REWE Group places one billion Euro Schuldscheindarlehen loan
16 February 2018
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Above-average growth in German supermarket business through organic growth and takeovers
REWE Group Facts and Figures 2017
In the 2017 business year, REWE Group saw a strong increase in revenue in all business segments, both at home and abroad. Total external revenue grew by 6.7 per cent to 57.8 billion euros. Business in Germany contributed to the dynamic growth of the group with an increase in revenue of 7.1 per cent. Revenue abroad increased by 5.7 per cent. The foreign share of total external revenue of REWE Group thus decreased slightly by 0.3 percentage points to 27.7 per cent, while for Germany it increased by 0.3 percentage points to 72.3 per cent. The number of stores rose by 3.7 per cent overall to 15,313.
At the presentation of the not yet audited business figures in Cologne on 10 April 2018, Lionel Souque, CEO of REWE Group, said: “2017 was an exceptional and successful year for our company, as our cooperative group grew very strongly overall by 3.7 billion euros. This is a record amount in terms of revenue increase. What’s particularly gratifying is that we didn’t achieve this increase in revenue solely through the takeover of Kaiser’s Tengelmann branches in Berlin, Bavaria and North Rhine-Westphalia, through the founding of Supermärkte Nord Vertriebs GmbH & Co. KG (SuNo) with its Sky stores, and through the consolidation of the newly established joint venture with REWE Dortmund eG, rather the group also grew very strongly through organic growth. In the highly competitive German food retail sector, REWE achieved the strongest revenue increase in the supermarket sector, even without including the acquired branches. PENNY was able to improve further on its revenue increase achieved in 2016. Likewise, our foreign business has developed exceptionally well, particularly in Central and Eastern Europe. Not least against the background of good developments at toom Baumarkt DIY stores and in our Travel and Tourism division, I am very satisfied with the overall development of REWE Group, which is primarily due to the outstanding performance and commitment of our employees. Amidst tough competition for trade and tourism, they represent a decisive competitive advantage for us. We are still reaping the fruits of our consistent policy of expansion, modernisation and innovation, which will continue to be the cornerstones of our profitable growth strategy. Our goal is to provide the best service for our customers – everywhere and at all times. This includes our commitment to the areas of sustainability and healthy diets. Therefore, we will significantly reduce the amount of sugar and salt in around 200 of our store brand products in 2018.”
Souque also expressed his satisfaction with the development of the independent food retail business under the umbrella of REWE Group. In 2017, REWE partner retailers achieved a revenue increase of 8.5 per cent. “The stores of our REWE independent retailers are an important driver of our growth. The promotion of independent retail is not only part of our cooperative philosophy, it also contributes decisively to the positive economic development of the entire company.”
Number of employees increases by 6 per cent
The number of employees in Germany and other European countries rose by 6.1 per cent to 345,434 (continuing operations). In Germany, the number of employees increased by 7.7 per cent from 235,897 to 254,097 in 2017. The number of employees abroad increased by 1.7 per cent to 91,337.
Compared to 2016 (as of 30 September), the Cologne-based trade and tourism group increased the number of trainees by 2.8 per cent last year from 8,168 to 8,394 (as of 30 September).
The revenue of REWE Combine from continuing operations rose last year by 8.3 per cent from 45.6 billion euros to 49.4 billion euros. In Germany, REWE Combine grew by 9.5 per cent and abroad by 5.7 per cent.
Excluding special items – the takeover of Kaiser’s Tengelmann branches, SuNo, and the consolidation of the joint venture with REWE Dortmund – there was a revenue increase of 4.4 per cent.
The unadjusted operating result from continuing operations totalled 491 million euros. Not including the aforementioned special items, the EBITA of REWE Combine was 594 million euros in the 2017 business year. It was therefore higher by around 20 million euros compared to the previous year’s figure – also adjusted for special items – of 574 million euros (unadjusted previous year’s figure: 997 million euros).
The EBITA of REWE Combine does not include the operating result of REWE partner retailers under the umbrella of the Cologne-based REWE, which amounted to around 290 million euros and thus reached the high level of the previous year.
The annual profit of REWE Combine is estimated to be 338 million euros for 2017. The difference to the previous year is solely due to the aforementioned special items.
REWE Combine’s earnings before interest, taxes, depreciation and amortisation (EBITDA) climbed from 1.53 billion euros to 1.64 billion euros compared with the previous year’s figure (excluding one-time special items in the 2016 business year).
Cash-effective investments in property and intangible assets made in 2017 totalled 1.9 billion euros, significantly above the high level of the previous year.
Equity reached a new high of 6.2 billion euros in 2017. The equity ratio amounted to 31.7 per cent. As of 31 December 2017, the net financial debt without finance leases totalled 752 million euros and therefore remains at a low level.
Souque confirmed that REWE Combine will continue to drive its investing activities in the current business year: “In 2018, we will increase investment to 2.4 billion euros. The focus of investing activities is on the expansion and modernisation of our sales networks, the acquisition of real estate, technology, logistics and training for our employees and management. We will invest around 1.5 billion euros in Germany and around 900 million euros in other European countries.”
Souque further stated: “We feel well equipped for the challenges ahead. Due to the takeover of the Kaiser’s Tengelmann branches and the need for renovation at Sky, we have a temporary charge against earnings. But by investing and modernising here, we are significantly improving our competitive position. We will continue on this path. We are strengthening our trade business in Germany with concepts such as REWE 2020 and PENNY 2020. At the same time, we will continue on our road towards digitalisation and optimise our omnichannel concepts. With our high investments, which we have also planned beyond 2018, we want to significantly increase the speed of our profitable revenue growth.”
National Full-Range Stores
National Full-Range Stores, with REWE, REWE Center, REWE City, REWE To Go, as well as nahkauf and other wholesale partners, achieved a revenue increase of 15.4 per cent to 21.2 billion euros in 2017. Adjusted for the new additions Sky, Kaiser’s Tengelmann branches and the joint venture with REWE Dortmund, revenue increased by 5.8 per cent. Thus, according to consumer researchers at GfK and TradeDimensions, REWE is once again leading amongst German supermarkets in terms of growth this year.
Significant factors in REWE’s success included further improved price positioning, the strengthening of regional and local products, convenience and organic products in the range as well as store brands. The continuous advanced training of employees as well as additional employees in stores also made it possible to further improve customers’ perception of service.
The innovative concept REWE To Go also developed successfully. In cooperation with ARAL, the number of petrol stations with REWE To Go has increased in 2017 from 60 to 236.
The development of REWE omnichannel activities is still fully on course. REWE Lieferservice (REWE’s delivery service) is currently available in 75 cities and covers about 40 per cent of Germany’s population with its offer. This makes REWE Germany’s number 1 online supermarket currently for fresh food products. This offer is supplemented by the REWE pickup service, which is currently available at 67 locations, as well as by the Germany-wide REWE parcel service for partner products.
International Full-Range Stores
International Full-Range Stores combines supermarket and drug store activities in Austria, the Czech Republic, Slovakia, Russia, Bulgaria, Croatia and Ukraine.
Revenue increased by 4.9 per cent (3.8 per cent adjusted for currency effects) from 8.5 to 8.9 billion euros.
Revenue in Austrian full-range stores with BILLA, BIPA, MERKUR and ADEG rose by 1.4 per cent to 6.3 billion euros. The supermarkets grew by 1.9 per cent, while the BIPA drug stores saw a fall in revenue of 4.7 per cent. The reasons for this were adjustments to the branch portfolio and targeted investments in prices.
In Central and Eastern Europe, BILLA generated a revenue increase of 14.5 per cent (+10.4 per cent adjusted for currency effects) to 2.6 billion euros. The strongest growth came from BILLA Czech Republic with +15.9 per cent (+12.9 per cent adjusted for currency effects).
National Discount Stores
PENNY Deutschland generated a revenue increase of 2.5 per cent to 7.4 billion euros. For the second year in a row, the number of PENNY branches in Germany increased again – by 1.2 per cent from 2,148 to 2,174.
At the same time, PENNY continued the roll-out of its concept PENNY 2020 in Germany. In the past year, 850 branches were remodelled accordingly, leading, amongst others, to an increased capacity for providing fresh goods through the enlargement of refrigeration areas and an expansion of the convenience store brands penny to go and penny heat&eat.
International Discount Stores
In Italy, Austria, Hungary, Romania and the Czech Republic, PENNY International generated revenue of 4.5 billion euros. Compared to the previous year, this means a revenue increase of 5.4 per cent (+4.8 per cent adjusted for currency effects).
The countries achieving the highest revenue are the Czech Republic (1.3 billion euros), Italy (1.1 billion euros) and Austria (785 million euros). PENNY International recorded its strongest revenue development in Hungary with 12.2 per cent (+11.4 per cent adjusted for currency effects). This is followed by the Czech Republic with an increase in revenue of 9.2 per cent (+6.3 per cent adjusted for currency effects) and Romania with a 6.9 per cent revenue increase (+8.8 per cent adjusted for currency effects).
In the highly competitive market in Austria, PENNY was able to maintain its revenue of the previous year with a slight increase of 0.7 per cent.
National Specialist Stores
The National Specialist Stores business segment encompasses the DIY store activities of toom Baumarkt and B1 Discount Baumarkt. The branches of toom Baumarkt generated an increase in revenue of 2.5 per cent in 2017 to 1.9 billion euros. With this growth, toom Baumarkt DIY stores clearly exceeded the overall revenue increase calculated by the German Association of DIY and Gardening Stores (BHB) of 1.1 per cent. Given the fall in revenue of around 12 million euros at B1, the total revenue of the National Specialist Stores business segment increased by 2 per cent to 2.1 billion euros.
Travel and Tourism business segment
The travel and tourism division of REWE Group, DER Touristik, continued to develop positively in 2017 with a 3 per cent increase in invoiced revenue to 6.5 billion euros.
The internationalisation of DER Touristik from a German tour operator to a European travel group – with the acquisition of Exim Tours in Eastern Europe in 2012 and the European tour operators, specialists and stores of Kuoni in 2015 – has paid off significantly in the past business year. In 2017, companies in the source markets of Eastern and Northern Europe in particular increased their revenue significantly. The destination agencies are also experiencing considerable growth. Achieving record sales and earnings, German travel sales were once again particularly successful. This area is becoming increasingly important, especially in times of perceived growing uncertainty in some target markets.