* Positive signs for key Christmas fourth quarter
* Targets slight sales growth for 2013/14, marked EBIT rise
* Hope for dividend return after loss in 2013 financial yr
* New branding campaign to update Metro image in 50th year
* Shares up 0.6 pct, outperform European retailers
(Adds comments from news conference)
By Emma Thomasson
COLOGNE, Dec 12 Germany's Metro is
confident of an improvement in profitability next year from a
revamp of its retail businesses after the group reported a net
loss and cancelled its dividend.
Europe's fourth-biggest retailer, which runs cash and
carries, supermarkets, department stores and the region's top
consumer electronics chain, is slimming down and cutting costs
to try to revive its fortunes.
"We are still at the beginning of the transformation but we
have made significant progress," Chief Executive Olaf Koch told
a news conference, adding that Metro had seen a "significant"
rise in sales in the current quarter from the last.
He was confident the group would be able to return to paying
a dividend for its new 2013/14 financial year. It scrapped a
payout for a shortened 2013 year to September following a net
loss of 71 million euros.
Metro forecast "slight absolute sales growth" for 2013/14,
while earnings before interest and tax (EBIT) and before special
items should "markedly exceed" a comparative level of 1.7
billion euros for 2012/13, a sign it is aiming for improvements
in margin growth.
Metro's core earnings before special items, of 728 million
euros ($1 billion) for the shortened 2013 business year to
September, beating its own target to "slightly exceed" the 706
million of 2012.
"Guidance more optimistic than we expected," Commerzbank
analyst Juergen Elfers wrote in a note. "Koch is distributing an
air of confidence and this is the really good news."
Metro shares, which jumped last month after it said it might
list up to a quarter of its Cash & Carry Russia business on the
stock market next year, were up 0.6 percent at 1140 GMT,
compared with a 0.8 percent weaker European retail index
The stock trades at 16.5 times forward earnings, a small
discount to Europe's biggest retailer Carrefour, but
well ahead of Britain's Tesco with a multiple of 10.5.
Koch said Metro would made a decision about listing the
Russian business in the first half of next year, but said the
group would definitely keep a majority stake in it.
CASH AND CARRY REVAMP
Metro, which runs over 2,200 outlets in 32 countries but
gets just over two thirds of sales from Germany and other
western European countries, has been divesting non-core
businesses, cutting prices at its cash and carries, as well as
revamping product ranges and investing in its delivery arm.
Divestments helped it cut net debt by 2.3 billion euros to
Koch said that Metro would still consider selling its
Kaufhof department store chain, which has been performing
better, if there was a "fair price" on the table, adding there
were no concrete talks underway on a sale.
In March, Koch took over direct responsibility for the cash
and carry business, which accounts for almost half of group
sales and which had underinvested in stores in its core markets
in Europe as it expanded rapidly in emerging markets.
"A lot needed doing, to put it politely," he said.
Koch, who presented Metro's results at a revamped cash and
carry store in the German city of Cologne, said he was
encouraged by 20 percent growth in its delivery service and a
slight rise in sales of higher-margin own-brand products.
The business has delisted 30 percent of poor-selling
non-food products and put a new focus on higher-margin fresh
produce like fish and meat as well as more upmarket
Mediterranean products designed to appeal to owners of
restaurants and hotels.
Aiming to improve its ties with independent entrepreneurs,
Koch presented a new slogan for the cash and carry business "You
& Metro" to be the focus of an international campaign in 2014,
when the company celebrates its 50th anniversary.
Metro, which shocked investors in March when it trimmed its
dividend for the first time in over 14 years, is moving its
financial year to start on Oct. 1 to avoid reporting
requirements interfering with the Christmas sales period.
($1 = 0.7251 euros)
(Reporting by Emma Thomasson; Editing by Erica Billingham and