metro predicts flat profit this year
Last Updated : GMT 16:22:18
Arab Today, arab today
Arab Today, arab today

Metro predicts flat profit this year

Arab Today, arab today

Arab Today, arab today Metro predicts flat profit this year

Berlin - Arabstoday

German group Metro, the world’s fourth-largest retailer, forecast flat profit this year due to a stuttering global economy and costs from expanding its cash-and-carry and consumer electricals stores businesses. Metro, which also runs hypermarkets and department stores, said on Tuesday it would be 2013 before investors could expect an increase in profit, as it reported a 1.8 per cent decline in 2011 earnings before interest, tax and special items (adjusted EBIT) to 2.37 billion euros ($3.1 billion). Metro, forced to scrap its profit target in 2011 as the global economy worsened, said sales should grow in 2012 but cautioned the outlook included an element of risk as high unemployment and austerity programmes in Europe weigh on consumer spending. “Today, it is clear that the current financial year will be a very challenging one,” Chief Executive Olaf Koch said in the group’s annual report published on Tuesday. Analysts on average forecast Metro’s adjusted EBIT to fall to 2.35 billion euros in 2012 and sales to rise to 67.1 billion from 66.7 billion, according to a Reuters poll. Retail sales in Germany, Europe’s strongest economy, fell unexpectedly in January, as mild weather stifled spending. European retail sales on the other hand, showed shoppers in the Euro zone increased spending, although economists cautioned the three-month trend still showed a contraction. Metro, which operates almost 2,200 stores in 33 countries, gets almost 39 per cent of its total sales from Germany, with a further 31.3 per cent coming from western Europe. Its caution comes after French rival Carrefour slashed its dividend and halted investment plans and Tesco jettisoned the head of its UK business following a shock profit warning. Nonetheless, shares in Metro rose 2.4 per cent to 31.57 euros by 0844 GMT, with traders saying news that hypermarkets chief Joel Saveuse was stepping down was fanning speculation Metro may sell its Real chain soon. Metro’s fourth-quarter adjusted EBIT was in line with expectations at 1.3 billion euros, but net income after minority interests dropped to 404 million in the final quarter, compared with expectations in a Reuters poll for 633 million. Metro said that was down to currency effects and costs from its Shape 2012 restructuring programme. Olaf Koch said the group needed to work more on improving sales, a departure from predecessor Eckhard Cordes, who had sought to boost earnings via cost-cutting. Koch, who took over earlier this year, said he would focus efforts to expand and improve sales on Cash & Carry and Media-Saturn, Europe’s largest chain of consumer electricals stores. Koch has already made his mark on the company, putting the sale process of department store chain Kaufhof on ice in mid-January. He said in a newspaper interview over the weekend that the group was in no hurry to sell Kaufhof, although it still wished to use funds tied up in the unit to expand its cash-and-carry business. German retail sales declined in January, the country’s Federal Statistics Office said on March 2, counter to analyst estimates that the figure would rise. European leaders’ efforts to stem mounting sovereign debt are curbing growth across the euro area, Germany’s largest export market, and higher energy costs pushed inflation to 2.5 per cent last month. “The sovereign-debt crisis, high unemployment rates and austerity programs in many European countries led to a buying restraint on the part of consumers,” Metro said. Koch, who succeeded Cordes as CEO on Jan.1, has to determine whether Metro needs to keep together a compendium of businesses that includes Kaufhof department stores, Saturn and Media Markt electronics outlets, Real supermarkets and the Cash & Carry wholesale unit.

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