Economic Performance

GRI 201: Economic PerformanceManagement Approach

The long-term business success of REWE Group is based on a cooperative structure that has given life to such company values as solidarity, unity and sustainability. The cooperative philosophy, the management culture that has arisen from it and the related long-term, cross-generational direction of the company create security and stability for all stakeholders, extending from members and employees to customers, suppliers and the entire socio-economic environment. For this reason, the Supervisory Board, shareholders, retailers and the Management Board of REWE Group consider the long-range cooperative structure to be a guarantee of independence and self-determination.

REWE Group is determined to generate long-term business success and to conduct its business activities in an environmentally and socially conscious manner. This commitment is spelled out in the Guidelines for Sustainable Business Practices that apply to all employees and contract partners of REWE Group. In the Guidelines, the company expresses its determination to reduce greenhouse gas emissions generated by business processes, use renewable energy sources and conserve natural resources, among other actions. By developing socially and environmentally acceptable products and services as well as expanding its more sustainable product range, the company is also helping to minimise the negative impacts created by its business operations

GRI 201-1: Direct economic value generated and distributed

In 2017, total external revenue of REWE Group increased by 6.7 per cent to 57.8 billion euros. Total revenue of REWE Combine was 49.4 billion euros in 2017 (previous year: 45.64 billion euros) (for more information, see also the Combined Management Report for the 2017 Business Year, pages 11 and 13).

Revenue development

in million €	2017	2016	Change in absolute figures	Change in %
Retail Germany	28,621.1	25,588.8	3,032.3	11.9
Retail International	13,353.5	12,710.0	643.5	5.1
Travel and Tourism	4,649.6	4,576.4	73.2	1.6
National Specialist Stores	2,130.8	2,088.5	42.3	2.0
Other	669.3	672.3	-3.0	-0.4
Total	49,424.3	45,636.0	3,788.3	8.3

Result, key figures

in million €	2017	2016	Change in absolute figures	Change in %
Revenue	49,424.3	45,636.0	3,788.3	8.3
Cost of materials, incl. changes in inventories	-36,948.6	-33,954.4	-2,994.2	-8.8
Gross profit	12,475.7	11,681.6	794.1	6.8
Gross profit ratio	25.2%	25.6%
EBITDA	1,594.9	2,002.6	-407.7	-20.4
Depreciation, amortisation and impairments/reversals of impairment losses and impairment losses (excl. goodwill)	-1,103.5	-1,006.0	-97.5	-9.7
EBITA	491.4	996.6	-505.2	-50.7
Goodwill impairments	0.0	-137.0	137.0	100.0
EBIT	491.4	859.6	-368.2	-42.8
Financial result	-16.6	28.8	-45.4	< -100.0
EBT	474.8	888.4	-413.6	-46.6
Taxes on income	-133.0	-396.1	263.1	66.4
Results from continuing operations	341.8	492.3	-150.5	-30.6
Results from discontinued operations	-4.0	-29.8	25.8	86.6
EAT/net income for the year	337.8	462.5	-124.7	-27.0

GRI 201-3: Defined benefit plan obligations and other retirement plans

REWE Group Pension Fund

As a result of demographic change, supplemental retirement planning is becoming increasingly important. REWE Group understands this need. Through its REWE Group pension fund, it provides employees with a company pension scheme that is designed especially with the needs of retail employees in mind.

The REWE Group pension fund also provides benefits that are paid out in cases of invalidity and death in addition to the pension payments themselves. An employee may remain in the REWE Group’s pension fund even if he or she leaves the company. In addition, REWE Group assumes liability for the funds paid into the system and supports employees with an employer-financed payment of up to 300 euros each year. The company provides a supplement of up to 15 per cent to employees’ own contributions to the pre-tax deferred compensation scheme. REWE International AG offers a similar programme in Austria.

REWE Group Voluntary Pension Benefits

The benefits of the German government’s basic pension scheme are limited to the so-called pension contribution assessment ceiling. The need to have a supplementary retirement plan is particularly high for employees with incomes that exceed this ceiling because the difference between their final salary and the highest basic pension entitlement of the government scheme can be very high. To address the needs of this target group, REWE Group offers its own retirement scheme model called “REWE Group Voluntary Pension Benefits”. The benefit of this model is its tax-free contributions, which can include large amounts of employee-financed contributions through the pre-tax deferred compensation scheme. Outside Germany, special retirement schemes are offered because national social security and tax laws set the conditions for company pension plans.

Historic Pension Models

In addition to the active pension models described above, both defined-contribution and defied-benefit plans of employees who worked at companies that were acquired in the past are continued. They are also listed among pension provisions in the Annual Report if necessary.

In 2017, the fair value of the defined-benefit obligation (DBO) for the entire REWE Group was 998.1 million euros (in addition to 243.5 million euros of pension-like obligations; 2016: 934.7 million euros and 243.8 million euros, respectively). More information can be found in the Combined Management Report for the 2017 Business Year, from page 118.

Other Benefits:

Other employee benefits include voluntary special payments above the general pay scale and voluntary social benefits like survivor benefits and retirement allowances, the volume of which is listed as a component of “pension-like obligations”.