Metro Posts Unexpected Operating Profit on Media-Saturn Chain
Metro AG (MEO), Germany’s biggest retailer, reported an unexpected first-quarter operating profit as losses at the Real hypermarkets unit and the the Media-Saturn electronics chain narrowed.
First-quarter earnings before interest, taxes and special items was 14 million euros ($18.4 million) compared to an 8 million-euro loss in the year-earlier period, the Dusseldorf- based company said in a statement today. The average estimate of eight analysts compiled by Bloomberg was for a loss of 9.1 million euros.
Metro repeated a forecast for a decline in earnings for the nine months from January through September, as the company invests in its Cash & Carry unit and the economy remains challenging in southern and eastern Europe. The euro-area jobless rate rose to a record in March, a report showed on April 30. The region’s economy has contracted for five quarters.
“In many countries, our customers’ purchasing power has been affected by the economic downturn and the related government austerity measures,” Chief Executive Officer Olaf Koch said in the statement. “However, we managed to improve our earnings and maintain our sales at a stable level year-on-year. This is particularly apparent when looking at the development in our home market Germany where we again saw a rise in like-for- like sales.”
First-quarter revenue fell 0.9 percent to 15.5 billion euros, as sales at Cash & Carry fell 2.8 percent. Analysts projected revenue of 15.4. billion euros, according to the average of nine estimates compiled by Bloomberg. Sales at Media- Saturn gained 2 percent.
Sales in Germany, where Metro gets almost 40 percent of revenue, gained 1 percent. In western Europe excluding Germany, sales fell 6.6 percent while they rose 0.3 percent in eastern Europe.
When he became CEO at the beginning of last year, Koch said that he would focus on Cash & Carry and the Media-Saturn electronics chain as he cuts investment in Kaufhof department stores and Real grocery outlets. Since then, he has agreed to sell Real stores in eastern Europe to Groupe Auchan SA, sold the Makro U.K. wholesale unit to Booker Group Plc (BOK) and announced Media-Saturn is leaving China.
A Kaufhof transaction “isn’t on the current agenda,” Koch told journalists on March 20, adding that long-term plans for the unit haven’t changed. Metro suspended talks for the sale of Kaufhof at the start of last year, citing market conditions, even as it reiterated that selling the unit remained part of its strategy.
Metro shares gained 0.9 percent to 23.68 euros on April 30. The stock is up 13 percent this year.
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