Metro : Media - Q2 2019/20 Results Presentation

Q2 2019/20

PRESS CONFERENCE CALL

7 Mai 2020

DISCLAIMER AND NOTES

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

KEY FACTS IN Q2 2019/20

METRO with 2.3%like-for-likesales growth, despite significant impacts from COVID-19 crisis since March. Adjusted EBITDAabove previous year.

METRO has been significantly less affectedby the COVID-19 crisis than others, due to immediate and consistent measures to protect the company and due to a strong balance sheet

The digitalisation initiated pre crisishas prepared METRO well and made us more agile. We use this situation to advance both METRO's and our customers' digitalisation.

METRO has launched numerous initiativesto support and strengthen our customers. This crisis is an opportunity to further expand our position as partner for independent entrepreneurshipand to capture growth potential.

Sale of a majority stake in METRO Chinato Wumei Technology Group in exchange for net cash proceeds of more than €1.5 billion successfully completed. Progress of sale transaction of hypermarket business Realto SCP Group according to plan.

Outlook for FY 2019/20 withdrawnon 3 April. Based on a projection of the business development from mid- March until end of April, METRO expects that every month in the current lock-down situation will cause a sales decline of 2%-point compared to PY.

Solid liquidity access: Reduction of net debtleads to a stronger equity value and agility

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02

FINANCIAL

PERFORMANCE

CUSTOMER GROUPS IMPACTED DIFFERENTLY BY COVID-19 RELATED GOVERNMENT RESTRICTIONS

Operative Development	Beginning of COVID-19 &	Broad spread of COVID-19 &
prior to COVID-19	governmental restrictions	governmental restrictions

Strong operational momentum in HoReCa and Trader above Q1 2019/20

Growth across all regions incl. Russia with positive sales momentum

HoReCaTraderSCO

Stock-up sales overcompensate first negative effects in HoReCa from governmental restrictions

Growth across all regions, especially regions with higher SCO share

Portfolio diversification partially compensates HoReCa decline as HoReCa operations are prohibited or strongly limited

Counter measures initiated on country and group level

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SALES TO EBITDA

	Continuing	Continuing
	operations	operations
P&L in €m / %	Q2 2018/191	Q2 2019/201
Sales	5,898	6,006
Like-for-like growth	1.0%	2.3%
thereof Food	1.5%	3.8%
Reported growth	-0.4%	1.8%
Growth in local currency	1.3%	2.1%
Delivery sales share	18%	16%
EBITDA adjusted(excl. transformation costs and RE	130	133
gains)
thereof FX		-3
EBITDA margin adjusted	2.2%	2.2%
Transformation costs	0	-45
Real estate gains	32	0
EBITDA total	163	87

1All figures reported in accordance with IFRS 16. 2Adj. EBITDA - EBITDA excl. transformation costs and real estate gains. 3Reported EBITDA - incl. transformation costs and real estate gains.

Like-for-like sales

• Like-for-likesales growth driven by all regions except for Western Europe (excl. Germany) and benefiting from additional day due to leap year
• Accelerated store based growth in Q2 at 3.8%
• Delivery sales growth of-5.3% impacted by COVID-19 , leading to reduced sales share in Q2
• Reported sales affected by negative currency development in Eastern Europe, especially Turkey

Adjusted EBITDA and EBITDA margin

• Adj. EBITDA2roughly on PY level
• Germany, Eastern Europe, Russia and Others compensate decline in Western Europe and Asia
• Others benefit from improved operating result in logistics and cost savings from efficiency measures in headquarter
• Adjusted EBITDA in constant currency decreased by-1.0% in H1
• Reported EBITDA3impacted by transformation costs and lack of RE gains

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REGIONAL PERFORMANCE

1

HoReCa Trader SCO

		1
	Germany
	€m / %	Q2 2019/20
	Sales	1,074
	Like-for-like growth	4.8%
	Reported growth	4.9%
	EBITDA adjusted2	-4
	EBITDA margin	-0.4%
		1
	Russia
	€m / %	Q2 2019/20
	Sales	637
	Like-for-like growth	9.8%
	Reported growth	11.3%
	EBITDA adjusted2	37
	EBITDA margin	5.8%

				3,8%
				2,3%
1,0%	1,5%
		Q2 2018/19		Q2 2019/20
		Like-for-like growth			thereof Food

1

Eastern Europe (excl. Russia)

€m / %	Q2 2019/20
Sales	1,703
Like-for-like growth	11.2%
Reported growth	9.9%
EBITDA adjusted2	64
EBITDA margin	3.7%

Western Europe (excl. Germany)

	€m / %	Q2 2019/20
	Sales	2,185
	Like-for-like growth	-6.3%
	Reported growth	-6.3%
	EBITDA adjusted2	23
	EBITDA margin	1.0%
		1
	Asia

€m / %	Q2 2019/20
Sales	401
Like-for-like growth	0.2%
Reported growth	0.0%
EBITDA adjusted2	-1
EBITDA margin	-0.3%

1Like-for-like sales share FY 2018/19. 2Adj. EBITDA - EBITDA excl. transformation costs and real estate gains.

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EBITDA TO EPS

	Continuing	Continuing
	operations	operations
P&L in €m / %	Q2 2018/19	Q2 2019/20
EBITDA total	163	87
D&A	-193	-230
EBIT	-31	-143
Interest and investment result	-60	-55
Other financial result	5	-54
Net financial result	-55	-109
EBT	-86	-252
Tax rate (6M)	42%	71%
Net income	-58	-116
EPS in €	-0.16	-0.32
Adjusted EPS from continuing operations	-0.16	-0.26

EBIT

• Decrease due to transformation costs and higher depreciation:
• • goodwill impairment for CFF of €25m due to negative impact byCOVID-19
  • higher share of software capex and other assets with shorter useful life

Net financial result

• Improvement in the interest and investment result due to lower financing costs
• IFRS 16 accounting forEUR-based lease contracts paired with strong quarter-end devaluation of many CEE currencies increases volatility in Other financial result

Tax

• Increase of tax rate to 71% due to transformation costs and temporarily lower expected income from real estate transactions
• 59% tax rate before transformation costs

EPS

• EPS decrease driven by a combination of one- time costs, no real estate gains, CFF impairment and FX volatility
• Adjusted for transformation costs, EPS is€-0.26

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04

STRATEGIC UPDATE

UPDATE ON HYPERMARKET BUSINESS

Real - Discontinued operations2

€m / %	Q2 2018/19	Q2 2019/20
Sales	1,606	1,710
Reported growth	-6.2%	6.4%
Like-for-like growth	-5.1%	8.7%
Reported EBITDA	-6	67
EBITDA margin	-0.4%	3.9%

• Strong sales acceleration due to stockpiling duringCOVID-19 as well as higher at home consumption
• EBITDA increase driven by strong sales and margin improvement

Transaction Highlights

• Post-signingprocess is running well with good momentum to closing; impact of COVID-19 on closing so far limited
• SCP Retail Investments had concluded agreements with the retail companies Kaufland and Edeka for the acquisition of 141 stores.
• Closing is expected to take place in summer with expected net proceeds of ~€0.3 bn1

1Preliminary, net of transaction costs (taxes, advisors), subject to closing accounts. 2Numbers are pre IFRS 5.

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CLEAR RESPONSE TO CORONA CRISIS TO SAFEGUARD BUSINESS AND CAPTURE CHANCES FOR GROWTH

		"PROTECT"	"PRESERVE"	"GROW"
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PROTECT: CUSTOMERS AND EMPLOYEES HAVE THE HIGHEST PRIORITY FOR METRO

Monitor
Store	measures
HQ	measures

Countries and HQ monitor the situation:

• DailyCOVID-19 cases report
• Political measures and regulation changes

Common measures in the stores:

• Communication to customers & employees
• Entry restrictions depending country & legal situation
• Store access limited to max. 2 people per card
• Hygiene measures (e.g. disinfectant, cleaning trolleys)
• Face masks/gloves for employees
• Distance markers & glass protection of cashiers
• Request cashless payments

Common examples for HQ:

• Home-officerecommended, swiftly supported by use of Office 365 and Microsoft Teams rolled out in 2019
• A/B team approach forre-opening (in development)

>95%of stores open

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PRESERVE: EFFICIENCY + EFFECTIVENESS

Manage personnel and related costs

Cancelation of business travelsand trainings

Short-time employment where appropriate,reduction of overtime, vacation etc.

Adjustment of service utilization

Product access and flow of goods

Advancedanalytics inforecasting volumes

Leverage ITO's(trading offices)

Adjust operations to market situation

Store operations review(e.g. opening hours, Ultra- fresh department closedown)

Review and stopof marketingactivities

Adjust delivery operations tolower volumes

Strong focus on cash

Close monitoringof stocksituation

Restrictive CAPEXmanagement

Optimizeavailability of critical goods cross countries

Ongoing review ofdays receivable outstanding

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GROW: MEASURES FOR EACH CUSTOMER GROUP

Strengthening HoReCa

Crisis management support

• Advisory support: Facilitate access to support programmes

Adjust HoReCa business

• Activate food ordering via METRO
• Provide delivery via METRO partners
• Sell vouchers via METRO partners
• Provide fast access through digital customer base

Political reflection

• Support HoReCa needs on local, regional and national level

Assistance after crisis

• Prepare HoReCa customers for restart
• Clear programmes per country

New channels for Trader

Neighbourhood store support

• Important role of independent grocers throughout the crisis
• Product availability and stable attractive terms

Franchise expansion

• Continuedroll-out and enhancement of METRO's franchise network

B2B2C cooperation

• Acceleration of partnerships with B2C delivery players to participate in risinge-grocery demand

Click and collect delivery

• Further expand click and collect channel, e.g. through embedding in Companion app

Addressing SCO

Re-Discover METRO

• Significant reactivation of METRO customers returning to METRO for high quality and safety. Aim to sustain customer base.

Discover METRO

• Encourage METRO customers to activate new accounts through Family & Friends programme

Opening of stores for B2C

• Temporary retail licenses in various countries to support general food supply to the community

Food delivery to SCOs

• Selected offering of FSD to SCOs
• Swift activation ofM-SHOP for B2C

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HOW DO WE SEE OUR FUTURE

COVID-19 with significant short term impact on HoReCa

However:High quality Food remaining ahigh priority among consumer preferences

General desire to eat outand enjoy excellent food still very strong

Gradualrelease of restrictions visible invarious countries

Eating outbehavior impacted midterm through governmental restrictionsand higher cautiousness

Increase in HoReCa volumes expected as ofMay 2020

Flexible structures will beessential to serve "New HoReCa demand pattern"

C&C + FSD + WS360 ideal combination

Tactical complementary business important to cushion volatility

OUR ORIGIN IS

WHOLESALE

IS OUR FUTURE

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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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