Metro Shares Jump as Retailer Surprises With Dividend Hike

  • German retailer vows to pay more of earnings to shareholders
  • Saturn and Cash & Carry owner cites improved results

Metro AG shares rose to the highest in more than three months after the German retailer proposed a surprise dividend increase and vowed to pay more of earnings to shareholders, citing better operating performance and a stronger balance sheet.

The stock gained as much as 6 percent to 30.71 euros in Frankfurt trading. It had already risen 15 percent this year through yesterday as the Dusseldorf-based retailer sells struggling operations and improves its stores and Web sites.

Metro plans to pay a dividend of 1 euro per share for the fiscal year that ended in September, compared with 90 cents a year ago. Analysts had expected an unchanged distribution, according to the median of 24 estimates compiled by Bloomberg. Between 45 percent and 55 percent of earnings will be paid out to shareholders, the company said Wednesday, increasing the ratio from a range of 40 percent to 50 percent.

Chief Executive Officer Olaf Koch sold the Galeria Kaufhof department stores this year to focus on chains such as Saturn electronics stores and Cash & Carry wholesale, and to cut debt. At the same time, he’s hunting for acquisitions after buying Singapore-based Classic Fine Foods and other companies to broaden and modernize Metro’s offerings.

“The increase speaks to management’s confidence in its turnaround,” Exane BNP Paribas analyst John Kershaw said in a note. “We remain happy buyers of the shares.”

The company plans to report fiscal fourth-quarter results Dec. 15, and Koch underlined growth at key chains in the statement.

“Metro Cash & Carry has achieved already nine quarters with like-for-like sales growth and Media-Saturn five,” Koch said. “Moreover, we have improved our results quality and through our strengthened balance sheet we can further invest in future growth.”

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