Performance

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2. Results of Operations

Revenue Development

in million €20172016Change in absolute figuresChange in %
Retail Germany28,621.125,588.83,032.311.9
Retail International13,353.512,710.0643.55.1
Travel and Tourism4,649.64,576.473.21.6
National Specialist Stores2,130.82,088.542.32.0
Other669.3672.3-3.0-0.4
Total49,424.345,636.03,788.38.3

Revenue increased by a total of 8.3 per cent in 2017. 

The highest-volume business segment, Retail Germany, recorded an 11.9 per cent increase in revenue and was thus significantly higher than the industry trend in Germany. The positive revenue trend was supported by the development of REWE's own stores and the Penny stores, as well as by wholesale activities. In addition, the stores of the Supermärkte Nord companies and Kaiser's Tengelmann acquired in the previous year and REWE Dortmund SE & Co. KG, Dortmund, which was fully consolidated for the first time as at 1 September 2017, also made a material contribution to the revenue trend, as well as reclassifications from the Other business segment, to a smaller extent (see corresponding section of this report). 

The Retail International business segment, with revenue of 13.4 billion euros, is the second-largest business segment in the REWE Group. The 5.1 per cent increase in revenue (+4.1 per cent adjusted for currency translation effects) was due primarily to the Full-Range stores segment in Central and Eastern Europe. Particularly high revenue increases were generated in Russia, Slovakia and the Czech Republic, which were due mainly to the positive performance of the existing stores and to expansion activities. The Austrian Full-Range Stores segment reported a continued positive revenue trend, which was attributable mainly to food retail. Penny International's revenue also made a contribution to this positive development: this was caused by the revenue trend in the Czech Republic and Hungary in particular. 

The Travel and Tourism Business Segment generated consolidated revenue of 4.6 billion euros (brokered travel revenue of 6.5 billion euros), 1.6 per cent over the previous year. The increases in revenue in Northern and Eastern Europe and the target destination agencies were offset by declining revenue in Central Europe. Overall, the recovery by the destinations Egypt and Tunisia and the high demand for travel to Greece had a positive effect on the revenue trend. 

The National Specialist Stores business segment recorded a 2.0 per cent increase in revenue and was thus slightly higher than the industry trend in Germany. The increase in revenue at DIY stores was attributable mainly to the positive performance by the retail stores. Expansion activities as well as existing stores contributed to this growth. 

The reported decline in the Other business segment amounting to 0.4 per cent was due to a consolidation effect: prior to the inclusion of REWE Dortmund SE & Co. KG on 1 September 2017, revenue from the food wholesale business of REWE DORTMUND Großhandel eG, Dortmund, was considered external revenue. Once the company was consolidated, the revenue was classified as internal revenue generated in the Retail Germany business segment to which REWE Dortmund SE & Co. KG is allocated. This revenue is netted in the course of consolidation. However, the actual increase in revenue amounts to 5.2 per cent. Positive revenue development was generated above all by the Eurogroup companies, which were fully consolidated for the first time in the previous year, and REWE's digital business.

Stores and Sales Areas

At the end of the year, the REWE Group's retail business segments operated 9,129 retail outlets with a total sales area of 9.0 million square metres.

Number of stores31 Dec. 201731 Dec. 2016Change in absolute figuresChange in %
Retail Germany14,0784,048300.7
Retail International4,0083,925832.1
Travel and Tourism75074820.3
National Specialist Stores29328762.1
Total9,1299,0081211.3
  • 1 Excl. stores operated by REWE Dortmund SE & Co. KG, Dortmund.
Sales area in m2 *31 Dec. 201731 Dec. 2016Change in absolute figuresChange in %
Retail Germany14,387,1044,372,04615,0580.3
Retail International2,702,1332,642,16759,9662.3
National Specialist Stores1,935,2351,881,59753,6382.9
Total9,024,4728,895,810128,6621.4
  • * No sales area calculated in Travel and Tourism.
  • 1 Excl. sales areas operated by REWE Dortmund SE & Co, KG, Dortmund.

Results

in million €20172016Change in absolute figuresChange in %
 Revenue49,424.345,636.03,788.38.3
 Cost of materials, incl. changes in inventories-36,948.6-33,954.4-2,994.2-8.8
Gross profit12,475.711,681.6794.16.8
 Gross profit ratio25.2%25.6%  
EBITDA1,594.92,002.6-407.7-20.4
Depreciation, amortisation and impairments/reversals of impairment losses and impairment losses (excl. goodwill)-1,103.5-1,006.0-97.5-9.7
EBITA491.4996.6-505.2-50.7
 Goodwill impairments0.0-137.0137.0100.0
EBIT491.4859.6-368.2-42.8
 Financial result-16.628.8-45.4<-100
EBT474.8888.4-413.6-46.6
 Taxes on income-133.0-396.1263.166.4
Results from continuing operations 341.8492.3-150.5-30.6
 Results from discontinued operations-4.0-29.825.886.6
EAT/net income for the year337.8462.5-124.7-27.0

EBITDA declined by 407.7 million euros. The increase in gross profit by 794.1 million euros was offset by a decrease in other operating income by 244.7 million euros (excl. reversals of impairment losses) and an increase in other operating expenses (383.5 million euros) and personnel expenses (573.6 million euros). The sharper increase in cost of materials as compared to revenue, particularly in the business segments Retail Germany and National Specialist Stores, resulted in a decrease in the gross profit margin to 25.2 per cent (previous year: 25.6 per cent). 

The decrease in other operating income was due mainly to a reduction in miscellaneous other operating income by 601.2 million euros, which had been heavily influenced in the previous year by a non-recurring effect (non-recurring income from central settlement due to revisions in ECJ rulings). This was offset by increased income from advertising services, rental income, income from other services and from the reversal of provisions. The increase in income from advertising services is attributable to increased advertising activities in radio and television, print media, outdoor advertising and the increased use of advertising material in the Retail Germany business segment. Rental income increased mainly in the Retail Germany business segment. This was due to the increase in the number of partner stores and the higher sales-based rents due to increased revenue. The increase in income from other services is attributable primarily to the increased income from the provision of services to the REWE partner stores. The increase in the items described above was also in part heavily influenced by the first-time inclusion of the Supermärkte Nord companies, REWE Dortmund SE & Co. KG, Dortmund, and the Kaiser's Tengelmann stores.

Corresponding to the increases in rental income, income from advertising services and other services, the related expenses also rose. In addition, expenses for the vehicle fleet and freight also increased, mainly in the Retail Germany and National Specialist Stores business segments.

The increase in personnel expenses (9.3 per cent) was primarily attributable to the inclusion of the Supermärkte Nord companies, the Kaiser's Tengelmann stores, REWE Dortmund SE & Co. KG, and the 2017 pay scale increase.

EBITA was 491.4 million euros in 2017, 505.2 million euros less than in the previous year (996.6 million euros).

The lower financial result was primarily the consequence of a 24.7-million-euro decrease in the interest result, a 13.4-million-euro reduction in the results from the measurement of derivative financial instruments and a 12.4-million-euro decline in the result from companies accounted for using the equity method. The previous year's interest result was materially influenced by interest income in connection with the non-recurring income from central settlement due to revisions in ECJ rulings.

Taxes on income resulted in an expense of 133.0 million euros (previous year: 396.1 million euros). This amount consists of a current tax expense of 136.4 million euros (previous year: 385.2 million euros) as well as deferred tax income of 3.4 million euros (previous year: expense of 10.9 million euros). The current tax expense includes income of 1.3 million euros (previous year: expense of 103.3 million euros) from taxes for previous years.