Metro AG, Europe’s fourth largest retailer is down 4.3% on lower earnings than expected.
After a steady incline over the last two months, German retailer Metro AG saw Tuesday’s share price fall 4.3% at opening of trade. Though its consumer electronics quarterly profit saw an increase, overall earnings were down slightly to €1.024 billion ($1.16 billion) from €1.073 billion a year ago with the blame on a Russian ruble, which led to a €60 million hit. Reuters predicted €1.008 billion.
Last month Reuters changed the consensus for Metro AG from ‘outperform’ to ‘hold’, whilst the markets on Tuesday’s trading were prone to ‘sell’.
Metro commented in its report that, ‘Overall, the METRO ordinary share price declined by 3.0% to €25.31 in Q1 2014/15. The DAX gained 3.5% while the Dow Jones Euro Stoxx Retail sector index rose by 5.1%.’
It was in November that the METRO share reached its quarterly high at €27.71. An attractive dividend held the upward trend for the rest of the quarter until Tuesday’s earnings release when the impact of the foreign exchange rate and sanctions on Russia were understood. Blame was also cast on the consumer prices that ‘stagnated in Western Europe, in particular, with some countries slipping into deflation.’ Though Metro also reported that, ‘Generally positive private consumption helped to stabilise the economy…benefited the retail sector, which recorded nominal growth of about 1.5%.’
Adjusted for currency effects and portfolio changes, Metro posted sales growth of 2.6% during the first quarter of 2014/15 (1 October 2014 to 31 December 2014) compared with the previous year's period. Reported sales declined by 2.2% to €18.3 billion.
In the first quarter of 2014/15, earnings per share amounted to €1.24 (Q1 2013/14: €1.38). Adjusted for special items, earnings per share stood at €1.36, after €1.35 in the previous year's period.
After assuming a future negative ‘translation effect’ of the weak ruble led to a bold statement from Metro: ‘There are no risks that could endanger the company’s existence and, at present, none can be identified for the future.’ Hence the outlook of a slight increase in sales for the remainder of the year.
Metro have four separate divisions covering cash and carry, department stores, electronics and hypermarkets. In Russia Metro have 148 stores, in Ukraine are 33 stores, China has 80 stores, Germany has 945 and the total worldwide is 1700 with Redcoon online electronics gaining 260,000 web shop users per day.
MT4 Chart: METRO
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