Metro Posts Unexpected Operating Profit on Media-Saturn UnitJulie Cruz
Metro AG, Germany’s biggest retailer, reported an unexpected first-quarter operating profit as losses at the Real hypermarkets unit and the Media-Saturn electronics chain narrowed.
Earnings before interest, taxes and special items were 14 million euros ($18.4 million), compared with 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.
Media-Saturn’s adjusted operating loss narrowed to 14 million euros from 20 million euros on higher sales in Germany. The unit’s total revenue gained 2 percent, boosted by an increase of more than 60 percent in online sales.
Media-Saturn’s results are “particularly encouraging,” Benjamin Peters, an analyst at UBS AG, wrote in a report today.
Metro shares traded 1.3 percent higher at 23.99 euros as of 9:20 a.m. in Frankfurt trading, after rising as much as 3 percent earlier. The stock has gained 16 percent this year.
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 dropped 2.8 percent. Analysts projected revenue of 15.4 billion euros, according to the average of nine estimates compiled by Bloomberg.
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. In Asia and Africa, sales increased 9.3 percent.
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 and announced Media-Saturn is leaving China.
Sales at the Real chain rose 0.5 percent to 2 billion euros in Germany as “positive” Easter sales offset three missing trading days, Metro said today.
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. Sales at the unit fell 1.5 percent, Metro said today.