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4-Traders Homepage  >  Equities  >  London Stock Exchange  >  Dixons Carphone    DC.   GB00B4Y7R145

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Metro consumer electronics division to seek acquisitions

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12/15/2016 | 12:54pm CET
File photo of shopping carts of Germany's biggest retailer Metro AG lined up at a Metro cash and carry market in St. Augustin

Metro (>> METRO AG) expects its consumer electronics division to go on a hunt for acquisitions once it has been separated from the German retailer's wholesale and hypermarket food business next year.

Metro (>> METRO AG) expects its consumer electronics division to go on a hunt for acquisitions once it has been separated from the German retailer's wholesale and hypermarket food business next year.

The consumer electronics sector is seen as ripe for more mergers as fierce competition from the likes of Amazon (>> Amazon.com, Inc.) squeezes margins and Metro said on Thursday its Media-Saturn division would be well-placed to lead consolidation.

Europe's biggest consumer electronics group has long been seen as a candidate to merge with its closest rival in the region, Britain's Dixons Carphone (>> Dixons Carphone PLC), and overtake Best Buy (>> Best Buy Co Inc) as the world's leading consumer electronics chain.

"We are the number one in European consumer electronics and we have created an excellent starting position for our upcoming independence through a comprehensive realignment," said Pieter Haas, who will be CEO of the separate electronics company.

"Our best years are yet to come," he said on Thursday.

Shares in Metro, which jumped on Wednesday after better than expected fourth-quarter operating profit and an upbeat forecast for its 2016-17 fiscal year, were 0.5 percent lower at 1119 GMT, in line with the European retail index <.SXRP>.

At a capital markets day in Duesseldorf on Thursday to present its plans to split into two separate companies, Metro said it expected both to reach an investment rating and to qualify for the German mid-cap index <.MDAX>.

HIGHLY FRAGMENTED

The electronics division set mid-term targets for annual sales growth of more than 3 percent and a rise in its earnings before interest, taxation, depreciation and amortisation (EBITDA) margin towards 5 percent from 3.3 percent in 2015-16.

Media-Saturn, which will be renamed Ceconomy, runs more than 1,000 stores in 15 countries in Europe and had sales of 22 billion euros ($23 billion) in the fiscal year to Sept. 30, up 0.6 percent from the previous year.

Haas said he expected the sale of high-margin services such as repairs of smartphone screens to help drive profitability, noting that services and solutions had grown more than a fifth in the last two years to account for 6 percent of sales.

Haas said consolidation would be driven by smaller players finding it harder to keep up with investment to combine e-commerce with stores, as well as demand for services given the number of increasingly complicated and connected devices.

He noted that the European consumer electronics market was still highly fragmented, with the five biggest players having a combined market share of below 50 percent.

Ceconomy will get a 10 percent stake in the new wholesale and food business to strengthen its capital base, with a six-month lock-up period for 9 percent and a seven-year lock up for the remaining 1 percent holding.

Metro set a mid-term target for sales at its food and wholesale business to rise by at least 3 percent. The business had 2015-16 sales of 37 billion euros.

The division of the company into two parts will cost 100 million euros ($105 million), with 24 million euros already incurred by Sept. 30, Metro said late on Wednesday.

Both businesses plan to pay shareholders 45 to 55 percent of earnings per share as an annual dividend.

(Editing by David Clarke)

By Emma Thomasson

Stocks treated in this article : Best Buy Co Inc, METRO AG, Dixons Carphone PLC, Amazon.com, Inc.
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Financials ( GBP)
Sales 2018 10 561 M
EBIT 2018 423 M
Net income 2018 282 M
Debt 2018 240 M
Yield 2018 6,78%
P/E ratio 2018 6,52
P/E ratio 2019 6,07
EV / Sales 2018 0,19x
EV / Sales 2019 0,18x
Capitalization 1 782 M
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Dixons Carphone Technical Analysis Chart | DC. | GB00B4Y7R145 | 4-Traders
Technical analysis trends DIXONS CARPHONE
Short TermMid-TermLong Term
TrendsBearishBearishBearish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 17
Average target price 2,42  GBP
Spread / Average Target 57%
EPS Revisions
Managers
NameTitle
Sebastian James Group Chief Executive Officer & Executive Director
Ian Paul Livingston Chairman
Humphrey Singer Executive Director & Group Finance Director
Simon Post Chief Technology Officer
Andrew Harrison Executive Director & Deputy CEO
Sector and Competitors
1st jan.Capitalization (M$)
DIXONS CARPHONE-56.60%2 357
BEST BUY CO INC34.29%16 530
CECONOMY-0.49%4 202
TECH DATA CORP4.81%3 482
GOME RETAIL HOLDINGS LTD2.13%2 647
AARON'S, INC.11.91%2 583