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BERLIN (Reuters) - Shares in German retailer Metro MEOG.DE jumped 5 percent on Wednesday after it reported better than expected fourth-quarter operating profit for the food and consumer electronics businesses it hopes to split in a demerger next year.
Metro, which had reported fourth-quarter sales in October, said on Wednesday earnings before interest and taxation (EBIT) before special items rose 31 percent to 568 million euros ($605 million), beating average analyst forecasts for 471 million.
Metro's shares were up 5.1 percent by 0816 GMT, making them the biggest gainers on a flat German mid-cap index .MDAXI.
Metro is due to hold a capital markets day on Thursday to give more details on its demerger plans, which it hopes shareholders will approve on Feb. 6.
Metro said its EBIT before special items for the 2015/16 fiscal year to Sept. 31 of 1.56 billion euros (1.31 billion pounds) included 162 million euros from the sale of real estate and 42 million from changes to pension benefit plans.
Bernstein analyst Bruno Monteyne said those gains helped explain a large part of the earnings beat, with just 16 million coming from operational improvements.
"We did anticipate that Metro may boost property sales (and profits) to maximise access to cash ahead of the demerger and to avoid a rights issue," Monteyne wrote in a note.
"The management team is aiming to put the best possible spotlight on the conglomerate before its capital markets day tomorrow and its demerger next year."
Metro said in September that it hoped both businesses it planned to list separately could achieve an investment grade rating without needing a capital increase.
Fourth-quarter EBIT at the cash and carry business rose 14 percent to 306 million, beating analyst consensus for 256 million. The unit will be split off together with the Real chain of hypermarkets, which saw its EBIT fall to 27 million.
The consumer electronics business reported a 35 percent rise in fourth-quarter EBIT before items to 179 million euros, although its profitability for the fiscal year was dampened by costs due to restructuring and steps to improve efficiency.
For the 2016/17 fiscal year that started in October, Metro expects a slight rise in overall sales and a slight improvement in EBIT before special items above the 1.56 billion achieved in 2015/16 despite slightly lower income from real estate sales.
It will continue to focus on strict cost management, which it expects to result in special items for the last time, and said it would adjust its outlook once the split is approved.
($1 = 0.9395 euros)
Reporting by Emma Thomasson; Editing by Victoria Bryan and Susan Thomas