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Metro Bullish on International Business, Boosts Forecast

Metro reported a near 15 percent rise in third-quarter operating earnings and upped its sales forecast for 2007 but its Real food unit lost money as it expanded in eastern Europe.

Metro, which operates 2,400 department, food, wholesale and electronics stores in 31 countries, said on Tuesday that earnings before interest and tax (EBIT) were 323 million euros ($465.5 million).

This was above a Reuters poll average of 314 million euros from 12 analysts.

Sales rose 10.8 percent to 15.65 billion euros, also beating the poll forecast of 15.55 billion euros.

Metro, which is a gauge of Germany's retail climate, said it now expects 2007 sales to rise more than 9 percent, up from an earlier forecast of 8-9 percent. It reiterated that it expects EBIT growth of 6-8 percent for the year.

"The growth driver continues to be our international business," Metro Chief Financial Officer Thomas Unger said in a statement.

At home, where Metro garners slightly over 40 percent of sales, like-for-like sales fell across all divisions except the Media Markt and Saturn wholesale electronics stores.

Metro will appoint Eckhard Cordes as chief executive on Nov. 1 after Hans Joachim-Koerber resigned earlier this year.

Cordes, who is chief executive of German conglomerate Haniel, is expected to sell Metro's real estate, valued at 12.5 billion euros and divest or transform its tepidly growing Kaufhof department stores and money-losing Real food division, which includes the Extra supermarkets.

At Real, Metro finished integrating 71 of the 85 Wal-Mart stores it bought in September, the company said.

Investors are keen to know whether Metro will fulfil its target of a 3 percent margin for Real in Germany by 2009. Many are sceptical.

Real, with 670 stores, derives 80 percent of its sales domestically and the rest from eastern Europe.