Metro shares rose to the highest in more than three months after the German retailer proposed a surprise dividend increase and vowed to pay more of earnings to shareholders, citing better operating performance and a stronger balance sheet.
The stock gained as much as 6 per cent to €30.71 in Frankfurt trading. It had already risen 15 per cent this year, as the Düsseldorf-based retailer sells struggling operations and improves its stores and websites.
Metro plans to pay a dividend of €1 per share for the fiscal year that ended in September, compared with 90 cent a year ago. Analysts had expected an unchanged distribution, according to the median of 24 estimates compiled by Bloomberg. Between 45 per cent and 55 per cent of earnings will be paid out to shareholders, the company said, increasing the ratio from a range of 40 per cent to 50 per cent.
Chief executive officer Olaf Koch sold the Galeria Kaufhof department stores this year to focus on chains such as Saturn electronics stores and Cash & Carry wholesale, and to cut debt. At the same time, he’s hunting for acquisitions after buying Singapore-based Classic Fine Foods and other companies to broaden and modernise Metro's offerings.
“The increase speaks to management’s confidence in its turnaround,” Exane BNP Paribas analyst John Kershaw said in a note. “We remain happy buyers of the shares.”
The company plans to report fiscal fourth-quarter results on 15 December, and Koch underlined growth at key chains in the statement.
“Metro Cash & Carry has already achieved nine quarters with like-for-like sales growth, and Media-Saturn five,” Koch said. “Moreover, we have improved our results' quality, and through our strengthened balance sheet, we can further invest in future growth.”
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