Metro hit by restructuring costs, weak rouble and attacks

German retailer Metro reported weaker-than-expected third-quarter results on Tuesday as the fall in the rouble and Islamist attacks hurt sales, while restructuring costs and investment in a new loyalty program squeezed profits.

Quarterly earnings before interest and tax (EBIT), before special items, fell to 154 million euros ($172 million) on sales down 2.7 percent to 13.6 billion, missing analysts' average forecasts for EBIT of 182 million on sales of 13.8 billion.

"We expect the EBIT miss and weak operational trends to weigh on the shares," said Citi analyst Nick Coulter, who pointed to falling like-for-like sales at the cash-and-carry unit in Germany and France and at the Real hypermarket chain.

Metro shares were down 7.3 percent by 0837 GMT, making them the top faller on Europe's Stoxx 600 index .

The company said its business supplying hotels and restaurants suffered in France and Belgium from fears of more Islamist attacks, although like-for-like sales rose in Turkey and Spain.

"Terror has had an impact on the way people dine out," Chief Executive Olaf Koch told a call for analysts, adding the Euro 2016 soccer championships in France had also put a temporary dampener on the restaurant sector across the continent.

Metro reported one-off costs of 190 million euros, mainly relating to restructuring measures at its cash and carry business in Germany, Belgium, the Netherlands and Italy.

Chief Executive Olaf Koch said the costs were due to a decision to speed up steps to decentralize management of the business and overhaul stores, which he said had dampened sales in the short term but should bear fruit within three years.

While the weaker rouble dented sales, Koch told a conference call for journalists that Metro's Russian business had seen its first period of positive like-for-like sales in June after a long decline, making him confident for full-year margins.

As third-quarter EBIT only accounts for just over a tenth of the expected annual total, Metro reiterated its forecast for slight rises in overall sales and EBIT in fiscal 2015/16, excluding special items, predicting a better fourth quarter.

Consumer electronics unit Media-Saturn reported a bigger loss than most analysts expected as it sold more televisions due to Euro 2016, but at low margins, and spent more on investment in ecommerce and marketing to launch a loyalty program.

Koch said Metro's plans to separate its wholesale and food business from Media-Saturn by mid-2017 were on track and that the company would give further details on the transaction, capital structure and strategy on Sept. 8 and 9.