e-commerce figures continue to bolster Otto Group financials

Hamburg-based Otto Group saw revenues rise 3.4% to €12.5bn in fiscal 2016, which implies a solid 5% growth rate for its top line on a like-for-like basis for the year-ended 28 February 2017.

The company is targeting €17bn of annual turnover by 2022. However, such an ambitious target could be only be reached organically if it records a five-year compound annual growth rate of 6.3%.

Alexander Birken, the new Chief Executive of the group, said, “We have set ourselves the aspirational goal of leading the Otto Group back onto a track of strong and sustained growth.”

This follows a number of years that were characterised “by consistent reshaping of the company portfolio and a successful turnaround”.

Confirming recent trends, e-commerce was the main growth driver last year.

Revenue from the “over 100 online shops worldwide” grew by around 10% on a like-for-like basis, totaling nearly €7bn in revenues, it noted. In Germany alone, online sales grew by just under 10% to about €5bn, cementing its position as the number two online retailer domestically.

Financial figures were patchy, but the group provided some details about its operating performance.

Reported EBITDA at group level came in at €730m, yielding a margin of 5.8%, while EBIT rose “more than €100m” to €365m. If 2022 targets are hit, and assuming a constant underlying profitability, it will reach almost €1bn of EBITDA in less than five years.

The core multi-channel retail unit saw revenues grow 2.4% to €9.8bn, up 5% on a like-for-like basis, with an EBIT of €146m.

Meanwhile, revenues of the financial services segment surged 8% to €732m, with EBIT coming in at €297m. “The EOS Group, which dominates this segment within the Otto Group, increased revenues by 10.9% to €645m,” it added.

Finally, its service segment grew at an annual clip of 6.7%, reaching revenues of almost €2bn and EBIT just above break-even at €6m.

“The Hermes Group, the leading company in this business segment, raised external sales by 4.9% to €1.57bn. Adjusted for exchange-rate fluctuations, the Hermes Group in fact grew by 11.3%.”

Otto is also investing in operating costs to achieve growth.

The total number of employees rose from around “49,600 to approximately 49,750 full-time equivalent (FTE) jobs; in Germany the FTE figure increased by some 800 to reach 26,650”, it said.

Source: Transport Intelligence, May 30, 2017

Author: Alessandro Pasetti