The REWE Group effectively navigates the 2022 financial crisis and maintains its course.

April 4, 2023

The REWE Group effectively navigates the 2022 financial crisis and maintains its course
2023 Annual Press Conference

German food retail: three-digit million dollars spent in customer prices
Group REWE:

The overall income increased by 10.4%, or 8 billion euros, to reach 84.8 billion euros.

As a consequence of cost increases and investments in customer prices, operating result (EBITA) was slightly lower than it was the prior year.

Return of travel and tourism income to pre-covid levels in 2019, more than doubling from 2021, and break-even after pandemic

Despite problems, investments increased by 2.8 billion euros in 2022.

German supermarkets REWE and PENNY sell food:

Revenue increased by 6.8% to 37.4 billion euros.

Results decline compared to 2021 due to intentional investments made to stabilise customer costs

Cologne. The 2022 fiscal year was successfully concluded by REWE Group, which also maintained its steady performance. The consistent course and broad-based global structure (retail, travel and tourism, convenience) have once again paid off in light of the numerous effects of the Ukraine conflict.

Inflation-related factors included, total income increased to a high level, but operating result (EBITA) decreased slightly from the prior year’s level. Positive contributions from other parts of the group more than made up for the negative effects on the results, including the deliberately costed decline in food retail in Germany by investing in customer prices, cost increases from energy, raw materials, staff, and logistics, and risk provisions for certain equity investments.

This stable outcome was primarily led by the robust rebound in travel and tourism following the coronavirus pandemic, as well as a positive trend in the global economy and at Lekkerland. The expenditures made by REWE Group were not only maintained in 2022, but also significantly increased.

CEO of REWE Group Lionel Souque makes good on his promise: “We did not leave our customers out in the rain without an umbrella in 2022.” “As announced, we invested a three-digit million dollar amount in Germany alone, effectively and verifiably stabilising our customer prices and consciously accepting a decline in the result in German food retail and actively foregoing profit.”

According to calculations for 2022 as a whole, product range inflation, or price increases on REWE’s shelves, was kept at 7.3%, which was notably lower for customers than the consumer price index (CPI) for food in 2022, which was 13.4%.

instead of focusing on maximising shareholder wealth, cooperative principles

“We made a deliberate choice to forgo profit by investing in our consumers in the food retail industry. We were able to counteract the decline thanks to the robust recovery of travel and tourism as well as the solid performance of other Group divisions.

We are able to do that because, as a cooperative, our goals are to maintain sustainable business practises and produce long-term development rather than being motivated by dividends. At the time of the publication of the company’s as of yet unaudited financials in Cologne, Souque emphasised that we eventually invest up to 99 percent of what we make in expanding our business segments.

He continued by citing, as an illustration of this long-term focus, the portfolio management strategy of REWE Group’s wholesale energy trading subsidiary EHA, which, in reaction to skyrocketing energy prices, had muted the resulting cost increases by nearly 150 million euros in Germany in 2022.

And in contrast to other players, we did not reduce or stop making investments during the recession. Instead, we increased them across all business segments to a total volume of 2.8 billion euros by putting a complete emphasis on what our customers want for the future—modernization, digitalization, innovation, and greening.

Financial stability ensures successful organic development that is sustained.

The CEO of REWE Group says that overall, the broadly based international group of companies was in very good financial shape after three years of economic and socio-political extremes: We are in a position to continue in the general direction we have taken and stay on a steady course from our own resources, given our revenue, results, debt, equity, and investment performance.

We have the ideal staff, structure, and game plan. It was a truth, though, that even REWE Group can only temporarily stifle inflation-driven developments by investing in customer prices. We kept a very close watch on the ongoing cost increases and our earning potential because we had a lower overall return on sales than other industries.

We must do this in order to manage the investments in the medium and long term and to continue the development of the business on a sustainable financial basis, says Lionel Souque. This is necessary not only out of a sense of responsibility to millions of customers across Europe, 384,000 employees, tens of thousands of partners and suppliers, and our owners.

Customers believe REWE retailers during crises: revenue increased by 6.4%
Under the management of the cooperative REWE Group, the REWE retailers’ revenue grew by 6.4% to 15.9 billion euros. The CEO of REWE Group continues,

“The independent REWE retailers were able to score, even in a year that was extremely challenging economically for our clients; they are and will remain the drivers of success for REWE.

Revenue for REWE Group rises by 10.4%
The REWE Group’s income increased by 10.4% in the most recent fiscal year, from 76.8 billion to 84.8 billion euros.

The cooperative combine increased by 8.2% to 58.6 billion euros (2021: 54.1 billion euros) in Germany and by 15.7% to 26.2 billion euros abroad (15.5% adjusted for exchange rate effects). To 384,239, the number of workers increased by 1.4%. While the group’s workforce grew globally by 4.7% to approximately 104,000, it increased slightly (+0.2%) in Germany to 280,839 people.

The REWE Group effectively navigates the 2022 crisis
The REWE Group’s revenue from continuing activities increased by 11.3% from 69.4 billion euros to 77.2 billion euros in the analysed year,

excluding independent retail and equity-accounted entities. German revenue increased by 8.7%% to 51.3 billion euros, while international revenue grew by 16.8% (or 16.6% after adjusting for exchange rate effects) to 25.9 billion euros.

While the combined net profit decreased by 33.4% from 755.6 million euros to 503.5 million euros, the working result (EBITA) decreased by 2.3% from 1.49 billion euros (2021) to 1.45 billion euros.

Two contrasting patterns contributed to the international group’s overall outcome. Positive contributions from other parts of the combine, particularly the positive trend in travel and tourism, were compensating for the purposefully accepted decline in the result in food retail in Germany (REWE, PENNY),

cost increases from energy, raw materials, logistics, and staff, as well as risk provisions for selected equity investments. Contributing factors were also strong performance in the international business and at Lekkerland.

The combination also increased its investment activities during this period, despite the crisis: Investments in real estate and intangible assets increased by about 520 million euros, from 2.3 billion to 2.8 billion.

In this year, REWE Group expects to spend 2.7 billion euros. Equity increased from 8.6 billion euros to 9.4 billion euros, a 9.3% increase.

Revenue trends across the company units and segments of REWE Combine

The Retail Germany business segment’s revenue, which includes PENNY and REWE shops, increased by 6.8% to 37.4 billion euros. The Austrian supermarkets (BILLA, BIPA, ADEG), the CEE supermarkets (BILLA, IKI), and PENNY International make up the Retail International business division, which increased by 10.5% (or 10.2% when adjusted for exchange rate effects) to 17.3 billion euros.

Revenue at National Supermarkets increased by 6.1% to 28.4 billion euros. This included the retail sales made by the REWE branches as well as the wholesale sales made to other businesses and merchants.

The Austria and CEE regions of International Supermarkets saw a rise in revenue of about 11% to more than 11 billion euros. Revenue increased by 4.2% to 7.3 billion euros in Austrian stores, which include BILLA, BIPA, and ADEG. Revenue in the CEE stores (BILLA, IKI) increased by 13.4% to 3.5 billion euros.

In 2022, PENNY Deutschland saw a rise in revenue of 8.9%, to 8.8 billion euros. The network’s 2,135 stores remained essentially constant, but their combined customer base increased considerably by almost 11% to reach more than half a billion.

Revenue at PENNY International, which conducts business in the Czech Republic, Hungary, Romania, Austria, and Italy, grew by 16.7% to 6.6 billion euros. PENNY increased the most in Romania, increasing by more than 27%, after exchange rate adjustments, followed by Hungary and the Czech Republic.

The Lekkerland Group’s domestic and international company, which is included in the convenience business segment, increased by 4.2% to 14.2 billion euros. The REWE To Go stores’ income in Germany increased significantly by more than 11%.

The DIY Stores business sector saw an increase in revenue of 8.7% on a yearly basis, reaching 2.6 billion euros.

Revenue from travel and tourism more than doubled to 5.7 billion euros from the prior year, a significant rise. “Business at the tour companies of DER Touristik returned to pre-crisis levels in the summer of 2022 as Europeans’

desire to travel was once again piqued. According to Lionel Souque, who summarises the positive tendency, “DER Touristik Group achieved a very strong summer of travel across all source markets, with revenue in some parts even exceeding the 2019 level.