Metro Forecasts Higher Profit on Cash & Carry, Media-Saturn

  • Debt reduced by 2.2 billion euros through Kaufhof sale
  • Higher profit forecast tempered by 'challenging' conditions

Metro AG reported fourth-quarter profit that beat analysts’ estimates and forecast further improvement this year, led by sales growth at the Cash & Carry wholesale chain and its Media-Saturn electronics business.

Adjusted earnings before interest and taxes rose 7.7 percent to 435 million euros ($480 million) in the three months through September, the company said in a statement Tuesday. Analysts expected 367 million euros on average. Metro forecast full-year profit on that basis will rise slightly, excluding currency shifts.

“All in all, a confident outlook,” Volker Bosse, an analyst at Baader Bank, wrote in a note to investors. "All three business segments performed slightly better than expected." The company also operates Real food stores.

Olaf Koch, about to start his fifth year as CEO, has been using cash from September’s sale of the Galeria Kaufhof chain to pay down debt, spruce up stores and invest in e-commerce and in-store services. The Dusseldorf-based company said it reduced net debt by 2.2 billion euros to 2.5 billion euros.

The stock rose as much as 2.7 percent, and was up 1.7 percent at 12:18 p.m. in Frankfurt. The shares have risen 9 percent this year after losing more than half their value between 2010 and 2014.

Metro said it expects a “slight rise” in sales this year despite a “continuously challenging economic environment.” Speaking before a press conference at its headquarters, Koch said about 70 percent of the company’s Christmas business still lies ahead.

“People get a couple of hundred euros from grandma and then go to the store -- that happens a lot in Germany,” he said. Koch expects gifts of cash and store vouchers to push much of the holiday business into the coming days and into January.

For the 2014/15 fiscal year, revenue fell 1.2 percent to 59.2 billion euros, in line with preliminary figures Metro released Oct. 19. Metro had signaled a good start to the Christmas season in October and last month raised its dividend.

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