Metro’s Losses Widen Substantially in Second Quarter

Currency among negative impacts on German group.

BERLIN — Portfolio adjustments, foreign exchange effects and the shift in the Easter business dented Metro Group’s earnings performance in the second quarter.
For the three months ended March 31, the German cash & carry, department store, hypermarket and electronics retail group reported a net loss 271 million euros or $371.4 million, compared to a loss of 16 million euros, or 21.1 million for the period a year previously.
Dollar figures are converted from the euro at an average exchange rate for the period to which they refer.
Metro also booked operative losses in the quarter with EBIT, or earnings before interest and taxes, plunging to 233 million euros or $319.3 million, from 1 million euros, or $1.3 million in the same period last year.


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EBIT before special items came in at minus 40 million euros, or minus $54.8 million, compared to 14 million euros or $18.5 million last year. Metro said “the fall reflects the loss of earnings contributions from the sold Real Eastern Europe business as well as persistent and negative currency effects.”
Group sales slipped 7.6 percent in the quarter to reach 14.32 billion euros, or $19.63 billion, due largely to the lack of Easter business, the group said. In local currency, sales declined 4.7 percent. The Easter shift in dates particularly impacted sales in Germany, which were down 5.1 percent to 5.8 billion euros, or $7.95 billion, while currency and portfolio effects pushed Metro’s international sales down 9.2 percent to 8.53 billion euros, or $11.69 billion.
In the first half, lower tax rates significantly improved the earnings picture, with net profit for the period more than doubling to 242 million euros, or $330.5 million, compared to 113 million euros, or $147.9 million, for the period a year previously.

EBIT slipped 12.8 percent to 861 million euros, or $1.18 billion, and EBIT before special items was down 9.2 percent to 1.03 billion euros, or $1.41 billion, which Metro said was due in particular to significantly reduced real estate transactions, the loss of earnings contributions due to the disposal of Real Eastern Europe and negative currency effects.

For the six month period, group sales were down 5.2 percent to 33.05 billion euros, or $45.13 billion. In local currency, they fell 2.9 percent in the half.
Metro confirmed its sales and earnings targets for the fiscal year. Pointing to ongoing below average economic growth and implemented portfolio changes, the group expects that sales will roughly equal last year’s levels.

Provided exchange rates remain constant, Metro said it should meet its target for EBIT before special items of around 1.75 million euros, but it noted earnings will be burdened by negative exchange rate effects in the mid-double digit million euro range.