December 19, 2017 / 6:17 AM / a month ago

UPDATE 2-Ceconomy profit forecast disappoints after Italy squeeze

* Ceconomy Q4 EBIT 244 mln euros, in line with consensus

* Earnings slip in Italy as competition heats up

* 2017/18 EBIT set to rise by “mid-single-digit” pct

* Shares down 4.6 pct (Adds details from presentation, shares, analyst comment)

By Emma Thomasson

BERLIN, Dec 19 (Reuters) - German consumer electronics retailer Ceconomy forecast on Tuesday an improvement in profitability for the 2017/18 financial year that fell short of analysts’ expectations as competition heats up in Italy, denting its shares.

Ceconomy, which runs Media Markt stores and split in July from German retail conglomerate Metro, expects a “mid single-digit” percentage increase in earnings before interest and tax (EBIT) in 2017/18, not taking into account contributions from its investment in France’s Fnac Darty.

That compares with analysts’ average forecast for a 9 percent increase, according to Thomson Reuters Eikon.

Ceconomy shares, which have risen 28 percent in the last six months to outperform the broader German market, were down 4.6 percent at 0833 GMT.

Ceconomy, which took a 24 percent stake in Fnac Darty in July, hopes to lead consolidation in the European consumer electronics sector, seen as ripe for a shake-out due to intense competition from online players such as Amazon.

“We are ready for the future and in an excellent position to take advantage of the opportunities presented by the fundamental transformation of the consumer electronics industry,” Chief Executive Pieter Haas said in a statement.

British rival Dixons Carphone last week said it would revamp its mobile phone business as it reported a 60 percent slump in first-half profit and cut its profit forecast, hurt by a weak mobile market as customers hold onto handsets for longer.

Fnac Darty said this month it was banking on merger synergies and its ability to deliver sales growth above that of its markets to nearly double its operating margin mid-term.

Ceconomy reported fourth-quarter EBIT rose 18 percent to 244 million euros ($288 million), meeting analysts’ average forecast, and proposed a dividend of 0.26 euros per share, ahead of analysts’ consensus estimate for 0.24 euros.

It said the rise was due to improvements in Germany, eastern Europe and the Netherlands. But earnings fell in Italy, where ecommerce is growing fast after a late launch by the likes of Amazon, which only started an Italian website in 2010.

Kepler analyst Fabienne Caron said she believed Ceconomy was now loss-making at the EBIT level in Italy.

Haas told analysts the competitive environment was difficult in Italy, but said he was convinced Ceconomy could recover quickly after installing new management there.

Ceconomy is working on integrating its stores and its online offering. Almost half of orders placed online are collected in store and 11 percent of sales now come online, up from 9 percent a year ago, with average store size down 3 percent.

It is also pushing ahead with loyalty programmes, which have signed up more than 14.5 million members, as well as offering to fix and install more electronic devices, with services and solutions now accounting for 6.2 percent of sales. (Reporting by Emma Thomasson; Editing by Maria Sheahan and Mark Potter)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below