Shares of Metro AG (MTTRY.PK,MTAGF.PK) declined around 3 percent in the morning trade on Frankfurt's Xetra after the German department store operator reported a sharp decline in fiscal 2012 profit on restructuring expenses and weak European performance. The company also trimmed its dividend, and said it expects higher adjusted earnings and moderate sales growth in the challenging and short financial year 2013.
Olaf Koch, chairman, said, "The continued challenging consumer environment in many European countries resulting from the sovereign debt crisis again impacted business development at METRO GROUP in 2012. Thanks to first successes of our measures to enhance the customer value we nevertheless met our guidance and significantly improved our cash flow and debt position."
In its fiscal year 2012, the company's net profit attributable to the shareholders plunged to 3 million euros from last year's 631 million euros, with earnings per share decreasing to 0.01 euro from 1.93 euros in the prior year.
Net profit of the period amounted to 101 million euros, lower than prior year's 741 million euros.
The latest results were impacted by special items totaling 585 million euros, including restructuring expenses, goodwill impairments and impairments.
Adjusted attributable profit, which excluded special items, decreased to 619 million euros or 1.89 euros per share from last year's 859 million euros or 2.63 euros per share.
The operating profit before special items or EBIT amounted to 1.976 billion euros, lower than 2.37 billion euros a year ago.
Annual sales rose 1.2 percent to 66.7 billion euros from last year's 65.9 billion euros, despite tougher market conditions, especially in Southern Europe. Sales edged up 0.8 percent in local currency. Adjusted for the divestment of MAKRO Cash & Carry in the UK and Media-Saturn in France, sales grew 2.3 percent.
Metro said its sales lines succeeded in increasing their market share in numerous countries. At Media-Saturn, online sales more than doubled. The company also reported growth in own brand sales.
In Germany, sales edged up 0.6 percent. In Western Europe, sales dropped 4.3 percent, while sales in Eastern Europe grew 4.8 percent. International sales grew 1.6 percent, mainly with a very dynamic growth in the Asia/Africa region, with a 26.2 percent rise in sales.
In its fourth quarter, sales edged up 0.5 percent to 19.4 billion euros, while EBIT before special items declined 2.7 percent to 1.27 billion euros.
Further, the company said its Management and Supervisory Boards have proposed a dividend of 1.00 euro per ordinary share, compared to 1.35 per ordinary share paid last year, and 1.06 euros per preferred share, compared to 1.485 per preferred share paid last year.
Looking ahead for the short financial year 2013, Metro said it expects to generate moderate growth in sales, adjusted for portfolio changes. EBIT before special items would increase from last year. The company added that earnings trends in the short financial year 2013 will be impacted by the uncertain economic situation.
In the subsequent financial year 2014, Metro expects to see this moderate growth in sales continue compared with the respective period for the previous year. The company also expects to generate higher EBIT before special items.
Metro added that it expects a significant strengthening of the company's financial substance, even if 2013 will be a challenging financial year with regard to the macroeconomic development.
On Frankfurt's Xetra, Metro shares are currently trading at 22.16 euros, down 0.78 euros or 3.40 percent.
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