Metro share price down, reports ruble-hit quarterly results

Metro AG reported on Tuesday quarterly results in line with expectations after performance was hit by the sharp decline of the Russian ruble against the euro.

Germany’s largest retailer reported a 4.6% decline in its core earnings before interest and tax to €1.02 billion for the three months ended December, or the companys first quarter, compared to €1.07 billion a year earlier. The figures mainly reflected the analysts expectations.

Dusseldorf-based Metro reported net profit of €404 million, or €1.24 per share, versus €451 million, or €1.38 a share, during the same period of 2013.

The company said unfavorable exchange rates, mostly ruble-related, hurt performance by €60 million. Typically, Metro reports its strongest results during the Christmas quarter, which generates around 30% of the companys full-year revenue.

Sales slid 2.2% to €18.3 billion in the reported quarter, including a 12.4% sales decline from the companys Eastern European operations to €4.04 billion. Metro contributed the significant drop to the sale of a number of Real hypermarkets in Eastern Europe as well as negative currency shifts in its operation in Russia and Ukraine.

However, like-for-like sales climbed 2.1%, the company said.

The troubled region accounts for nearly 25% of Metros full-year revenue, with 148 store in Russia, or almost 7% of the total 2 209.

The Russian ruble has lost a significant amount of its value during the three months, at the beginning of October one euro was trading for around 54 rubles and by the end of the year one euro was worth 78 rubles.

Metro finished the quarter with a net debt of €1.5 billion, or its lowest figure in ten years, compared to net debt of €2.4 billion a year ago.

The company projected to report slightly better overall sales in the financial 2014/2015, despite “persistently challenging economic environment.”

“Overall, we remain confident that we will achieve our sales and earnings targets for the full year,“ said Olaf Koch, chairman of the management board, adding that excluding the negative impact of currency effects earnings were higher compared to same quarter of last year.

Metro AG fell 0.50% on Monday and closed at €29.65 in Frankfurt. On Tuesday the stock lost 2.92% to €28.79 at 14:02 GMT, marking a one-year decrease of 9.12%. The company is valued at €9.72 billion.

According to the Financial Times, the 29 analysts offering 12-month price targets for Metro have a median target of €28.00, with a high estimate of €38.00 and a low estimate of €22.00. The median estimate represents a 5.56% decrease from the last closing price.