BERLIN — Portfolio adjustments, foreign exchange effects and the shift in the Easter business throttled the Metro Group’s earnings performance in the second quarter of fiscal 2013-14.
For the three months ended March 31, the German cash & carry, department store, hypermarket and electronics retail group reported a net loss of 271 million euros, or $371.4 million, compared to a loss of 16 million euros, or $21.1 million, for the same period a year ago.
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 earnings before interest and taxes falling to a loss of 233 million euros, or $319.3 million, from earnings of 1 million euros, or $1.3 million in the same period last year.
EBIT before special items came in at a loss of 40 million euros, or $54.8 million, compared to a profit of 14 million euros, or $18.5 million, in the period a year previously. 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 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.
At the core Metro Cash & Carry division, EBIT before special items was flat for the quarter at 43 million euros, or $58.9 million, but the group said that without negative currency effects, the figure would have “markedly exceeded the previous year’s level.” Sales slipped 3.1 percent to 6.86 billion euros, or $9.4 billion, but like-for-like sales gained 0.8 percent. The loss of Easter business impacted sales in Western Europe, and negative currency effects hit sales results in Eastern Europe, though Metro noted very positive sales developments in Russia, Turkey and Poland. Metro recently revealed plans to step up expansion in India, with 50 cash & carry units planned there by 2020. Metro currently operates 16 stores there in 12 cities.
In the group’s Kaufhof Galeria department store division, second quarter sales dipped 1.9 percent to 682 million euros, or $934.7 million, again mainly due to the lack of the Easter business. EBIT before special items improved in the quarter, with an operative loss of 2 million euros, or $2.7 million, compared to a loss of 3 million euros, or $4 million, for the period a year previously. For the first six months, real estate transactions in the period a year previously weighed on EBIT before special items, which dropped 16 percent to 157 million euros, or $214.4 million.
In the first half, lower tax rates significantly improved the group’s earnings picture, with group 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 particularly 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 (2.9 percent in local currency) to 33.05 billion euros, or $45.13 billion.
Metro confirmed its sales and earnings targets for fiscal 2013-14. Pointing to ongoing below-average economic growth and implemented portfolio changes, the group expects 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 noted earnings will be burdened by negative exchange rate effects in the middouble-digit million euro range.