Electronics arm helps Metro to limit its loss

Metro posted a smaller-than-expected loss in the first three months of the year, helped by a strong performance from its Media-Saturn electronics unit.

Retailers traditionally make the bulk of their profits in the last three months of the year, and analysts had expected the German group, whose portfolio of businesses also includes department and cash-and-carry stores, to make an operating loss of €51m in the quarter, excluding one-off effects.

However, partly because of a robust performance at its electronics unit, where like-for-like sales rose 5.2 per cent, Metro limited its loss in the quarter - which it counts as the second of its year - to €40m.

On a net basis, Metro posted a loss of €397m - or €1.21 per share - having said in April that it would book a €450m writedown on goodwill at its Real hypermarket chain.

Sales came in at €14.37bn, up 0.3 per cent on the same period a year earlier, but up 2.5 per cent on a like-for-like basis.

Metro's dominant cash-and-carry division, which accounts for almost half of the group's revenues, posted €6.7bn in sales, down 2.5 per cent, but up 1.1 per cent on a like-for-like basis, and excluding currency movements. On the same basis, sales at the Real chain were up 1 per cent, while sales at Metro's Galeria Kaufhof department stores were down 1.1 per cent.

Metro's chief executive, Olaf Koch, who is trying to revive the fortunes of the retailer, said that the results showed that his reforms were paying off, particularly at Media Saturn and Metro's cash-and-carry business.

"We are on the right track with our investments in the modernisation of the company and new concepts," he said.

Analysts also responded positively to the results. David Payne, an analyst at Nomura, said that the figures were "very encouraging" and added that the stability of Metro's cash-and-carry business in Russia, which has been hit by the fallout from the Ukraine crisis, was "reassuring".

Metro said that for the year as a whole, it expected to achieve a "slight" rise in overall sales, and a "slight increase" in like-for-like sales "that will follow the 0.1 per cent gain in the previous year".

The group also expects its operating profits, excluding one-off effects and currency movements, to be "slightly" above the level it managed a year earlier.

Shares in the company were down 1.21 per cent at €32.37 in late afternoon trading in Frankfurt.

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