Metro reassures on earnings despite weak electronics

FRANKFURT: Group earnings at German retailer Metro AG will not be affected by a weaker than expected second quarter at its electronic goods division MediaMarkt-Saturn (MMS), it said on Tuesday.

"Except for Media-Saturn, all sales divisions of Metro Group are within market expectations," Finance Director Olaf Koch said in a statement on Tuesday as the group reaffirmed its forecast of a rise of around 10 percent in its full-year profit before special items.

To improve trading at MMS, Europe's largest electricals retailer, Metro will seek acquisitions and start sales via the Saturn website in October, with the mediamarkt.de website to follow in January 2012.

It expects the division's fortunes will improve in the second half and is targeting online sales of 5 billion euros ($7.2 billion) by 2015.

The comments boosted its battered shares, which have lost 30 percent this year on fears of poor trading, and were up 2.3 percent at 0759 GMT, the best performer on the German bluechip index .

"What's having a positive effect on the shares is that Metro confirmed earnings guidance and expects a better performance for MMS in the second half," BHF Bank analyst Peter Steiner said. "However we await the presentation this afternoon for information on how this will be achieved."

MMS rivals Dixons Retail and Kesa Electricals have warned on trading this year and there are signs that consumers in Germany, which saw a bumper recovery at the start of the year, are holding back too.

For the second quarter MMS posted a loss before tax, interest and special items of 44 million euros ($63 million), the group, hurt by a drop in sales in Germany and start-up losses in China.

There was no mention in the statement of the group's previously stated target for 2011 sales to grow by 4 percent and a spokesman told Reuters the group would not be commenting on the sales target on Tuesday.

Some analysts have predicted Metro group would walk away from the target when it reports second-quarter results next Tuesday.

Copyright Reuters, 2011