Metro Gets German Sales Boost, Plans Media-Saturn China Exit
Metro AG (MEO), Germany’s biggest retailer, reported little changed fourth-quarter revenue as increased sales at the Media-Saturn consumer electronics business in Germany offset weakness in western Europe.
Sales rose 0.5 percent to 19.4 billion euros ($25.8 billion), the Dusseldorf-based company said today in a statement. That compared with the 19.6 billion-euro average estimate of nine analysts surveyed by Bloomberg News. Metro also announced that Media-Saturn will leave China.
Same-store sales in the consumer-electronics unit rose more than 3 percent in Germany, while falling “considerably” in western Europe, the company said. Metro reiterated its forecast for 2012 earnings before interest, tax and special items of about 2 billion euros. The retailer, which also owns Real grocery stores and the Kaufhof department-store chain, cut the prediction in October because of the weakening economic climate in southern Europe and parts of eastern Europe.
“Germany was the bright spot amid relatively weak numbers,” said Sebastian Frericks, an analyst at Bankhaus Metzler in Frankfurt. “Nobody expected sales growth of 3 percent” at Media-Saturn.
Metro rose as much as 3.5 percent in Frankfurt trading and was up 2.3 percent at 23.46 euros at 11:02 a.m. The stock has gained 12 percent in 2013 after falling 26 percent last year.
Sales momentum increased “significantly” at the end of the year after a “subdued” start to the holiday, the retailer said, describing overall Christmas business as “satisfactory.”
Media-Saturn’s exit from China was expected and will eliminate about 40 million euros of losses for 2013, according to John Kershaw, an analyst at Exane BNP Paribas.
The retailer entered the country in November 2010 and has seven Media Markt stores in the Shanghai area.
“We’d expect minimal incremental cash costs to unwind the entity,” Kershaw said.
Chief Executive Officer Olaf Koch is focusing on the Cash & Carry wholesale business and Media-Saturn, while cutting investment in Kaufhof and Real grocery outlets. Metro agreed in November to sell its Real grocery stores in eastern Europe to Groupe Auchan SA. The retailer gets almost half its revenue from Cash & Carry and about a third from electronics.
Fourth-quarter sales at Media-Saturn rose 1.3 percent, led by growth in Russia and Turkey, while revenue at Cash & Carry, the retailer’s biggest unit, increased 0.4 percent.
Sales at Real hypermarkets gained 0.6 percent as “the non- food business was difficult and prevented a better sales development” in eastern Europe, Metro said.
Full-year revenue rose 1.2 percent to 66.7 billion euros from 65.9 billion euros in 2011. That compared with the 66.9 billion-euro average estimate of 31 analysts compiled by Bloomberg. Metro is due to report full-year earnings March 20.
“I’m sure people will be satisfied that they are reiterating the profit guidance,” Charles Allen, a Bloomberg Industries analyst, said by phone. “There’s nothing spectacular” about the sales numbers.
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