METRO GROUP FIELD TRIP 2015 Berlin, 6 May 2015
METRO GROUP FIELD TRIP 2015 METRO GROUP STRATEGY I Olaf Koch Berlin, 6 May 2015
STRATEGIC PRIORITIES CLEARLY IDENTIFIED IN 2012 1 CUSTOMER VALUE 2 OPERATIVE EXCELLENCE 3 FOCUS METRO GROUP FIELD TRIP 2015 METRO GROUP STRATEGY METRO AG 2015 2
OUR FRAMEWORK CUSTOMER, MARKET AND TECHNOLOGY TRENDS 1 METRO GROUP STRATEGY 2 4 SALES LINE TRANSFORMATION NEW BUSINESS PARENTING MODELS ADVANTAGE / JOINT ASSETS Business Innovation [!] ACCELERATOR [!] Business Building 3 PORTFOLIO OPTIMIZATION / EXTENSION METRO GROUP FIELD TRIP 2015 METRO GROUP STRATEGY METRO AG 2015 3
1 FROM PUSH TO PULL TO CURATED PUSH TRADITIONAL RETAIL We have PRODUCTS. Let s FIND customers who want to buy them! MODERN RETAIL We have CUSTOMERS. We understand and fulfill their NEEDS! Growth potential shifts from conquering new markets and market shares Profit pools shift from selling products Our USP shifts from offering best prices... Customer preferences shift from anonymous shopping and consumption to growing share-of-wallet with existing customers based on analytical insights to selling services to offering the best solution to highly interactive, social shopping, shared economy and target group specific marketplaces METRO GROUP FIELD TRIP 2015 METRO GROUP STRATEGY METRO AG 2015 4
2 SALES LINE TRANSFORMATION INTENSIFIED METRO CASH & CARRY BRAND POSITIONING: YOU & METRO COMMUNITY BUILDING & EMOTIONALIZATION FOOD SERVICE DISTRIBUTION / SUPPLY CHAIN FOCUS: HORECA / TRADER / MULTISPECIALIST FRANCHISE & FORMATS INNOVATIVE STARTUPS (ACCELERATOR) MEDIA-SATURN MULTICHANNEL & PURE PLAY INTERNET (EOG) FORMAT REFRESH / NEW FORMATS MARKETING & CRM MOBILE CONNECTIVITY / SMART HOME CONTENT (DIGITAL) OFFERS / SERVICES COMMUNITY BUILDING REAL TERRITORY STRATEGY / ENTREPRENEURSHIP LOCAL ASSORTMENT OWN BRAND REMODELLING: BIG BANG CONCEPT INNOVATIVE CONCEPTS (EMMAS ENKEL) COMMUNITY BUILDING & EMOTIONALIZATION MULTICHANNEL DRIVE IN GALERIA KAUFHOF CUSTOMER ORIENTED ASSORTMENT BUILDING BUSINESS AREA OPTIMIZATION / CONCESSIONS OWN BRAND COMPETENCE/PREMIUM BRANDS MARKETING & COMMUNITY BUILDING MULTICHANNEL-RETAILING REAL ESTATE POTENTIAL METRO GROUP FIELD TRIP 2015 METRO GROUP STRATEGY METRO AG 2015 5
2 LONGTERM FOCUS SIGNIFICANT INVESTMENT PROGRAM SINCE 2012 Investment in Transformation and Modernization with P&L impact of ~ 2 bn Total Investments Traditional Investment Topics 1 Innovation/New Business Model Investment 2 Price Invest OPEX 3 Cost nature ( capex) 1 Expansion; Modernization incl. IT hardware; Others 2 Real Big Bang / New Concepts / Remodellings / Innovation; Delivery / FSD; Sustainability projects (Energy Savings Project / F-Gas-Exit) 3 Multi-channel ramp-up, Pure Player METRO GROUP FIELD TRIP 2015 METRO GROUP STRATEGY METRO AG 2015 6
3 ACTIVE PORTFOLIO MANAGEMENT IBOOD Acquisition MidBan Acquisition (MCC ES) Emmas Enkel Investment/ cooperation with Real Share in Culinary Agents 2012 2013 2014 2015 MCC UK Divestment due to challenging environment MSH CN Discontinuation due to unsatisfying piloting phase performance Real TR Divestment to Begendik Group MCC DK Exit due to limited potential Real EE Divestment of Eastern European operations to Auchan MCC EG Closing down due to limited potential MCC GR Divestment due to limited market potential Past / Current: Portfolio Optimization Divestments and exits to secure focused allocation of resources and portfolio balance Current / Future: Portfolio Extensions Acquisitions and business building as well as selective new market entries and expansion to secure balanced and future-proof portfolio mix METRO GROUP FIELD TRIP 2015 METRO GROUP STRATEGY METRO AG 2015 7
4 SYSTEMATIC BUSINESS INNOVATION Five innovation areas STORE Shaping the POS: New store formats, area concepts, etc. Use of digital technologies at the POS CHANNEL Extent online reach (e.g. platforms/ marketplaces) FULFILMENT Last Mile Logistics: Same-Day-/Time-Slot- & Emergency Delivery Pick-up concepts NEW PRODUCTS & SERVICES Accelerator MARKETING Focus e.g. on topics like Big Data, data driven marketing Marketing technologies, targeted marketing, CRM, etc. Significant customer value Strategic fit Scalability METRO s contribution Key criteria for new business models METRO GROUP FIELD TRIP 2015 METRO GROUP STRATEGY METRO AG 2015 8
4 METRO S CONTRIBUTION: POWER TO SCALE NEW BUSINESSES ILLUSTRATIVE JOINT ASSETS INITIATION SCALING 100 m customers p.a. 80 m customer cards (Metro Card & Payback) 1.6 bn offline visits 0.9 bn online visits 2.200 stores with 13 m sqm 30 countries > 60 websites and apps > 2 bn direct marketing contacts ~ 5,500 sales reps (sales force) Marketing & Sales Power Customer Access ~ 50 bn procurement volume 100% of all key suppliers in our categories worldwide Sourcing METRO GROUP FIELD TRIP 2015 METRO GROUP STRATEGY METRO AG 2015 9
TRANSFORMATION OF METRO GROUP METRO TECHSTARS ACCELERATOR BUSINESS INNOVATION STRATEGY TURNAROUND OF LFL SALES DEVELOPMENT MODERNIZATION OF OUR BUSINESS MODELS DEBT REDUCTION STRENGTHENING THE BALANCE SHEET FOCUS PORTFOLIO OPTIMIZATION SUSTAINABILITY CORPORATE CULTURE, MANAGEMENT CULTURE, EMPLOYEE ENGAGEMENT CUSTOMER-CENTRIC STRATEGY 2012 2013 2014 2015 METRO GROUP FIELD TRIP 2015 METRO GROUP STRATEGY METRO AG 2015 10
METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY Olaf Koch Berlin, 6 May 2015
AGENDA 01 METRO Cash & Carry at a Glance 02 Strategic Ambition 03 Approach by Customer Group 04 Customer & Innovation @ METRO Cash & Carry 05 New Operating Model @ Metro Cash & Carry 06 Key Takeaways METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY METRO AG 2015 12
METRO CASH & CARRY AT A GLANCE Sales EBIT before special items EBIT Margin Countries Stores Selling space (1,000 sqm) Registered customers Buying customers visits per day Employees 30,513 million 1,125 million 3.7% 28 766 5,576 20 million ~ 700,000 117,255 Data from FY 2013/14 Strong Global Cash & Carry Player METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY METRO AG 2015 13
STRATEGIC AMBITION Champion for Independent Business Clear focus on CTGs localized strategy per country Intensified effort to engage in communities Aim to continuously increase our relevance Strong differentiation in FOOD competence and solution mind set Serving our customer through various channels Intensive effort to further improve the EEI (Employee Engagement Index) Our people are the most important success factor Powerful and intensive execution mindset Lean Attitude taking benefit of economies of scale and shared resources OUR AMBITION: Market leadership in defined sectors through unique assortment, solutions and strong customer relationships METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY METRO AG 2015 14
7 CONSECUTIVE QUARTERS WITH LFL SALES GROWTH 2.0% 1.4% 1.1% 0.9% 0.9% 0.8% 0.1% Q4 2012/13 Q1 2013/14 Q2 2013/14 Q3 2013/14 Q4 2013/14 Q1 2014/15 Q2 2014/15 METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY METRO AG 2015 15
STRATEGICALLY IMPORTANT AREAS WITH STRONG GROWTH Act 12M 2013/14 LfL Sales Customer in % per customer group % vs. PY Horeca 91% 0.4% 5.1% 4.7% Food Non Food Total Trader 93% -5.5% 2.0% 1.5% SCO 72% -6.3% -2.2% -0.5% Total 84% -4.9% 1.0% 2.4% METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY METRO AG 2015 16
MEASURES TO CONTINUOUSLY GROW HORECA BUSINESS Develop our business with more than 1.4 m active HoReCa customers by strictly applying MCC s unique Target Group Management (TGM) process to cater to the needs of our selected Core Target Groups (CTGs) within the HoReCa segment providing unique assortment and offering special services (i.e. prepicking) accelerating the roll-out of the delivery business, i.e. Transport after check-out, Out-of-Store (OoS) delivery and Food Service Distribution (FSD) focusing the digital transformation efforts on the areas beneficial for our HoReCa customers becoming an integral part of the local HoReCa communities supporting innovation within the eco-systems of our HoReCa customers (Techstars METRO Accelerator) METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY METRO AG 2015 17
MEASURES TO ENHANCE AND GROW TRADER BUSINESS Continuously enhance and grow our Trader business by strictly applying MCC s unique TGM process to cater to the needs of our selected Core Target Groups (CTGs) within the Trader segment providing a low cost goods flow solution to cater to the price sensitivity of the Traders (store and delivery) leveraging MCC s buying power especially in commodities across our Trader focused countries (mainly Eastern Europe) serving as a trustable and compliant provider according to international standards especially in food safety (mainly in Asia) offering a tailor made loyalty program as well as a state of the art Retail Franchise solution to help the independent Traders to compete with retail chains and discounters METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY METRO AG 2015 18
MEASURES TO TACTICALLY MANAGE SCO BUSINESS Defend the complementary part of our SCO business by offering attractive solutions for small offices (especially in developing markets) leveraging our HoReCa expertise to attract Food loving SCOs increasing customer frequency via targeted marketing/promotion and the introduction of the Treasure Hunt concept continuously refining our Non-Food approach, e.g. Implementing the 5 Worlds of Non-Food across countries Teaming up with category killers within METRO GROUP or with external partners to increase depth of Non-Food assortment, e.g. joint sourcing with Kaufhof for Netherlands or the cooperation with B8 in Germany Adapting categories purely to local market environment (ensuring METRO right to play) METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY METRO AG 2015 19
SIGNIFICANT UNTAPPED POTENTIAL THROUGH ECO-SYSTEMS IN HORECA SEGMENT METRO HAS A VERY GOOD STARTING POINT Market potential hospitality sector 2 mn Companies (hotels, restaurants, caterers) 400 bn Sales 120 bn Purchasing volume Use of technology ~35% without a website ~78% without presence at a booking platform Digital tools with underdeveloped use (food communities, payment solutions, etc.) Market access METRO C&C 1.4 mn active, registered HoReCa customers 3,000 sales representatives 6.5 bn sales hotels, restaurants and caterers Source: MCC countries Western Europe, data exclude VAT METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY METRO AG 2015 20
OUR AIM AT MCC: CAPTURE SIGNIFICANT ADDITIONAL POTENTIAL FSD Expansion & Remodeling Franchise Innovation TODAY FUTURE Transactional System Partner Transactional Low switching cost Limited value add beyond product Contractual/System Partner Emotional relationship Significant added value through additional services and eco-system METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY METRO AG 2015 21
Growth Mature Saturated OVERALL STILL SIGNIFICANT POTENTIAL TO BE CAPTURED Benchmark within MCC Significant untapped potential France Czech Rep. Strong Market share in HoReCa Valued member of HoReCa Community Highly Profitable business model Relevant player in 3 different customer groups (HoReCa, Trader and SCO) Champion in CTGs (e.g. Vietnamese Trader) Highly profitable with continuous growth Growth story across segments based on trusted Brand Adjustment of business models still in early stage New sales channels with significant room for growth First upgrade/rightsizing efforts of existing format with encouraging results New formats with strong results and opportunity for additional roll out Market shares in various countries still limited BUT clear visibility of the necessary requirements to capture higher shares Russia Success despite significant regional differences Highly profitable despite on-going expansion METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY METRO AG 2015 22
MCC S TRANSFORMATION AND THE NEED FOR FURTHER CHANGE 0.9% 0.9% Q4 2012/13 Q1 2013/14 Business trend at MCC 2.0% 1.4% 1.1% 0.8% 0.1% Q2 2013/14 Q3 2013/14 Q4 2013/14 Q1 2014/15 Q2 2014/15 Further need for change MCC s performance has picked up momentum Attractiveness and relevance has been increased Velocity of change to be increased Local empowerment is key The old idea the center thinks entities execute based on infrastructure limitations (i.e. systems and IT) New ways of collaboration have emerged A change in the operating model is needed METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY METRO AG 2015 23
THINKING DIFFERENTLY RECAP Value creation is local New ways of working Understanding that value creation at MCC is local and acknowledging that there are new ways of working together, we asked ourselves Questions 1. What if 26 independent C&C companies would just have been merged? 2. How would they look at things in today s world? 3. What would be the approach they would choose to maximize value for customers? 4. How would they ensure implementation? 5. How would they improve performance? METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY METRO AG 2015 24
KEY PRINCIPLES 1 Cooperation of countries 2 Steering Model for the portfolio Value creation authority needs to be local It is key to learn from the best and take advantage of special expertise Economies of scale need to be utilized without compromise and quickly Knowledge should be extremely close to operations Bureaucracy should be minimal Collaboration among countries will be essential Interdependence will be a key principle Value creation authority needs to be local Value creation needs to be defined with high precision Local management teams need permanent support A high level of proximity to management teams is a must Minimum bureaucracy is essential The leadership principle should follow a partnership approach as established in private equity Active ownership is the core of the new approach METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY METRO AG 2015 25
MCC S NEW OPERATING MODEL FOSTERS ENTREPRENEURSHIP Our new approach includes: Countries are fully empowered for value creation Certain functions are shared based on common needs Utilization of best practices and expertise will be increased Commercial Intelligence is close to operations The center takes an active ownership approach through Operating Partners with much higher proximity to the business and much more intensive interactions Effectiveness and intensity of leadership grow METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY METRO AG 2015 26
VALUE CREATION FOCUS & ACTIVE OWNERSHIP Value Creation Approach Holistic assessment Define ultimate potential for the business and set target equity value Define value creation plan Assess organization capability and act/adapt Prioritize initiatives and allocate required resources Active Ownership Ongoing support and performance tracking Support targeted initiatives Provide resources Implement longer-term organization improvements Revisit investment thesis and re-fresh value creation plan Regularly and actively track progress Incentivize fund portfolio resources and company management to drive value creation METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY METRO AG 2015 27
WITH VCPS TO FOCUS COUNTRIES ON ULTIMATE POTENTIAL Value Creation Plan (VCP) Expected value drivers (hypothesis) 1 2 3 4 5 Point of Departure: External and internal fact base Bold, full-potential ambition & financial targets in 3-5 years as well as a 10 years strategic outlook Clear strategic choices to advance from Point of Departure to aspiration Detailed roadmap to execute strategy leading to aspired financial results Efficient PMO to support implementation of initiatives and achievement of results (within country) Intensified effort to tailor assortment, services and channels towards CTGs Intensified FSD engagement Trader franchise expansion Low cost C&C formats Stronger utilization of Shared Service Centers METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY METRO AG 2015 28
MAJOR CHANGES EXPECTED From past to new operating model Standard approach across all countries Significant localization based on country situation Multi project management across all countries Dedicated focus on locally selected CTGs and selected key initiatives Heavy expansion across many countries Focused expansion in selected countries Most international country portfolio Optimized portfolio to create value Classic planning and budgeting process Value Creation plan as the central steering component METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY METRO AG 2015 29
OPERATING BOARD STRUCTURE CONCEPTUAL MCC Operating Board MCC CEO CEO Direct Reports OP FM OP FM OP FM OP OP HR FIN OP OP OP IT MCC Operating Board with CEO and 13 Partners (Operating / Functional) 10 Operating Partners with dedicated country responsibility and (if required) functional mandates 3 Functional Partners for HR, Finance and IT Small support teams / Value Creation Managers / Directors (2-4 resources each) for each Operating Partner METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY METRO AG 2015 30
MASSIVELY ACCELERATE OUR VALUE CREATION LOCALLY MCC countries completely empowered Focus on value creation per country Value Creation plan as the central steering component Predominant leadership through Operating Partners and Country Boards Federation across common themes allowing for better utilization of expertise among participants Principle of mandate to be assigned close to operations Lean HQ as essential aim MCC focuses on: Value creation in countries Leveraging the strengths of a federation Taking an Active Ownership approach METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY METRO AG 2015 31
ESSENCE OF OUR NEW OPERATING MODEL Our Aspiration: Increase effectiveness & proximity METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY METRO AG 2015 32
MCC GERMANY Our AIM: To make MCC Germany the leading multichannel Food Service Provider One Brand Move to a one brand strategy using a best of both worlds approach Sales Cluster Converting current store by store approach into a regional SALES driven approach Food Service Distribution Store Adjustments + NSO Business Process Optimization Expand existing delivery concept to reach new customer segments Tailored adjustment of stores (rightsizing, upgrade) and ECO store Increase efficiency in store and headquarter processes METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY METRO AG 2015 33
KEY TAKEAWAYS METRO CASH & CARRY 1 Significant progress in reinitiating the business in last years with signs of returning growth Seven quarters of consecutive like for like sales growth Strategically important areas of HoReCa and food sales with even better development 2 Strategy is focused on creating customer value based on a sustainable, flexible business model MCC country portfolio covers a wide range of customers, regions and business models Establishing MCC as System Partner will enhance customer value and hence boost company value 3 Change in Operating Model will enable MCC to faster capture significant untapped potential Focus on value creation in countries, strengths of a federation and active ownership approach Value creation plans will allow countries to faster reach their ultimate potential METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY METRO AG 2015 34
OUR MOST DECISIVE SUCCESS FACTOR METRO GROUP FIELD TRIP 2015 METRO CASH & CARRY METRO AG 2015 35
METRO GROUP FIELD TRIP 2015 MEDIA-SATURN Pieter Haas Berlin, 6 May 2015
MEDIA-SATURN AT A GLANCE Sales: 20,981 million EBIT before special items: 335 million EBIT Margin: 1.6% Countries: 15 Stores: 986 Selling space (1,000 sqm): 3,070 Customer visits per day: ~ 4,5 million Employees : 64,483 Data from FY 2013/14 Number 1 consumer electronics retailer in Europe METRO GROUP FIELD TRIP 2015 MEDIA-SATURN METRO AG 2015 37
RECAP METRO GROUP INVESTOR FIELD TRIPS FEBRUARY 2010 IN MUNICH AND JULY 2011 IN ASCHAFFENBURG MEDIA SATURN KEY MESSAGES Multichannel business (offline and online) Combination of products, content and services Adjust cost basis France as turnaround case We liked the fact that management acknowledged clearly that the pure bricks and mortar consumer electronics retailing model has no future and has already approached its peak as the online channel is gaining market share rapidly. Santander China, Russia and Turkey as growth markets Entry into Pure Play through redcoon acquisition They are behind the online curve but with its strong (mostly No. 1) positions in most of its markets, its new approach is unlikely to be a negative, in our view. RBS METRO GROUP FIELD TRIP 2015 MEDIA-SATURN METRO AG 2015 38
DIGITAL REVOLUTION... FROM RETAIL IS DEAD METRO GROUP FIELD TRIP 2015 MEDIA-SATURN METRO AG 2015 39
TO DIGITALIZATION AS A CHANCE FOR RETAIL The click & collect business model is increasingly developing into the winning concept METRO GROUP FIELD TRIP 2015 MEDIA-SATURN METRO AG 2015 40
CE MARKET IN EUROPE IS LARGE AND CONTINUES TO GROW MODERATELY WITH ONLINE AS THE MAIN DRIVER Market size and growth of the CE market by region in billion 6.8% X CAGR 2013 17e 1.7% 1.5% 193 199 206 286 293 306 511 581 663 2013 15 2017 1.6% 2013 15 2017 8.2% 88 102 120 2013 15 2017 2013 15 2017 165 228 305 2013 15 2017 METRO GROUP FIELD TRIP 2015 MEDIA-SATURN METRO AG 2015 41
CURRENT DEVELOPMENTS WITH STRATEGIC RELEVANCE FOR THE MEDIA-SATURN GROUP Russia Changed political situation in Russia Collapsing RUB Planning beset by uncertainty; sharp drop in sales expected Internet of Things Internet of Things is forcing its way into the market even faster than expected New product groups; service strategies necessary Battle for data Struggle for sovereignty of customer data Danger of losing touch with customers (in both senses!) Digitization The technology of digitization is changing from a threat to a driver of change Digitization is changing the structure of retail Manufacturers strategies new Direct selling by manufacturers is rising SoftSim is an innovation disrupting the mobile phone segment Threat to the Media-Saturn value chain Customer centricity Balance of power in retail is shifting towards the customer Customer-centricity as the basis Multichannel Multichannel as a winning concept Growth of multichannel capabilities METRO GROUP FIELD TRIP 2015 MEDIA-SATURN METRO AG 2015 42
ASSESSMENT OF THE CURRENT MARKET ENVIRONMENT The CE market in Europe is growing moderately The European CE market is the world's second largest and is experiencing moderate growth (CAGR 2013-17e: 1.7%) Connected World as the megatrend in the digital world Internet of Things is growing, increasing the need for solution selling and services Multichannel as winning concept Multichannel and click & collect recognized and valued by customers Stores are an asset again, not just a brick liability METRO GROUP FIELD TRIP 2015 MEDIA-SATURN METRO AG 2015 43
MEDIA-SATURN FINANCIAL RESULTS: STABILIZATION IN 2014 2011 to 2013/14 Sales in EUR billions EBIT in EUR millions 20.6 21.0 0.6% p.a. 21.1 21.0 541 326-14,8% p.a. 299 335 2011 2012 2012/13 2013/14 2011 2012 2012/13 2013/14 LfL -4.3% -1.9% -2.4% -0.9% EBIT 2.6% 1.6% 1.4% 1.6% margin Main drivers Online growth not able to compensate loss of frequency in stores Economic crisis Hesitant implementation Main drivers Price investments Investments in new channels and concepts METRO GROUP FIELD TRIP 2015 MEDIA-SATURN METRO AG 2015 44
DEVELOPMENT MARKET SHARES MEDIA-SATURN GROUP Germany Austria Switzerland Italy* Spain Greece* Portugal Russia Turkey* Hungary Belgium* Netherlands Luxembourg* Poland Sweden MS Market Shares 6M FY 2015, in % 16,8 25,8 12,7 14,6 14,9 11,1 7,1 4,8 4,8 14,6 13,4 20,1 30,6 14,6 8,5 GfK Panel including online (incl. redcoon and 003.ru) * 5M FY 2015 Delta to PY in % -0,4-0,2-0,8-0,5-0,9-0,1 0,1 1,6 1,7 0,5 0,9 1,2 0,5 0,8 0,6 METRO GROUP FIELD TRIP 2015 MEDIA-SATURN METRO AG 2015 45
MEDIA-SATURN IS WELL POSITIONED Size and relevance Media-Saturn Group is still No. 1 for customers in the European CE retail market (market leader in 9 countries) Brand strength 3 strong, trusted brands provide basis for both multichannel and online pure play Awareness of "Media Markt" and "Saturn" brands is nearly 100% in many European countries Footprint Unique infrastructure in European CE retail market: 1,000 stores Frequency / reach ~4.5 million visitors "enter" Media-Saturn Group shops every day, physically and digitally METRO GROUP FIELD TRIP 2015 MEDIA-SATURN METRO AG 2015 46
THE STRATEGIC OBJECTIVES OF THE MEDIA-SATURN GROUP Mission The partner, day-to-day companion and navigator for consumers in the fascinating yet sometimes confusing digital world Vision The leading provider of consumer electronics and corresponding services in Europe with a sustainable and profitable market position in selected countries Strategy Transition from pure high-volume, transactional and undifferentiated retail business into a target group and country-specific portfolio of brands, channels and formats based on a data-based understanding of our customers METRO GROUP FIELD TRIP 2015 MEDIA-SATURN METRO AG 2015 47
MEDIA-SATURN GROUP STRATEGY BASED ON TWO CORE FORMATS Adaptations i.e. MM City, SAT Connect. BiWiGo Vision The leading provider of consumer electronics and corresponding services in Europe with a sustainable and profitable market position in selected countries 360 o Retail "Seamless integration of all channels" - "Any time, anywhere": Media Markt, Saturn Pure Play Online Innovative growth formats i.e. Live Shopping, ReCommerce, Services EOG * 2 Core formats Addition * Electronics Online Group METRO GROUP FIELD TRIP 2015 MEDIA-SATURN METRO AG 2015 48
THE MUST-WIN PROGRAM AIMS TO REACH THE VISION Fundament Core formats Portfolio strategy 1 Cost structure 2 Employees 3 IT as core 4 Supply chain and 18% with the right competence logistics as new competencies competence 360 Retail 5 Extend 6 New definition of 7 Development of multichannel core and service new MC formats offers concepts 8 Digital 9 Push efficiency 10 Assortment and content and effectiveness in marketing purchasing excellence 12 Brand-, format- and channel 13 Growth strategy for portfolio strategy per country Russia and Turkey Pure Play Online 11 Pure play Vision METRO GROUP FIELD TRIP 2015 MEDIA-SATURN METRO AG 2015 49
AMBITION FOR 2020: THE CE DIGITAL COMMERCE COMPANY Key elements IV EOG data & KPI driven III CRM, MC offerings, end2end services II Core format refresh I Store network I II Store network Optimization of store and country portfolio Core format refresh Rollout of all stores with corporate design, core format refresh and electronic shelf labels III CRM, multichannel offerings, services CRM as the core of the strategy Additional multichannel and added value services IV EOG data & KPI driven Sustainable growth of redcoon Integration of new players ibood Development of new ideas and business models METRO GROUP FIELD TRIP 2015 MEDIA-SATURN METRO AG 2015 50
FORMAT I 360 O RETAIL: MEDIA MARKT AND SATURN ILLUSTRATIVE The customer evolved. Customers don t think in sales lines on research. They know and use all channels and decide themselves which touch point to use starting and ending shopping. Customers expect an equal and service oriented shopping experience Source: Channelpartner.de, March 2015 # Customer Journey METRO GROUP FIELD TRIP 2015 MEDIA-SATURN METRO AG 2015 51
FORMAT I 360 O RETAIL: CHANNEL VARIETY Media Saturn offers its customer various channels to cover individual needs # Customer Journey ILLUSTRATIVE Stores Customers have the possibility to get advice about products or solutions on site and to buy the products as well as to pick up items which have been purchased online Web Shop Online offers and product information with the option to buy online or pick up in store Mobile Shop Mobile websites and apps enable the customer to have access to Media-Saturn anywhere, anytime Vending Machine Ad hoc availability of products (e.g. airport) Communities Customers get information about products, innovations and marketing actions via Facebook, Twitter and YouTube Content Platform Further interaction areas with the customer via e.g. Saturn Turn-On or offers via digital content like Juke Call Center Customer service for online / offline purchases or product information queries METRO GROUP FIELD TRIP 2015 MEDIA-SATURN METRO AG 2015 52
AMBITION FOR 2020: THE CE DIGITAL COMMERCE COMPANY Key elements IV EOG data & KPI driven III CRM, MC offerings, end2end services II Core format refresh I Store network I II Store network Optimization of store and country portfolio Core format refresh Rollout of all stores with corporate design, core format refresh and electronic shelf labels III CRM, multichannel offerings, services CRM as the core of the strategy Additional multichannel and added value services IV EOG data & KPI driven Sustainable growth of redcoon Integration of new players ibood Development of new ideas and business models METRO GROUP FIELD TRIP 2015 MEDIA-SATURN METRO AG 2015 53
PRICING STRATEGY: HAVING THE RIGHT PRICES AT ALL TIMES Having the right prices becomes an increasingly bigger challenge Assortment becomes bigger Full price transparancy Volatile price development Pricing as a fully integrated, key discipline for retail Pricing strategy per country Pricing tools need to have all relevant pricing infomation and automatically set prices Communicate prices Electronic Shelf Labels (ESL) METRO GROUP FIELD TRIP 2015 MEDIA-SATURN METRO AG 2015 54
PRICING STRATEGY: EXAMPLE MEDIA MARKT NETHERLANDS Clear price strategy and price setting leading to positive effects Positive front margin development Continuous growth in market share Changed, positive price perception Reduced frequency of price changes Evolution of Media Markt Netherlands from price follower to price leader with simultaneous improvement of operative excellence METRO GROUP FIELD TRIP 2015 MEDIA-SATURN METRO AG 2015 55
KEY TAKEAWAYS MEDIA-SATURN 1 Digitalization has developed from a deadly thread to a huge chance for retail 2 3 Retail is back in the game, Media-Saturn is well positioned with its assets and is BACK-TO-ATTACK and pushing ahead by fundamentally redefining its core format with stable, increasing earnings For FY 2016, the strategic cornerstones have been sharpened and will be implemented through the must-wins program: Further development of the core format 360 o Retail with focus on improving store experience, pricing strategy, CRM and further digitalization as well as piloting of new formats Bundling of all Pure Play online activities in the Electronics Online Group ( EOG ) incl. sustainable growth of redcoon, integration of ibood and new activities 4 Target 2020: Media-Saturn Group is Europe s leading CE digital commerce company METRO GROUP FIELD TRIP 2015 MEDIA-SATURN METRO AG 2015 56
METRO GROUP FIELD TRIP 2015 REAL Olaf Koch Berlin, 6 May 2015
AGENDA 01 Real at a Glance 02 Strategic Ambition 03 Business Model Transformation 04 BIG BANG program 05 Key Takeaways METRO GROUP FIELD TRIP 2015 REAL METRO AG 2015 58
REAL AT A GLANCE Sales: EBIT before special items: EBIT Margin: Countries: Stores: Selling space (1,000 sqm): Buying customer visits per day : Employees: 7,939 million 88 million 1.1% 1 307 2,100 ~ 900,000 36,500 Data from FY 2013/14 Germany s leading hypermarket METRO GROUP FIELD TRIP 2015 REAL METRO AG 2015 59
STRATEGIC AMBITION OF REAL Expand the strength of variety of choice, fresh & ultrafresh competence and regional assortment. THE AUTHORITY OF CHOICE The best partner for the daily life of each customer, not only in products but as well in services Seamless experience between channels and devices ("one" Real) e.g. several buy and pick options to fit with each customers' needs, at any time and any place An efficient and evolutionary platform for both our food and non-food business The FOOD retail format with the BEST CHOICE, strong FRESHNESS, attractive SERVICE & INNOVATIONS METRO GROUP FIELD TRIP 2015 REAL METRO AG 2015 60
REAL STRATEGY FRAMEWORK SIX KEY PILLARS Vision Mission 1 2 3 4 5 Customer orientation Marketing efficiency Multichannel Purchasing & Logistics Operational efficiency Organization, culture and leadership to boost entrepreneurship and customer orientation METRO GROUP FIELD TRIP 2015 REAL METRO AG 2015 61
REAL HAS LAUNCHED NUMEROUS INITIATIVES TO BOOST CUSTOMER VALUE AND SUSTAINABILITY Sustainable sourcing Environmentally friendly operations Employee development Involvement of customers and society SUSTAIN- ABILITY ULTRA FRESHNESS Fruits and vegetables Master butchers Bakery Hot counters VARIETY Fresh fish Sushi Daily Cheese assortment Deep frozen Food theme areas Drugstore products Wine / spirits Drinks Home Textiles Electronics Seasonal Intensive online and mobile communication and couponing In-store terminals for online ordering of long tail products DIGITALI- ZATION PRICE PERCEPTION Broad and deep product assortment Extended own brand portfolio Intensive communication of price positioning METRO GROUP FIELD TRIP 2015 REAL METRO AG 2015 62
REAL HAS DEVELOPED ADVANCED SHOPPER INSIGHTS BASED ON PAYBACK DATA TO IDENTIFY CORE TARGET GROUPS AND THEIR NEEDS 1 Basic customer groups Event-oriented Premium customer groups 10 Conservative & demanding 2 Weekly flyer shopper 9 Conventional cold kitchen 3 Price entrance 8 Health conscious 4 Young families with baby 5 Male beverage buyer 6 7 Smart budget family Modern quick cuisine Standard customer groups Advanced shopper insight analysis based on transactional/payback data Identification of ten core target groups with differentiated purchasing behavior Understanding of customer needs METRO GROUP FIELD TRIP 2015 REAL METRO AG 2015 63
FRESHNESS IS KEY Regionality: Real is working with numerous local producers e.g., fruit & vegetables already has over 100 items Bio: Real is carrying 1,200 organic products in the range Quality and freshness: Regular quality checks in the stores. Real employees also personally visit local producers More than organic permaculture: As the first German retailer Real offers fruits and vegetables from permaculture METRO GROUP FIELD TRIP 2015 REAL METRO AG 2015 64
BROADEST VARIETY OF CHOICE IN GERMAN RETAIL Real offers more than 80,000 products in each store Real is the only retailer with a master butcher ( Meistermetzger ) in every store Real offers space and customer frequency to the industry for innovative products Home/season world Master butcher ( Meistermetzger ) Textile world World of dry food My drugstore METRO GROUP FIELD TRIP 2015 REAL METRO AG 2015 65
CUSTOMER RETENTION CUSTOMER ACQUISITION INTENSIVE COMMUNICATION FOR CUSTOMER ACQUISITION AND RETENTION ACROSS ALL MEDIA Frequency (every week) Events (every quarter) Competence (bi-weekly) COMMUNICATION OF VARIETY Loyalty (permanent) METRO GROUP FIELD TRIP 2015 REAL METRO AG 2015 66
BIG BANG IS THE ULTIMATE EXPERIENCE FOR CUSTOMERS WE PROVIDE THE BEST SHOPPING EXPERIENCE AND LARGEST VARIETY IN GROCERY RETAIL Service Spaceplanning Advertisement Pricing Department concepts Timesaving by extra Reverse Vending Machines and compactors Additional shopping carts simplify customers shopping experience State-of-the-art technology in checkout area, e.g. new handscanner, tandem- and self-service cash desks Free Wi-fi for customers Wide and cheerful corridors provide an optimized overview customers benefit by extra space The arrangement of all departments and product ranges is strictly targeted to customer search logic Lower shelf heights simulate a bigger clear and open store Separate area for special promotions, regionality, seasonal and competent topics in a compact and attractive presentation Extension of advertising circle Customer and seasonal targeted promotions over all distribution channels Adjustment of all pricing ranges Competitive prices and successive convergence to hardline competitors Customer-focused reallocation of all Food and Non Food concepts considering trends and market data Optimization of local customer segmentation METRO GROUP FIELD TRIP 2015 REAL METRO AG 2015 67
BIG BANG STORES & FAST MOVING CONSUMER GOODS (FMCG) OUTPERFORMANCE Since March 2014 82 stores remodeled Ø Sales > +2% vs. lfl Ø Customer > +3% vs. lfl Leader in hypermarket segment in FMCG products > lfl stores +4% vs. competitors METRO GROUP FIELD TRIP 2015 REAL METRO AG 2015 68
PRICE PERCEPTION AND SUSTAINABILITY The price perception has materially improved since Big Bang Price Own Brand Promotion Price Price-/ Performance Ratio Price Overall Standard Price Sustainable lifecycle from products over environment to customer and employee Perfectly satisfied 1.82 1.82 1.85 1.85 After remodeling Before remodeling 100% of Real s own-brand garden furniture and cosmetic products made of wood or wood content are FSC-certified Less satisfied 2.07 2.10 2.15 2.17 2.18 2.23 Strict prohibition of forced labor, child labor or any other form of exploitation is a fundamental component of supplier agreements Around 250 markets support the local Tafel with food donations METRO GROUP FIELD TRIP 2015 REAL METRO AG 2015 69
DIGITALIZATION Real establishes various new approaches for customer interaction online & offline On- and offline offerings ( Real Drive, "Lieferservice Köln, "Click&Collect, "Emmas Enkel ) Cashless and contactless "smart" cash desks (QR codes, self-service cash desks, mobile payment, etc.) The Real app/e-couponing, digital loyalty points Under development: complete online NON FOOD assortment ordering and paying in store METRO GROUP FIELD TRIP 2015 REAL METRO AG 2015 70
KEY TAKEAWAYS 1 Sustainable commercial model with Big Bang 2 Intensively targeting multichannel potential 3 Customer relevance in marketing & merchandising 4 Efficiency optimization program METRO GROUP FIELD TRIP 2015 REAL METRO AG 2015 71
METRO GROUP FIELD TRIP 2015 GALERIA KAUFHOF Mark Frese Berlin, 6 May 2015
AGENDA 01 Galeria Kaufhof at a Glance 02 Strategy 03 Customer & Innovation @ Galeria Kaufhof 04 Business Model 05 Key Takeaways METRO GROUP FIELD TRIP 2015 GALERIA KAUFHOF METRO AG 2015 73
GALERIA KAUFHOF AT A GLANCE Sales: EBIT before special items: EBIT Margin: Countries: Stores: Selling space (1,000 sqm): Buying customer visits per day: Employees: 3,099 million 193 million 6.2% 2 137 1,446 up to 2 million 21,115 Data from FY 2013/14 Number 1 department store in Germany and Belgium METRO GROUP FIELD TRIP 2015 GALERIA KAUFHOF METRO AG 2015 74
OUR AMBITION: MORE THAN A DEPARTMENT STORE A MULTI- CHANNEL RETAIL DESTINATION, OFFERING A UNIQUE SHOPPING EXPERIENCE Vision GALERIA Kaufhof stands for the pleasure in shopping across all channels, any time, for a lifetime Mission GALERIA Kaufhof is more than a department store. Committed teamwork, creativity and inspiring worlds create a unique shopping experience for the whole family in every phase of life, everywhere Values Corporate values as a foundation for the vision and mission Customer inspiration Innovation Sustainability Personal responsibility Respectful cooperation METRO GROUP FIELD TRIP 2015 GALERIA KAUFHOF METRO AG 2015 75
A CUSTOMER DRIVEN MULTICHANNEL RETAIL (MCR) STRATEGY 1 Brand image Flagship stores 2 Leverage and build our strong brand Strengthening our emotional appeal in our communication and at the PoS Consistent 360 -communication Customers Roll-out of premium concept to our flagship stores in top inner city locations Focus on emotional shopping experience in highly attractive stores 4 MCR proposition Assortment 3 Further roll-out of additional MCR services Continue integration of multichannel Roll-out of assortment online Complement assortment with premium brands in selected stores Continued assortment innovation and addition of new brands in core price points METRO GROUP FIELD TRIP 2015 GALERIA KAUFHOF METRO AG 2015 76
CUSTOMER FOCUSED INNOVATION ENHANCES SHOPPING EXPERIENCE Customer orientation Product innovation Shelf Extension Revell helicopter Activity Tracker Adidas Springblade MCR services Mobile payment Instore communication METRO GROUP FIELD TRIP 2015 GALERIA KAUFHOF METRO AG 2015 77
WE HAVE ALL THE KEY SUCCESS FACTORS FOR MULTI CHANNEL RETAIL Recognized assortment authority Unique nationwide store network Prime locations Access to all relevant brands Strong and reliable brand Inspiring & easy-to-use online shop and compelling MCR proposition 5.0m visitors on average per month State-of-the-art IT & logistics platform ~80% brand recognition in Germany New MCR platform 1. Product management Illustrative logistics platform Berlin Hannover Norf Porz Erfurt Frechen/ Dietzenbach WW Würzburg 5 Stuttgart Distribution centres Distribution centre München RCP 1 2... 2. Agile SW development/ SCRUM 9 3. eshop architecture METRO GROUP FIELD TRIP 2015 GALERIA KAUFHOF METRO AG 2015 78
Base portfolio Core portfolio DEDICATED INVESTMENT STRATEGIES FOR OUR REAL ESTATE PORTFOLIO TO SECURE INTEGRATED RETAIL AND REAL ESTATE STRATEGY Köln Berlin Hannover Frankfurt Stuttgart Düsseldorf 7 locations ~ 45% of portfolio value Long term commitment High street locations in Germany s top cities with attractive growth potential Value potential through project development and active letting management Portfolio extension München Bonn Mannheim Aachen Leipzig Locations in 1A/1B areas in big and medium-sized cities Locations managed to move up into core portfolio 52 locations ~55% of portfolio value Management to core portfolio Stable basis for department store business Real estate performance potential Hub for MCR strategy in mid-sized cities METRO GROUP FIELD TRIP 2015 GALERIA KAUFHOF METRO AG 2015 79
TOP LINE DRIVERS 1 2 Develop a leading, truly-integrated MCR platform Connect with customers on emotional level with focus on local customers needs 3 Customer-oriented assortment optimization 4 Roll-out of premium concept in selected stores 5 Expand Galeria INNO in Hasselt (Nov. 2014) and Grand Duchy of Luxembourg (2018) METRO GROUP FIELD TRIP 2015 GALERIA KAUFHOF METRO AG 2015 80
BOTTOM LINE DRIVERS 1 2 Transform sales growth via online business, MCR, and Inno Luxembourg into scale effects Improve margins through relevant product assortments and inventory management 3 Increase profitability of the online business 4 Expand concession/consignment model to reduce inventory risk 5 Continue to focus on operational efficiency METRO GROUP FIELD TRIP 2015 GALERIA KAUFHOF METRO AG 2015 81
STRONG POSITION IN THE GERMAN DEPARTMENT STORE SEGMENT COMBINED WITH THE MOST ATTRACTIVE RETAIL REAL ESTATE PORTFOLIO 1 The winning department store concept in Germany 7 Highly profitable and strong cash flow generation 2 In-depth customer insights & attractive customer demographics 6 Prime real estate portfolio with significant value upside 3 Assortment authority in apparel, home and beauty 5 Compelling strategy to deliver sustainable profitable growth 4 Substantial MCR opportunity METRO GROUP FIELD TRIP 2015 GALERIA KAUFHOF METRO AG 2015 82
KEY TAKEAWAYS GALERIA KAUFHOF 1 2 3 4 Leading MCR department store in Germany and Belgium In-depth understanding of customers Roll-out of assortment innovations and premium concept Focus on flagship stores 5 Further roll-out of MCR services On the basis of a fully integrated retail and real estate strategy METRO GROUP FIELD TRIP 2015 GALERIA KAUFHOF METRO AG 2015 83
METRO GROUP FIELD TRIP 2015 FINANCE Mark Frese Berlin, 6 May 2015
METRO GROUP: FINANCIAL STRATEGY Our services and processes in all sales lines are focused on creating value for our customers. We drive value for our shareholders by improving operational efficiency, optimizing our asset base and investing in profitable growth. Operational Efficiency: Improve the profitability of our existing operations Capital Efficiency: Achieve the target portfolio and minimum financing costs Profitable Growth: Focus on value proposition for consumer and growth investments METRO GROUP FIELD TRIP 2015 FINANCE METRO AG 2015 85
TRANSFORMATION PROCESS HAS STRENGTHENED OUR FINANCIAL POSITION Net Debt in Million -3.3 bn Net Working Capital in % of Sales 2009/10* 2010/11* 2011/12* 2012/13 2013/14 7,989 7,839 7,735 5,391 4,655-3.0% -2.6% -2.9% -3.6% -3.6% 2009/10* 2010/11* 2011/12* 2012/13 2013/14 Significant net debt reduction while maintaining cash flow from operations Substantial improvement in net working capital reflects reduced inventory levels Strengthened balance sheet offers operational and financial opportunities * pro-forma, amounts per 30 September METRO GROUP FIELD TRIP 2015 FINANCE METRO AG 2015 86
AGENDA 01 Drivers of Value Creation 02 Active Real Estate Management 03 Financial Targets METRO GROUP FIELD TRIP 2015 FINANCE METRO AG 2015 87
Return on Invested Capital THE DRIVERS OF VALUE CREATION Operational Efficiency Shared Services New Operating Model OUR STRATEGY Profitable Growth Capital Efficiency Invest in growth increase capital expenditures Divest non-strategic assets Improve net working capital Invested Capital METRO GROUP FIELD TRIP 2015 FINANCE METRO AG 2015 88
Return on Invested Capital THE DRIVERS OF VALUE CREATION Operational Efficiency Shared Services New Operating Model OUR STRATEGY Profitable Growth Capital Efficiency Invest in growth increase capital expenditures Divest non-strategic assets Improve net working capital Invested Capital METRO GROUP FIELD TRIP 2015 FINANCE METRO AG 2015 89
OPERATIONAL EFFICIENCY IS A PREREQUISITE TO ENABLE PROFITABLE GROWTH Shared Services Accelerating the ramp-up of our shared services operations in Poland and India Centralization of selected processes creates additional benefits through simplification and standardization New Operating Model MCC Federation approach with countries adopting entrepreneurial role Structuring the country portfolio to maximize sales and margins Elimination of bureaucracy with corporate focus on supporting local country value creation plan Improved effectiveness and collaboration METRO GROUP FIELD TRIP 2015 FINANCE METRO AG 2015 90
Return on Invested Capital THE DRIVERS OF VALUE CREATION Operational Efficiency Shared Services New Operating Model OUR STRATEGY Profitable Growth Capital Efficiency Invest in growth increase capital expenditures Divest non-strategic assets Improve net working capital Invested Capital METRO GROUP FIELD TRIP 2015 FINANCE METRO AG 2015 91
INVEST IN GROWTH MARKETS, DIVEST LOW OPPORTUNITY MARKETS Geographical spread of METRO GROUP owned real estate Asia Eastern Europe Western Europe Invest in New Store Openings and locations with value potential in booming markets (China/India) Invest in the growth markets Turkey and Russia NSO and project developments on back of dynamic growth Real estate divestments of saturated markets with minor development potential (e.g., France and Italy) Germany Selective divestments of non strategic assets Investments in development projects with major value potentials Est. Market value: EUR 9-10bn METRO GROUP FIELD TRIP 2015 FINANCE METRO AG 2015 92
FOCUS ON THE CORE TO BUILD AN OPTIMIZED PORTFOLIO WITH GROWTH POTENTIAL Media-Markt China METRO Cash & Carry Denmark METRO Cash & Carry Morocco Real Eastern Europe MAKRO Cash & Carry Egypt Real Turkey Saturn France MAKRO Cash & Carry UK METRO Cash & Carry Vietnam Sale of Booker stake 2010-2011 2012-2013 MAKRO Cash & Carry Greece 2014 Optimization of portfolio based on our market position and growth opportunities Proceeds were used to reduce debt and strengthen the balance sheet Active screening of our entire portfolio on a continuous basis METRO GROUP FIELD TRIP 2015 FINANCE METRO AG 2015 93
NET WORKING CAPITAL MANAGEMENT BENEFITS CASH FLOW AND STRENGTHENS BALANCE SHEET Inventories in Million per Store 3.2 3.2 3.0 2.6 2.7 Active inventory management while increasing assortment availability Reduction of old stock share and improvement of stock structure Continue to improve inventory level per store 2009/10* 2010/11* 2011/12* 2012/13 2013/14 * Pro forma, amounts per 30 September METRO GROUP FIELD TRIP 2015 FINANCE METRO AG 2015 94
EXCELLENT STANDING IN DEBT CAPITAL MARKETS AND WELL-BALANCED MATURITY PROFILE Interest Result (in Million) 2009/10* 2010/11* 2011/12* 2012/13 2013/14-583 -622-527 -517 +30% (+174) -409 Recent opportunistic bond issues secure low interest rates longer term and a more balanced maturity profile Average interest rate** down from 6.6% in 2009/10 to 4.8% in 2013/14 Continuing efforts to further reduce interest costs * pro-forma, amounts per 30 September ** based on gross financial expenditure METRO GROUP FIELD TRIP 2015 FINANCE METRO AG 2015 95
GOODWILL IMPAIRMENT REAL: A NON-CASH CHARGE 450 m Carrying amount 1.1 bn of Real is mainly driven by the Acquisition Allkauf (1998) 0.8 bn 0.6 bn 2016 2017 2018 acquisition of Allkauf in 1998 The impairment of 450m paves Underlying Value 0.4 bn the way to realize future growth potentials Carrying Amount 31/12/2014 New Fair Value METRO GROUP FIELD TRIP 2015 FINANCE METRO AG 2015 96
Return on Invested Capital THE DRIVERS OF VALUE CREATION Operational Efficiency Shared Services New Operating Model OUR STRATEGY Profitable Growth Capital Efficiency Invest in growth increase capital expenditures Divest non-strategic assets Improve net working capital Invested Capital METRO GROUP FIELD TRIP 2015 FINANCE METRO AG 2015 97
PROFITABLE GROWTH: CUSTOMER FOCUS IS KEY Champion for Independent Business HoReCa SCO & Trader Food Non-Food Past Midterm ambition METRO GROUP FIELD TRIP 2015 FINANCE METRO AG 2015 98
RAISING CAPITAL EXPENDITURES FOR GROWTH INVESTMENTS in bn 1.7 1.1 ~1.4 ~2.0 Expansion Intangible assets / IT Repair & Maintenance Remodelings / new channels / innovations Focus of store capex on high return, quick payback remodeling projects Increasing focus on new channels and innovative market opportunities New Store Openings focused in selected high growth emerging countries 2011 2013/14 2014/15 Midterm Increased focus on additional Remodelings (esp. for MCC) Remaining capital expenditures stable to ensure a well maintained asset base METRO GROUP FIELD TRIP 2015 FINANCE METRO AG 2015 99
AGENDA 01 Drivers of Value Creation 02 Active Real Estate Management 03 Financial Targets METRO GROUP FIELD TRIP 2015 FINANCE METRO AG 2015 100
BETTER COMMUNICATION WITH OPERATING SEGMENTS IS THE FOUNDATION FOR VALUE CREATION 3 Increase of frequency, sales & EBIT 4 Increase of rental income & property value 2 Better design of sales area & increased location attractiveness 1 Project development & investment in properties METRO GROUP FIELD TRIP 2015 FINANCE METRO AG 2015 101
METRO PROPERTIES STREAMLINED METRO PROPERTIES OLD Investment Construction, Expansion Property Management Transfers Spin-offs Downsizing Asset and Portfolio Management Project Development Transactions Full Service Provider 1.600 employees 1.300 virtual employees Real Estate Company 360 employees in core functions 210 employees in shopping center management METRO GROUP FIELD TRIP 2015 FINANCE METRO AG 2015 102
ACTIVE PORTFOLIO MANAGEMENT OF METRO PROPERTIES Mannheim (Kurpfalz Center) Project development GALERIA Kaufhof Improved ownership structure High share of freehold assets METRO GROUP Headquarters Profitable divestments 51% Mixed 49% Freehold Old Wal-Mart store converted into modern retail destination Invest: 34.5 m Rent p.a.: 4.0 m Conversion to freehold Long-term extension of lease agreements Divestment of non-strategic properties reaching their value peak METRO GROUP FIELD TRIP 2015 FINANCE METRO AG 2015 103
AGENDA 01 Drivers of Value Creation 02 Active Real Estate Management 03 Financial Targets METRO GROUP FIELD TRIP 2015 FINANCE METRO AG 2015 104
WE HAVE STABILIZED OUR RATING IN A CHALLENGING ENVIRONMENT Key Ratios Qualitative Rating Factors 2.0x Strong market position 30.0% 20.0% 10.0% BBB 3.0x BBB- 21.8% BB+ 2012 Net Debt / EBITDA 3.0x 3.1x 3.0x 19.9% 21.8% 4.0x 5.0x 2012/13 2013/14 Funds from Operations / Net Debt Geographic diversification Broad product range Omni-channel Positive LfL development Strong liquidity Free cash flow generation Prudent finance strategy Stable food sales S&P as the only officially authorized rating agency with insider status Stabilized and improved Investment Grade Rating targeted Quote S&P rating report: it appears that Metro has passed its trough METRO GROUP FIELD TRIP 2015 FINANCE METRO AG 2015 105
FINANCIAL MID TERM AMBITIONS 2013/14 Mid Term (~ 2020) LFL Sales Growth 0.1% > 2% EBIT Margin 2.7% > 3.5% Capex 1.2 bn ~ 2 bn Rating BBB- BBB METRO GROUP FIELD TRIP 2015 FINANCE METRO AG 2015 106
OUR FINANCIAL STRATEGY IS DESIGNED TO DELIVER SHAREHOLDER VALUE BY CREATING THE CONDITIONS FOR PROFITABLE GROWTH 1 We focus our entire business on creating value for customers 2 We have strengthened our balance sheet and achieved a sound financial position 3 We continuously improve our net working capital and cash flow 4 We strive for a strengthened credibility at capital markets 5 We improve our financial flexibility through the transformation of METRO GROUP METRO GROUP FIELD TRIP 2015 FINANCE METRO AG 2015 107
OUR TRANSFORMATION PROCESS HAS LAID THE FOUNDATION FOR SUSTAINABLE, PROFITABLE GROWTH METRO GROUP FIELD TRIP 2015 FINANCE METRO AG 2015 108
METRO GROUP FIELD TRIP 2015 METRO GROUP STRATEGY II Olaf Koch Berlin, 6 May 2015
TRANSFORMATION OF METRO GROUP METRO TECHSTARS ACCELERATOR BUSINESS INNOVATION STRATEGY TURNAROUND OF LFL SALES DEVELOPMENT MODERNIZATION OF OUR BUSINESS MODELS DEBT REDUCTION STRENGTHENING THE BALANCE SHEET FOCUS PORTFOLIO OPTIMIZATION SUSTAINABILITY CORPORATE CULTURE, MANAGEMENT CULTURE, EMPLOYEE ENGAGEMENT CUSTOMER-CENTRIC STRATEGY 2012 2013 2014 2015 METRO GROUP FIELD TRIP 2015 METRO GROUP STRATEGY METRO AG 2015 110
METRO GROUP S TRANSFORMATION IS ON TRACK CUSTOMER VALUE clearly in focus, relevance further increased BUSINESS MODEL UPGRADE on track and to be intensified EFFECTIVENESS enhanced with new Operating Model (MCC) Successful PORTFOLIO MANAGEMENT to be continued Fast growing new sales CHANNELS and SERVICES Strengthened BALANCE SHEET INNOVATION as a catalyst for further growth METRO GROUP FIELD TRIP 2015 METRO GROUP STRATEGY METRO AG 2015 111
METRO GROUP FIELD TRIP 2015 Berlin, 6 May 2015