) and Asia. For Russia, a measurable trend improvement is expected.

Earnings

EBITDA excluding earnings contributions from real estate transactions is expected to decrease by around 2–6% compared to financial year 2017/18 (€ 1,242 million), particularly driven by an expected double-digit percentage decrease in the segment Others (2017/18: €–129 million) as well as by an expected mid- to highsingle-digit percentage decrease in the segment Russia. For all other segments an EBITDA around previous year level is expected.

STORE NETWORK

STORE NETWORK BY COUNTRIES AND SEGMENTS

As of -December

METRO Q Q Germany Austria Belgium France Italy Netherlands Portugal Spain Western Europe (excl Germany) Russia Bulgaria Croatia Czech Republic Hungary Kazakhstan Moldova Poland Romania Serbia Slovakia Turkey Ukraine Eastern Europe (excl Russia) China India Japan Pakistan Asia International METRO		New store openings	Closures
				METRO

The locations and countries of the Classic Fine Foods and those of Pro à Pro and Rungis Express are not shown in the table as they relate to distribution centres and warehouses whereas this table only covers sales locations

INCOME STATEMENT

million	Q	Q
Sales revenues
Cost of sales	-	-
Gross profit on sales
Other operating income
Selling expenses	-	-
General administrative expenses	-	-
Other operating expenses	-	-
Result from impairment of financial assets		-
Earnings share of operating companies recognised at equity
Earnings before interest and taxes (EBIT)
Earnings share of non-operating companies recognised at equity
Other investment result
Interest income
Interest expenses	-	-
Other financial result	-	-
Financial result	-	-
Earnings before taxes EBT
Income taxes	-	-
Profit or loss for the period from continuing operations
Profit or loss for the period from discontinued operations
Profit or loss for the period
Profit or loss for the period attributable to non-controlling interests
from continuing operations
from discontinued operations
Profit or loss for the period attributable to the shareholders of METRO
from continuing operations
from discontinued operations
Earnings per share in (basic diluted)
from continuing operations
from discontinued operations
Adjustment of previous year due to discontinued operations and according to explanation in notes

BALANCE SHEET

ASSETS

million
Non-current assets
Goodwill
Other intangible assets
Property plant and equipment
Investment properties
Financial assets
Investments accounted for using the equity method
Other financial assets
Other non-financial assets
Deferred tax assets
Current assets
Inventories
Trade receivables
Financial assets
Other financial assets
Other non-financial assets
Entitlements to income tax refunds
Cash and cash equivalents
Assets held for sale

Adjustment of previous year according to explanation in notes

EQUITY AND LIABILITIES

million
Equity
Share capital
Capital reserve
Reserves retained from earnings	-	-	-
Non-controlling interests
Non-current liabilities
Provisions for post-employment benefits plans and similar obligations
Other provisions
Financial liabilities
Other financial liabilities
Other non-financial liabilities
Deferred tax liabilities
Current liabilities
Trade liabilities
Provisions
Financial liabilities
Other financial liabilities
Other non-financial liabilities
Income tax liabilities
Liabilities related to assets held for sale

Adjustment of previous year according to explanation in notes

CASH FLOW STATEMENT

million	Q	Q
EBIT
Depreciationamortisationimpairment lossesreversal
of impairment losses of assets excl financial investments
Change in provisions for post-employment benefits and other provisions	-	-
Change in net working capital
Income taxes paid	-	-
Reclassification of gains (–) losses () from the disposal of fixed assets	-	-
Other	-	-
Cash flow from operating activities of continuing operations
Cash flow from operating activities of discontinued operations
Cash flow from operating activities
Acquisition of subsidiaries
Investments in property plant and equipment and in investment property (excl finance leases)	-	-
Other investments	-	-
Investments in monetary assets	-	-
Disposals of subsidiaries
Disposal of fixed assets
Gains () losses (–) from the disposal of fixed assets
Disposal of financial investments
Cash flow from investing activities of continuing operations	-	-
Cash flow from investing activities of discontinued operations	-	-
Cash flow from investing activities	-	-
Dividends paid
to METRO AG shareholders
to other shareholders	-	-
Redemption of liabilities from put options of non-controlling interests
Proceeds from new borrowings
Redemption of borrowings	-	-
Interest paid	-	-
Interest received
Profit and loss transfers and other financing activities	-
Cash flow from financing activities of continuing operations	-	-
Cash flow from financing activities of discontinued operations	-	-
Cash flow from financing activities	-	-
Total cash flows	-	-
Currency effects on cash and cash equivalents	-
Total change in cash and cash equivalents	-	-
Cash and cash equivalents as of October
Cash and cash equivalents reported in assets in accordance with IFRS
Cash and cash equivalents as of October
Cash and cash equivalents as of December
Cash and cash equivalents reported in assets in accordance with IFRS
Cash and cash equivalents as of December
Adjustment of previous year due to discontinued operations

SEGMENT REPORTING Q1 2018/19

OPERATING SEGMENTS

	Germany		Western Europe (excl Germany)		Russia		Eastern Europe (excl Russia)		Asia
million	Q	Q	Q	Q	Q	Q	Q	Q	Q	Q
External sales (net)
EBITDA excluding earnings contributions from real estate transactions
Earnings contributions from real estate transactions
EBITDA
EBIT
Investments

OPERATING SEGMENTS

	Others		Consolidation		METRO continuing operations		METRO discontinued operations
million	Q	Q	Q	Q	Q	Q	Q	Q
External sales (net)
EBITDA excluding earnings contributions from real estate transactions		-
Earnings contributions from real estate transactions
EBITDA		-
EBIT	-	-
Investments			-

NOTES

Accounting principles

The income statement, balance sheet and cash flow statement have been prepared in accordance with IFRS as adopted for the EU. The income statement, balance sheet and cash flow statement were prepared in accordance with IAS 34 interim financial reporting. With the exception of the following IFRS, which are applied for the first time, the same accounting policies as in the consolidated financial statements from 30 September 2018 were applied.

As of 1 October 2018 METRO applies IFRS 9 (Financial Instruments) while exercising the option to continue the accounting of hedging transactions in accordance with IAS 39 and proceed according to the modified retrospective transition method. The adjustment effect resulting from the first-time application of the standard, which is recognized in the reserves retained from earnings as of October 1, 2018, amounts to a low single-digit million amount compared to the current accounting in accordance with IAS 39.

Furthermore, as of 1 October 2018 METRO applies IFRS 15 (Revenue from Contracts with Customers). The modified retrospective transitional approach has been applied, in which no adjustment of the previous year's figures is conducted and any resulting adjustment amount is recognised in equity. Furthermore, METRO decided to make use of the simplified process and only applies IFRS 15 retrospectively to contracts that have not been fully performed at the date of the firsttime application (1 October 2018).Due to this change, an adjustment to the reserves retained from earnings in a low single-digit million amount was recorded in the opening balance sheet as of 1 October 2018.

The Turkish government issued a decree in September 2018 under which business contracts may only be concluded in Turkish lira and no longer in other currencies such as Euros or US dollars. At METRO, predominantly real estate lease contracts will be affected. The leases contracts of Metro Properties Gayrimenkul Yatirim A.Ş that were previously based on Euros have been converted accordingly to Turkish lira. As a result, as of October 1, 2018, the functional currency of the company will also change from Euro to Turkish Lira. The deferred taxes calculated from the differences between the tax book values previously translated at historical rates and the IFRS values carried in Euros were adjusted retrospectively. As of 1 October 2017 deferred tax assets had been reduced by €30 million, deferred tax liabilities had been increased by €16 million, the effect on income taxes in financial year 2017/18 amounts to €11 million (thereof in Q1 2017/18 €1 million) expenses from deferred taxes. For the financial year 2018/19 onwards no further currency related effects on income taxes are expected, as the functional currency of Metro Properties Gayrimenkul Yatirim A.Ş. will not differ from the local currency anymore.

Change in segment reporting in the Management report of METRO

Due to the reporting of the hypermarket business as discontinued operations, the segment reporting of METRO has been adjusted slightly. The 5 Wholesale regions continue to represent reportable segments according to IFRS 8.

All remaining entities have been bundled in "Others", whereby no separate disclosure of individual companies as "Wholesale Others" as well as total METRO Wholesale will be shown in the management report.

FINANCIAL CALENDAR

Friday	15 February 2019	10.00 a.m.
	9 May 2019	7.30 a.m.
Thursday	1 August 2019	7.30 a.m.
	Half-yearly Financial Report H1/Q2 2018/19 Thursday

All time specifications are CET

IMPRINT

METRO AG Metro-Straße 1 40235 Duesseldorf, Germany

PO Box 230361 40089 Düsseldorf, Germany

http://www.metroag.de

Published: 12 February 2019 Investor Relations Telephone +49 (211) 6886-1280 Fax +49 (211) 6886-490-3759 E-Mail investorrelations@metro.de

Creditor Relations Telephone +49 (211) 6886-1904 Fax +49 (211) 6886-1916 E-Mail creditorrelations@metro.de

Corporate Communications

Telephone	+49 (211) 6886-4252
Fax	+49 (211) 6886-2001
E-Mail	presse@metro.de

Visit our website at www.metroag.de, the primary source for publications and information about METRO AG.

DISCLAIMER

This quarterly statement contains preliminary, unaudited figures and forward-looking statements. These statements are based on certain assumptions and expectations held at the time this statement is published. Preliminary figures and forward-looking statements are therefore subject to risks and uncertainties and may significantly deviate from the actual results. With regard to forward-looking statements in particular, risks and uncertainties are to a large extent determined by factors that are outside of METRO's sphere of influence and that can currently not be estimated with an adequate degree of certainty. These factors include, among others, future market conditions and economic developments, the actions of other market participants, the full utilisation of anticipated synergy effects as well as legislative and political decisions.

The hypermarket business for sale is reported as a discontinued operation as of 30 September 2018 due to the ongoing sales process. The discontinued segment primarily includes the former segment Real and a few entities and assets from the former segment Others.

METRO does not consider itself obligated to publish any corrections to these forward-looking statements for the purpose of adjusting them to events or circumstances that eventuate after the publishing date.