* Sees 9-month operating earnings down on comparable period
* Hit by weak consumer spending, cash and carry investments
* Shares fall over 3 percent
(Changes dateline, adds analyst, details, background)
By Victoria Bryan
DUESSELDORF, Germany, March 20 German retailer
Metro predicted operating earnings would fall in the
coming months, hit by weak consumer spending, a lack of major
sporting events and investments aimed at reviving its main cash
and carry business.
Shares in the company, which also runs consumer electronics
stores, hypermarkets and department stores, fell over 3 percent
in Wednesday morning trade, the biggest decline by a European
Store groups across Europe are battling with a prolonged
squeeze on consumer incomes as governments try to reduce their
deficits. France's Carrefour, for example, is handing
more power to store managers, while Britain's Tesco is
cutting prices and upgrading stores.
Metro, which runs over 2,200 outlets in 32 countries, has
also been cutting prices at its cash and carry business, as well
as revamping product ranges and investing in its delivery arm in
a bid to reverse a decline in earnings.
That investment would continue in the first nine months of
this year - a shortened fiscal year as the group changes its
reporting period - leading to a further profit fall, Metro said.
The group also said its consumer electronics business Media
Markt Saturn would be held back by a lack of major sporting
events compared with 2012, when the Olympic Games and European
soccer finals boosted sales of televisions.
"Overall, the guidance would imply that the earnings
scenario looks poorer than expected," Commerzbank analysts wrote
in a research note.
In an unscheduled statement earlier this month, Metro
reported operating profit dropped 16 percent to 1.98 billion
euros last year and cut its dividend for the first time in over
The dividend cut hurt its largest shareholder, the Haniel
group, which has recently sold a stake of around 4 percent in
Metro in a bid to reduce its debts.
A big payout for the shortened fiscal year looks unlikely.
"We intend to continue to distribute a competitive and
attractive dividend," the group said in its annual report.
"But Metro generates a large share of its earnings in the
final quarter of the calendar year. This all-important quarter
will not be included in the short financial year 2013."
Metro is changing its reporting period to start its fiscal
year on Oct. 1. That means its first quarter will include the
Christmas trading period, in which it makes most of its profit,
making it easier to give an outlook for the financial year.
The company did not say on Wednesday by how much it expected
operating earnings to fall in the first nine months of 2013.
But it added that earnings before interest and tax,
excluding special items, would improve from 704 million euros
($907 million) in the comparable period thanks to gains from the
sale of property assets.
Despite the spending on its cash and carry business, Metro
said it would reduce overall investment in the shortened 2013
year to below 954 million euros.
Earlier this week, chief executive Olaf Koch took over the
running of the cash and carry business.
At 1005 GMT Metro shares, which last year dropped out of
Germany's index of 30 leading companies, were down 3.4 percent
at 22.165 euros.
($1 = 0.7760 euros)
(Additional reporting by Maria Sheahan; Editing by Ludwig
Burger and Mark Potter)