German electronics group Ceconomy has released a profit warning: disappointing sales in its MediaMarkt and Saturn stores have caused the company to miss the profit forecast.
Even reduced profit forecast missed
The operating profit for the broken financial year 2017-18 is lower than hoped for at Ceconomy, the electronics spin-off of the German Metro Group. The MediaMarkt and Saturn chains are struggling, resulting in an EBITDA for the financial year ending on 30 September of only 630 million euro. Ceconomy's performance is significantly lower than expected: last month, the company forecast an operating profit of between 680 and 710 million euro. This was already a setback, as a year earlier the retail group achieved an EBITDA of 714 million euro.
The operating result (EBIT) was lower than expected as well: profit before tax fell to 400 million euro, compared to 494 million in the previous financial year. Management assumed earlier that an operating result of between 460 and 490 million euro was feasible.
Too hot for TV
The hot summer, which caused people to get away from their screens and look out fresh air, is to blame for the company's disappointing results as fewer television sets and electronic gadgets were sold.
"This deviation is attributable to significantly lower than expected operating earnings contributions at MediaMarktSaturn Retail Group at the end of the financial year 2017-18", says Ceconomy. On December 19th, the group publishes its full annual results.