Metro Posts Q3 Record Net Earnings, Experiences Higher Synergies

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Metro Posts Q3 Record Net Earnings, Experiences Higher Synergies

MONTREAL -- With its three-part plan to integrate and rationalize its operations proceeding apace, Metro, Inc. here reported net earnings of CAN $89.3 million (US $84.4 million) for its third quarter, vs. CAN $85.1 million (US $80.4) last year, an increase of 4.9 percent. Fully diluted net earnings per share were 77 cents, up 5.5 percent from 73 cents in the year-ago period. Sales rose 0.1 percent to CAN $3.3 billion (US $3.1 billion), while same-store sales went up 2.1 percent.

During the quarter the retailer continued the integration of A&P Canada, which it acquired in August 2005, and recorded synergies of CAN $27.9 million (US $26.4 million), vs. CAN $15.5 million (US $14.6 million) in the same quarter last year. Metro completed the implementation of its retail information systems in all of its stores and payroll and human resources management systems during the quarter, and last month disconnected the last A&P U.S. information systems, thus terminating the systems outsourcing period with A&P U.S. a few weeks earlier than the anticipated deadline of two years.

As a result of the third-quarter decision to further integrate Loeb Canada's operations into A&P Canada's, the retailer revised its initial figure of integration and rationalization plan costs from CAN $55 million (US $52.0 million) to CAN $59 million (US $55.8 million).

For the first 40 weeks of 2007, the company posted net earnings of CAN $219 million (US $207 million), a 25.8 percent increase from CAN $174.1 million (US $164.5 million) last year. Fully diluted net earnings per share were $1.88, a 25.3 percent rise from last year's $1.50. Sales for the period came to CAN $8.2 billion (US $7.8 billion), a decline of 0.7 percent, but synergies of $67.5 million (US $63.8 million) were achieved, compared with $32.6 million (US $30.8 million) last year.

The variations in the retailer's results over the past four quarters are mainly attributable to the A&P Canada acquisition, the impact of its integration plan during those quarters, and the synergies achieved, according to Metro.

Quarterly sales for 2007 vs. those for 2006 were affected by lower sales of tobacco products; lost sales due to the disposal, in the fourth quarter of 2006, of Metro's interest in a grocery wholesaler; and the fact that Christmas week fell in the first quarter of 2007 instead the second quarter, as it did in 2006, the company said.

During the first 40 weeks of 2007, Metro invested CAN $252.5 million (US $238.2 million) in capital expenditures to open 14 new stores and complete major renovations and expansions of 37 stores.

"By the end of the fiscal year, we plan to complete our original integration and rationalization plan following the acquisition of A&P Canada and achieve close to CAN $90 million [US $85.1 million] in synergies," says Metro president and c.e.o. Pierre H. Lessard in a statement. "We are already preparing the phase II of our integration plan, involving the rationalization of our banners and private labels to be completed over the next three years, which will allow us to continue our growth in the Canadian grocery market."