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Good morning, ladies and gentlemen. Thank you for standing by. Welcome and thank you for joining the Analyst and Press Call Q1 2022-'23 Results Presentation. [Operator Instructions]It's my pleasure, and I would now like to turn the conference over to Dr. Steffen Greubel, CEO of Metro AG. Please go ahead, sir.
Yes. Thank you very much. Good morning here from Dusseldorf. Welcome to our Metro Q1 2022-'23 results call. We are happy to present to you our most recent business developments today. As usual, I will present the Q1 development first, and then later Christian Baier will take over, and then we will have proper time for Q&As.What is new, and let me just reiterate that, you feel free to post your questions also in the chat during the presentation or then ask verbally as you used to be afterwards. Moreover, after the English-speaking part, after the Q&A session, we also reserved some time for German-speaking or German-only-speaking people to ask questions that we can actually then also answer in German language.So then let's directly -- before we jump into the content, let me give a couple of words to the situation in Turkey. As you're all aware, there is a massive -- 2 massive earthquakes there. We are impacted because we do have 4,300 people in Turkey. We have 34 stores there. So we have a sizable operation there. Thanks God, nobody from our employees is injured. Nevertheless, it's a devastating situation for the country. We have 5 stores in the area of the earthquake, 4 of them continue to operate with very small and light damages. There is one store that is currently being examined because of construction safety. But so far, thanks God, there is no major impact at least to our people and our structure. We are focusing now very much on giving aid and help in the moment. So that means we here made a donation of EUR200,000 to the Red Crescent. The colleagues on-site are providing structure, parking lots for help, food donations, chefs that are cooking for people, and while we are talking, there is a CHR or there is an HR conference hosted in the moment in Istanbul led by Christiane Giesen, our Board member responsible for HR. And they interrupted the conference, and they are right now, while we are talking, in the Istanbul store packing trucks with goods for aids with food that will be deployed then in the region of the earthquake. So the entire organization, obviously, is with the Turkish people, and we are providing aid on-site from here sort of mentally and physically, if you want. So that's now a focus in this very moment. We hope that we can add a little bit to alleviate some of the suffering at least.So then let's go back to our Q1 results and what I want to talk about today. I want to talk about business environment that eases. I want to talk about growth. We still -- we see growth momentum that continues to occur also in the first quarter. I want to talk about the cyberattack that is actually temporarily impacting performance in Q1 or has impacted performance. And I want to talk about sCore where our execution, nevertheless, progresses substantially. And I want to talk about the financial year outlook that we are confirming.So let's directly jump into the content and talk about business environment. So #1, food inflation remains high, but it has been coming down slightly in the course of the quarter and also this trend continues in this very moment. Also, inflation effects in gastronomy are lower than in food retail. The HoReCa sector is resilient, the out-of-home consumption is stable, and the consumer confidence increases. Latest HoReCa [indiscernible] show that the industry expects a growing sales and a stable-to-slightly positive market development in 2023, according to the Food Service magazine, which is very good news. The main challenge apparently is not a lack of guests, it's a lack of staff. So there is staff shortage in our -- at our clients in a significant amount. The digitalization of processes and like preprepared products like cleaned fish, pre-diced/sliced onions, meat and so on are key levers to really make our clients more [ efficient ], and we are very happy to provide those things that can ease a bit the staff shortage that is apparently out there.So in this business environment, how did we actually perform? So let's look at sales first. Q1 reported sales is 7% plus against Q1 of the previous year in a reported view. The EBITDA adjusted decreases by EUR56 million versus the Q1 previous year also in the reported view. And apparently, both figures are strongly impacted by the cyberattack. As already shared in the financial year results, we estimate that the cyberattack had a low triple-digit million euro impact on sales and a mid-to-high double-digit million impact on EBITDA.Good news, though, is in January, apparently, we are back on track. We are back on growth. We are looking at a 16% sales growth in the reported view. So that means that, #1, we could regain the customers that didn't buy because of the cyberattack. And we are also looking at volume gains. So we are actually back on track. And the cyberattack was a temporary incidence that we have overcome, and we don't see a lot of longer-lasting challenges now from that one, which is good news. So we are back on track in terms of growth.Let's look a little bit closer at the channel view. You all remember this strategic visual of the 3 circles of growth. Growth continues to be driven by all channels. That's the measures you need to take. Our store-based sales grew by 4%. Our FSD investments continue to pay off with sales growing by 18%, even though the FSD, the delivery business, was more impacted by the cyberattack than the stores. And Metro Markets, as the gastronomy marketplace, sales increased by 46% and the marketplace volume -- marketplace sales has grown in all dimensions. And that means we are also looking at more than 100 more vendors and sellers looking at more than 700 new brands, and we're looking at more than 50,000 new active products listed that we have actually added in the first quarter of the year.Also, we see significant progress in digitalization. I was mentioning digitalization as the tool to overcome staff challenges at our HoReCa customers. So the hospitality digital number of subscribers increased 13,000 new subscribers in Q1. So that is a very healthy composition of the individual channels and of the growth.From the channels now, let's look a little bit more in depth onto our sCore KPIs that we are reporting continuously. So let's look at sales force. First, we added net 200 additional FTE in Q1 and thus making good progress towards our 2030 aim of at least doubling sales force. Sales force, to remind everybody, is important to push FSD and to push digital because we are moving from a pull to a push multichannel sales and growth model. The strategic customer sales share significantly increased from 68 -- from 65% to 68% versus the Q1 of the previous year. The FSD sales further grew by 2 percentage points to 20%, and the digital sales share grew from 7% to 8% of sales. Very nice development with own brand sales share. It increased significantly by more than 3 percentage points to 20%. The growth continues to be driven by HoReCa and by FSD. Those are the main 2 channels that are adding to our own brand sales here. And this is, again, an all-time record, and we are looking at a very good progress towards our 2030 target. We have big confidence that we will even increase even in this very year the share of the own brand even further. So here we are very, very happy actually with the development, very important movement here. The delivery infrastructure, we have no additional depots so far, but we have several ongoing projects that will come live in the coming quarter. It does not mean that we will not stick to our network expansion plans. It just is a matter of fact that we didn't complete any project in the first quarter of this year, but there is more to come in the upcoming quarters.Let's look a little bit more in digital -- digital sales share. So what are we doing to advance the KPIs. One of the key long-term drivers is the DISH POS rollout as it links our customers to us and will, at some point, enable a direct connection also with our sales channels. DISH POS covers the complete process from purchasing to billing and enables our customers to manage and to optimize their business out of one system. So there's one digital system for the gastronomy, and we are providing that now, with this DISH is de facto the missing piece of the puzzle regarding digitalization of gastronomy.In January, we announced this DISH POS rollout in France as a very important milestone for us because only our 10 months after we have successfully acquired Eijsink in March 2022, we are now having France as the biggest -- as our biggest HoReCa country, being the first country where we are doing the first steps in the internationalization. The tool was presented to a broad audience at the leading gastronomy and food in Sirha in Lyon. [ The full board ] has been part of the launch event. We were very impressed by the huge interest and the customer insights from the French pilot show, already a very positive feedback regarding system's capabilities and handling. And now, like we are also doing with Metro Markets, also with DISH POS, you can expect 2 to 3 countries per year now being hooked up, so to say, to the DISH POS system to where we will roll out the DISH POS system to. And Germany is going to be next. Germany is going to be the next country for that one. So we will push that throughout Europe in the course of the next months and years.Talking portfolio for a moment. In Q1, we've also announced that the strategic decision to exit the Indian market and divest Metro India to Reliance Retail Ventures Limited has become reality. The transaction includes the operations of 31 Indian Metro stores, representing sales of a bit more than EUR920 million and low-double-digit-million euro EBITDA figure as well as real estate portfolio of overall 6 stores. The decision was based on the rationale that the Indian trade industry is experiencing a tremendously strong consolidation and an increase in competition, which would require a sizable investments to further grow the business, thus being the right time to seize the momentum and enable Metro India into a future alongside a very strong local partner. The transaction values Metro India at an EV/sales multiple of 0.6x based on sales of the financial year '21-'22 and implies an equity value of roughly EUR300 million. This considers lease rental and other related reliabilities of EUR150 million. After closing, we expect a transaction gain on EBITDA level of approximately EUR150 million and a corresponding EPS gain. Both numbers are subject to exchange rates at closing. We expect the closing in the first half of the year of the calendar year '23, following governmental and regulatory approvals. Until then, the India sales and EBITDA continues to be consolidated and at the same time with the sale of India, we have completed the adjustment measures in our portfolio. We have completed the adjustment measures in our portfolio.In summary, we are very well on track towards our recently upgraded mid- and long-term targets. I am thrilled to see us turning the market opportunities and advantages of our multichannel business model into business growth. So thank you very much for your attention. And I will now hand over to Christian for the financial part.
Yes. Thank you, Steffen, and good morning, everyone. So let me continue with the financial performance, and let's start with the high-level KPIs.So as shown by Steffen, we achieved 5% sales growth despite a low triple-digit estimated impact from the cyberattack. On the EBITDA side, it declined to EUR465 million impacted by a mid-to-high double-digit amount from the cyberattack.Our real estate team was able to close a very significant real estate development project in the quarter of around EUR200 million of gain. The EPS increased to EUR1.44 compared to EUR0.54, is benefiting from this development and also from some nonoperational effects that I will explain later on.So let's look at the details. The overall group performance is built on strong regions, and all regions contributed to the growth, except Russia. While cyber affected all regions, Germany and Russia were most impacted, and this is visible in their growth rates. And when we look into it more specifically, in Germany, reported sales increased by 4% versus prior year, supported by continuing execution of sCore and the strong implementation of buy-more-pay-less in more and more SKUs. This is also visible by the HoReCa sales growth and the reported sales reaching EUR1.3 billion. The sales growth in Germany translates into an adjusted EBITDA of EUR84 million.In the segment West, reported sales increased by 4% and reached EUR3.2 billion. The largest sales growth was recorded in France, Italy, Spain and in Portugal. The FSD companies all grew in the double-digit range. The reported growth rate of the segment West is adversely affected by the exit of the Belgian operations, while on the other hand, the acquisition of AGM in the course of the last financial year only partially compensated for this effect. The adjusted EBITDA in West reduced to EUR173 million as the strong sales development could not completely compensate the cost from the cyberattack. Especially in France and Spain, there was an impact felt. In addition, and also as anticipated, the expected cost inflation impacted some countries.When we turn to Russia, there sales in local currency decreased by 14% and the invasion of the Ukraine and the following sanctions affected the customer sentiment measurably in the country. Together with the cyberattack, this led to a significant decline. Due to a positive currency development though, reported sales increased by 11% to EUR0.9 billion. In Russia, the adjusted EBITDA at constant currency followed the sales development and decreased to EUR60 million. Currency adjusted, this is a reduction by EUR45 million versus prior year.In the segment East, sales in local currency increased by 15%, and almost all countries contributed to the sales growth, mostly through positive HoReCa development. Turkey achieved a highest sales growth that was also strongly supported by inflation. The Ukrainian business continues to show very high resilience with a stable number of stores open and sales at minus 20% in Q1, which is up from minus 45% for the comparable period in March 2022. Adjusted EBITDA increased to EUR146 million and up by EUR18 million at constant currency, also following the trend on the sales growth perspectives.In the segment Others, reported sales grew by EUR31 million to EUR51 million. It included Metro Market sales of EUR21 million, and this sales growth in the segment is mainly due to the expected growth in our digital business, with, on the one hand, Metro Markets in Germany, Spain, Italy, and Portugal, and also with our newly acquired POS provider, Eijsink.The adjusted EBITDA decreased to minus EUR2 million due to these expansion efforts and also other investments into digitization. When we turn to the market share development, since COVID, Metro has continuously developed above the HoReCa market. And this positive trend is driven by Metro's strong performance on both store and delivery channels, while the market is only slowly reaching pre-pandemic levels. This trend further confirms the effectiveness and strong execution of our sCore strategy.So let's sum up. The solid sales momentum and the successful implementation of the sCore strategy has continued, and we have overall reached 5% sales growth to EUR8.1 billion, as you can see on the P&L here. All channels have contributed to that growth. The store sales increased to EUR6.5 billion, up by 4%. FSD sales increased to EUR1.6 billion, up by 18%, and Metro Markets reached EUR21 million, which is plus 46% versus prior year.The sales development is generally also reflected in the earnings. However, it could not compensate the impact from the cyberattack, including additional costs for IT specialists, leading to the overall adjusted EBITDA decline. As mentioned before, in Q1, we closed a large real estate development project on our so-called campus area here around our Dusseldorf headquarter. Including the resulting roughly EUR200 million transaction gain, reported EBITDA grew to EUR673 million.Given the relevance of that mentioned real estate project, let's have a quick look at some details. So Swiss Life Asset Managers acquired a 73,000 square meter site in Dusseldorf for Metro to realize a comprehensive district development. The site holds significant potential from a real estate and urban development perspective. It will be a mix of gastronomy, residential, and office space, applying very high ESG standards. The current Metro store on the location will be replaced by 2 new stores: one at the existing and one at a new location in Dusseldorf. The Metro AG and Metro Germany headquarters will remain at the current location and will further develop their respective areas. This project is a very good example for the future focus of our real estate strategy. First and foremost, there the operational business is put at the center of our thinking, and this is to best support our sCore strategy.Secondly, there is a strong focus on project development where our team can create significant value-add also from a financial perspective. When we move further down the P&L, the interest and investment result improved mainly due to onetime interest income from tax refunds as well as lower financing costs. The other financial results strongly benefited from noncash and potentially reversible FX effects from Russian currency. And this is really the opposite effect to the ones that we have seen in Q2 and Q3 last year at that point with a negative connotation to it.The income tax is in line with expectations, and you might realize the comparatively low tax rate compared to the prior year, which is mainly attributable to the nontax effective income in the other financial results and also on the real estate development project. As a result, earnings per share increased to EUR1.44. And if we would adjust for the noncash FX effects in the financial result, EPS would have been around EUR0.90.So let's now look at the cash flow perspective, and there some of the mentioned effects are also visible in that development. The operating cash flow reached EUR168 million, and that's EUR328 million below the prior year. This relatively significant change can mainly be attributed to the net working capital development and is mainly driven by 2 key effects: one is the temporary inventory increase where we are prioritizing product availability during the sCore assortment transition. And on the other hand, it's also driven by increased receivables, where we have 2 effects. 1 is a bit more structural and the other one is very temporary. The structural one is we are increasing our FSD business and also showing a very solid financial profile there. This is increasing receivables. And on the other hand, due to cyber, we had some delayed collections, which will be compensated in Q2. And therefore, if you look entirely at the first half of the year, we will expect a very solid development also on the net working capital side. On the investment side, the investments are higher, mostly due to some Italian property CapEx that we had there. And in the coming quarters also, as Steffen mentioned before, we will expect more and more investments to happen from our network transformation, given that this is the key capacity building program for supporting our sCore strategy.In total, when we sum up the full free cash flow for the quarter 1 reached EUR115 million. And as a result of that positive free cash flow, net debt decreased again. In addition to the free cash flow, the expected Metro India disposal, and hence the first time reclassification of Metro India as an asset held-for-sale, has technically reduced our net debt.So what does that looking forward all mean for our outlook? We have guided that we expect 5% to 10% sales growth. And in the guidance view, when we adjusted from a portfolio perspective for the Belgian exit, we have reached 8% in Q1. This is a strong start to the year as Q1 was impacted by the cyberattack. As Steffen showed, Q2, namely the January month, is trading at 16% so far and, therefore, in a very positive territory. The adjusted EBITDA decline in Q1 also matches our full-year expectation. While Q1 is impacted by the mentioned nonrecurring effects, we expect growing cost inflation, especially on the [ PEC ] side in the course of the year. With the current status, we also foresee a further softening of the business development in Russia.Overall, the start to the year, hence, matches our full year expectations for sales and EBITDA, and we see ourselves well positioned roughly in the middle of the guidance range. In addition to that, we also confirm further expectations for the year as we have outlined already in the annual press conference. The expected EUR200 million rough real estate gains have already been booked in Q1.On the D&A, net financial results and taxes side, if we disregard the noncash FX effect, there is a very normal development underway. On the EPS side, we continue to expect EUR0.40 to EUR0.80 before factoring in the India transaction, which is to close in the next quarters. The cash invest of above EUR600 million for the full year is in line with our expectations and very much also with the sCore strategy. Hence, in sum, we expect a neutral to slightly negative free cash flow and a stable net debt.This concludes our presentation today, and Steffen and I are now happy to take your questions.
Ladies and gentlemen, at this time, we will begin the question-and-answer session. [ Operator Instructions ] We have the first question from Volker Bosse from Badder Bank.
Yes, Volker Bosse from Badder Bank. Congratulations on the solid figures given that you had to deal with the cyberattack, great achievement. I would like to start with the EPS question, more for clarification. [indiscernible] EPS adjusted excluding the one-off. I think the EUR0.90, which you provided as an adjusted EPS still includes the real estate gains, if I'm not mistaken. So could you provide also an EPS adjustments, excluding real estate gains, please?A second question would be on the administrative expenses in Q1 were down minus 8%, and it's quite impressive. So I'm asking myself how is it possible that given that we see overall cost inflation trend and given your higher headcount.And last question would be on your strategy in Russia. Could you provide us here with any changes within your thinking about the business in Russia going forward? And also how do you see any changes on the operations? How is it running, especially in the light of the tensions, in the light of the capital transfer restrictions, and the underlying economic trends in Russia? [indiscernible] it would be great to have your insights as it's hard to look behind the curtains here from outside. So thank you very much for all the details.
Great. Volker, we'll tackle your questions. So EPS Q1 tax inflation in Russia. Very happy to do that. I think on the EPS side, you said what is it excluding on the one-off side. Basically, what we stated is we had this EUR1.44. If you were to adjust for the noncash FX effects, this would roughly result in EUR0.90. And indeed, as you have mentioned, there has been that real estate transactions, which on the EBITDA side is roughly EUR200 million. And if you were to basically adjust that, although we certainly had planned and intended to do that. So the underlying business would be roughly on the PY level with respect to the EPS development and PY has been at EUR0.54. So I think that's a simple bridge to look at it. Certainly, on the real estate side, we will for the remainder of the year compared to the prior year, we'll then have less real estate gains. So there is a little bit of a quarterly shift in between those perspectives.With respect to Q1, there was -- it was not that easy to hear the question, but we understood it was mostly related around the [ PEC ] development and inflation there. Certainly, [ PEC's ] development across the year will deviate between the quarters in Q1, which is, for us, obviously, October to December. There has been so far a relatively limited impact. We are now seeing from Q2 onwards in various countries that the inflation impact is also coming into the [ PAC ] perspective where we have seen France and Spain, for example, with some adjustments, but these are all in line with our expectations also from a guidance point of view.For us, it's very important that in light of that inflationary environment, and that's not only on [ PACs ], but also on energy and other topics. We are very much focusing on the productivity gains, which is coming from sCore, and it's part and parcel of it. So we are very confident in our strategy there and in the guidance that we have given out that we are solidly in there. And Steffen will now comment on Russia.
So we confirm our decision to stay in Russia. Apparently, we are focusing a lot, and let me put that even in front of that answer to help our Ukrainian colleagues. As you remember, we also have 3,400 people still working there. We are operating 23 stores on a continuous basis. We are one of the few networks for food supply, not only to the population but also to sort of governmental institutions. And that is our first priority, including also all form of as aid, you can imagine. So that's our first priority.And then on the same hand, we are confirming the decision, as I have said, we are -- the argumentation was clear, and there is no update to it. We still feel responsible for those 10,000 colleagues and the customer we are providing basic food. Of course, we are obeying all the sanctions possible. So in this very moment, we are in Russia maintaining the business. And in terms of business or customer sentiment, of course, we see a tense situation there. Christian was mentioning in his speech because there is challenges in a macroeconomic sense there, and we also feel them. We are now managing the business accordingly, trying to adjust capacities. We are not investing in growth. We are maintaining the business. And that's basically. Christian, do you want to add something to capital transfers?
Absolutely. I think there, just to reiterate of prior quarters. Russia itself, our business there is a self-sustained and self-funded business, which is operated over there. And when we are talking about potential transfers from Russia into the Group, basically by respecting all the sanctions, but also by aligning with the relevant authorities on all sides, we are able to also distribute funds in that perspective. So from that view, we feel confident and comfortable also from a financial steering and control perspective there.
And Mr. Christian, you can be assured, just the last sentence, that we are continuing -- closely monitoring the developments there. And we are always assessing that situation basically on a continuous basis. You can be assured that we are closely watching it.
Thank you. The next question comes from Xavier Le Mene from Bank of America Securities. Your question, please.
Yes. Good morning, gentleman. 2, if I may. The first one, can you elaborate a bit more on the gross margin? It seems that it was done in the first quarter, but you also have a higher penetration of your private label, which potentially could help the gross margin. So can you potentially give us the big blocks to explain the potential decline of the gross margin in the first quarter?The second question is more about portfolio and assets you've got. So you said it's the right time to leave India today, but do you see other countries where potentially the competition is getting tougher, where potentially you require more investment and the decision is potentially on the table to know whether you have to stay or not. So any color here would be quite helpful. Thank you.
Yes, Xavier. Thank you. I will go for the gross margin. Steffen will go for the India perspective. On the gross margin side, I think we see 2 developments. One is structural and very positive and the other one is tactical and has been obviously that impact. I think the structural one is when we look at our development of the business with respect to the sCore strategy and the buy more, pay less. Over time, we will see a slight reduction on the overall gross margin perspective. However, from a percentage view, but from an absolute terms, there will be a significant growth in that view. And that's exactly what sCore is about driving this forward. So increasing significantly absolute gross margin from that view and ensuring that below gross margin we have the productivity and efficiency to translate that to the bottom line perspective.In Q1, there has been also a bit of an impact from cyber in that view. Just to give you a bit of a sense, while all of the stores have always been operating, I think the agility and nimbleness that is required, especially in an inflation environment to adjust prices basically on a day in, day out and even intraday perspective has not always been there perfect, and that has been one of the impacts from a margin perspective. We do see already now in Q1 that this is solidifying and we have that -- sorry, in Q2, we have that agility very much back. So 2 effects, both very much explainable. The one has already evaporated in a positive manner.
And on the portfolio, let me reiterate, we have completed now the adjustments of the portfolio. So now, we don't see any other country we are operating in where we don't feel that with our sCore strategy and with our execution focus, we are not being able to really deliver substantial growth and substantial increase of profitability to the entire Group. So that has been completed now. Let me also give 1 or 2 remarks on India. It's not only the high competition. It just -- it's also the changing of the business environment. There is massive capital inflow. There's a lot of companies that are investing billions now in India. The entire market dynamics are changing. It's a very e-business-driven market now, and we feel -- and we have done studies quite substantially to evaluate if there's any possibility for us in a risk return profile that makes sense to stay, but we came to the conclusion we rather focus on the existing portfolio, and we let them -- our new partner develop that strategy. They are more equipped than we are to actually do that and also to bear the capital investments that would be required.
Thank you. That's very helpful.
The next question comes from Andrew Gwynn from BNP. Your question, please.
Hi, good morning. Two quick questions, if I can. So firstly, is it possible to get a bit more clarity on the cyberattack? There's obviously a big range when you talk about low triple digit impact on sales, so anywhere between more than [ EUR350 ] million. So just a little bit more clarity there, also on EBITDA?And then the second question, just on food inflation. You mentioned it's come down slightly in January. Are you able to just put an approximate figure, not necessarily on the inflation as you see it, but maybe just to change versus where it was in Q1. Thank you very much.
Yes. Thanks, Andrew. With respect to cyber, the low triple digit on the sales side and the mid- to high double digit on the EBITDA side, that's basically our estimate. Just be reminded all stores at all times and all services have been up. However, the efficiency and effectiveness of those in the background have not been there. This also shows you that it's not entirely scientific that you can put a very specific number to it. We are very confident that the number that we are giving here is roughly that pointing out. I think it's also very important that this is now very much behind us. We have all systems completely restored since already mid and later December. So from that perspective, strong development that we see in January also free of that.With respect to the inflation, and you specifically asked about the delta between Q1 and then what we are seeing in January. Obviously, with quite significant inflation numbers where the central banks are working heavily against, it is also that one not too scientifically easy to look at, but we are talking about 1 to 2 percentage points reduction that we are basically seeing in January. And let's see how that will further develop. Just be reminded given that in our categories, lots of fresh and ultra fresh we are talking, there is quite a high volatility historically, which we now expect to come down somewhat. But again, the jury is a little bit out also from interventions from central banks there.
Okay. That's very clear. Thank you. And then just to come back to cyberattack. I mean, obviously, there was some vulnerability in the system. How confident are you that you'll resolve those issues? Thank you.
With respect to -- it was not that easy to hear, but I will just go for the rough understanding what you provided. So the cyberattack has been basically hitting us in that Q1. We have had fended off very, very significantly in all the prior years heavily on that side, and we have continuously invested into that area, certainly now with a further and further intensity that is out there in the market, we have been unfortunately hit in that Q1. And we are continuously and further investing into upping our game given that this is an increasing threat across the entire industry, also from a macroeconomic perspective, and that will be continuously more and more on our radar screen also from a resource perspective.
Okay. All very clear. Thank you very much.
The next question comes from Frederic Wild from Jefferies. Your question, please.
Yes. Good morning, Christian. Just 2 for me, please. When I look at the market share charts you shared, it looks like the outperformance has stalled and maybe even that the market is slightly growing during Q1 in Italy, Spain, France and Germany. Is that due to the cyberattack or is there a change in market dynamics behind that?And secondly, I was just trying to piece together the acceleration in sales growth in January. It looks like it goes above and beyond the cyberattack impact. So is there a regional mix of this? I think the comp was pretty stable in January from Q1 last year. Thank you.
So we would attribute the sort of movements of the curve to this temporary impact from the cyberattak. And if we look forward and if we also look in this very moment, we are very confident that we -- with the implementation of the sCore strategy and the growth that we are seeing will also continue to gain market shares and to do further important step in the consolidation of that very fragmented industry. So here, we are -- judgment now it's temporary, and we continue to grow market share for the future.
Mr. Wild, does that answer your question?
And behind the acceleration in sales growth in January as well in terms of just more breakdown of regional and maybe category mix as well. Thank you.
I think when we look into the various regions that is quite consistent, if you just carve out Russia from that perspective, so the acceleration is happening everywhere. We are attributing that very much to our continuous rollout on the sCore side, including all the BNPL and volume perspective that we are driving there. So the underlying strategy in our view is working out well, and this is showing in the Q1 -- sorry, in the Q2 and therefore January numbers over there, and we expect that to continue.
Fantastic. Thank you very much.
[ Operator Instructions ] We have a follow-up question from Mr. Bosse. Please go ahead.
Yes, hi. Thank you for the opportunity again. I had some question on the free cash flow. You provided free cash flow of EUR150 billion and EBITDA [indiscernible] And it seems to be -- you know your ambitions -- so the question is about the cash conversion here. And could you provide us about the free cash flow target for the current year for the full year? You mentioned something that I did not get it from the press. Could you repeat yourself? Thank you.
Yes. Thank you, Volker, for the question. With respect to the full year free cash flow, we expect a slightly negative to stable free cash flow development. That's basically driven by a positive operation cash flow development and on the other hand, increased -- significantly increased investments that we would expect there, fully in sync with our overall strategy perspective.With respect to the first quarter, yes, there has been a significant different setup in terms of the net working capital. That's due to the mentioned before developments. On the one hand, the inventory that we proactively increased because during the way where we are basically redeploying our assortments in the sCore strategy, just be reminded, we are reducing the assortment -- the number of SKUs, but we are ensuring then by the ones that we focus on that they are always, always available. And that is so very critical in the very beginning. And therefore, that's where we focus on, so a slight increase on the inventory side and on the accounts receivable, 2 effects. One is on FSD, as we are growing significantly that business that's increasing and on the other hand there have been some delayed collections. Therefore, we will see in the Q2 pretty much full reversal of that slight net working capital inefficiency that we have now seen in Q1 for obvious reasons. So if we then look at the entire H1, that will basically show the full cash flow development, although just be reminded, Q2 always is a quarter where we have structurally a negative cash flow development.
There are no further questions at the moment from the call, and we switch to the written questions via webcast.Thank you very much. I will read the first question from Marcus Schmidt at Adobe. He has 2 questions. The first one is, could you please explain what is included in the line other OCF in the cash flow statement? The change year-on-year is quite material? And the second one is you have a solid cash position, though you had borrowings in the quarter, could you please explain?
Yes, Marcus, very happy to comment on. I think on the other operating cash flow, we are talking there, basically there is VAT refund claims that are in there that is swinging and that depends then very much on the seasonality on certain payment dates and so on. And therefore there is a bit of a delay from that perspective. So roughly a mid-double-digit euro amount that is in there and swinging. And again, that topic will be completely resolved than in Q2. But again, it's seasonal, and it also happens usually in that way.With respect to financing, we feel very confident from the overall perspective. So what you're seeing there is the various and normal swings. We are continuously active in commercial paper markets continuously throughout the year. Therefore, the borrowings that you see there is very very -- the very normal way. Just be reminded, in March of this year we have a bond to be repaid. And as we stated in December, at this stage, we do not expect that we will do a refinancing of it, but we will basically take it from our existing cash position and also the short-term perspectives and the access that we have to all those places.Just as a quick information. In December, we have also renewed our RCF, which is then EUR1 billion, which has been done in a very good manner in a tough environment. And in addition to that, we have further access to fully committed bank lines at all times. But again, that's normal course of business, and we are very confident to fund our sCore strategy operationally and in other pieces very much with our strong financial position.
The second question comes from Ulrike Dauer from Dow Jones Newswire. The question is, good morning. One question regarding the cyberattack. Have all impacts announced hits to revenue and EBITDA being accounted for Q1? Or is the financial impact spread over several quarters? And if so, how? Thank you.
Thank you, Ulrike Dauer, for your question with respect to the impact, yes, this is all fully reflected in the Q1 in terms of the operational effects but also the remediation perspective. What is important, and that does not only apply to us, but also applies to other companies in the future while we did have significant investments in the past into that direction, we will certainly deploy continuously in a business-as-usual way more into that direction, but that's just the normal part of our IT upgrading and IT transformation perspective. So a quick answer on your question, yes, all relevant effects covered in Q1. And yes, longer-term even stronger focus on that overall.
There's one more question from Matthias InVerde from [indiscernible] The question is, could there be a potential CE expansion after the [indiscernible] expand into Germany as well?
Let me take that one. Thank you for the question, Mr. Inveradi. Regarding our coverage of CEE with our normal, I would say, normal in [ Metro macro operations ] we are fully covering CEE to my knowledge, right? I'm just going through the map mentally, but I think we are there everywhere. Number two, the expansion of [indiscernible] is very much focused on Eastern Europe. There is no current plan that the expansion will come to Germany.
[ Operator Instructions ] Seems to be no further questions, and I hand back to Dr. Steffen Greubel.
Yes. Thank you very much for the participation and for your questions. We speak to you in 3 months for the next update, and I wish you all the best and stay safe, healthy and go out eating. Goodbye.
We did receive one question. Mr. Greubel, would you like to take it?
Let me think, yes.
She changed her mind and she's not in the queue no more.
It doesn't matter. It's okay. Very good. So then again, go out eating. Thank you very much, and goodbye.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you very much for joining, and have a pleasant day. Goodbye.