More than 60 billion euros revenue for the first time: REWE Group experiences strong national and inter&shynational growth

Cologne. For the first time in the history of the company, REWE Group achieved total external revenue of more than 60 billion euros: in the past business year, 2018, revenue increased by 4.7 per cent to 61.2 billion euros. Both business in Germany and foreign business of the Cologne-based cooperative trade and tourism company contributed to this strong revenue increase. In Germany, revenue grew by 4.5 per cent and abroad by 5.2 per cent. The foreign share of total external revenue of REWE Group thus increased slightly by 0.2 percentage points to 28.7 per cent.

At the presentation of the not yet audited business figures in Cologne on 3 April 2019, Lionel Souque, CEO of REWE Group, said: REWE Group is on a healthy growth trajectory, both nationally and internationally. In 2018, we once again profited from our huge investments made in previous years in the modernisation and expansion of our stores and in strengthening our Travel and Tourism division, both in Germany and in other European countries. The 2018 business year was one of the best in the history of our company – and this despite ongoing burdens due to the renovations at Sky stores. The strength in our core business gives us the opportunity to drive forward new business models and innovations that will be the foundation for a continued positive development of our company in the future.

As a cooperative group, we pursue our strategic priorities calmly and with commercial foresight, even when the market and competitive environment is sometimes characterised by turbulence.

Once again, the independent food retail business, under the umbrella of REWE Group, was a driver of the positive overall development. REWE retailers in Germany again managed to increase their revenue growth compared to the previous year, says Souque. Following growth of 8.5 per cent in 2017, our retailers contributed to the successful economic development of REWE Group in 2018 with a revenue increase of 9.1 per cent. The strengths of REWE retailers clearly lie in being local enterprises with roots in their respective towns and communities, high customer proximity, regional and local product ranges, as well as individual service. The promotion of independent retail remains a high priority for us. The continuous expansion of the sales network of independent retailers is a key factor here, explains Souque. The number of stores of REWE retailers in Germany increased in 2018 by 5.1 per cent from 1,635 to 1,718.

In addition, revenue from online business under the umbrella of REWE Group continued to grow significantly by 22.4 per cent overall.

Number of employees increases by 2.4 per cent

The number of employees in Germany and other European countries rose by 2.4 per cent to 360,315. In Germany, the number of employees increased by 2.1 per cent from 254,097 to 259,496 in 2018, including 8,560 trainees (as of 30 September). The number of employees abroad increased by 3.2 per cent to 100,819.

REWE Combine

The revenue of REWE Combine from continuing operations rose last year by 8 per cent from 49.4 billion to 53.4 billion euros; adjusted for currency effects, growth was 8.1 per cent.

In Germany, REWE Combine grew by 8.3 per cent and abroad by 7.3 per cent (+7.6 per cent adjusted for currency effects).

The operating result (EBITA) increased by 23.8 per cent from 491 million euros to 609 million euros. The EBITA of REWE Combine does not include the operating result of REWE retailers, which amounted to around 320 million euros and thus exceeded the previous year’s result of 290 million euros.

The annual profit of REWE Combine is estimated to have increased by 27.2 per cent to 430 million euros.

The EBITDA of REWE Combine increased by 15.6 per cent from 1.6 billion euros to 1.8 billion euros as against the previous year’s comparable figure.

Cash-effective investments in property and intangible assets made in 2018 totalled 1.8 billion euros, on par with the high level of the previous year.

Equity grew by 5.9 per cent in 2018, thus reaching a new high with 6.5 billion euros. The equity ratio amounted to 31 per cent. As of 31 December 2018, the net financial debt without finance leases totalled 1.2 billion euros.

REWE Group’s Chief Financial Officer, Dr. Christian Mielsch, commented: REWE Combine has an exceptionally strong balance sheet. We have the strength to keep our investments at a high level in the future and plan to invest around two billion euros in the current business year. This is essential if we are to continue to grow dynamically and profitably in retail and tourism – nationally and internationally.

National Full-Range Stores

National Full-Range Stores, with REWE, REWE Center, REWE To Go, as well as nahkauf and other wholesale partners, achieved a revenue increase of 12.3 per cent to 23.8 billion euros in 2018. This includes the joint venture with REWE Dortmund.

Significant momentum was generated for the supermarket business particularly by the roll-out of the REWE 2020 store concept, the central elements of which include freshness, regionality, healthy diets, variety, innovation and expert assistance. Overall, 180 stores had been converted to the REWE 2020 concept by 31 December 2018.

Rapid progress has been made in the conversion of 152 Sky stores to the REWE sales concept. The complete transition from Sky to REWE will be finished by mid-2019.

International Full-Range Stores

International Full-Range Stores combines supermarket and drug store activities in Austria, the Czech Republic, Slovakia, Russia, Bulgaria, Croatia, Lithuania and Ukraine.

Revenue increased by 6.2 per cent (6.8 per cent adjusted for currency effects) from 8.9 to 9.4 billion euros.

Revenue in Austrian full-range stores with BILLA, BIPA, MERKUR and ADEG rose by 1.7 per cent to 6.4 billion euros. BILLA supermarkets grew by 1.5 per cent; BIPA drug stores in Austria increased revenue by 1.1 per cent.

In Central and Eastern Europe, BILLA achieved a revenue increase of 17 per cent (+19.1 per cent adjusted for currency effects) to three billion euros. This includes the business (fully consolidated for the first time) of Lithuanian supermarket chain Iki in which REWE Combine acquired a majority interest on 1 August 2018. In the Czech Republic, BILLA achieved revenue of over one billion euros (1.1 billion euros) for the first time thanks to a revenue increase of 12 per cent.

National Discount Stores

PENNY Deutschland increased revenue by 3.1 per cent to 7.6 billion euros. For the third year in a row, the number of PENNY branches in Germany also increased again, reaching 2,182 as of 31 December 2018.

The drivers of this positive development were the consistent positioning of PENNY as a neighbourhood discounter, the expansion of the organic and convenience ranges, as well as the introduction of Payback.

International Discount Stores

In Italy, Austria, Hungary, Romania and the Czech Republic, PENNY International achieved revenue growth of 7.5 per cent to 4.8 billion euros. The number of stores rose by 2.7 per cent to 1,505. The country to experience strongest growth was Romania, where PENNY increased revenue, adjusted for currency effects, by 14.6 per cent. In Austria, PENNY increased revenue by 2.5 per cent.

DIY Stores

The DIY Stores business segment encompasses the DIY store activities of toom Baumarkt and B1 Discount Baumarkt. In 2018, revenue in this segment grew by 0.9 per cent to 2.2 billion euros. The toom Baumarkt DIY stores alone grew by 2.3 per cent, above the industry growth rate of 1.6 per cent.

Travel and Tourism Business Segment

DER Touristik, the second pillar of REWE Group, next to the retail business, continued to develop positively with a 3.4 per cent increase in invoiced revenue to 6.7 billion euros. This development was supported by the internationalisation of DER Touristik. For example, Exim Tours achieved revenue growth of 30.7 per cent in Eastern Europe.

With revenue growth of around 20 per cent, the Destination Management Companies, which are responsible for guest services, excursions and hotel procurement, also proved to be particularly successful. The travel agencies of DER Touristik increased invoiced revenue by 6 per cent in the 2018 business year.