Metro AG, Germany’s largest retailer, said its second-quarter profit unexpectedly fell 15 percent as the company spent more to eliminate jobs.
Net income fell to 44 million euros (US$57.6 million), or 0.13 euros a share, from 52 million euros, or 0.16 euros, a year earlier, the Dusseldorf-based company said yesterday in a statement. That missed the 87 million euro average estimate of four analysts surveyed by Bloomberg. Sales rose 2.4 percent to 15.7 billion euros.
Metro aims to lift profit by 1.5 billion euros over four years through its Shape 2012 program as it slashes jobs at its Cash & Carry unit. The retailer generates almost half its revenue from wholesale operations, which have lost appeal to hotel owners and catering companies in some western European countries. The company increased one-time spending by 21 percent to 82 million euros in the quarter.
“Expenses for Shape were higher than I expected,” said Robert Greil, an analyst at Merck Finck & Co in Munich.
He recommends investors “sell” the stock.
The company repeated that earnings before special items this year will “tangibly exceed” the 2.02 billion euros reported last year. Sales will be less than the company’s medium-term 6 percent growth target, though they will be higher than last year.
Metro has said it will eliminate an additional 900 jobs, or 6 percent of its workforce, at its domestic Cash & Carry unit after having already cut 1,000 positions. The company is trying to turn around a business that has been in decline for more than five years.
The shares fell 0.86 euros, or 2 percent, to 41.74 euros. The stock has dropped 1.9 percent this year, giving the company a market value of 13.6 billion euros.
The retailer spent 9 million euros more than a year earlier for interest payments as it changed short-term debt into long-term loans. Metro will spend 2.1 billion euros this year to open new stores, more than the previously planned 1.9 billion euros.
Earnings before interest, taxes and special items at the Cash & Carry division, Metro’s largest, with 670 stores in 31 countries, rose to 245 million euros from 225 million euros a year earlier.
The Media Markt and Saturn consumer electronics divisions operating profit fell 25 percent as the company paid to enter the Chinese market and introduce new private-label products. Revenue excluding currency swings rose 7.7 percent, boosted by this year’s soccer World Cup.
The operating loss narrowed at the Real hypermarket unit to 2 million euros. It shrank to 15 million euros from 19 million euros at Kaufhof department stores, which Metro has said it would like to sell.
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