Metro AG, Germany’s biggest retailer, cut its full-year dividend 26 percent and reported earnings that missed analysts’ estimates as the company struggled to contend with weakening economies in Europe.
Investors will receive 1 euro ($1.31) per ordinary share, down from 1.35 euros in 2011, the Dusseldorf-based company said today in a statement. That was less than the 1.33-euro average estimate of 35 analysts compiled by Bloomberg. The retailer also said earnings per share before special items fell 28 percent to 1.89 euros in 2012, missing the average estimate of 2.37 euros.
The shares fell as much as 5.3 percent in Frankfurt, the steepest drop in five months, and were 5 percent lower at 22.52 euros at 3:16 p.m. local time. The stock has declined more than 50 percent in the past two years, costing Metro its place in the benchmark DAX Index, as the owner of Media-Saturn electronics outlets struggled to grow sales in southern and parts of eastern Europe. Chief Executive Officer Olaf Koch has implemented cost-cutting measures and said last year savings would probably exceed 120 million euros in 2012.
“The saving from the dividend cut is not particularly large but it is clearly part of a wider policy of tightening capital discipline,” James Collins, an analyst at Deutsche Bank AG in London, wrote in a report today. EPS missed expectations because of a high effective tax rate as “the company has not capitalized the deferred taxes on current losses.”
Full-year earnings before interest and tax was 1.98 billion euros before one-time items, Metro said, almost meeting the company’s forecast of 2 billion euros. The retailer cut the prediction in October, having said before then that earnings would be about the same as 2011’s 2.37 billion euros.
Koch is focusing on the Cash & Carry wholesale business and the Media-Saturn electronics unit, while cutting investment in Kaufhof department stores and Real grocery outlets. Metro agreed in November to sell its Real stores in eastern Europe to French retailer Groupe Auchan SA.
Metro’s biggest investor, Franz Haniel & Cie GmbH, reduced its stake to 30.01 percent from 34.24 percent last month, generating proceeds of about 300 million euros.
Today’s statement was released ahead of the company’s full earnings report due on March 20.
Metro also said it will reduce the 2012 dividend on its preference shares to 1.06 euros from 1.49 euros.
“The dividend is below expectations but the yield is still reasonable,” Fabio Fazzari, an analyst at Equita SIM SpA, said by phone. “Analysts are not expecting a stellar 2013. Investors could be satisfied with a little sign of positive rebound or a stabilization. Big negative surprises are unlikely this year.”