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UPDATE 2-Metro sales boosted by delivery; Russia weighs
August 31, 2017 / 6:24 AM / 21 days ago

UPDATE 2-Metro sales boosted by delivery; Russia weighs

* Metro Q3 same-store sales up 2.6 pct, recover from Q2 fall

* Germany, France, Turkey strong; Netherlands, Russia weak

* Shares down 2 pct in sector hit by Carrefour warning

* Metro delivery sales up more than 30 pct

* Metro Q3 EBIT before items down on lower real estate gains (Adds details, comments from conference call)

By Emma Thomasson

BERLIN, Aug 31 (Reuters) - German retailer Metro reported a recovery in quarterly sales on Thursday, helped by fast-growing online and delivery services, but saw a decline in its Russia business that is a major driver of profits.

Metro, which runs wholesale stores in 35 countries as well as Real hypermarkets in Germany, was reporting its first results since it split from consumer electronics group Ceconomy last month.

Fiscal third quarter sales rose 4.9 percent to 9.3 billion euros ($11 billion), a like-for-like increase of 2.6 percent, recovering from a slight fall in the first half.

Metro highlighted sales growth in its core market Germany, as well as France and Turkey, but said it had seen a decline in the Netherlands and Russia.

Chief Executive Olaf Koch told a conference call for journalists the Russian market remained challenging, but the macro environment suggested it was on the way to recovery.

Earnings before interest and taxation (EBIT) excluding special items slipped slightly to 230 million euros, which Metro said was largely to the fact the previous year’s quarter was flattered by real estate transactions.

It said a decline in Russia EBIT had been largely mitigated by a rise in the value of the rouble.

Metro shares were down 2 percent by 0905 GMT, compared to a 1.3 percent fall in the European retail sector, dragged down by a profit warning from France’s Carrefour.

“Overall, this will be viewed as a reassuring statement from Metro,” Morgan Stanley analysts said in a note.

Metro hopes the split from Ceconomy will trigger a revaluation of its stock, but it is still trading at a big discount to pure wholesale retailers such as Sysco and Booker.

Koch said the share was suffering after it lost its slot in the German mid-cap index following the demerger and said it was up to the company to win over investors by producing several quarters of solid results.

Metro said the acquisition last year of French food services company Pro a Pro, which delivers directly to schools, hospitals and restaurants, had contributed to an increase in delivery sales, which now accounts for 16.7 percent of the total.

It also flagged a 70 percent rise in online sales at its struggling Real hypermarket chain, where like-for-like sales rose 2.5 percent in the quarter, recovering from a 3.4 percent fall in the first half.

Due to the split from Ceconomy, Metro has not given a forecast for the full-year, but it reiterated medium-term targets for annual sales growth of at least 3 percent and an EBITDA (earnings before interest, taxation, depreciation and amortisation) margin of about 5 percent. ($1 = 0.8422 euros) (Reporting by Emma Thomasson; Editing by Maria Sheahan/Keith Weir)

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