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Hey, everyone, and welcome to our Q2 2018-'19 results call. As usual, please take note of our disclaimer. I will now hand you over to Olaf to present our Q2 results.
Thank you, Sabrina, and good morning, everyone. Welcome to the results call for the second quarter '18-'19. As we outlined before, this is the year of intensification, and it's all about making sure that our focus on wholesale continues to progress. And in that sense, on a nutshell view on what we have achieved in the quarter, it's fair to say that despite some calendar shift due to the Easter situation, we could show a good momentum on like-for-like for the continued business in the wholesale division. We also could see that our progress in the 2 strategic tier groups, being HoReCa and Trader, continue to progress. We also saw progress in transformation in various parts of our business, leading then to an earnings quality which is encouraging and at the bottom line on the EPS growing, and Christian will explain much more in detail in a few moments. Before we go there, let's have a look into the hypermarket division, and then into the sale process. Without referencing too much into the recent past and how we have been preparing for this for a number of years now, we are now entering the final part of the process of stepping out of the hypermarket business. Among various attributes, we have selected a consortium led by a company called Redos to grant them exclusivity for negotiation in the upcoming 12 weeks. We have done this on the back of a business which has preconditions for the future that we're convincing for that consortium to make a bid for a holdco. This is, of course, one of the key reasons why we have chosen them for exclusivity, among others, like making sure we are not running into any complications on the antitrust side. Having assessed this carefully and having negotiated with the Redos-led consortium, we have come to an exclusivity agreement, which, and I need to emphasize this, is not a signed contract. But that leads to a couple of observations and assessments that, of course, we would like to share with you at this moment in time. The current assumptions, the current parameters of the exclusivity agreement indicate an enterprise value for holdco, so propco and opco, of roughly EUR 1 billion. At the moment of closing the transaction, which would, of course, happen a few months after signing, which we would envision in summer, at the moment of closing, we would anticipate a cash-in of roughly EUR 0.5 billion, EUR 500 million, in that moment of time to come into the books of METRO. Having said all of that, we also have agreed with a party that METRO will remain a minority partner on the opco side also to support a smooth transition and to ensure value creation in the operations. This is not without an end. This has a clear due date, which is in 3 years after closing the transaction. It is also contractually anticipated to have a clear put and also to have a clear cap on how far our financial commitment can go.Given all of those parameters, we also conducted an adjustment in our discontinued operations in the balance sheet in the magnitude of EUR 385 million. These are all noncash relevant impairments.Having said all of this, I would now hand over to Christian, and he will give you much more detail on the financial performance of the first half year and the second quarter.
Thank you, Olaf, and good morning, everyone. Let us start with the drivers of the sales development in Q2. We have achieved resilient like-for-like growth of 1.2%, where in the previous quarter, we observed a very positive development in the same way in Eastern Europe and in Asia. Adjusted for the Easter shift, like-for-like sales grew on the same level as the very good level in Q1 '18-'19. Delivery sales grew by roughly 9% and now accounted for 20% of total sales in this quarter. The reported growth in euro terms came in at 0.2% due to currency effects especially in Russia and Turkey, while growth in local currency was at 1.6%.EBITDA excluding real estate gains amounted to EUR 83 million in Q2. And in the 6-months period, EBITDA decreased by EUR 62 million, to EUR 553 million. In constant currency, this equals to EUR 41 million or a minus 6.9% reduction in EBITDA, which is in line with our expectations. As we confirmed in the Q1 results call, the transaction in Bangalore on the real estate side has, in the meantime, crystallized, and this transaction led to a profit amounting to around EUR 30 million. We continue to expect EUR 250 million to EUR 300 million gain from real estate transactions for fiscal year '18-'19. We have a number of projects at an advanced stage to fulfill the guidance with the majority of gains still expected in Q4.Having said that, let's move to our regional performance. Let me start with METRO Germany, where like-for-like sales decreased by 3.1% in Q2, and that is predominantly driven by the Easter shift. Adjusted for the Easter shift, sales were roughly flat, which you can also see by looking at the 7-months number, where Germany is trading at plus 0.8% like-for-like growth. EBITDA decline is also mainly attributable to the Easter shift. We've also remodeled 4 stores under the so-called BIG concept. This stands for best in gastronomy and has meanwhile been rolled out to 10 out of the 53 large stores.In METRO Western Europe, due to the Easter, sector like-for-like growth came in at minus 0.3%. Excluding Easter, it came in at plus 1.1%. Last year's EBITDA benefited from a onetime gain. Adjusted for this, EBITDA grew driven by various countries that performed well in the region.Moving on to Russia, where like-for-like sales came in at minus 0.4%, which is slightly below the Q1 level but still a strong improvement against the previous year. This development continues to be driven by the BMPL assortment, which, as you are aware, has been increased over time. On the right side of the chart, you can see how the corresponding assortment shows a marked response within a few months following the introduction, with a very much same pattern for the first and the second wave. Nonetheless, volume response is not yet at the level that we aspire to, and we will continue to invest into the price positioning particularly on the core trade assortment. On the other hand, EBITDA declined by EUR 5 million year-on-year, which is roughly 40 basis points margin pressure. This strong improvement versus previous quarters is a combination of some initial COGS improvements and the continuing cost savings. For the remainder of the year, we expect to see further improvement in margin development stemming from a combination of cost savings and COGS improvements and, of course, supported by the expected sales development. In Eastern Europe, we once again generated strong like-for-like growth of 6.8%. The growth has been driven by the majority of countries and especially by the Trader business in Romania as well as the HoReCa growth in Turkey. Due to negative currency effects, especially in Turkey, total revenue increased by only 2.4%. EBITDA excluding real estate gains declined by EUR 3 million, to EUR 42 million in this quarter. In constant currency, EBITDA excluding real estate gains is largely on previous year levels. In the Asia segment, like-for-like sales have grown by 3.6% with all countries showing a positive like-for-like development and particularly a strong development in China and in India, where in total now, EBITDA came in, in that segment largely flat year-on-year.On the Others segment, EBITDA decreased slightly as costs for IT increased also driven by the continued rollout of our digital interface for delivery and others. This development was countered by a small onetime gain. Moving further down the P&L. The depreciation has slightly increased, resulting in a lower EBIT than in the previous year. Net financial result has improved mainly due to better refinancing conditions. And the tax rate in this quarter stood at 38% and is, therefore, in line with our full year expectation of 37% to 39%. Easter effects, tax rate and improved net financial results resulted in Q2 EPS from continuing operations slightly increasing by EUR 0.03 higher than last year. As a result of the advanced stage of negotiations, we have booked a noncash impairment of EUR 385 million in the discontinued operation this quarter, therefore, resulting in an EPS from discontinued operations of minus EUR 1.17. Reported EPS including discontinued operations amounted to minus EUR 1.26 compared to minus EUR 0.15 in Q2 last year. The result was heavily impacted by the previously mentioned impairment in discontinued operations. Reported EPS pre-impairment totals minus EUR 0.20 or EUR 0.05 below last year. The decline is mainly due to the EBITDA development in discontinued operations, which is mostly driven by the tariff and Easter effects.We now go to the free cash flow. This has improved by EUR 62 million compared to last year. The change in net working capital amounted to minus EUR 572 million in Q2 compared to roughly EUR 600 million negative also in the last year. This improvement despite the Easter shift is driven by some operational improvement and also supported by certain timing effects. Despite the encouraging performance, we maintain our full year expectation of largely flat change in net working capital against a very strong net working capital performance that we have seen in the last year. CapEx in Q1 came in EUR 36 million lower than last year, driven by a lower number of new store openings. All in all, our simplified operational free cash flow came in at roughly minus EUR 550 million in the quarter compared to roughly EUR 610 million minus in last year's quarter.From the full cash flow perspective, the picture looks slightly different, but this is really mainly due to timing effects that I will quickly elaborate. The operating cash flow, if you look at the full financial statement on the cash flow side, from continuing operations came in at approximately minus EUR 680 million versus roughly minus EUR 640 million last year, whereby the lower usage of restructuring provisions and the better net working capital development were accounted by higher cash taxes and an increase in other operating cash flow mainly driven by temporary VAT effects. Investing cash flow has significantly improved from last year due to lower CapEx and higher cash-in from real estate transactions, and the financing cash flows really only impacted by the various levels of net borrowings in that sense. Finally, net debt stood at EUR 3.6 billion at the end of March, which is broadly in line with the previous year.That was a run-through of our key financials. I'll now hand back over to Olaf to discuss the strategic developments of METRO in more detail.
Yes. Thank you, Christian. And let's have a brief look into our strategic focus. And here, let's begin with the HoReCa target group. We have achieved a growth of 3.2% in a quarter, which also has been -- of course, been impacted by the Easter shift. And the momentum that we have seen in previous quarters continues to grow, and this on the back of quite a number of initiatives that we are rolling out locally. Today, we will give you a very brief view on 3. Let me start with Turkey. Turkey, as you know, in the last years has shown a quite significant growth momentum in the HoReCa industry, and it's fair to say METRO Turkey has established itself as one of the leading brands in the hospitality sector. Now in this case, the Turkish team has used the relaunch of our own brands. 2018 marked the year of the relaunch of our private label strategy to actually use that on a localized approach. And they call that geographically indicated products, products that you can use as a restaurateur to enhance your menu and show your customers that you take care about the local taste, the local origin, the local culture. The whole program has been developed inclusively with restaurateurs across various regions and has then been rolled out. And in 1 month, we were able to sell more than 15,000 menus that have been cocreated. It's, I think, a clear indicator not only about how we're enhancing our own brand position but how we are establishing ourselves as a strong partner of the HoReCa community in Turkey. In France, I think it's well known that METRO France is continuously working on assortment, on service level, on innovation. I think what is less known is how much METRO France is activating the workforce and how much attention they pay to motivate every associate in the shop floor, in goods receiving, at the welcome desk, in the headquarter, to put yourself in the shoes of a customer and permanently rethink how can we serve better. And the current version of the program in France is called Brigades. Brigades is, as you know, also the claim or the label for the teams in the restaurants that are actually working in the kitchen and are preparing the meals for the customers. We are calling that the same, and we have the same principle because, collectively, we can enhance the way we are serving our target groups, and this we do store-by-store in an individualized basis. And we do that for those selected target groups per store. That means we have cross-functional teams that on a voluntary basis are sitting together various times a week in challenging ourselves how are we doing for that specific target group, i.e., the traditional French restaurant, what is good, what is superb, what is missing and what is not good, and then enhancing products on shelf, enhancing the way we display the products but also how we are servicing them and how we are explaining customers the ways how they can use the product. This is a continuous improvement process à la française, so to say, and is a driver for growth that is certainly helping us already in this fiscal year to continue to work on a successful growth on a business which already is certainly a leading business in the French market.Another example is Spain. And here, I think we can give a clear indicator that NPS for us is not just statistics or metrics. We're using the Net Promoter Score to continuously improve the way we are operating, and this is owned by the leadership. And the executive team of MAKRO Spain is on a permanent tour throughout the country to make sure that they take advantage of all of those insights and, together with the associates, the floor manager, the store managers, make necessary adjustments to grow the business.Now let me go and look into one of the key enablers for success in the future of our business, and that, of course, is digitalizing the core. And as Christian already mentioned, we have incurred some more costs in the headquarter for developing our digital suite. And one of our most important tools is M-Shop. M-Shop is the front end for ordering at METRO. And as you can see, we meanwhile have rolled this out to 17 countries. We have 2 versions of it. One is the HoReCa front end, which, of course, is tailor-made for their demand. It's much more flexible in quantities. You can order products by weight. Of course, it also is very much individualized on pricing. And it, of course, also is validating product availability on a very detailed level. So it's tailor-made for a restaurateur to take advantage of a front end which is much easier to use than anything we had been supplying before. For traders, of course, the same principle but then different functionality. A buy more, pay less, of course, comes alongside with minimum quantities and has pre-configured baskets that traders can take advantage of. So all in all, it should, and actually it does, make the buying experience easier and more convenient. And as a result, our online ordering share, meanwhile, is at 40%. It comes without saying that the cost of an order significantly declines once it is conducted online. And the service level, of course, also is significantly improved. Just to remind you, in December 2018, the share of online ordering was at 30%. So we have an absolute growth of 10% in that short period of time, which we feel is very encouraging.Let's move on to Trader, and let's have a look on how we are doing there. Here, we have seen a growth of 4.6%, which means we are continuing to see the good momentum. And also here, I would like to give you a bit more insight into 3 good examples on how we are taking this very seriously, and we are focusing on the target group of Trader as much as we do focus on the target group of HoReCa. Romania has shown significant improvement over the course of the last years. Now the good thing about Romania is they are never satisfied with what they do, and they continue to push the envelope. So having seen the success on buy more, pay less, having seen the success of massification, the journey continues and the number of pallet presentations continues to grow. But also the way we are placing the pallets now even closer to entrance and to the cashier zone are things that are very intuitive, things sometimes you might even say that are obvious but things that the team here is continuously identifying and optimizing as much as they also pay attention to the fact that we're not only servicing the Trader, we are servicing other B2B customers. But to enhance the flow throughout the store is one way to also enhance the convenience and the effectiveness of the buying experience, which is another driver for the continued significant growth we are experiencing at METRO Romania.In India, we have been pretty successful in turning that business finally profitable last year. And our focus on Kirana continues to advance in a way that we are now taking a similar view on the Kirana business or the Trader business like we do on the hospitality. So we spoke a lot about hospitality digital in previous quarters. It's now time to make you aware about the SmartKirana program, which is a program which has an online and offline component. The online, of course, is a digital POS and the number of tools that will enhance the attractiveness of the Kirana. The offline component is a fully fledged upgrade of store operations and therefore turning a business which today is very traditional over-the-counter into a real store and helping customers to do the layout and the remodeling at low cost but therefore then enhancing significant double-digit growth in their business. And of course, that has an implication for the relationship to METRO and lets our share of wallet grow.Final one, MAKRO Poland. I think it's a good example on, once again, our focus on employees and associates being the signs of success factor. Similar to France, here we are taking an approach which wants to make sure that everyone in the store is aware that you are a part of the sales force no matter where you are, on the walk-in desk, behind the counter, at the checkout. And for this, MAKRO Poland has developed a program and an academy that educates essentially every single one in the operations, and that has led to a significant turnaround over the last years. And the program is permanently enhanced.So with all of that, let's move on, and let's have a look into how we are doing and how we are looking into the future. First of all, the first 6 months give us a clear confirmation of our direction and, certainly, the confidence that we are well on track on the anticipated intensification. As a result, I'm also happy to confirm our guidance for '18-'19 of 1% to 3% sales growth at constant currency following a 2.1% in the first quarter and a 1.6% growth in the second quarter; and then a 1% to 3% like-for-like growth after 2.3% in Q1 and 1.2% in Q2. Our sales development will be driven by Eastern Europe, including Russia actually, and Asia also in the next quarters. For Russia, still we expect a trend improvement. EBITDA excluding gains from real estate transactions at constant currency, we expect to be minus 2% to minus 6% below last financial year. With regard to technical effects that we wait for the next quarter, we expect to have some tailwind from Easter shift, of course, as we had some headwind this quarter. Also, Q3 last year has been impacted by a onetime loss in the segment Others in the magnitude of roughly EUR 20 million and a onetime gain of roughly EUR 10 million in the segment Russia. With regards to real estate transactions, we continue to expect EUR 250 million to EUR 300 million EBITDA contribution from this financial year. As the majority of the transactions will be back-ended, however, a vast majority of transactions are very well advanced. Last but not least, please take note of our upcoming events, roadshows and reporting dates. On May 14, our Investor Relations teams will be attending the conference in London; on 15th of May and 16th of May, in Frankfurt. Also, I want to use the opportunity to invite you as well to come and visit us and to show you more what we're doing in our operations and also very much on the digital side as we are progressing in enhancing the business model of wholesale.And with this, let me open the Q&A session.
[Operator Instructions] The first question comes from the line of Maxime Mallet of Deutsche Bank.
The first one is on Real and tell me the process that you are going through. So my understanding is that you are well under this process, selling 100% of the real estate of Real but keeping 25% of the operation, which will imply that on your P&L, we -- it would have an impact of the 25% of -- well, loss is 24.9% -- profit at some point in the future will be through the associate line. And then on top of that, you would also have to pay basically 25% of the rents from Real to the real estate entity. Just wanted to confirm that and if you have an idea of what this kind of impact would have been, for example, in 2017-'18. The second one was with regard to the lower financial costs that you have in Q1, getting a sense whether Q1 level for the financial cost is a good idea of what it's going to be for the remainder of the year and the coming quarters. The next one is with regard to Russia. And notably, the like-for-like, we see an evolution notably with the store that moved to the BMPL process. Could you maybe give us the like-for-like -- the exit rates of the like-for-like in Russia that you had in the quarter. And the last one is we've seen some news in the press notably with regard to China and some potential discussion that you will have with some potential partners. Can you maybe update us on that front as well?
Let me start with the first one. It's clear we will report at equity of participation in opco as soon as we have concluded the transaction. As soon as it's closed, it will be a financial participation, which we will report 24.9% of that P&L. So this is our essential reporting transparency that we will have. There's no other agreement in place than that other than a cap which we have put in to any other financial commitment on top of what a transaction parameter will say. And this is then linked to the 3-year tenure of the 24.9%. The 24.9% also indicates that we are not taking a strategic view and that we are not having a control aspect in our equity participation. On China -- before I hand over to Christian on the net financial costs. On China, the process is going well. The strategic rationale there is we have a great business. By no means we are dissatisfied with the quality of the business nor are we dissatisfied with the progress in this fiscal year. I dare to say it's a high-performing business in a market which is not that easy for food retailers. But that's the word, retail. It's predominately a retail business also under the METRO banner. And therefore, with our focus on wholesale and our direction to completely concentrate all of our effort on wholesale, we have embarked into this journey in exploring how can we take advantage of the current situation and then potentially think about a B2B play in China. So there's not a lot much more than I can say than the ones, unfortunately, that you have seen in the media. The interest is significant. We are now embarking into a more focused process with selected parties, and I think we will be in a much better position to report back as of Q3. So early August. But everything is in line with our expectation. In regard of momentum, actually, it's better. In regarding of timing, we are just spot on, on the schedule.
Yes. And just to underline also Olaf's statement with respect to the expected equity participation, so that will be then only a financial asset on the balance sheet, which will be assessed continuously for any changes in valuation, but it will not have another impact on our P&L. So that is in the assumption completely separate from our P&L then. With respect to the net financial costs, the guidance for the year is EUR 150 million. And despite some good developments that we have seen in the first 2 quarters, we stick to those numbers. They are always -- there is always some volatility in those numbers, so the EUR 150 million is the one to stick to. With respect to the Russia like-for-like evolution of BMPL, as shown on the chart, how the dynamics are going in terms of the rollout, we have quoted 3% growth of volume in Q1. This is roughly the number, with a slight uptick, that we have been seeing on Q2 on this.
Just maybe to make sure I understood that, with regards to the like-for-like in Russia, was mentioning the like-for-like for -- well, to Olaf, the Russian business, like the exit rate that you have?
Well, the like-for-like development in Russia is that minus 4%. In the most important segment in the meantime from BMPL, you see that this is growing in the wave 2, and the volume in BMPL is -- was in Q1, that 3%. And in Q2, it's slightly higher than that.
The next question is from the line of Caron Fabienne of Kepler Cheuvreux.
Three questions from me. First, it is for you, Christian, on the cash flow statement on the press release, Page 18. Can you explain why the other line is deteriorating from minus EUR 165 million to minus EUR 237 million, and it was more or less flat in Q1 will be the first question. The second question as well on Russia. Could you give us a feeling how you would split the minus 4% between the customer groups? And the last one is more for Olaf regarding the like-for-like as a whole. When you give the 3.2% like-for-like for HoReCa, I understand that it's for all the HoReCa customers within the group. When you give the Trader's number of 4.6%, it's not the same definition because it's mainly the Trader countries excluding Russia. What would be the like-for-like for Trader if you use the same definition as for the HoReCa, please?
Yes. Fabienne, with respect to that question on that other cash flow line, as mentioned in the call, that is the timing -- is the effects that we do have there, these are non-income taxes around VAT and other topics in the various countries that just slipped between one quarter and the other and something that is expected to reverse in the ongoing quarters. So nothing from a structural nature.
On Russia, the split of the 4% [ is something ] we are not disclosing, the split by target group. What we can say is that, of course, the buy more, pay less that Christian was referring to, of course, is very much geared to support the Trader business. We can also report back that the Fasol business is making encouraging progress. But I beg your pardon, we are not splitting up the number here for Russia at this moment in time. On your question in regard of why are we showing the HoReCa and the Trader differently, it follows, I think, a simple strategic rationale, Fabienne. One is HoReCa essentially in all countries will have a strategic angle somehow. Even in a Trader-denominated country, we will have a HoReCa nucleus. And that most often is then the megacities or the capital of the country. Take Russia, it's a Trader country, like no means we are deviating from that strategy. But in Saint Petersburg, in Sochi, in Moscow, we are focusing on HoReCa, and that's why we are also then showing those numbers, to indicate how much progress we see throughout the portfolio, because HoReCa essentially is applicable to all. Trader is not applicable to all. And I'd give you another example. In a Western European business where we are aiming to get into a share of 60%, 70% plus of HoReCa, like we have in France, like we are aiming for in other places, we consciously dilute the Trader volume. So we consciously step away from businesses that we have been serving there. As of the choice that we want to strategically build out a stronger position in HoReCa, that's why we separate the Trader-denominated countries, and we are only tracking those. And going back to the other example, in India, the focus must be completely on trade. The HoReCa, for example, is marginal.
Okay. I understand, and it makes all sense. But then I think it would be useful if you could have the like-for-like Trader as you define it within maybe as well result and then including Russia, if you could have 2 numbers because Russia is still a Trader country.
Fair point. And for us, that is clearly in line with our turnaround focus on Russia. And we said as of the turnaround, of course, Russia needs to be included, fully accepted. That is absolutely clear.
The next question is from the line of Andrew Gwynn of Exane.
Just a couple of quick questions. Again, unfortunately in Russia, I'm not seeing the momentum, the minus 4% goes against a very, well, frankly, easy comparative. When do you think you can get yourself back into positive like-for-like momentum? Obviously, the base of comparison does get much more difficult as we progress. And obviously, the volume progression, as you mentioned, is a little bit below your expectations. So a bit more color there would be very much appreciated. And the operational detail through the subsidiaries is sort of greatly received. I mean Turkey, obviously, you've called in particular, but obviously, Turkey very inflationary at the moment. So I'm just wondering if there's a volume component to that. And then more generally within the Eastern European segments, what's the volume versus inflation split of that total like-for-like?
On the Russian angle, it's clear that our ambition needs to be -- to turn to positive like-for-like. The reason why we continue to be very confident on that is the volume uptick we've seen now consistently for quite a long period. We have seen, on the other hand, market circumstances not enhancing, neither on customers -- let's say, customer mood nor disposable income for food purchases. That means that we remain confident and we are optimistic we will move into territory of like-for-like positive. But I would be ill-advised to say this is exactly the quarter where that will happen. But rest assured our ambition is to push the envelope as much as we can, that, that is not in the distant future. And as we said, we want to see the trend change in the fiscal year '18-'19. Now it's fair to say the second quarter was a bit slower, that it also has some technical effect that has been impact of expo sales which shift from one month to the other. And therefore, I would not say we have a trend change. But for the second half, the trend needs to improve, and that is clearly our own ambition and the ambition of the local team in Russia.
With respect to the question to Turkey volume, yes, in Turkey, we are growing also the volume in a relevant way despite also support in that country by inflation. When you then look into the overall countries and that especially Eastern Europe, and yes, there is a certain way of inflation, but the countries overall are also relevantly increasing their volume setting. And compared to the prior year, there is no relevant additional support by inflation in those jurisdictions.
Do you have the number, sorry, for inflation in Eastern Europe as a segment? And mostly, the like-for-like looks very strong, so I just want to understand the sort of drivers of that.
Well, no, we don't give that number. What we do is we look into inflation, both the reported one, very obviously, and then the one which is internal that really takes into account the appropriate assortment that we are trading in. But we don't give the overall number there. Volume in most of the Eastern European jurisdictions has gone up quite relevantly. In the total of 6.8%, there is a very relevant component in there that is volume-driven.
The next question is from the line of Juergen Elfers of Commerzbank.
This is Juergen. Sorry, I have 2 questions. One is again on Russia. Is it right to -- or fair to understand that you are, at the moment, not satisfied with the volume growth, that buy more, pay less should have had the hope of higher volume growth? Does that imply that going forward, you will have higher price investments in order to satisfy the expectations in terms of volume growth. That's the one question on Russia? And then just on the Real disposal again, I would like to learn more about the maximum financial downside that you engage in with the 24.9% stake. Obviously, in the second quarter, the Real loss, and that included the freehold portfolio, was somewhere like EUR 40 million. If I am calculating the things correctly, now the 24.9% stake is only in the opco. I understand that you're not showing it in the P&L, but how did you manage to sort of limit the maximum financial downside? And what maximum financial downside do you see once the deal is done?
So on Russia, I would say the following. I think the volume uptick we have seen in buy more, pay less, I would call it encouraging. It's actually faster than what we have seen in Romania. The rollout has been more impactful in a short period of time than at the time when we started this in Romania. You remember we showed the reference case of Romania, which took us 2 years. So it's encouraging. Are we satisfied? Honestly, Juergen, we are not. And we will not be satisfied until we will see positive like-for-likes and an earnings trend improvement. So we are dissatisfied by nature with the current approach, but we are encouraged. So what we are saying is it makes all sense to intensify on the strategic direction, but it leads to as well some more adjustments. And that will imply that we will invest into price here and there. So I'm not backing off from that question. Yes, there will be some more price investment. On the other hand, we are also expecting that the impact of the other strategic initiatives, the Fasol network and our share of wallet that we can gain there, alongside additional improvement both on the cost savings and the terms and conditions within the industry, will help us to get the balance right. So as I said, very encouraged but by no means satisfied.
Olaf, can I just quickly ask back on inflow sales price inflation? Obviously, ROSDAQ reported 5.8% inflation for the quarter. How has the sales price inflation contributed to the minus 4% like-for-like?
Well, this one I would really lead to the IR team to give you some more detail. I think the statistics that are disclosed are quite confusing, and it depends, of course, as well on the categories and the mix. So would ask you to get back with the IR team. They can give you some more color to that. It probably would take too much time at this moment in time.
Okay. Yes. And on Real?
On Real, without disclosing numbers, one thing I can certainly say is, first of all, we need to respect that we have an exclusivity agreement. It's not a signed SPA. We're now in the process of working out all the details. So all the parameters that we have disclosed are based on the current state of negotiation, number one. Number two, we have clearly shown our willingness and our readiness to support the transition of opco, but we clearly said this cannot be unlimited. It cannot be unlimited in time, and it cannot be unlimited in funding. And therefore, we have a clear exit after 3 years, and we have kept that limit of financial exposure to a number which, at this moment, we cannot and should not disclose. But it's clearly limited, and it's not out of range. And therefore, we will disclose it, of course, once we have the signed SPA, then we can give more figures to that.
We now take our last question from the line of Dusan Milosavljevic of Berenberg.
Just 3 questions from me, please. The first one, you were flagging the one-off gains in the Others segment. Maybe I missed on the call. Maybe you've flagged this. Can you quantify how significant those were? Well, actually, the second question is in relation to -- or do you want to answer the first one, and then we can move?
Happy to take the first one. That is a high single-digit euro million amount.
Okay. The second question is just in relation to -- if you haven't commented on this explicitly before, but just target leverage and, generally, where you'd like to get your balance sheet to and any other capital allocation comments especially in relation to EUR 500 million inflows from Real.
Well, I think at this stage, we feel quite comfortable and solid from a balance sheet perspective. Again, S&P has confirmed in January our investment-grade rating. And with respect to any expected or potential proceeds from a transaction that is just in the making, we would refer to that very stage once we have confirmed that transaction.
Fair. And the -- and just the last question, I appreciate obviously it's difficult to put a time line on Russia. Like-for-like seems inflecting, but can you maybe comment on how satisfied you are with your cash generation profile and any technical factors? And kind of when can we expect maybe inflection in free cash flow and any comment around that, the kind of timing effect this year by quarter relative to next year?
Well, we -- and I commented that earlier. I think it's not sensible to give you a specific quarter where we're going to have that breakthrough. I think what we can say is the trend change, that's what we committed to, and that's what we want to see and we will see throughout the second half of the year. And of course, for the full calendar year, I think we have a good chance to show a trend improvement. And let's not forget the first quarter was just 2.8% negative, so that means we are seeing a base which we are probably able then to beat in the foreseeable future. But as I've said, not to give you a specific quarter, it's just replacing, not knowing right now because it's the future, with wrong anticipation. So let's not go there. Our commitment remains the same, second quarter trend improvement, and that's what we need to deliver.
And this concludes the question-and-answer session. I hand back to Olaf, CEO, for closing comments.
Yes. That concludes the session on Q2. Ladies and gentlemen, thank you for having joined our conference call. Should you have any follow-up questions, please reach to our Investor Relations team. Thank you, 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.