METRO started strongly into the financial year 2019/20. Until end of February the development was in the upper end of the guidance range and H1 2019/20 was concluded with respective like-for-like sales growth of 1.5% and stable EBITDA adjusted^[1]. Thereafter, METRO's overall sales and earnings have been affected by the regulatory measures related to COVID-19 and resulting impacts on public life. These restrictions had negative consequences for our hospitality business (HoReCa), while our Trader business continued to improve and SCO business benefitted.

At the beginning of the third quarter of 2019/20 (April to June 2020), HoReCa sales hence declined, partially compensated by the positive and sustainably improved Trader and SCO sales. The resulting overall sales decline was in line with the expectations we expressed in the light of the restrictions prevailing per end of April.

The gradual easing of the regulatory measures in the context of the COVID-19 pandemic in the course of the third quarter and the measures taken by the Management Board to adapt to the respective market environment have led to a far-reaching recovery of the HoReCa sales development. At the same time, Trader and SCO sales continuously grew above the pre-pandemic level. Group sales have therefore strongly recovered since the middle of the third quarter. In addition, METRO was able to manage the EBITDA impact better than expected through stringent cost management.

Preliminary development of sales and earnings in the third quarter of 2019/20 is therefore as follows:

At the beginning of the fourth quarter 2019/20, the group sales have recovered further, driven by further improvement of the HoReCa business. In the single month of July, the majority of countries has reached previous year sales level or is back to growth. All segments show a strong sales trend improvement compared to the Q3 development, leading to sales on previous year level in the single month of July. Consequently, METRO expects its business development in the fourth quarter 2019/20 to be roughly on previous year level.

The Management Board has therefore today decided to provide the following outlook for the 2019/20 financial year:

For the 2019/20 financial year, METRO expects total sales and like-for-like sales to decline by 3.5% to 5% (9M 2019/20: -5.0%) and a decrease in EBITDA adjusted of around € 200 million up to € 250 million (9M 2019/20: € -192 million) vs. previous year. For Russia and Eastern Europe this includes significantly better developments with regard to sales as well as EBITDA, while Western Europe and Asia are expected weaker than the group average for the 2019/20 financial year. Due to savings and other effects, the segment Others has a significantly positive effect on EBITDA adjusted.

The outlook is based on the assumption of stable exchange rates and no further adjustments to the portfolio and only covers METRO's continuing operations. Furthermore, the outlook is based on the assumption that negative impacts of the COVID-19 pandemic will not surge again in countries relevant for METRO and that the stable recovery of the HoReCa sector continues.

The 9M 2019/20 Quarterly Statement will be published as scheduled on August 5, 2020 at 6:30pm, followed by an analyst conference call on August 6, 2020 at 8:45am.

^[1] EBITDA adjusted: EBITDA excluding transformation costs and earnings contributions from real estate transactions