German retailer Metro AG said third-quarter net profit fell 55 percent because of currency exchange rate swings and lower prices in key food categories.
Profit for the period fell to euro97 million ($144 million) from euro214 million in the July-September period of 2008, the company said Tuesday. Revenue fell to euro15.6 billion ($23 billion) from euro16.3 billion, a 4.2 percent decline.
Metro, based in Duesseldorf, said western European revenue was virtually flat during the first nine months of the year at euro14.7 billion. The company said that trend was better than the rest of the market.
Eastern European revenue fell by 13 percent to euro11.2 billion, from nearly euro13 billion a year ago, largely because of currency effects. Meanwhile, revenue from the Asia and Africa region increased 9.2 percent to euro1.8 billion over the nine months.
Metro is one of the world's biggest retailers with revenue of euro68 billion in 2008. Its brands also include Kaufhof department stores and Media Markt and Saturn electronics stores.
"Metro remains our preferred restructuring in the sector," said Christopher Hogbin, a retail analyst at Bernstein Research.
Hogbin said that comparing Metro's restructuring to that of French rival Carrefour's suggested the German company faced a relatively "easier" task with less execution and reinvestment risk. He said Metro appeared to be making good progress with its efficiency measures program called Shape 2012. He rated the company at market perform with a target price of euro47.
Investors seemed encouraged by the results, sending shares 3 percent higher to euro38.49 in Frankfurt morning trading.
Despite the downturn, Metro has also continued its expansion. Last week it announced it could open between 15 and 20 of its wholesale Cash & Carry stores in Egypt and Kazakhstan in the coming years. Cash & Carry stores sell especially to retailers, hotels and restaurants.
"Also in times of crisis we continue to invest in our growth," Eckhard Cordes, the company's chief executive said in Metro's report.
Metro said it would continue to invest in the store network in the fourth quarter as well, following the opening of 44 new stores during the first nine months of the year.
Metro is now planning to increase its international presence by more than 30 stores during the last quarter. Investments will focus on the growth regions in eastern Europe and Asia.
"We are strengthening our outstanding starting position for the next economic upturn," Cordes said.
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