* Q3 sales 15.9 bln eur, in line with Rtrs poll avg
* Q3 adj EBIT 398 mln eur vs Rtrs poll avg 438 mln
* Sentiment in Germany worsening - CEO
* Shares rise 2.5 pct after opening lower
(Adds CEO comments)
By Victoria Bryan
FRANKFURT, Oct 30 German retailer Metro
reported a bigger-than-expected plunge in quarterly
profit as it cut prices to lure crisis-hit customers, and warned
the outlook, even at home, was worsening.
Retailers across Europe have been feeling the pain as
shoppers hit by rising unemployment, higher prices and low wage
growth hold back on spending on non-essential items, especially
on non food purchases such as electronics.
While Metro said it was especially southern and parts of
eastern Europe that were responsible for the fall in profit,
Chief Executive Olaf Koch said sentiment was also worsening in
Germany, where recent data indicates that the debt crisis is
finally catching up to Europe's largest economy.
Even though consumer morale rose unexpectedly going into
November, German joblessness rose for a seventh month in a row
in October, highlighting the vulnerability of Europe's biggest
economy to the euro zone crisis.
Koch also cited a survey by retail association HDE last
month that warned a slowdown was imminent.
In Germany, which is Metro's single largest market, the
group reported a 2 percent fall in sales in the third quarter.
Koch said the group had spent around 200 million euros ($258
million) in the first nine months of this year on lowering
prices at its cash and carry division and MediaMarkt-Saturn,
Europe's largest chain of consumer electronic stores.
"All in all, the progress made could not compensate the
worsening of trading conditions," he said.
Metro, which also runs hypermarkets and department stores,
reported third-quarter earnings before interest, tax (EBIT) and
special items of 398 million euros ($513.6 million), below
average expectations for 438 million euros.
Sales for the period met forecasts at 15.9 billion euros.
Metro, which was demoted to Germany's second-tier share
index in September after its shares lost a quarter of their
value, had warned on 2012 profit earlier this month citing
worsening conditions in Europe.
Its shares opened lower but reversed direction to trade up
2.5 percent by 1135 GMT after the group said it was assessing
its options for the eastern European operations of the Real
hypermarkets chain and was confident of reducing net debt to
below 4 billion euros this year.
Selling the Real operations would follow similar moves from
rival Carrefour, which has exited Greece, Singapore
and Colombia and is also keen to sell operations in Poland and
Turkey as part of a major restructuring programme.
Koch said the group would make a decision on whether to
expand the Mediamarkt chain in China at the end of this year or
the beginning of next. Many large retailers are rethinking
expansion plans in China after being met with fierce
Metro also confirmed its lowered profit forecast for 2012 of
adjusted EBIT of around 2 billion euros for the year. It still
expects a rise in sales from 2011's 66.7 billion.
Silvia Quandt analyst Mark Josefson said the group would
need to repeat last year's fourth quarter profit, which came in
at 1.3 billion euros, to achieve the target.
When asked about the Christmas outlook, Koch said the group
felt well prepared in terms of stock levels and products,
although southern Europe was not expected to improve.
(Additional reporting by Daniela Pegna; editing by Jason Neely
and Mike Nesbit)