Metro : Media - Q3 2019/20 Results Presentation

Q3 2019/20

PRESS CONFERENCE CALL

6 August 2020

DISCLAIMER

To the extent that statements in this presentation do not relate to historical or current facts, they constitute forward-looking statements.

All forward-looking statements herein are based on certain estimates, expectations and assumptions at the time of publication of this presentation and there can be no assurance that these estimates, expectations and assumptions are or will prove to be accurate. Furthermore, the forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or financial position to differ materially from any future results, performance or financial position expressed or implied in this presentation. Many of these risks and uncertainties relate to factors that are beyond METRO AG's ability to control or estimate precisely. The risks and uncertainties which these forward-looking statements may be subject to include (without limitation) future market and economic conditions, the behavior of other market participants, invest in innovative sales formats, expand in online and multichannel sales activities, integrate acquired businesses and achieve anticipated cost savings and productivity gains, and the actions of government regulators. Readers are cautioned not to place reliance on these forward-looking statements. METRO AG does not undertake any obligation to publicly update any forward-looking statements or to conform them to events or circumstances after the date of this presentation.

This presentation is intended for information only and should not be treated as investment advice or recommendation. It is not, and nothing in it should be construed as an offer for sale, or as a solicitation of an offer to purchase or subscribe to, any securities in any jurisdiction. Neither this presentation nor anything contained therein shall form the basis of, or be relied upon in connection with, any commitment or contract whatsoever. This presentation may not, at any time, be reproduced, distributed or published (in whole or in part) without prior written consent of METRO AG.

Not all figures included in this presentation have been audited and certain figures may also deviate substantially from information in the consolidated financial statements of METRO AG, thus, may not be fully comparable to such financial statements. The hypermarket business for sale is reported as a discontinued operation as of 30 September 2018 due to the ongoing sales process. Following the signing of the contract for the disposal of a majority stake in METRO China to Wumei Technology Group, METRO China has been reported as discontinued operation as of 30 September 2019. Meanwhile the sale has been closed and will be reflected in Q3 2019/20 reporting. METRO will retain only 20% stake in METRO China. The discontinued segment primarily includes Real, majority of METRO China and some other individual companies or assets. All following explanations of the business development will focus on the continuing operations unless stated otherwise. Furthermore, the results are reported based on the retrospective adjustments due to IFRS 16.

This presentation includes supplemental financial measures which are or may be non-GAAP financial or operative measures. These measures should not be viewed in isolation as alternatives to financial measures presented in accordance with IFRS. Other companies that disclose similarly titled measures may calculate them differently. All amounts are stated in million euros (€ million) unless otherwise indicated. Amounts below €0.5 million are rounded and reported as 0. Rounding differences may occur.

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01

FOCUS

Q3 2019/20 IN A NUTSHELL

PROTECT

PRESERVE

GROW

• Ensuring safety of our employees and customers
• Making sure that stores provide safe shopping experience without compromising on high service
• Our teams responded with extraordinary resilience, determination and commitment
• Our country operations were quick and proactive when it came to handling this backdrop. Flexible C&C operations and strong customer relationship are very valuable in times of crisis.
• Proximity to our customers was key. Various support measures were launched in order to help them in these unprecedent times.
• The entrepreneurial culture and accountability accelerated performance which started before COVID-19
• Diversified customer base and flexible operations cushion the COVID-19related decline in Horeca and FSD

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OUR MISSION: YOUR SUCCESS IS OUR BUSINESS

DEFINED MEASURES RESULTED IN RESILIENCE AND QUICK RECOVERY

HoReCa under pressure in Q31 but with rapid recovery due to incessant customer service and focus on product availability. Agility of hybrid model (stores + FSD + services) proved to be advantageous.

Trader with accelerated growth above pre-COVID levels (+10.3%2 Q3 19/20) driven by Russia turnaround, acceleration of e-commerce and trader franchise

SCO grew due to strong customer reactivation (+16% Q3 19/20)3. Main drivers were food quality, availability and superior safety

Grow: your success is our

business

Overall sales at 75% of PY in April, recovery to 80% in May and recovery to 95% in June

Sales in July ~1.5%4

• HoReCa declined by -47% in Q3 2019/20. 2 Trader countries: Bulgaria, Czech Republic, India, Pakistan, Poland, Romania, Russia, Serbia, Slovakia. 3 LfL SCO customer sales. 4 Preliminary unaudited figures; calendar support of 1.7%.

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METRO - A FULLY FOCUSED WHOLESALER

More profitable, cash-generativeand less levered

METRO FY2018/19 Guidance view, excluding Real

+0.6%-pts	~+€250 m
EBITDA-margin1	FCF p.a.2

€1.9 bn

in net cash proceeds3

Transformation into a pure wholesaler
completed	20%

stake in METRO China

Balance sheet strength

Firepower to drive consolidation

Participate in the upside potential

Put option with full flexibility

Outperformance vs. market during COVID-19

1. EBITDA-marginpost IFRS 16 and excl. gains from real estate transactions 2 FCF defined as EBITDA reported - capex excluding finance lease extensions and M&A +/- change in NWC.

1. Sale of the majority stake in METRO China was closed on 23rd April and sale of real was closed on 25th June except for 6 remaining properties to be closed in late summer.

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RESILIENCE + ABILITY TO ACT

Strong disruption throughout the	Portfolio transformation towards a pure
industry created an opportunity to act,	wholesaler is complete and results in
and we did. Market share gains in	substantially improved financial profile
various countries. Sales back to
previous year's level.

1 Includes transaction related cash flow from investing activities of discontinued operations of €1.3 bn. Comprises of €1.9 bn total purchase price less cash and cash equivalents -€0.6 bn.

€1.41

Q3 EPS reported

~+1.8 bn

improvement in net debt 1

Strong financial profile basis

for M&A and dividend

continuity

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02

FINANCIAL

PERFORMANCE

CRISIS-PROOF BUSINESS MODEL

April: ~75% of sales level	May: ~80% of sales level	June: ~95%1 of sales level
Broad spread of COVID-19 &	Initial easing of governmental	Broader loosening of governmental
governmental restrictions	restrictions	restrictions

Q2 results communication

• Portfolio diversification partially compensates HoReCa decline as operations were strongly limited
• Broad counter measures initiated
• Resilient Trader with limited volatility
• SCO with mid/low double-digit inflow

• HoReCa restarting; strong positioning due to flexibility of C&C channel
• Trader stayed on low single-digit growth aided by online and trader franchise
• SCO's basket and frequency were still high

• HoReCa recovery was supported by opening of borders
• Trader continued to improve across majority of regions
• SCO was at high single-digit percentage growth; aim to retain new customers

HoReCa	Trader2	SCO 1 Break-even achieved first week of July. 2 Full Trader sales.
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GRADUAL WEEK BY WEEK IMPROVEMENT

April	May	June	July
~75% of sales	~80% of sales	~95% of sales	On PY level

% LFL Sales - all customer groups

15

Easter:

Weekly %-Change vs. PY

Avg. ~-150m€ per week

0

-15

Weekly %-Change vs. PY

-30

-45

CW 14

CW 15

CW16

CW17

CW18

CW19

CW20

CW21

CW22

CW23

CW24

CW25

CW26

CW27

CW28

CW29

CW30

CW31

LFL Sales - HoReCa

25

0

-25

-50

-75

April	May	June	July

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SALES TO EBITDA

	Continuing	Continuing
	operations	operations
P & L in €m / %	Q3 2018/191	Q3 2019/201
Sales	6,940	5,568
Like-for-like growth	3.1%	-17.5%
thereof Food	3.9%	-18.3%
Reported growth	2.4%	-19.8%
Growth in local currency	3.2%	-17.4%
Delivery sales share	18%	12%
EBITDA adjusted2 (excl. transformation costs and	373	175
earnings contributions from real estate transactions)
thereof FX		-12
EBITDA margin adjusted	5.4%	3.1%
Transformation costs	0	-1
Real estate gains	32	2
Reported EBITDA3	404	176

1 All figures reported in accordance with IFRS 16. 2 Adj. EBITDA - EBITDA excl. transformation costs and real estate gains. 3 Reported EBITDA - incl. transformation costs and real estate gains. 4 Part of transaction includes licence fee paid by Wumei for use of brand over next three years; reported in segment "Others".

Sales growth

• Sales development driven by mix of
• • Stable accelerated growth with Trader & SCO
  • HoReCa sales affected by lockdowns but steep recovery
• HoReCa customers with clear preference for the stores; putting temporary pressure on FSD
• Reported sales growth affected by negative currency development in Eastern Europe, especially Turkey

EBITDA and EBITDA margin

• EBITDA impacted in line with sales development; countered by intense and successful efforts to save costs across countries
• Structures made flexible to react quickly to pandemic development
• "Others": costs savings from efficiency measures and licence fee from Wumei4
• Continuous trend improvement throughout Q3 as lockdowns were released and sales trend improved
• EBITDA to PY in constant currency:
  April -€99m, May ~-€60m and June ~-€26m

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REGIONAL SALES DEVELOPMENT

Simplified view

Customers split		Lockdown	Intensity of	LfL sales
(rounded, in %, FY 18/19)	Start	Duration	Q3 19/20	July LfL1
			measures

HoReCa Trader SCO

Russia	16 %	30 %			54 %
Eastern
37 %	31 %	32 %
Europe
Germany	46 %	13 %	41 %
Western
65 %			16 %	20 %
Europe
Asia	40 %	31 %	28 %

1 July: Preliminary unaudited figures, 1.7% calendar support.

Late March	6 - 8 weeks
lockdown
Mid March	6 - 8 weeks
lockdown
Mid March	6 - 8 weeks
lockdown
Mid March	~10 weeks
lockdown
January, second	Ongoing
wave in March

+6.0%	~ +16%
-7.4%	~ +3%
-9.5%	~ +3%
-32.8%	~ -2%
-19.2%	~ -11%

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Medium/low

Medium

Medium/High

High

REGIONAL PERFORMANCE

		1
	Germany
	€m / %	Q3 2019/20
	Sales	1,092
	Like-for-like growth	-9.5%
	Reported growth	-9.4%
	EBITDA adjusted2	31
	Constant FX to PY	-9
		1
	Russia
	€m / %	Q3 2019/20
	Sales	646
	Like-for-like growth	6.0%
	Reported growth	-3.7%
	EBITDA adjusted2	53
	Constant FX to PY	-2

3,1%	3,9%
				Q3 2018/19			Q3 2019/20
						-17,5%-18,3%
				Like-for-like growth				thereof Food

1

Eastern Europe (excl. Russia)

€m / %	Q3 2019/20
Sales	1,620
Like-for-like growth	-7.4%
Reported growth	-12.2%
EBITDA adjusted2	75
Constant FX to PY	-17

			HoReCa		Trader			SCO	1
	Western Europe (excl. Germany)
	€m / %			Q3 2019/20
	Sales			1,869
	Like-for-like growth			-32.8%
	Reported growth			-32.9%
	EBITDA adjusted2			18
	Constant FX to PY			-168
										1
	Asia
	€m / %			Q3 2019/20
	Sales			331
	Like-for-like growth			-19.2%
	Reported growth			-22.5%
	EBITDA adjusted2			-6
	Constant FX to PY			-14

1 Like-for-like sales share FY 2018/19. 2 Adj. EBITDA - EBITDA excl. transformation costs and real estate gains. Note: Transformation costs affect segment "Others".

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EBITDA TO EPS

	Continuing	Continuing
	operations	operations
P & L in €m / %	Q3 2018/19	Q3 2019/20
Reported EBITDA	404	176
D&A	-192	-197
EBIT	212	-21
Interest and investment result	-61	-52
Other financial result	2	14
Net financial result	-59	-38
EBT	153	-59
Tax expenses	-61	-78
Net income	-92	-137
EPS from continuing operations in €	0.25	-0.38
Reported EPS in €	0.32	1.41
Net debt (30 June)	6,164	4,408

EBIT

• Decrease due to government restrictions affecting top line and lower real estate gains

Net financial result

• Improvement in the interest and investment result due to lower financing costs
• Other financial result positively affected by appreciation of currencies in CEE countries with EUR based lease contracts

Tax

• Tax expense is calculated based on expected tax expense for FY 19/20
• Q3 is impacted by a tax catch-up effect to match the expected tax expense for the full year
• Implied tax rate not meaningful due to low negative EBT and resulting high & volatile tax rate

EPS

• Decrease in EPS from continuing operations driven by a combination of operating deleverage, low real estate gains and FX volatility
• Growth in reported EPS significantly driven by resilient business model and successful execution of transformational transactions

Net debt

• €1.8 bn improvement due to disposal of majority stake in METRO China (€1.6 bn) and hypermarket business (€0.3 bn)

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04

STRATEGIC UPDATE

REINFORCING OUR STRATEGIC APPROACH

Convenience & out-of-home consumption

Supported overall quick rebound

Connected consumer

Fast ramp-up of B2B2C and e-commerce via M|SHOP for Trader and SCO

Hospitality digitalization

COVID-19 disruption leads to

Q3 2018/19stronger demand for new solutions. The crisis has turned into a catalyst for modernization.







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HORECA: TRUE PARTNERSHIP IS KEY

HoReCa Europe:

• • SMEs: ~1.7m Volume: ~€600 bn1
    Highly fragmented supply base
• Short term impact through lockdowns not seen as long-lastingchange in trends
• Out-of-home-consumptionstill expected to grow due to preferences and habits
• Business models however need to be adjusted

Operational excellence to support customers in difficult times (focus on product availability, stores remained open etc.)

Fair pricing to ensure predictability for our customers

Support and advise to adjust the business and to apply for government aid packages

Controlled support on payment terms

Support of public campaigns to address the needs of the sector. Contribution to #restartGastro concepts (whitepapers).

As a result we observed above market performance due to beneficial setup and clear customer focus leading to an up to 40%-pts outperformance in some countries

1EURb, sell-out value 2018, MCC countries .WE incl. DE, EE incl. RU, Asia without CN; MCC countries excl. countries with pure play FSD operations (e.g. CFF) HoReCa market according to Euromonitors definition excluding social foodservice Source: Euromonitor

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HORECA: EXTENSION OF SERVICES

During the last months we intensified our efforts to support our customers in adjusting their business to the new circumstances. We launched and activated several additional services:

• Online meal ordering

 Collaboration with car rental companies

• Voucher sales
• Digital Check-In Tool
• Digital Menu Tool

At the same time our digital base continued to grow:

~200,000 DISH accounts, >30,000 reservation sites, etc.

Leading to positive business impact. Digital tools have helped customer acquisition. Furthermore we have clear evidence that digital accounts have 2x purchasing frequency than non-digital accounts.

1EURb, sell-out value 2018, MCC countries .WE incl. DE, EE incl. RU, Asia without CN; MCC countries excl. countries with pure play FSD operations (e.g. CFF) HoReCa market according to Euromonitors definition excluding social foodservice Source: Euromonitor

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HORECA: ABOVE MARKET PERFORMANCE

FOCUS DRIVES GROWTH

FOR HORECA

Compared to CW3-8 average sales level

HoReCa sales came back		Taking advantage of		Portfolio skewed to
quickly to above market		channel flexibility		customers that recover first

%	CY Sales	PY Sales
150
100
50
0 CW	CW	CW	CW	CW	CW	CW
8	12	16	20	24	28	31

%	Total	C&C	FSD
150
100
50
0 CW	CW	CW	CW	CW	CW	CW
8	12	16	20	24	28	31

%		Sales Top 3 CY		Sales Top 3 PY

150
100
50					28 %	Top 3
					other
					72 %
0 CW	CW	CW	CW	CW	CW	CW
8	12	16	20	24	28	31

Up to 40%-pts outperformance of	Up to ~15%-pts outperformance	High exposure to resilient customers2
market in e.g. FR, DE and IT1	of store over FSD	in resilient countries3 with low
		dependency on inbound tourism4

1 FR: Market assessment based independent market size by Food Service Vision DE: Market assessment based on DWH, npdgroup CREST Panel (total out-of-home consumption; n≈ 12.000

19 08/06/2020 © METRO AG participants) IT: Market assessment based on estimated data (calculated by combining different sources NPD / FEDERALBERGHI / ISTAT) 2 >70% of sales with Restaurants, cafés, fast food; compared to lagging CTGs (hotels, caterers, canteens). 3 Germany, France and Italy >50% of sales, based on sales FY2018/19 incl FSD companies 4 Based on internal analysts and

Euromonitor 2019 data. For DE, FR and IT tourism spending is coming mostly from local demand, therefore those countries are less dependent on foreign travel.

GERMANY: GOING THE EXTRA MILE!

FOCUS DRIVES GROWTH ABOVE MARKET	
	July LfL sel.
IN GERMANY	~+3%1

A robust business model appreciated

by our customers

100% of stores remained opened

100% Sales Force employment and 100% of hours

97% Food stock availability (stable to pre COVID-19)

> NPS to PY in June and July

+28% reactivated SCO customers during COVID-19

USP through various extensions

• Webinars

• One-time crisis rebates

• Payment terms

• Reservation Tool

• Check-In Tool

• …

1 Preliminary unaudited figures; calendar support of 1.7% on total group. METRO Germany LFL sales include results from Rungis Express, a pure HoReCa FSD player, which is still under pressure.

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TRADER: TRUE PARTNERSHIP IS KEY

Trader

• SMEs: ~1.3m Volume: ~€1,000 bn1 fragmented independent retail market

Operational excellence to support customers in difficult times (focus on product availability, stores always open)

Ramping up diverse online solutions and partnering with e-commerceplayers to target end consumer demands - B2B2C

Pre-existing some countries; quickly set up in others:

5 countries	4 countries	7 countries
Offer B2B2C delivery	Run pilots	Evaluate entering

Trader franchise continues to grow and proves even more resilient than normal trader

1EURb, sell-out value 2018, MCC countries .WE incl. DE, EE incl. RU, Asia without CN; MCC countries excl. countries with pure play FSD operations (e.g. CFF) Trader market including traditional grocery retailers, forecourt and CVS Source: Euromonitor

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TRADER: FRANCHISE SUCCESS ACCELERATES

FOCUS DRIVES GROWTH

IN TRADER

Supporting independent

entrepreneurs

Increased engagement and support for our partners during crisis:

Home delivery solution from trader to end consumer

• Running in Romania and Czech Republic for 80 partner stores

Trader Sales Force

• Further development of partner management approach is planned

Developing digital

solutions

1/3 of franchisees search for click & collect/delivery options:

M|SHOP Trader

• Front-endsolution for delivery, running in Russia and Romania
• +15% in basket size
• +100,000 orders in Q3 19/20

B2B and B2C solutions

• Launching B2B & B2C solutions in next financial year

Growing our business

through franchise

Achieving recurring revenues through partnership:

+24%	2.5x
Q3 total sales	higher basket
to PY	than average Trader

• 10 countries with Trader franchise model
• +200 new partners in Q3
• ~8,000 partners in total

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RUSSIA: BACK TO OUTPERFORMANCE

FOCUS DRIVES GROWTH		
		July LfL sel.
IN RUSSIA	~+16%1

Operational excellence

Store adjustment

Change to a warehouse feel: more pallet placement for higher availability, wider isles for easy navigation, lower racks in Nonfood for better visibility

People management

High and improving team engagement; especially at store level, despite recent headcount optimisation and COVID-19

Customer management

More efficient acquisition: +25% in new SCO vs. PY, higher sales per visit of new vs lost customers

1 Preliminary unaudited figures; calendar support of 1.7% on total group

Growing our business

Partnership with Sbermarket [B2B2C]

Leveraging logistics infrastructure, outsourcing non-core tasks to partner

50+ cities | 8% of sales share May '20

Fasol development

Continued expansion despite COVID-19 restrictions +135 new in Q3

Successful territory approach and contact model

"HoReCa Renaissance" development and execution start, incl. METRO-Partner

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VIEW ON SECTOR CONFIRMED WITH Q3 PROOFPOINTS

COVID-19 had a significant short-term impact on HoReCa

However: High quality food remained and will remain a high priority among consumer preferences

General desire to eat out and enjoy excellent food is strong	
Vast majority of restrictions have been lifted

HoReCa volumes are largely on pre COVID-19 levels

Flexible structures will be essential to serve "New HoReCa demand pattern"

C&C + FSD/Franchise + WS360 ideal combination

Tactical complementary business important to cushion volatility

OUR ORIGIN IS

WHOLESALE

IS OUR FUTURE



July LfL sel. +1.5%

1 Preliminary unaudited figures; calendar support of 1.7%.

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OUTLOOK FOR 2019/20

Guidance1		In addition:

9M 2019/20

FY 2019/20

Sales

growth in local-5%decline 3.5-5% currency

LfL growth	-5%		decline 3.5-5%

Adj. EBITDA2		€834 m		decrease by €200
	-€192 m to PY		to €250 m

Regional Development for 2019/20

• Russia and Eastern Europe: significantly better than group average
• Western Europe and Asia: weaker than group average
• Others: continuation of positive 9M development, among others supported by the efficiency programme and licence fee from the cooperation with Wumei3

P&L

• Real estate gains: c. €10 m (€339 m in 18/19)
• D&A: c. €-840 m (€-774 m in 18/19)
• Net financial result: c. €-265 m4 (€-230 m in 18/19)
• Tax expense: c. €-130 m (€-301 m in 18/19)
• EPS: additional ~€0.15 from remaining property closings from Real transaction
• Reported EPS: Strong basis for dividend continuity in line with payout ratio (45-55% of EPS) in unprecedented year

1 At constant FX and before transformation costs, portfolio measures and IFRS16. Outlook based on the assumption of stable exchange rates and no further adjustments to the portfolio and only covers METRO's continuing operations. Furthermore, the outlook is based on the assumption that negative impacts of the COVID-19 pandemic will not surge again in countries relevant for METRO and that the stable recovery of the HoReCa sector continues. 2 Adj. EBITDA - EBITDA pre transformation costs and real estate gains. 3 Part of the transaction includes lcence fee paid by Wumei for use of brand over the next three years; reported in "Others". 4 At current exchange rate.

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Q&A

Olaf Koch, CEO

Christian Baier, CFO

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CONTACT

Corporate Communications

METRO AG

Metro-Strasse 1

40235 Duesseldorf

Germany

1. [phone] F [phone] E [e-mail]

www.metroag.de

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