German retailer Metro reins in profit expectations
By Emma Thomasson and Matthias Inverardi
BERLIN/DUESSELDORF (Reuters) - German retailer Metro AG reined in full-year profit expectations on Tuesday after a dip in first-quarter earnings, largely due to lower real-estate income and the strong euro.
Europe's No. 4 retailer said on Tuesday it expected more stable economic conditions and exchange rates to lift earnings before interest and tax (EBIT) before special items to about 1.75 billion euros ($2.4 billion) for its 2013/14 fiscal year.
However, it had previously said earnings should "markedly exceed" a comparative level of 1.7 billion euros from 2012/13.
"Management guidance for FY 2013/14 is slightly below market expectations, which could cause some (share) price pressure in the short term," said DZ Bank analyst Herbert Sturm.
Metro shares, which trade at 16 times forward earnings - a slight discount to Europe's biggest retailer Carrefour - were down 1.5 percent at 0825 GMT, underperforming a 0.8 percent rise in the European retail index <.SXRP>.
Metro's EBIT before special items fell 16 percent to 1.07 billion euros for the three months through December, just shy of an average analyst forecast for 1.08 billion.
The firm, a sprawling group with 2,200 stores in 32 countries which is in the midst of trimming its portfolio and cutting costs, said the fall was due to the lack of income from real estate sales, which boosted last year's results, as well as the sale of its Real supermarkets in eastern Europe.
Profits were also dented by a strong euro and lower earnings at its Media-Saturn consumer electronics chain, which has been struggling from online competition and saw EBIT before special items fall to 289 million euros from 332 million.
Metro said it would seek to improve profitability at Media-Saturn, the world's second biggest consumer electronics group after Best Buy Co , by further reducing stock levels, improving purchasing processes and cutting costs.
Chief Executive Olaf Koch told journalists the group's performance in the Christmas quarter - when it makes more than half of its profits - laid a "solid foundation" for the group to pay out a dividend again after it shocked investors last year by scrapping a payout.
Metro shares have been supported in recent months by Metro's plan to float its Russian wholesale business, with the London listing expected around Easter, two people familiar with the plans told Reuters last week.
The company, which also runs cash and carries and department stores, reiterated it expects to see a slight rise in sales in local currencies this financial year.
($1 = 0.7327 euros)
(Editing by David Holmes and Mark Potter)
