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Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the Metro AG Conference Call. [Operator Instructions]I would now like to turn the conference over to Sabrina Ley, Director, Investor Relations. Please go ahead.
Thank you. Good morning, everyone, and welcome to our Q1 2018, '19 Results Call. As usual, please take note of our disclaimer.I will now hand you over to Olaf to present our Q1 results.
Yes, good morning, everybody, and let me open this with a clear statement. I think Q1 for us has been a real encouraging start into the new fiscal year. And what we see is that the intensification that we're aiming for when it comes to the B2B profile is making good progress. So you'll see a 5% growth, almost, in both target groups in HoReCa and Trader. And this clearly is achieved by a transformation of the business towards more relevance, more proximity and therefore stronger momentum also on the top line. We'll talk about that in more detail and give you examples on how that is progressing.I think the other one that is remarkable in this quarter is our transformation in Russia. It's well known that this has been one of the big challenges in the last fiscal year '17/'18.And as we kicked off the transformation in Q3 '17/'18, we have seen steady progress. And this is the reason why we've seen also a like-for-like trend change, which shows the right direction.On top of that, as much as we told you already, this year will come a bit lower on EBITDA, and this is predominantly due to the fact that we are investing into competitiveness and into modernization.And as such, our Q1 results are very much in line and they're very much in control when it comes to the development on the earnings of EBITDA, excluding real estate and at constant currency.When you look at the earnings per share on the continued operations, they're actually on par with previous year level. And then, of course, it's very important for us that this year will mark the conclusion of the transformation from a very diversified conglomerate into a purely focused wholesale company. And in this regard, we are absolutely online -- in line with our plan.So let's look at that a bit in more detail. And first of all, let me remark a few things on how Real is doing.First of all, I think it is worth mentioning that our first quarter came in a bit better than the quarters before. So we will not spend too much time talking about that, but I think it's worthwhile mentioning. And why is that? That is because of the progress that we're making on the food level side. We opened a new store in Braunschweig. We are very happy that we are also able to conclude a new opening in this calendar year.And while we are doing this, we are seeing, as well, that the development of our earnings is very much in line with what we have been announcing. We have a change in tariff cost, which comes after the departure from [ Birdie ] that has led to a step up in costs actually. And that has a burn on our EBITDA. But let's not forget, this will be turned into positive, as we are hiring more people on the new tariff regime. And there, we have more than 5,000 people that already have signed the contract, actually 5,600. This is more than 50% of total workforce and we'll continue to hire people.The other one is, we are closing stores, as a natural optimization of our network. So we are closing some of the underperforming entities, and we have built accruals for that in the first quarter of the year.The momentum, as I said, on the day-to-day operation is improving, still negative, slightly negative, but it's improving. But what is growing very fast and continues to grow very fast is our online presence. So therefore, it's worth mentioning that we are conducting one of the most viable marketplaces in Germany, now more than 14 million SKUs on offer and actually teaming up with more than 5,000 merchants. All of this, I think, is very much in line with what we have been saying about Real, and makes it even more clear that now a new ownership is the way to go, as we are focusing much more on wholesale.So just a brief look into the process. So we conducted a very thorough preparation in the fiscal year '17/'18. We announced in September that we are conducting this process, and that we will conclude the process between 6 to 8 months.The momentum is good. We are seeing good engagement of interested parties. Actually, we are expecting nonbinding offers in due course, and therefore, we remain confident that the announced timeline is absolutely stable. No reason to deviate from that.Having said all of this, now let me hand over to Christian, who's going to elaborate a bit more on the financials.
Thank you, Olaf, and good morning, everyone. Let us start with the drivers of the sales development in Q1.Overall, we have generated like-for-like growth of 2.3%, which was primarily driven by the very positive development in Eastern Europe and Asia, while a slightly positive day effect was also supportive.As in the past quarters, our delivery business remains a significant driver for like-for-like sales development. In Q1, total delivery grew by 9% and accounted for 18% of total sales.In addition to delivery, the store-based business has also contributed positively to the total development. The reported growth in euro terms came in at minus 0.6%, due to currency effects in Russia and Turkey.EBITDA, excluding real estate gains, amounted to EUR 470 million in Q1, down by EUR 34 million versus prior year. However, adjusted for currency, EBITDA decreased only by 3% or EUR 16 million.Gains from real estate transactions were rather small in Q1 with only EUR 2 million. However, this has no impact on the expected EUR 250 million to EUR 300 million for the full financial year.In that context, it is worthwhile mentioning that in January, we have concluded the announced sale of the real estate project development in Bangalore. This transaction alone lets your profit amounting to roughly EUR 30 million.Having said that, let's move to our regional performance.Let me start with METRO Germany, where like-for-like sales slightly decreased by 0.2% in Q1. This quarter once again saw a good sales development in HoReCa which grew by more than 2%, driven by both frequency and basket. However, this growth couldn't fully compensate for the Black Friday actions of last year. The EBITDA has slightly been above prior year.In METRO Western Europe, like-for-like growth came in at 1%. Compared to Q1 last year, the delta between reported sales and like-for-like came down as a result of the annualization of the acquisition of Pro à Pro.EBITDA improved by EUR 5 million, due to margin improvement in both France and Belgium, and Olaf will, later on, spend a bit of time on the very good development in France.As we now move to the numbers for Russia, you have seen a significant improvement in the sales trend. While the transformation has been challenging and is by no means concluded, we are confident with the recent development. This is also in light of the fact that the adjusted management team has only been in play since last summer.Like-for-like sales came in at minus 2.4%. This is significantly driven by a healthy improvement also in Trader sales coming from basket growth. EBITDA declined by EUR 29 million year-on-year or EUR 80 million, excluding FX.As you can see on the right-hand side of the chart, we have invested into prices to drive the top line growth. This price investment could not be offset by the achieved the cost savings and could not yet be balanced against COGS improvement, hence resulting in decline in EBITDA.Nonetheless, this is in line with our expectations. And as we explained in December, the first half of the year will bear the majority of the EBITDA pressure, as a result of the active business repositioning.With regards to the quarters to come, we will continue to invest into prices. However, as of Q2, we have supplier funding coming from renegotiation in South Health from logistics, which will offset the majority of the price investment.BMPL already shows increase in volumes, which will help in improving operating leverage, and of course, there are still some cost-saving opportunities in the next quarters.The Trader franchise, Fasol, has continued to grow to more than 1,400 Fasol stores as per the end of December, contributing with roughly 1 percentage point to like-for-like sales growth. We are pleased with the current development and expect Fasol to contribute up to 2 percentage points like-for-like sales in this fiscal year.In addition, we are working on remodeling floor space, which was previously occupied by media market. This space will be allocated to food assortment in which we can differentiate ourselves, and hence expect further support for sales.In Eastern Europe, we once again generated strong like-for-like growth of 6.4%. The development is primarily driven by the continued strong growth in the Trader business in Romania and HoReCa growth in Turkey.Due to negative currency effect, especially in Turkey, total revenue increased by only 0.8%, understating the strong operational improvement.The EBITDA, excluding real estate gains, declined by EUR 10 million to EUR 113 million in Q1 '18/'19. This is partly driven by the ramp-up of our distribution center in the Czech Republic, but is also impacted by currency effects.In the Asia region, like-for-like sales growth came in at 5.9% with all countries showing a positive like-for-like development and accelerated growth rates, especially in China and India. EBITDA came in largely flat year-on-year.Under the new operating reporting structure, the Other segment is composed of the former Wholesale Others and Group Others.EBITDA decreased slightly, as cost for digitalization and IT increased, also driven by the continued roll out of our digital interface for delivery. Moreover, both the current and the previous year benefited from some one-time gains.Moving further down to P&L. EBIT came in lower than in the previous year, in line with the development on EBITDA level. Net financial results increased year-on-year, mainly due to a positive interest effect related to tax refund last year and a negative noncash and onetime effect from a regulatory requirement to change euro-denominated contracts into Turkish lira.The tax rate in this quarter was at 38%, and therefore, in line with our full year expectation of 37% to 39%. Tax rate of Q1 '17/'18 should not be used for comparison purposes and it was affected by technical impacts from the application of IFRS 5.As a result of the lower tax rate, Q1 EPS from continuing operations came in at prior year's levels of EUR 0.50. Reported EPS, including discontinued operations, amounted to EUR 0.56 compared to EUR 0.64 in Q1 last year. The decline is mainly due to termination of the temporary tariff agreement and expenses for future store closures in our hypermarket business.Moving on to the free cash flow, which decreased by EUR 60 million compared to last year.The change in networking capital amounted to EUR 95 million in Q1 this year compared to EUR 138 million in the last year, and this decline is mainly due to seasonal effects.CapEx in Q1 was EUR 15 million lower than last year, driven by a lower number of new store openings and more efficient format than last year.All in all, our simplified operational free cash flow came in at EUR 482 million in the quarter compared to EUR 542 million last year.From the forecaster perspective, the picture looks broadly similar. The operating cash flow from continuing operations came in at about EUR 360 million versus roughly EUR 420 million last year, led by lower usage of restructuring provisions partly compensated the EBITDA decreased and seasonal networking capital effects.Investing cash flow from continuing operations was in line with the prior year's levels of approximately EUR 100 million.The financing cash flow from continued operations changed from minus EUR 0.7 billion to minus EUR 0.4 billion as a result of lower debt repayments.Finally, net debt stood at EUR 2.4 billion at the end of December, which is broadly in line with the previous years.On a side note, a few weeks ago, S&P also confirmed the investment grade rating for METRO with BBB- and a stable outlook.That was the run through our key financials. Now I hand back over to Olaf to discuss the strategic developments of METRO in more detail.
Yes, thank you, Christian. And let me start with a brief look into our development in HoReCa.As mentioned before, we have seen a growth, which is very encouraging, almost 5%. And this is really driven by a continued transformation of our business. And it's well known that in France, we call this business the role model of a HoReCa business within the METRO group. And I think the good indicator that there's still opportunity to progress is the change of attitude we even can see in METRO France that has led to a healthy growth in the first quarter of this new fiscal year.Despite the fact that the market was very much distorted by the yellow vest demonstrations, we have to face similar challenges like everyone else. So how comes that we can grow on such a good market position that we already have, but still can make the progress.Number one, we continuously optimize our assortment, and we review not only on a national or regional level, our optimization actually goes now store-by-store. So this is the far progressed localism that we applied.Number two, it's about our holistic approach to the customer relationship, making sure that not only our sales force is taking care about A and B customers, but we take care about all customers coming by in an approach where we are activating all our associates throughout all departments for the respective target which we are serving in that store.And finally, we are continuing to optimize our food service distribution performance. And altogether, and then also combining us as well with Pro à Pro, we could show another good quarter of healthy numbers when it comes to visits, baskets and actually buying customers. So all in all, it shows that even the top-performing entity within the HoReCa group at METRO still has significant opportunity to progress in the coming years in the foreseeable future.Turkey has embarked into the journey of full transformation to HoReCa 3 years ago, as part of their VCP. And here, we have been talking about a lot of changes when it comes to ranges, but also on the sales side, we are much more capable today to encounter cross-selling opportunities as much as we are now promoting our own brands in Turkey. And I think it's fair to say that METRO Turkey, also with the iconic Gastronometro, which is an academy in Istanbul, has turned into a figurehead of the industry in whole Turkey. Market itself remains not easy, but still we can show healthy growth quarter-by-quarter.And then, of course, Germany, as you well know, is one of our most important countries for the transformation. And here, our target is the same. We want to be the #1 marketplace for the gastronomy sector. This can only happen through a continued optimization of ranges and assortment and to learn from the best within the group.And here, we are now applying the same sales approach that we are successfully applying already in France, in Italy and elsewhere, into Germany, which is the regional sales force approach so that we are actually covering the customer by various channels just to optimize the experience for those restaurateurs, hoteliers or catering entrepreneurs, and on the other hand, also improve effectiveness. And it's about the 2 things, efficiency and effectiveness, also of cost combined with unique product in range and quality.But let's talk about efficiency and effectiveness on the next one. And you are well aware that we are investing quite a bit into the digitalization of the card at METRO. We have rolled out a new interface for our food service distribution channel, which is called M-Shop.This has been rolled out meanwhile to 13 countries. We were able to collect 3.4 million orders in 2018. We expect to double that. We share the number with you in the annual press release -- conference that this is roughly 1/5 of our orders that we are taking. And the benefits for the customer are significant. It's very convenient. It's very easy. It's a lot of time-saving, and on the other hand, this is the foundation for a better service level, because the margin of error that you have when you have other channels of ordering, is it e-mail communication, phone or whatever kinds of channels you are using, the inconsistency risk is significant. The benefit for us is noticeable, not only we can increase the basket up to 18%, but actually, we can reduce the cost for the order taking by 50% roughly. And from my point of view, actually that's the minimum of savings that we can get there.So we are very excited about this development, and we'll continue now to roll it out to as many customers as possible to ensure the highest penetration that is applicable.Now digitalization doesn't stop at the borders of METRO, but from our point of view, it needs to go beyond the boundaries of METRO, and that means the digitalization of business of our customers.We shared with you a couple of insights last year, and we are continuing to see significant progress. So meanwhile, we have more than 120,000 digital accounts, we are adding roughly 10,000 per month. This is the foundation for more functionality, because the principal is the easy application of online presence, the website, the Facebook integration, the Google My Business integration, that leads to the digital account and the digital dialogue. Because the next thing we are doing is, of course, promoting our table reservation. As you can see, we have had 350,000 reservations in the single month of January. And that means that we are capable to intensify the digital relevance METRO can play for those customers.What's the benefit for them? The benefit is actually more visibility, more attractiveness for customers who come through the online channel. And on the other hand, reduced cost. Plus it is relationship-building event. But not only that, we have more solutions in the pipeline that will support our customers. And actually, will support our capability to provide more services and more solutions to them, so we foresee this to be a catalyst for the role we are playing in Wholesale, becoming a Wholesale 360 player, including digital solutions and services.We have rolled out a lending platform called DISH. This platform basically is kind of the place where you find all of these solutions, plus learning, plus events that are happening around the sector, not only on digital. This platform has now been rolled out to Germany, Italy, France and Croatia. And we'll continue to roll out throughout the year.Now let's look at the second very important target group, the Traders. And here, it's hard to say, we had to learn the lesson by heart because it's a very different model, it's a very different earnings model when it comes to gross profit. And therefore we need to have much higher throughput, and on the other hand, much lower cost of service. Our role model certainly here is Romania. This has been the pioneer in buy more, pay less. And we see continued progress in the roll out as well as on the La Doi Pasi which is our [Foreign Language] twin so to say, is our franchise model that we are running in Romania.Worth mentioning are the 2 underneath. India, which is quite impressive performance throughout the last 2 years, not only we gained momentum on sales quarter-by-quarter, but also earnings are now on a level which are encouraging.And just one example, I think the Diwali festival preparation was the best we ever had, leading to significant uptick in sales. And this is why, I think, we, as a management, are very confident that our position in India can be enhanced in the years to come.Same in Pakistan. Much smaller, but also quite encouraging. Here, not only we are launching our new range of Own Brand products, but we are also now accelerating our effort on the franchise.The model here is called Freshly, and there is more to come. All of this together is the reason why we're able also to go on a like-for-like level coming closer to 5%, 4.6% to be precise, and to be very straightforward. This excludes Russia, as in Russia we are, like Christian mentioned it before, reshaping the business model.Now this will also include digital. The learning we have made on the hospitality sector is so encouraging that we are now taking the chance to look into this for Trader.And no big surprise, our pioneer in that model is Romania and we have strong technical capabilities in Romania. We have a division of Metronom, our IT entity in Bucharest. And we are now looking to find new ways and means to do the same thing we have done on the HoReCa hospitality side for the Trader.So here, we have now a pilot that is actually connecting the Trader business to ourselves, giving them a significant access to benefits and make the relationship much more efficient and effective at the same time.So this is why we, as I mentioned, are quite confident on the 2 target groups and the strategic transformation. And we feel that we are in good shape when it comes to the purity of our business becoming a fully focused wholesale company.And this is also the reason why we also are very confident with the start of this year to be in line with our guidance, which remains unchanged for the fiscal year '18/'19. I don't think I need to go for every single line item here. It's visible on the left side of the chart. So we are reconfirming our guidance. We are also making you aware that Q2 will be a bit special, due to the calendar situation. Easter will be in April, and, therefore, we will have quite a significant shift on sales from March to April. And this also, of course, has an impact on the balance sheet. So the working capital aspect also needs to be considered. So we are just making clear that we will see those deviations on the smallest quarter of our fiscal year. It's also, I think, important to mention that the quarter from January to March typically is one of our smallest quarters.So all in all, let me therefore make it clear, we are very confident about the start. We're very encouraged about that. We are quite encouraged in regard to the strategic transformation. We are now heading for communication in the coming days to provide more data to the Capital Market.And we have our Annual General Meeting this week, end of the week, on Friday, which we all look forward to conduct.And let me close with just one observation, which is the intensification towards the wholesale sector is progressing as we announced on the annual press conference.And let me close here, and now open for questions and answers. Thank you.
So much from our side. Let's start Q&A session.
[Operator Instructions] And the first question is from Cedric Lecasble with MainFirst.
I have two actually. So first one is on Russia, where you seem to have some positive developments. Could you be a little bit more precise maybe on the volume situation and maybe tell us how much volume growth you need to offset the price investments you've made, which is [indiscernible] but it would be helpful to have a few guidelines and a few figures. And when do you expect to reach this? And I read a few days or weeks ago some potential study of disposals in Asia. I want -- just wanted to be sure about that. Are you considering any disposals? Why would be -- why would you be disposing some pieces of Asia which has been working pretty well over these last years? And more generally, do you see anything in terms of capital allocation? Are you considering reinvesting eventual Real proceeds into new acquisitions, maybe in some areas like Eastern Europe or potentially Asia?
Yes. On Russia, your question is, of course, spot on. The main ambition which we had when we started the transformation was to ensure that our volume throughput grows again. This is the main indicator as well for relevance of customers as much as it is important for the relationship to our suppliers. So right now, the positive is, it is growing. We have plus 3% volume uptick in Q1, which is, I think, a good progress and still not breaking even on the sales side. But it gives you a bit of a flavor where we need to have. So we would say that this is for the coming quarters, our main ambition. How do we want to do that? Well, we will need to invest a bit more on the pricing side. We are ready for that on the buy more, pay less model, you know, we have this 3-tier model. And tier 1 is the enterprise, tier 2 is the kind of the volume uptick for larger pack, and tier 3 is for the big pack. And this buy more, pay less, to be precise on what I mentioned before, goes that well that we have this volume uptick of 3%. So it's related to the buy more, pay less performance. Now the worrying part could be, are you then able to compensate for that on the P&L? And as Christian elaborated on his chart, there is 2 things -- there are 2 things that we are addressing here. There's more cost saving to be done and here, we have a good plan. And the team is executing on the plan consistently. And the other one is on the back of growing volumes to entertain very close discussions with our fellow partners in the industry to give them access to this growth channel, but therefore, also review the terms and conditions, which we foresee to progress now in the coming month. And that should bring the balance of growth and then also on the P&L side, the necessary improvements to turn back as well on profitable growth. Your question regarding China is, unfortunately, the result of some leakage in the market. But it's true, we are reviewing our options in China. Let me be very clear on China, it's a business which has done very well as you said, 23 years now in China. We are certainly regarded as a very strong brand, with a very high quality, a very strong food safety reputation. We have been growing consistently, despite a sector which has been suffering quite a bit. And we have been growing profitably. So all of this together is a good reason to say it's a very healthy and a very sound business. Nonetheless, the question that we need to ask ourselves is how are we progressing from here? And there, our view is, we need to consider options including local partners and explore our roots also here to more B2B. It's still a quite significant SCO country, due to this uniqueness which we have on food safety and food quality. But as we always make clear, B2B is our future. The same needs to apply on China.And I still owe you the capital allocation. I beg your pardon. On the capital allocation, of course, we would talk about that once transactions are done, and we then can actually make the assessment on the impact P&L and balance sheet. We just got the reconfirmation of our investment grade rating from Standard & Poor's. We are committed to that. We want to make sure that, that is there. But I think you also asked about M&A. We are permanently looking for opportunities to add capability when it comes to the food services distribution aspect. We are also looking into the digital arm. So our capability to roll out more solutions. So it's sad to say that while we are coming to -- not completion, but to very far progress in the portfolio optimization, that there -- our readiness to add one or the other thing is also growing.
Next question is from the line of Fabienne Caron with Kepler.
Three questions for me. And the first one on Eastern Europe. I understand the impact of the Czech Republic because you're moving to food service, which is fine. Can you help us to quantify the ramp up or the double running cost of shifting to the new distribution centers? And how much should we expect for the year? I think it will help us. The second question is on cash flow. Christian, you said your CapEx was lower. You are more efficient. So I'm wondering if you may expect lower CapEx for the full year. And in the cash flow, if you could help me and explain the seasonal impacts as well on the working capital? And the last question for you, Olaf, is on SCO. We never talk about SCO, but it's still 34% of your top line. It's still negative in terms of like-for-like. I don't know if you want to share with us how much it is in terms of EBITDA for the group? But it would be helpful as well to know going forward what's your plan there because all the other customers are performing very well?
Yes. So let me just take the first question on Eastern Europe. We have mentioned that there has been some effects from the startup expenses of the distribution center in the Czech Republic. We don't give the full specificity on the number. But if you look at the Eastern European segment, which was down by EUR 10 million and EUR 5 million on an FX adjusted basis, the FX adjusted basis there would have seen growth in EBITDA in that very segment. So that also would show that the translation of the 6% -- 6.4% like-for-like growth would have translated into EBITDA growth on constant currency. With respect to the remainder of the year, in Q2, we still do expect some impact, but not in the magnitude of what we have had now in Q1. And then over the remainder of the year, this should be basically balanced out. And then we are expecting also to reap the fruits from the new setup in the Czech Republic, which has really taken advantage not only of the great Prague market but also of the rural areas around it that are very attractive. With respect to your question on CapEx, we have opened 2 stores in this very quarter, which is one of those also in Turkey. You will remember that we have implemented there, what we call, the lean [ Anatolian ] model, which is very CapEx efficient, CapEx-light approach. That was one of the reasons why we came out slightly below. With respect to the full year CapEx, the EUR 600 million, as we've indicated in the full year results is standing there and it's also standing because of the significant investments that we are doing on the IT and digitalization side in that respect. There was one question on networking capital. To be honest, I haven't fully understood that verbally. So if that's still open, you can...
Yes, okay. I was wondering you talked about seasonal impacts. What was the seasonal impacts that were negative for the working capital in your quarter?
Yes. That's mainly relating to China. As you know, there are a couple of key seasonal events that have significant peaks also in terms of inventory loading. There are 3 effects in this case. One is Chinese New Year. In this year, it has been on the 5th of February. So 11 days prior to what we have seen in the last year. And in addition to that going into Q1, there was a shift of the so-called Mid-Autumn Festival, which also had an impact. So the stock position, as we mentioned also in the full year result in Q4, was relatively good also because of seasonal effects from China and that flip side basically came through now in Q1.
Your question on SCO is, of course, a very valid one. And looking into the past of METRO, specifically at the time when we were a pure Cash & Carry in many places, we conducted the business in a very open way, almost you could say it was up to a camouflaged hypermarket. This is not a sustainable business proposition -- value proposition. Therefore, we changed our direction quite a while ago in saying we need to build relevance for 2 tariff groups, which are HoReCa and the independent Trader. And there, we will see our future. Nonetheless, SCO customers are good. We don't send them away. We don't want them not to consider METRO anymore. But what we need to do is -- the reason why they consider us needs to be different than in the past. It cannot be a promo-based nonfood range that we are actually not capable to run in a competitive way. There are other people that can do that much better. So the reason why they should come is unique ranges in fresh, ultra-fresh professional equipment, things that inspires them and then we can take opportunities along that way. So cost to serve the SCO needs to come to a much lower level. By no means will we try to send the message that we don't want them in our business, but the way how we operate needs to be much clearer also for them. That will lead to a decline over time in buying customers here and there, but we need to overcompensate that with a number of customers and share of wallets growing in the other 2 target groups. And we have, I think, many, many examples for this being conducted successfully now in the recent past when I look to Turkey, when I look into the development in Spain, when I look into the most recent development that we're seeing here in the pilot region in Germany. This has been done before and will be the way forward. So on your question, yes, SCO remains an important part and we'll protect it as much as we can but at a much lower cost to serve.
Next question is from the line of Dusan Milosavljevic with Berenberg.
This is Dusan from Berenberg. I had 3 questions, please. The first one, just wanted to make sure that I understand correctly. In Q1, you've had the 3% volume growth in Russia and the total number is minus 2.7. So the price mix was minus 5 over that period, if I'm understanding it correctly. And I just wanted to check if you can perhaps comment on is most of that kind of coming through -- coming from price investments? Or is there a mix component within that number as the customers trade on? That's the first question. The second question, just wanted to ask, I think the provisions in Q1, the provisions in the cash flow statement came down, they were about minus EUR 50 million negative throughout the past year. And I was just wondering you have a guidance for this year for what the impact from releasing provisions would be on the cash flow statement? And the third one, if you can comment on the one-off gains that you've mentioned in the Other segment? And how significant those might be?
So thank you for asking the question and for clarification. And I tried to bring that across before. The 3% are related to the buy more, pay less volumes that we are planning, so that was 3%.
With respect to the provisions, yes, as you have seen in the cash flow statement, this has come down in the Q1, as last year was still driven significantly also by some cash outs from the demerger provisions, if you will. Last year, it was around EUR 200 million in cash out at our -- in provision change there. For this year, we would expect roughly a number of EUR 100 million in that overall context. And yes, therefore, it's coming down in our expectation. With respect to the one-offs in the other segment, basically, we've given all the disclosure at this very stage. Just be reminded that also the last year Q1 has been supported, so I think both quarters have been having support that is not materially massively different from each other.
Next question is from the line of Kiranjot Grewal with Bank of America Merrill Lynch.
Just firstly on your outlook. Does your outlook include the one-off gains that you booked? Secondly, could you give us some color on the cost savings in Russia? We can see the chart, but how do you expect these to develop in H2, particularly as you start to cycle last year's cost saving? And thirdly, could you give us any sense of how much additional investment was made into digital this quarter? And if you can't answer that, perhaps if you can give us color on the shape of digital spend over the year, should it ramp up or should it be fairly steady?
Yes. With respect to the outlook in Q1, there are no surprises, if you will, to the extent that there would be any changes in the outlook. And therefore, yes, those perspectives are included in that.
In Real, the cost saving, it's fair to say that the progress has not only started in Q3, though there has been done some work before. I think the most relevant change that you are referring to is our set-up and ramp-up of our shared service center in Samara. And we have been able to take many back-of-the-house functions from stores and other operations into that center. And we are still exploring, honestly. I think there's much more opportunity to reduce some of the cost-intensive and labor-intensive work that we have in our store operations, in our logistics centers and actually also in our headquarter in Moscow. So we expect progress that continues throughout this fiscal year and actually will go into the next fiscal year. In regard of the investments in digital, it's clear that there's a bit of a step-up, that's why we also included that into the guidance. But to your question, it's not different in shape. So it will be distributed across the quarters on a fairly consistent cost level. So there's no impact that you can deduct here from this very quarter.
Okay, great. Just coming back to the first question, it seems like you've had some foresight on the one-off gain that you booked in Q1. Are there any other one-offs that you're incorporating in your outlook the rest of the year that we should be aware of?
Beg your pardon, but the nature of the one-offs to a certain extent is also there is chances and risk profile related to it. And then with respect to giving the indication prior to doing and concluding any of those situations that sometimes come in a surprising way, sometimes come in the risk-adjusted sectored in a way is tough at this stage. So with respect to the one topic that we mentioned on the Czech Republic, there is still expected to be a bit of an impact in the Q2, as we are going through. But other than that, at this stage, nothing to be specifically mentioned around it.
Next question is from the line of Andrew Porteous with HSBC.
A few from me, if I could do. Just firstly on the chart, on Slide 11, that you helpfully provided on Russia. Very clear there's sort of volume and price drag there. But just thinking about the shape of your business there, should we expect that volume drag on margin to effectively neutralize from Q2 onwards? Or is it more of a Q3 impact there? Just thinking about the fact you're talking about sort of positive volume growth there. So hopefully, as you annualize the price [ and expense ] then, you should hopefully get some of that back. And then a couple of other questions. Firstly on the digital side of things, you talked a lot about some of the initiatives that you're providing for customers. Could you give any benefits on how that's improving your business? I mean, are you seeing greater share of wallet with these customers? I mean, is there any tangible benefit to the rest of your business for providing these services? And then a last one, we're just coming back on NPS, I mean, it seems to have gone quite quiet on NPS roll out over the past few quarters. Appreciate there's been a lot of other things going on, but so curious to see what the progress has been on that? And whether there's been any marked improvement in your NPS across your business?
Yes, maybe then I'll start with the last one. Indeed, we did mention it here. It has become kind of a normal course of business within METRO. We are not releasing number by entity because it's still very early days. As you know, we rolled out NPS into all entities by end of fiscal year, so we are now fully equipped. And we see progress on the NPS score along most all entities right now. But it's still fair to say the sample size or the time period we are assessing for quite a number of entities still is fairly small, fairly short. So therefore, yes, we are fully committed to it and it has become a very strong steering model predominantly as well for permanent optimization continuous improvement for our operations in the store but also in the center. The digital is a very good question. We are assessing as well on a batch, on a data set, which is still fairly young. But what we can see is compared to regular customer acquisitions or customers that we acquire through the offline world, people signing up for METRO card in the store by opening their new business or being approached by the sales force, they don't actually consider a digital tool versus those who do digital, we see significant benefit in number of visits, but also in baskets. So this is the first indicator we have. We, of course, are watching this very closely and will share more data. On the other hand, we clearly see this, the first wave of digital tools that we have are doing 2 things on top of that. One is create much more awareness for the brand, and we see that in -- specifically in those countries where we started the roll out first. So the brand awareness and therefore the consideration of professional customers for METRO and Makro is growing. And the second is, of course, to build this continuous dialogue. As I said, online presence, table reservation is just the first wave. We have seen in the pilots, which we conducted in Paris, Berlin, Milan, Vienna and Barcelona, that not only the material impact for the P&L of our customers is significant, but we've seen a significant uptake as well in the share of wallet in these pilots. Though this is still early days, but the impact on economics is quite material as we expect. The impact on the strategic role we play in the industry is even bigger. We'll share more data somewhere later this year, probably towards summer as we are now rolling out another wave of tools and then we'll probably able as well to give more -- more figures. And then on Russia, I think the guidance we have given is we want to see that the turnaround moment in this fiscal year, I think, probably would not be sensible to select now that one single quarter. We all said, it's more geared to the second half of the year, but our internal ambition remains unchanged, the faster, the better. And we -- I think from a prudent point of view, we'd rather tell you it's going to be around Q3, Q4 when we should see that breakthrough.
Next question is from the line of Nicolas Champ with Barclays.
I have 3 questions for me, please. First one is about Real, I know this is not treated as a discontinued operation. But could you tell us how many stores you shut down in Q1? How many you expect to close down also in Q2? And the related cost provision and cash impact of this store closure? The second one is about your country portfolio. I mean, you gave a very clear answer regarding China. Would you contemplate also options in other countries, where maybe you don't have attractive growth opportunities? Or where your performance are not as good as expected? And third question is about your relationship with your new [ cross ] shareholder, Mr. Kretinsky, could you update us? And especially with regard with the upcoming AGM, that will take place later this week. Did you receive any specific request from him, including seats as Board of Directors, for instance? So any color regarding the dialogue with your new [ cross ] shareholder will be very interesting.
Yes. With respect to your question on Real and store closures, as we have indicated, this is future store closures that did have a negative impact with respect to provision building in Q1 of this year on the discontinued operation. This is relating to 4 store closures that should be happening basically starting this summer going into next spring of the actual execution, and all of those stores are running out rental contracts that we did not prolong.
On the country portfolio, those of you who have watched the transformation of METRO throughout the years, yes, first of all, the biggest priority was transforming the conglomerate into a purely focused wholesale company. But at the same time, we optimized the portfolio of wholesale countries just to recollect a few, exit of the United Kingdom in 2012, following an exit from Greece, Denmark, Vietnam, those have happened for various different reasons. The first 3, because we choose to be in countries where we can be in a leading position, i.e. #1, 2 or 3. If we don't see that chance, we better work out a new plan. If we don't see the plan working, we will review all options. And this is still the case, but it's also very clear that our organization right now is very much focused on making sure that the final step change in dismantling the conglomerate will happen, which is the Real transaction. But you can rest assured we are reviewing our portfolio in regard of necessary changes because of the role we play, but also opportunities, what else can we do to enlarge our position and to strengthen our position. So it's not only about reviewing critically and considering, for example, an exit, but also concluding that we can have a much better role to play like in France where we acquired a very sizable business 2 years ago, which is called Pro à Pro. So work on the portfolio is kind of a day-to-day job. We are reviewing this on a permanent basis. In regard of EPGC, we are very much positive, and we look forward to welcome them. Also on the board level, they have expressed their view that they don't want a box seat prior to the call option to be exercised according to the news we are following as well as you do by the month of March. And thereafter, we look forward to welcome them on the supervisory board. Other than that, no particular stuff I can mention, and there's no particular request for the AGM.
We'll now take our last question from Christian Bruns with Pareto Securities.
One question remains for me, and this is your strategy and your portfolio. So you mentioned to look for partners in countries where it makes sense. And would Russia also be such a country also looking at large SCO customer profile and also the market position with this also be a country where partnering could be -- would make sense. And maybe another question, you said on the HoReCa growth that you are growing your top line with 4.7% across all countries, as I understand it. And on your Trader growth, you said that you're growing 4.6% in your Trader countries. Could you also give us a figure on the overall growth with Trader, please?
Well, we selected the clusters, actually, to show a representative confirmation of the strategic direction. So therefore, we'll disclose on the portfolio of countries as selected. And the reason for that is very simple. We have countries where we consciously reduce Trader because of our conviction that we need to go fully fledged on HoReCa, and therefore, the number of buying Trader customers, those are not included in the country portfolio that you see on the chart, the number of customers there will go down. On the portfolio strategy, I think I would not add more right now. The country where we are looking into such a situation right now is China, and we do this on the position -- from a position of strength, not a weakness position. So this is not a critical portfolio review situation, but rather a positive one. How can we take more advantage of the achieved performance since 1996. But as I said, that also opens still the room for further discussions elsewhere. But I think it's also fair to say an organization needs to be focused on delivering on those changes. And right now, the workload we have in our Corporate Development Department, with the situation at Real and now consideration of options in China, as you can imagine, is pretty high. So we'll see. We'll take it from here. As soon as we will consider other things, we'll tell the market, but it's [ fair ] enough for now.
Okay. Just for clarification, your HoReCa growth plus 4.7% is across all countries. Is that right? Or is it also only...
That's correct. That's correct. No, you're right.
We are at the end of our Q&A session. I hand back to Olaf Koch for closing comments.
Well, thank you for joining the Q1 conference call. And should you have any further questions, our Investor Relations team is happy to receive your calls or e-mails. Other than that, thank you for participating. Take care, and have a great day.
Ladies and gentlemen, the conference has now concluded. And you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.