Metro reports smaller Q2 loss of 40m euros

Frankfurt

METRO AG reported a narrower second-quarter loss than analysts estimated, helped by a stronger performance from its electronics and wholesale stores and an earlier Easter.

The loss was 40 million euros (S$59 million) before interest, taxes and special items, beating the average projection for 54.8 million euros.

Revenue at Germany's biggest retailer was 14.37 billion euros in the three months through March, little changed from a year earlier, Metro said.

Chief executive officer Olaf Koch is expanding sales at Cash & Carry wholesale stores and Media-Saturn electronics outlets, and repositioning its Real food stores for profit growth. Dusseldorf-based Metro may also be once again seeking a buyer for its Galeria Kaufhof department stores, according to a report last week.

"The rigorous realignment of our sales lines and our successful efforts to tap new retail channels and formats are increasingly paying off, particularly at Metro Cash & Carry and Media-Saturn," Mr Koch noted. "Both sales divisions are now experiencing sustained positive like-for-like sales growth."

"Nobody ever gives Metro credit for trying to turn around all three of their businesses at once," said Richard Clarke, an analyst at Sanford C Bernstein in London, who has an "overweight" rating on the shares. "If they can and get that credit, then you'll see the stock jump."

Shares of Metro have risen 29 per cent this year as Mr Koch has taken steps to divest underperforming divisions and modernise its stores. The shopping run-up to Easter's fall in early April this year helped second-quarter sales compared with last year, when the holiday fell later, Barclays said in an April 21 note to clients.

At its big-box Real food stores, Metro on April 24 took a 450 million-euro writedown for acquisitions made in the 1990s and said it plans to invest "extensively" in coming years to modernise the business.

The company also said it expects Ebit (earnings before interest and taxes) before certain items and adjusted for currency effects to rise slightly from last year's 1.73 billion euros. BLOOMBERG