Letter to theshareholders

Dear Ladies and Gentleman (handwriting)
Olaf Koch, Porträt Vorstandsbrief (photo)

Olaf Koch, Chairman of the Management Board of METRO AG

Both operationally and strategically, financial year 2015/16 was a significant year for METRO GROUP. Our core businesses continued their positive trend and we further strengthened our balance sheet thanks to our consistent drive to create value for our customers and our efforts to sharpen the focus of our business activities. We have been doing this since we launched METRO GROUP’s repositioning in 2012 and we are making increasing headway in this respect. Our achievements to date motivate and inspire us to continue on this course. We can do this with confidence based on what we have already achieved and in the knowledge that we can implement even more improvements in the future.

Another thing we have learned over the past few years is that our customers’ needs and requirements are changing ever faster and that the speed of innovation is increasing. In an environment of dynamic change, our markets are faced with ever new challenges. For us, this means that our future success depends even more on our ability to continue to sharpen our focus. We will achieve the desired results only if we tackle the opportunities and challenges with drive and focus. For this reason, we explored the option of creating two high-performing, focused retail companies from a diversified group over the past financial year.

On 30 March 2016, we informed you of our plans to split METRO GROUP into a wholesale and food retail specialist and a consumer electronics group. After the successful completion of the analytical and preparatory phase, the implementation is now pending. The demerger of METRO GROUP into two independent, high-performing and exchange-listed retail companies is the final logical step in the transformation of our group and is set to be concluded by mid-2017. Both companies are to be established as separate joint-stock corporations with their own public listings, company profiles as well as management and supervisory boards. The goal is to give each of the two companies and their respective management full control over their own strategies to further sharpen customer focus, accelerate growth and increase the speed of implementation and therefore ultimately improve the operational performance strength in general. Both companies will also make independent decisions relating to acquisition and cooperation opportunities and will therefore be in a better position to systematically implement their strategies.

We have created the preconditions for the successful demerger of METRO GROUP through our customer-centric value creation strategy and the continual transformation process. In financial year 2015/16, we achieved our sales and earnings targets in a market environment that was challenging. Both our METRO Cash & Carry and our Media-Saturn sales lines registered an increase in like-for-like sales, which was also reflected in earnings. At Real, we continued to make significant progress in strengthening our competitiveness and shaping the future business concept.

METRO Cash & Carry

METRO Cash & Carry, which gave METRO GROUP its name, is also our biggest and most international business. As part of its explicit focus on customer and market requirements, METRO Cash & Carry introduced the New Operating Model in financial year 2014/15 and implemented it in 2015/16. Even after a short time, it was evident that this organisational model strengthens customer orientation and the entrepreneurial spirit in our sales line. The foreign subsidiaries now have more creative freedom in their operations and more responsibility. Nonetheless, our sales line can continue to coordinate value-adding measures across its international markets – but now under local responsibility. In addition, there is a new and more flexible form of strategic corporate planning: each country has produced an individual Value Creation Plan, in which it lays down its strategic and financial planning for the forthcoming three to five years – with the aim of realising additional value potential.

By the end of October, all foreign subsidiaries had prepared their Value Creation Plans, and some of them are already in the implementation phase. The activities and measures in this regard are manifold and geared specifically to customer preferences in the respective country. The objective is to provide customers with attractive solutions and thus to expand customer relations into trusted and sustainable partnerships.

After the August 2015 purchase of the Classic Fine Foods group – one of Asia’s leading providers in the fast-growing food service business, particularly for premium hotels and restaurants in Asian megacities – we took over Rungis Express in the last financial year. Rungis Express is one of the leading providers in the food service distribution (FSD) business in Germany, focusing on direct delivery of premium foods to customers in the hotel, restaurant and catering (Horeca) sectors. The acquisition complements METRO Cash & Carry Germany’s previous delivery business by adding special competencies, particularly in the area of fresh and ultra-fresh food as well as the related logistics. In July 2016, we also announced the purchase of Pro à Pro, the French food supplier for commercial customers. Pro à Pro is one of France’s most important FSD providers, supplying about 42,000 customers and focusing on large customers in the corporate catering business, canteens in the public and private sectors, system catering and independent food service businesses. With this acquisition, METRO Cash & Carry is strengthening its French wholesale business in the FSD growth segment and creating an additional offering for METRO Cash & Carry customers in France. The transaction has yet to be closed.

METRO Cash & Carry is continuing to promote the area of digitisation. For a second time, we launched the METRO Accelerator initiative in Berlin together with Techstars. Through this programme, we support young businesses that create and implement solutions for customers in the food service and hospitality industries. The goal is to develop sustainably successful business models from innovative ideas within a period of three months.

METRO Cash & Carry is also on the right track in operational terms, like-for-like sales have risen for 13 consecutive quarters, but we are still not where we want to be. The implementation of our Value Creation Plans offers immense additional potential and therefore requires full management attention.


Media-Saturn has established itself as a multichannel provider. This is confirmed by the strong growth in online-generated revenue at Media Markt and Saturn. Overall, our sales line was able to boost the internet share of total sales to almost 9 per cent in financial year 2015/16. We see particular opportunities in the dovetailing of online and store-based retailing. Furthermore, we expanded Media-Saturn’s business model specifically by adding service options. Not least due to the takeover of the customer care and repair service provider RTS, our sales line can now offer a range of services that includes the design, installation, inspection, maintenance and repair of the most diverse electronic products through to the establishment of fully networked households – a range that is unique in this form in Europe.

In addition, METRO GROUP has acquired a stake in the start-up company Deutsche Technikberatung, a participant in Media-Saturn’s first Spacelab accelerator programme. Deutsche Technikberatung provides technical assistance for the home and offers quick help on technical issues through a professional network of advisers. Selected and specially trained technical advisers assist private customers and small businesses in all questions relating to the purchase, installation, networking and troubleshooting of modern technology.

We have had great success with the Media Markt Club, through which the sales brand offers its customers wide-ranging benefits, offers and sales promotions. Among other things, all purchases are registered online. As a result, customers no longer have to search for receipts when they wish to return merchandise or make a warranty claim. By 30 September 2016, 2.1 million customers in four countries were members of the Media Markt Club. The company is using this strong community to get even closer to the customer and to continue to deepen its customer relationships.

Media-Saturn’s operational business developed positively, with sales and earnings rising compared with the previous year. Media-Saturn also managed to further increase its operating margin compared to the previous year, not just through an improved revenue mix and a higher proportion of services, but also through continuously efficient cost management.


Real has pushed ahead with its transformation over the past few years. With the pilot of its new hybrid store concept, the sales line has reached an important milestone in its strategic repositioning. The aim of the hybrid store concept is to further accentuate Real’s product expertise in the fresh and ultra-fresh food area while continuing to offer price-conscious bulk shoppers an attractive product range. To achieve this, Real is focusing on new offerings that consider both emotional and rational customer wishes, offering a product range that is optimally aligned to this goal, a wider range of service and consultation options as well as food service offerings. At the end of November 2016, we opened the first renovated store in Krefeld. We are therefore setting new standards for the German food retail sector. A prerequisite for further investment in this concept in the coming years is an agreement on competitive long-term collective bargaining conditions. In June 2016, we agreed on the key parameters for a future package with the responsible trade union. Based on this foundation, we can improve Real’s competitiveness and make comprehensive investments in the modernisation and repositioning of our operations.

Due to the closure of unprofitable stores, sales at Real declined. Aside from improved purchasing terms and greater cost discipline, these measures have helped Real to improve its earnings. Another major step towards more efficiency is the reorganisation and restructuring of the company’s administration. As a result of numerous corporate acquisitions in the past, the administrative units of Real are spread across several locations all over Germany. In the foreseeable future, all central functions are to be consolidated at the sales line’s Düsseldorf location.


Financial year 2015/16 was generally successful for METRO GROUP and we met our forecasts. METRO GROUP increased its like-for-like sales by 0.2 per cent in financial year 2015/16. At €58.4 billion, reported sales were 1.4 per cent lower than a year earlier due to negative currency and portfolio effects. However, METRO GROUP’s sales in local currency rose 0.4 per cent. EBIT before special items amounted to €1,560 million. We were once again confronted with negative exchange rate effects. Adjusted for these effects, we recorded a pleasing improvement here as well. Net debt was reduced yet again and now stands at €2.3 billion compared with €2.5 billion at the previous year’s closing date.


METRO’s ordinary shares also turned in a positive performance in financial year 2015/16. The share price rose by 7.3 per cent to €26.49. In addition, we paid a dividend of €1.00 per ordinary share in February 2016.

Sales (net)

€58,417 M

Like-for-like sales development

+0.2 %

EBIT (before special items)

€1,560 M

On the basis of earnings per share before special items of €1.96 (2014/15: €1.91), the Management Board and Supervisory Board will propose a dividend of €1.00 per ordinary share for you, our company’s shareholders, to consider at the next Annual General Meeting. Please take into account that we have achieved the very good earnings per share before special items even though the income contribution of Galeria Kaufhof was fully incorporated in the previous year’s figures. The dividend proposal is made on the basis of our dividend policy to distribute about 45 per cent to 55 per cent of earnings per share before special items. This corresponds to a distribution rate of 51 per cent.


In financial year 2016/17, our focus is still on generating sustainable growth and increasing like-for-like sales as well as earnings. The implementation of the Value Creation Plans at METRO Cash & Carry, which has now started, will lead to special items for the last time while also generating initial positive earnings contributions. Media-Saturn, as market leader in Europe, will continue to expand its online business, so we anticipate a good business development overall. With the opening of the pilot store in Krefeld, Real has created a unique concept in German food retail sector and achieved a key milestone in its strategic repositioning.

“I sincerely thank you for your loyalty and for the trust you have placed in us.”

Olaf Koch, Chairman of the Management Board of METRO AG

At this point, I would like to express my warmest thanks to our approximately 220,000 employees for their can-do attitude, their commitment and the role they play in realising our goal of continuously creating value for our customers. The overall success of METRO GROUP is owed to our staff, who work enthusiastically to offer our customers an inspiring shopping experience. Thanks to their energy and passion, we can look to the future with confidence, and only together can we master our future challenges.

One important event that I would like to cordially invite you to is our Annual General Meeting, which will take place on 6 February 2017 in Düsseldorf. I am hoping for your attendance in large numbers or at least your instructions so that your voting rights can be represented. There, you will be able to vote on the demerger of METRO GROUP into a wholesale and food retail specialist and a consumer electronics group, as well as the usual agenda points. Even after the demerger of the company, you will remain shareholders to the full extent since you will receive additional shares in the new company without the need for any additional payment. We expect the public listing to be implemented by mid-2017. In the process, two independent, exchange-listed market leaders would be formed in their respective segments and we would write a completely new chapter in METRO AG’s company history.

I sincerely thank you for your loyalty and for the trust you have placed in us.

Best regards,

Signature Olaf Koch (handwriting)

Olaf Koch
Chairman of the Management Board of METRO AG