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METRO AG

Quarterly Report Aug 31, 2017

286_10-q_2017-08-31_ca6af257-6914-4f43-9611-3fd0747e907a.pdf

Quarterly Report

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METRO

COMBINED QUARTERLY STATEMENT 9M/Q3 2016/17

Preliminary note

On 6 February 2017, the Annual General Meeting of METRO AG (registered in the trade register of the Local Court of Düsseldorf under HRB 39473) decided on the demerger of METRO GROUP into two independent exchange-listed companies focused on their respective market segments. The agreed demerger became effective with the registration in the trade register of METRO AG on 12 July 2017. METRO AG has since been renamed CECONOMY AG.

Since 13 July 2017, all shares of METRO Wholesale & Food Specialist AG (registered in the trade register of the Local Court of Düsseldorf under HRB 79055) have been listed on the Frankfurt and Luxembourg stock exchanges; METRO Wholesale & Food Specialist AG has been operating under the name METRO AG since 18 August 2017.

This combined 9M/Q3 2016/17 quarterly statement of METRO AG has been prepared on a voluntary basis.

The new METRO (formerly METRO Wholesale & Food Specialist GROUP, in the following also referred to as MWFS GROUP) was part of the group of companies of CECONOMY AG (formerly METRO AG) during the nine-month period from 1 October 2016 to 30 June 2017 and did not operate as a separate group. The combined 9M/Q3 2016/17 quarterly statement therefore does not serve as a guide to the results that METRO would have achieved during this period as a separate, standalone group with independent central functions. The combined 9M/Q3 2016/17 quarterly statement also does not serve as a guide to future results of METRO.

For further details on the background and purpose of the combined 9M/Q3 2016/17 quarterly statement, please see the notes to the combined financial statements for the six months ended 31 March 2017 of MWFS GROUP, which were prepared by the Management Board of the former METRO AG on 23 June 2017.

METRO WITH STRONG LIKE-FOR-LIKE SALES GROWTH IN Q3

9M

  • Like-for-like sales improved slightly by 0.5% (in local currency: +0.9%; overall: +1.9% to €27.9 billion)
  • EBIT totalled $£720$ million (9M 2015/16: €942 million); EBIT before special items amounted to €840 million (9M 2015/16: €741 million)
  • $-$ Earnings per share1 before special items improved markedly to €1.08 (9M 2015/16: €0.81)
  • $-$ Net debt amounted to $\epsilon$ 3.8 billion (30 June 2016: €3.6 billion)

$Q3$

  • Strong increase in like-for-like sales of 2.6%; sales in local currency up 3.7%; total sales rose 4.9% to €9.3 billion
  • EBIT: €215 million (Q3 2015/16: €68 million); EBIT before special items amounted to €230 million

(Q3 2015/16: €239 million)

$-$ Earnings per share1 before special items: €0.24 (Q3 2015/16: €0.36)

Q3: METRO Wholesale (formerly METRO Cash & Carry)

  • Like-for-like sales of METRO Wholesale increased markedly by 2.6%; total sales rose by 6.2% to €7.6 billion (in local currency: +4.6%)
  • Growth of delivery sales: more than 30%
  • EBIT totalled €250 million (Q3 2015/16: €104 million); EBIT before special items amounted to €256 million (Q3 2015/16: €242 million)

Q3: Real

  • Like-for-like sales at Real increased by 2.5%; total sales improved by 0.7% to €1.8 billion
  • Online sales with strong growth
  • EBIT amounted to €-2 million (Q3 2015/16: €8 million)

These are pro-forma figures because these are combined financial statements, which means
that no shares existed as of the closing date of 30 June 2017.

OVERVIEW

9M 2016/17

$\epsilon$ million 9M 2015/16 9M 2016/17 Change
Sales 27,416 27,947 1.9%
Germany 9,337 9,061 $-3.0%$
International 18,080 18,886 4.5%
International share of sales 65.9% 67.6%
EBITDA 1,457 1,248 $-14.3%$
EBITDA before special items 1,253 1,354 8.1%
EBIT 942 720 $-23.6%$
EBIT before special items 741 840 13.3%
Combined earnings before taxes $EBT1$ 527 687 30.5%
Combined profit or loss for the period after taxes $1, 2$ 295 391 32.7%
Earnings per share $(\epsilon)^{1,3}$ 0.81 1.08 32.7%
Investments 682 531 $-22.1%$
Stores 4 1,043 1,036 $-0.7%$
1 Before special items
Attributable to METRO GROUP

<sup>4Attributable to METRO GROUP
3Pro forma figures
4As of the closing date 30 June

Q3 2016/17

$\epsilon$ million Q3 2015/16 Q3 2016/17 Change
Sales 8,901 9,339 4.9%
Germany 2,950 2,972 0.8%
International 5,951 6,367 7.0%
International share of sales 66.9% 68.2%
EBITDA 250 389 55.5%
EBITDA before special items 417 399 $-4.4%$
EBIT 68 215 >100%
EBIT before special items 239 230 $-4.1%$
Combined earnings before taxes $EBT1$ 208 154 $-26.0%$
Combined profit or loss for the period after taxes 1, 2 130 87 $-33.1%$
Earnings per share $(\epsilon)^{1,3}$ 0.36 0.24 $-33.1%$
Investments 299 185 $-38.1%$
Stores 4 1,043 1,036 $-0.7%$
1 Before special items
Attributable to METDO CDOUD

Attributable to METRO GROUP

3Pro forma figures

4As of the closing date 30 June

SALES, EARNINGS AND FINANCIAL POSITION

Sales

METRO achieved a slight increase in like-for-like sales of 0.5% in the first nine months of 2016/171, driven by very good developments in Q3 2016/17, in particular. Sales in local currency increased by 0.9% in the first nine months, while total sales rose by 1.9% to €27.9 billion.

In Q3 2016/17, like-for-like sales grew significantly by 2.6%, helped by the shift in the Easter business. Sales in local currency increased by 3.7%. Overall, sales rose by 4.9% to €9.3 billion (Q3 2015/16: €8.9 billion). Aside from like-for-like sales growth and positive currency effects, the acquisition of Pro à Pro France, which was completed in February 2017, also contributed to this.

Earnings

During the first nine months of 2016/17, EBIT at METRO stood at €720 million (9M 2015/16: €942 million) and comprised special items of €120 million, particularly from restructuring at Real and METRO Wholesale. The previous year's figure included positive special items totalling €201 million. These primarily concerned gains from the disposal of METRO Cash & Carry Vietnam. EBIT before special items amounted to €840 million (9M 2015/16: €741 million). The increase is due to higher gains from real estate transactions and positive currency effects.

In Q3 2016/17, EBIT stood at €215 million (Q3 2015/16: €68 million). Special items amounted to €14 million (Q3 2015/16: €171 million). EBIT before special items totalled €230 million (Q3 2015/16: €239 million). This decline is due, in particular, to the fact that the figure for the previous year's quarter included higher gains from real estate transactions.

During the first nine months of 2016/17, the net financial result amounted to €-146 million (9M 2015/16: €-242 million), with the distinct improvement due, in particular, to positive currency effects and lower interest expenses.

Earnings before taxes stood at €573 million in the first nine months of 2016/17 (9M 2015/16: €700 million). Before special items, EBT amounted to €687 million (9M 2015/16: €527 million).

Reported tax expenses of about €318 million (9M 2015/16: €312 million) correspond to a group tax rate of 55.5% (9M 2015/16: 44.5%). The tax rate before special items stands at 40.8% (9M 2015/16: 41.6%).

Profit for the period totalled €255 million in the first nine months of 2016/17 (9M 2015/16: €388 million). Profit for the period before special items climbed sharply from €307 million to €407 million. In Q3 2016/17, however, profit for the period before special items declined from €133 million to €88 million.

In the first nine months of 2016/17, earnings per share2 amounted to $\epsilon$ 0.66 (9M 2015/16: €1.03). Adjusted for special items, earnings per share stood at €1.08 (9M 2015/16: €0.81). In Q3 2016/17, earnings per share came to €0.21 (Q3 2015/16: €0.14). Adjusted for special items, earnings per share in Q3 declined from €0.36 to €0.24.

I sales growth adjusted for selling space, reflecting sales growth in local currency on a
comparable area or with respect to a comparable group of locations or sales concepts such
as online and delivery. The figure only in

$^2$ These are pro-forma figures because these are combined financial statements, which means that no shares existed as of the closing date of 30 June 2017

Financial position

Net debt, after netting cash and cash equivalents as well as financial investments with financial liabilities (including finance leases), totalled €3.8 billion as of the quarterly closing date 30 June 2017 (30 June 2016: €3.6 billion).

During the first nine months of financial year 2016/17, total cash inflow from operating activities amounted to €0.3 billion (9M 2015/16: €0.3 billion).

Cash flow from investing activities totalled $\epsilon$ -0.5 billion (9M 2015/16: €-0.1 billion). The deviation results from the acquisition of Pro à Pro in the current financial year and the sale of the METRO activities in Vietnam in the previous year.

Cash flow from financing activities showed outflows of €0.3 billion (9M 2015/16: outflow of €2.6 billion).

SALES LINES

Sales
$(E \text{ million})$
Change $(\epsilon)$ Currency effects Change
(local currency)
Like-for-like
(local currency)
9M
2015/16
9M
2016/17
9M
2015/16
9M
2016/17
9M
2015/16
9M
2016/17
9M
2015/16
9M
2016/17
9M
2015/16
9M
2016/17
Total 21,648 22,421 $-3.1%$ 3.6% $-3.2%$ 1.3% 0.1% 2.3% 0.3% 1.1%
HoReCa 10,400 10,728 2.2% 3.2% $-0.9%$ $-1.1%$ 3.1% 4.3% 0.8% 0.4%
Multispecialist 9.051 9,567 $-4.6%$ 5.7% $-5.5%$ 4.4% 0.9% 1.3% $-0.7%$ 1.0%
Traders 2,064 2,108 $-3.7%$ 2.1% $-5.4%$ $-0.5%$ 1.7% 2.6% 2.3% 4.8%
Others 134 19 $\blacksquare$ $\blacksquare$ $\blacksquare$

METRO Wholesale (formerly METRO Cash & Carry)

Sales $(E \text{ million})$ Change $(\epsilon)$ Currency effects Change
(local currency)
Like-for-like
(local currency)
Q 3
2015/16
Q 3
2016/17
Q 3
2015/16
Q3
2016/17
Q 3 Q3
2015/16 2016/17
Q 3
2015/16
Q 3
2016/17
Q 3
2015/16
Q 3
2016/17
Total 7.113 7.554 $-4.5%$ 6.2% $-4.7%$ 1.5% 0.2% 4.6% 0.1% 2.6%
HoReCa 3,552 3,788 1.0% 6.6% $-0.8%$ $-1.6%$ 1.8% 8.2% $-1.1%$ 2.8%
Multispecialist 2,858 3.019 $-7.2%$ 5.6% $-9.1%$ 5.1% 1.9% 0.5% 1.0% 1.2%
Traders 699 741 $-4.9%$ 6.1% $-6.3%$ $-1.4%$ 1.4% 4.7% 2.9% 6.3%
Others 4 6 - ۰ $\overline{\phantom{0}}$ -

Like-for-like sales at METRO Wholesale rose by 1.1% in the first nine months of 2016/17. Sales in local currency were up 2.3%. Thanks to positive currency effects, total sales rose by 3.6% to €22.4 billion. In addition, the acquisition of Pro à Pro in France has contributed to sales since the beginning of 2017. In Q3 2016/17, like-for-like sales increased by 2.6%. However, in local currency, the sales increase was markedly higher at 4.6%, with total sales surging by 6.2% to €7.6 billion.

Like-for-like sales in the HoReCa cluster were up 0.4% in 9M 2016/17. Sales in local currency increased by 4.3%. Total sales increased by 3.2% to €10.7 billion and were dampened slightly by negative currency effects. In Q3 2016/17, like-forlike sales rose by 2.8%. Like-for-like sales in Germany, the largest HoReCa country, increased by 2.0%. Like-for-like sales also developed very positively in France and above all Turkey. Despite negative currency effects, sales rose markedly

by 6.6% to €3.8 billion, driven partly by the acquisition of Pro à Pro in France.

Like-for-like sales in the Multispecialist cluster rose by 1.0% in 9M 2016/17. Sales in local currency increased by 1.3%. Due to very positive currency effects, total sales jumped 5.7% to €9.6 billion. In Q3 2016/17, like-for-like sales rose by 1.2%. Positive developments in China, Pakistan and India more than compensated for the distinct decline in like-for-like sales in the Netherlands and Russia. Positive currency effects caused sales to increase by 5.6% to €3.0 billion.

Like-for-like sales in the Traders cluster were up 4.8% in 9M 2016/17, with Ukraine and Romania once again the key drivers. Sales in local currency rose by 2.6%. However, as a result of negative currency effects, total sales increased by just 2.1% to €2.1 billion. The development improved in Q3 2016/17 with like-for-like sales growth of 6.3% and sales rose by 6.1% to

€0.7 billion thanks also to slightly positive currency effects.

METRO Wholesale's delivery sales showed very positive momentum, with sales rising by more than 25% to €3.4 billion in 9M 2016/17. As a result, delivery sales accounted for more than

15% of total sales for the first time. The acquisition of Pro à Pro contributed to this increase. As a result, growth rates in Q3 2016/17 were higher, with delivery sales increasing by more than 30% to €1.3 billion. This already corresponds to 16.7% of total sales.

$\epsilon$ million 9M 2015/16 9M 2016/17 Change Q3 2015/16 Q3 2016/17 Change
Reported EBIT 976 783 $-19.7%$ 104 250 >100%
EBIT before special items 741 822 10.8% 242 256 5.9%
Investments 399 369 $-7.6%$ 227 108 $-52.4%$

In 9M 2016/17, EBIT amounted to €783 million (9M 2015/16: €976 million) and included special items amounting to €38 million, which essentially concerned restructurings. The previous year's figure included positive special items totalling €235 million. These primarily include gains from the disposal of METRO Cash & Carry Vietnam. At €822 million, EBIT before special items was €81 million higher than in the comparable period of the previous year. While positive currency effects substantially mitigated the decline in EBIT in Russia, gains from a real estate transaction in China contributed €81 million (in Q2 2016/17) to the strong overall EBIT improvement, with cost savings in administrative functions also having a positive effect.

In Q3 2016/17, EBIT before special items came to €256 million (Q3 2015/16: €242 million), with EBIT boosted, in particular, by positive currency effects amounting to €12 million.

Real

Sales ( $\epsilon$ million) Change $(\epsilon)$ Like-for-like (local currency)
9M 2015/16 9M 2016/17 9M 2015/16 9M 2016/17 9M 2015/16 9M 2016/17
Germany 5,715 5,502 -3.8% $-3.7%$ $-1.5%$ $-1.5%$
Sales ( $\epsilon$ million) Change $(\epsilon)$ Like-for-like (local currency)
Q3 2015/16 Q3 2016/17 Q3 2015/16 Q3 2016/17 Q3 2015/16 Q3 2016/17

Real's like-for-like sales declined by 1.5% in 9M 2016/17. Primarily due to store disposals, total sales fell by 3.7% to €5.5 billion compared with the previous year's period. In contrast, like-forlike sales rose markedly by 2.5% in Q3 2016/17. The Easter shift and higher food prices contributed to this positive development. Although the store network has decreased by nine stores

compared to the previous year, total sales increased by 0.7% to €1.8 billion.

Online sales continued to develop very positively, rising by more than 50% from €53 million to €80 million in 9M 2016/17. In Q3 2016/17, sales grew by nearly 70%, with the online share of sales at Real increasing to 1.5%. Real now also offers online food ordering.

$\epsilon$ million 9M 2015/16 9M 2016/17 Change Q3 2015/16 Q3 2016/17 Change
Reported EBIT 77 $22 \overline{ }$ $-71.2%$ -2
EBIT before special items 77 68 $-10.7%$ -2
Investments 201 72 $-64.5%$ 44 39 $-10.8%$

EBIT totalled $\epsilon$ 22 million in 9M 2016/17 (9M 2015/16: €77 million). This figure includes special items totalling €46 million (9M 2015/16: €0 million), which essentially relates to restructuring measures. EBIT before special items totalled

€68 million, compared to €77 million in the previous year's period.

In Q3 2016/17, EBIT declined from €8 million to €-2 million due to price investments and higher marketing expenses. Earnings were not impacted by special items.

Others

$\epsilon$ million 9M 2015/16 9M 2016/17 Change Q3 2015/16 Q3 2016/17 Change
Sales 53 24 $-54.0%$ 17 $-87.7%$
Reported EBIT $-109$ $-87$ 20.5% $-46$ -36 21.1%
EBIT before special items -75 $-51$ 31.7% $-13$ $-28$ $< -100%$
Investments 82 91 11.3% 28 38 34.5%

The Others segment comprises, among others, the centralised activities of METRO, the procurement organisation in Hong Kong, which also operates on behalf of third parties as well as logistics services and real estate activities of METRO PROPERTIES, which are not attributed to any sales lines (that is speciality stores, warehouses, head offices, etc.).

In 9M 2016/17, sales in the Others segment fell markedly to €24 million (9M 2015/16: €53 million) and include above all the four remaining Real stores in Romania and commissions from the third-party business operated by METRO's Hong Kong-based procurement organisation. However, the stores in Romania were sold as of

the end of Q1 2016/17 so that the resulting sales have no longer been included in total sales as of 1 January 2017.

EBIT totalled €-87 million in 9M 2016/17 (9M 2015/16: €-109 million). Special items amounted to €35 million (9M 2015/16: €34 million). EBIT before special items stood at €-51 million (9M 2015/16: €-75 million). The strong improvement was due to higher gains from real estate transactions.

However, EBIT before special items fell from €-13 million to €-28 million in Q3 2016/17 compared to the previous year's period as gains from real estate transactions declined during the quarter.

OUTLOOK

With the annual report 2016/17, METRO will publish a forecast for financial year 2017/18. There is no forecast for the rest of financial year 2016/17 because the demerger and listing of METRO shares took place just recently in mid-July 2017.

METRO also maintains its mid-term guidance. These include at least 3% sales growth, a stable EBITDA margin of approximately 5%, a free cash flow conversion of more than 60%, and a tax rate of less than 40%. These mid-term objectives are based on the assumptions of constant currency exchange rates and irrespective of any portfolio measures.

LOCATIONS

Store network development 9M 2016/17

30/9/2016 New store
openings/
additions
9M 2016/17
Closures/
disposals
9M 2016/17
30/6/2017 Change
(absolute)
METRO Wholesale
(formerly METRO Cash & Carry)
752 $+8$ -6 754 $\mathcal{P}$
Real 285 $+0$ $-3$ 282 $-3$
Total $1,041^1$ $+8$ $-13^{1}$ 1,036 -5
1 Including disposal of 4 stores in the Others segment

METRO COMBINED QUARTERLY STATEMENT 9M/Q3 2016/17

Store network as of 30 June 2017

METRO Wholesale
(formerly METRO Cash & Carry)
Real Total
New store
openings/
additions
9M
2016/17
Closures/
disposals
9M
2016/17 30/6/2017 New store
openings/
additions
9M
2016/17
Closures/
disposals
9M
2016/17 30/6/2017 New store
openings/
additions
9M
2016/17
Closures/
disposals
9M
2016/17 30/6/2017
Germany $-2$ 104 -3 282 -5 386
Austria 12 12
Belgium 16 16
France $+1$ 95 $+1$ 95
Italy $+1$ 50 $+1$ 50
Netherlands 17 17
Portugal 10 10
Spain 37 37
Western Europe
(excl. Germany)
$+2$ 237 $+2$ 237
Bulgaria 11 11
Croatia 9 9
Czech Republic 13 13
Hungary 13 13
Kazakhstan 6 6
Moldova 3 3
Poland 30 30
Romania 30 30
Russia 89 89
Serbia $-1$ 9 $-1$ 9
Slovakia 6 6
Turkey 32 32
Ukraine -1 31 $-1$ 31
Eastern Europe $-2$ 282 $-2$ 282
China $+3$ $^{\mbox{-}1}$ 88 $+3$ $-1$ 88
India $+2$ $-1$ 21 $+2$ $^{\text{{\small -1}}}$ 21
Japan $^{\rm +1}$ 10 $^{\rm +1}$ ${\bf 10}$
Pakistan 9 9
Asia $+6$ $-2$ 131 $+6$ $-2$ 131
Total $+8$ -6 754 $-2$ 282 $+8$ $-13^{1}$ 1,036

$\frac{1}{4}$ Including disposal of 4 stores in the Others
segment

RECONCILIATION OF SPECIAL ITEMS1

9M 2016/17

SPECIAL ITEMS BY SALES LINE

As reported Special items Before special
items
$\epsilon$ million 9M
2015/16
9M
2016/17
9M
2015/16
9M
2016/17
9M
2015/16
9M
2016/17
EBITDA 1,457 1,248 $-203$ 106 1,253 1,354
thereofMETRO Wholesale (formerly METRO Cash & Carry) 1,297 1,113 $-238$ 24 1,060 1,137
Real 180 127 $\mathbf 0$ 46 180 173
Others $-16$ 10 34 35 18 45
Reconciliation to the combined financial statements $-5$ $-1$ 0 0 $-5$ $-1$
EBIT 942 720 $-201$ 120 741 840
thereofMETRO Wholesale (formerly METRO Cash & Carry) 976 783 $-235$ 38 741 822
Real 77 22 0 46 77 68
Others $-109$ $-87$ 34 35 $-75$ $-51$
Reconciliation to the combined financial statements $-2$ 1 $\Omega$ O $-2$ 1
Net financial result $-242$ $-146$ 27 -6 $-215$ $-153$
Combined earnings before taxes EBT 700 573 $-173$ 114 527 687
Income taxes $-312$ $-318$ 92 38 $-219$ $-280$
Combined profit or loss for the period after taxes 388 255 $-81$ 152 307 407
Combined profit or loss for the period attributable
to non-controlling interests
13 15 0 1 13 16
Combined profit or loss for the period
attributable to METRO GROUP
376 240 $-81$ 151 295 391
Earnings per share in $\epsilon$ (pro forma) 1.03 0.66 $-0.22$ 0.42 0.81 1.08

1 For a definition of special items, please see the condensed combined interim financial statements of MWFS GROUP for the six months ended 31 March 2017.

RECONCILIATION OF SPECIAL ITEMS1

Q3 2016/17

SPECIAL ITEMS BY SALES LINE

As reported Special items Before special
items
$\epsilon$ million Q 3
2015/16
Q 3
2016/17
Q 3
2015/16
Q 3
2016/17
Q 3
2015/16
Q 3
2016/17
EBITDA 250 389 167 10 417 399
thereofMETRO Wholesale (formerly METRO Cash & Carry) 218 358 134 $\overline{2}$ 352 360
Real 42 33 0 0 42 33
Others $-12$ -5 33 8 21 3
Reconciliation to the combined financial statements $\mathbf{1}$ 3 0 0 1 3
EBIT 68 215 171 14 239 230
thereofMETRO Wholesale (formerly METRO Cash & Carry) 104 250 138 7 242 256
Real 8 -2 0 0 8 $-2$
Others $-46$ $-36$ 33 8 $-13$ $-28$
Reconciliation to the combined financial statements 2 3 $\Omega$ O 2 3
Net financial result $-35$ $-72$ 3 -5 $-32$ $-76$
Combined earnings before taxes EBT 33 144 174 10 208 154
Income taxes 22 $-68$ $-97$ $\mathbf{2}$ $-75$ $-66$
Combined profit or loss for the period after taxes 56 76 77 12 133 88
Combined profit or loss for the period attributable
to non-controlling interests
3 1 0 0 3 1
Combined profit or loss for the period
attributable to METRO GROUP
52 75 77 12 130 87
Earnings per share in $\epsilon$ (pro forma) 0.14 0.21 0.21 0.03 0.36 0.24

1 For a definition of special items, please see the condensed combined interim financial statements of MWFS GROUP for the six months ended 31 March 2017.

RECONCILIATION OF EVENTS RELATED TO SPECIAL ITEMS1

9M 2016/17

9M 2016/17

Special items
in $\epsilon$ million as reported Portfolio
changes
Restructur-
ings and
efficiency-
enhancing
measures
Risk
provisions
and
impairment
losses on
goodwill
Other
special
items
Before
special
items
EBITDA 1,248 $\overline{\mathbf{2}}$ 71 - 34 1,354
EBIT 720 2 84 - 34 840
Net financial result $-146$ -6 - $-153$
EBT 573 -5 84 - 34 687
Income taxes $-318$ $\overline{\phantom{0}}$ - 38 2 $-280$
Combined profit or loss for the period after
taxes
255 -5 84 - 72 407
Combined profit or loss for the period
attributable
to non-controlling interests
15 - - 1 2 16
Combined profit or loss for the period
attributable to METRO GROUP
240 -5 84 - 71 391
Earnings per share in $\epsilon$ (pro forma) 0.66 n/a n/a n/a n/a 1.08

9M 2015/16

Special items
in $\epsilon$ million as reported Portfolio
changes
Restructur-
ings and
efficiency-
enhancing
measures
Risk
provisions
and
impairment
losses on
goodwill
Other
special
items
Before
special
items
EBITDA 1,457 $-444$ 234 7 1,253
EBIT 942 $-444$ 236 7 741
Net financial result $-242$ 27 $-215$
EBT 700 $-417$ 236 7 527
Income taxes $-312$ $92^{2}$ $-219$
Combined profit or loss for the period after
taxes
388 $-417$ 236 99 307
Combined profit or loss for the period
attributable
to non-controlling interests
13 13
Combined profit or loss for the period
attributable to METRO GROUP
376 $-417$ 236 99 295
Earnings per share in $\epsilon$ (pro forma) 1.03 n/a n/a n/a n/a 0.81

RECONCILIATION OF EVENTS RELATED TO SPECIAL ITEMS1

Q3 2016/17

Q3 2016/17

Special items
in $\epsilon$ million as reported Portfolio
changes
Restructur-
ings and
efficiency-
enhancing
measures
Risk
provisions
and
impairment
losses on
goodwill
Other
special
items
Before
special
items
EBITDA 389 1 1 - 7 399
EBIT 215 1 6 - $\overline{ }$ 230
Net financial result $-72$ -5 $\overline{\phantom{0}}$ - $\overline{\phantom{0}}$ $-76$
EBT 144 -3 6 - $\overline{ }$ 154
Income taxes -68 - $\qquad \qquad$ - 2 2 $-66$
Combined profit or loss for the period after
taxes
76 $-3$ 6 $\blacksquare$ 10 88
Combined profit or loss for the period
attributable
to non-controlling interests
1 - - 0 2 1
Combined profit or loss for the period
attributable to METRO GROUP
75 -3 6 10 87
Earnings per share in $\epsilon$ (pro forma) 0.21 n/a n/a n/a n/a 0.24

Q3 2015/16

Special items
in $\epsilon$ million as reported Portfolio
changes
Restructur-
ings and
efficiency-
enhancing
measures
Risk
provisions
and
impairment
losses on
goodwill
Other
special
items
Before
special
items
EBITDA 250 0 157 9 417
EBIT 68 0 162 9 239
Net financial result $-35$ 3 $-32$
EBT 33 3 162 9 208
Income taxes 22 $-97^{2}$ $-75$
Combined profit or loss for the period after
taxes
56 3 162 -88 133
Combined profit or loss for the period
attributable
to non-controlling interests
3 3
Combined profit or loss for the period
attributable to METRO GROUP
52 3 162 $-88$ 130
Earnings per share in $\epsilon$ (pro forma) 0.14 n/a n/a n/a n/a 0.36

INCOME STATEMENT

$\epsilon$ million 9M 2015/16 9M 2016/17 Q3 2015/16 Q3 2016/17
Sales 27,416 27,947 8,901 9,339
Cost of sales $-22,190$ $-22,697$ $-7,214$ $-7,602$
Gross profit on sales 5,226 5,250 1,687 1,737
Other operating income 1,182 766 245 204
Selling expenses $-4,652$ $-4,516$ $-1,591$ $-1,486$
General administrative expenses $-747$ $-708$ $-261$ $-226$
Other operating expenses $-76$ $-85$ $-17$ $-20$
Earnings share of operating companies recognised at equity 8 12 6 5
Earnings before interest and taxes EBIT 942 720 68 215
Earnings share of non-operating companies recognised at
equity
3 0 0 0
Other investment result $\Omega$ -7 $\Omega$ 0
Interest income 60 29 38 15
Interest expenses $-205$ $-148$ $-66$ $-49$
Other financial result $-100$ $-20$ $-7$ $-38$
Net financial result $-242$ $-146$ -35 $-72$
Combined earnings before taxes EBT 700 573 33 144
Income taxes $-312$ $-318$ 22 $-68$
Combined profit or loss for the period after taxes 388 255 56 76
Combined profit or loss for the period attributable
to non-controlling interests
13 15 3 1
Combined profit or loss for the period
attributable to METRO GROUP
376 240 52 75
Earnings per share in $\epsilon$ (pro forma) 1.03 0.66 0.14 0.21

BALANCE SHEET

ASSETS

$\epsilon$ million 30/09/2016 30/06/2016 30/6/2017
Non-current assets 9,434 9,322 9,396
Goodwill 852 863 881
Other intangible assets 420 406 475
Property, plant and equipment 6,979 6,835 6,856
Investment properties 163 169 139
Financial assets 89 56 91
Investments accounted for using the equity method 183 195 182
Other financial and non-financial assets 239 230 207
Deferred tax assets 509 568 565
Current assets 6,558 6,878 6,237
Inventories 3,063 3,182 3,208
Trade receivables 493 462 543
Financial assets 0 0 $\mathbf{2}$
Other financial and non-financial assets 1,280 2,119 1,311
Entitlements to income tax refunds 123 117 161
Cash and cash equivalents 1,599 971 1,012
Assets held for sale 0 27 0
15,992 16,200 15,633

EQUITY AND LIABILITIES

$\epsilon$ million 30/9/2016 30/6/2016 30/6/2017
Equity 2,924 3,152 3,204
Net assets attributable to METRO GROUP 3,748 3,973 3,970
Other components of equity attributable to METRO GROUP $-860$ $-852$ $-807$
Non-controlling interests 36 31 41
Non-current liabilities 4,954 5,101 4,153
Provisions for post-employment benefits plans and similar obligations 646 667 582
Other provisions 297 294 276
Borrowings 3,796 3,928 3,137
Other financial and non-financial liabilities 127 128 109
Deferred tax liabilities 88 84 49
Current liabilities 8,114 7,946 8,276
Trade liabilities 4,892 4,537 4,524
Provisions 559 531 485
Borrowings 944 1,433 1,647
Other financial and non-financial liabilities 1,591 1,250 1,186
Income tax liabilities 128 195 434
Liabilities related to assets held for sale 0 0 O
15,992 16,200 15,633

CASH FLOW STATEMENT

$\epsilon$ million 9M 2015/16 9M 2016/17
EBIT 942 720
Depreciation/amortisation/impairment losses/reversal of impairment losses of assets excl.
financial investments
515 529
Change in provisions for post-employment benefits plans and similar obligations 78 -57
Change in net working capital $-582$ -518
Income taxes paid -143 $-161$
Reclassification of gains (-) / losses (+) from the disposal of fixed assets $-35$ $-120$
Other $-471$ -119
Cash flow from operating activities 304 274
Acquisition of subsidiaries $-77$ -180
Investments in property, plant and equipment (excl. finance leases) $-431$ -430
Other investments -88 -111
Financial investments -378 $-481$
Disposals of subsidiaries 357 -50
Disposal of fixed assets 104 61
Gains $(+)$ / losses $(-)$ from the disposal of fixed assets 35 120
Disposal of financial investments 362 566
Cash flow from investing activities -116 $-505$
Dividends paid
to METRO AG shareholders 0 -8
to other shareholders -14 -19
Redemption of liabilities from put options of non-controlling interests -85 -20
New borrowings 540 1,628
Redemption of borrowings $-3,058$ $-1,554$
Interest paid $-209$ -147
Interest received 70 28
Profit and loss transfers and other financing activities 109 $-253$
Cash flow from financing activities $-2,647$ -345
Total cash flows $-2,459$ $-576$
Currency effects on cash and cash equivalents -8 -11
Total change in cash and cash equivalents $-2,467$ -587
Cash and cash equivalents as of 1 October 3,438 1,599
Cash and cash equivalents shown under IFRS 5 assets 0 0
Cash and cash equivalents as of 1 October 3,438 1,599
Cash and cash equivalents as of 30 June 971 1,012
Cash and cash equivalents shown under IFRS 5 assets 0 0
Cash and cash equivalents as of 30 June 971 1,012

SEGMENT REPORTING 9M 2016/17

OPERATING SEGMENTS

METRO Wholesale
(formerly: METRO Cash & Carry)
Real Others
$\epsilon$ million 9M 2015/16 9M 2016/17 9M 2015/16 9M 2016/17 9M 2015/16 9M 2016/17
Sales 21,648 22,421 5,715 5,502 53 24
Internal sales (net) 5 9 72 69
Sales (net) 21,653 22,430 5,722 5,508 125 94
EBITDA 1,297 1,113 180 127 $-16$ 10
EBITDA before special items 1,060 1,137 180 173 18 45
EBIT 976 783 77 22 $-109$ $-87$
EBIT before special items 741 822 77 68 $-75$ $-51$
Investments 399 369 201 72 82 91

OPERATING SEGMENTS CONTINUED

Reconciliation to the combined METRO financial statements

$\epsilon$ million 9M 2015/16 9M 2016/17 9M 2015/16 9M 2016/17
Sales 0 27,416 27,947
Internal sales (net) $-84$ $-85$ 0 $\mathbf{o}$
Sales (net) $-84$ $-85$ 27,416 27,947
EBITDA -5 -1 1,457 1,248
EBITDA before special items $-5$ -1 1,253 1,354
EBIT $-2$ 942 720
EBIT before special items $-2$ 741 840
Investments 0 O 682 531

SEGMENT REPORTING Q3 2016/17

OPERATING SEGMENTS

METRO Wholesale
(formerly: METRO Cash & Carry)
Real Others
$\epsilon$ million Q3 2015/16 Q3 2016/17 Q3 2015/16 Q3 2016/17 Q3 2015/16 Q3 2016/17
Sales 7,113 7,554 1,771 1.783 17
Internal sales (net) 2 2 23 23
Sales (net) 7,114 7,557 1,773 1,785 40 25
EBITDA 218 358 42 33 $-12$ -5
EBITDA before special items 352 360 42 33 21 3
EBIT 104 250 8 -2 -46 -36
EBIT before special items 242 256 8 -2 $-13$ $-28$
Investments 227 108 44 39 28 38

OPERATING SEGMENTS CONTINUED

Reconciliation to the combined financial statements METRO

$\epsilon$ million Q3 2015/16 Q3 2016/17 Q3 2015/16 Q3 2016/17
Sales 0 8,901 9,339
Internal sales (net) $-26$ $-28$ 0 0
Sales (net) $-26$ $-28$ 8,901 9,339
EBITDA 3 250 389
EBITDA before special items 417 399
EBIT $\mathcal{P}$ 68 215
EBIT before special items 239 230
Investments 0 O 299 185

FINANCIAL CALENDAR

Trading statement Financial Year 2016/17 Fridav 20 October 2017 7:30 a.m.
Annual Report 2016/17 Wednesday 13 December 2017 $8:00$ a.m.
All time specifications are CET

IMPRINT

METRO AG Metro-Strasse 1 40235 Düsseldorf, Germany

PO Box 230361 40089 Düsseldorf, Germany

http://www.metroag.de

Published: 31 August 2017

Investor Relations

Telephone +49 (211) 6886-1051 +49 (211) 6886-490-3759 Fax E-mail [email protected]

Creditor Relations

Telephone +49 (211) 6886-1904
Fax. +49 (211) 6886-1916
E-mail [email protected]

Corporate Communications

Telephone +49 (211) 6886-4252
Fax +49 (211) 6886-2001
E-mail [email protected]

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

DISCLAIMER

This quarterly statement contains forward-looking statements which are based on certain expectations and assumptions at the time of publication of this report and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in these materials. Many of these risks and uncertainties relate to factors that are beyond METRO AG's ability to control or estimate precisely such as future market and economic conditions, the behaviour of other market participants, the ability to successfully integrate acquired businesses and achieve anticipated cost savings and productivity gains as well as the actions of government regulators. METRO AG does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of these materials.

Please note: In case of doubt the German version shall prevail.

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