BUSINESS NEWS: METRO's fully diluted net earnings per share increased 8.8% in the second quarter of 2010

Metro Inc. has reported net earnings for the second quarter of 2010. The Company realized $80.3 million in the second quarter ended March 13, 2010, an increase of 5.2% over the same quarter last year, and fully diluted net earnings per share of $0.74 versus $0.68 last year, an increase of 8.8%.

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METRO's fully diluted net earnings per share increased 8.8% in the second quarter of 2010

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2010 SECOND QUARTER HIGHLIGHTS
- Net earnings of $80.3 million, up 5.2%
- Fully diluted net earnings per share of $0.74, up 8.8%
- Sales of $2,576.7 million, up 1.1%
- Declared dividend of $0.17 per share, up 23.6%
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MONTREAL, April 21 /CNW Telbec/ - METRO INC. (TSX : MRU.A) realized net earnings of $80.3 million in the second quarter ended March 13, 2010, an increase of 5.2% over the same quarter last year, and fully diluted net earnings per share of $0.74 versus $0.68 last year, an increase of 8.8%.

"We are pleased with our second quarter results. Despite persistent deflation in certain product categories, our results improved on last year's excellent second quarter. Consumers remain cautious and our teams constantly strive to provide them excellent value across all of our banners. On April 12, 2010, we launched the Metro & Me loyalty card in the Québec City region in phase 1 of a new program that will allow our Québec customers to accumulate points that can be applied towards purchases at Metro supermarkets. We are confident(2) that we will continue our growth in 2010," stated Eric R. La Flèche, President and Chief Executive Officer.


SALES


2010 second quarter sales reached $2,576.7 million compared to $2,549.7 million last year, an increase of 1.1%. Sales for the first 24 weeks of 2010 reached $5,221.7 million, up 1.4% compared to sales of $5,150.2 million for the corresponding period of fiscal 2009.

These increases were achieved despite a slight drop in the value of our basket, whereas last year, high food price inflation and the temporary closing of several stores of a competitor due to a labour conflict had a positive impact on our first and second quarter sales. Same-store sales declined 0.7% in the second quarter due to deflation in certain product categories.


EARNINGS BEFORE FINANCIAL COSTS, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA)(1)


Second quarter EBITDA(1) in 2010 was $171.6 million, up 5.5% from $162.6 million for the same quarter last year. Second quarter EBITDA(1) represented 6.7% of sales versus 6.4% last year.

EBITDA(1) for the first 24 weeks of 2010 was $353.7 million or 6.8% of sales compared to $332.8 million or 6.5% of sales for the same period last year. Excluding banner conversion costs of $0.9 million and $5.8 million before taxes recorded for the first 24 weeks of 2010 and 2009 respectively, adjusted EBITDA(1) represented 6.8% of sales in 2010 and 6.6% in 2009.

These increases are due mainly to an increase in our gross margins driven by our improved store operations.

Our share of earnings from our investment in Alimentation Couche-Tard for the second quarter and the first 24 weeks of 2010 were $6.5 million and $17.3 million respectively, compared to $9.4 million and $20.5 million for the corresponding periods of fiscal 2009. Excluding non-recurring items as well as our share of earnings from our investment in Alimentation Couche-Tard, our adjusted EBITDA(1) for the second quarter and the first 24 weeks of 2010 were $165.1 million and $337.3 million respectively or 6.4% and 6.5% of sales versus $154.5 million or 6.1% of sales for the second quarter of 2009 and $318.1 million or 6.2% of sales for the 24-week period.


EBITDA(1) Adjustments




(Millions of 12 weeks / Fiscal Year
dollars, 2010 2009
unless ------------------------------------------------------------
otherwise EBITDA Sales EBITDA/ EBITDA Sales EBITDA/
indicated) Sales (%) Sales (%)
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EBITDA 171.6 2,576.7 6.7 162.6 2,549.7 6.4
Banner
conversion
costs - - 1.3 -
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Adjusted
EBITDA 171.6 2,576.7 6.7 163.9 2,549.7 6.4
Share of
earnings
from our
investment in
Alimentation
Couche-Tard (6.5) - (9.4) -
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Adjusted EBITDA
excluding share
of earnings 165.1 2,576.7 6.4 154.5 2,549.7 6.1
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(Millions of 24 weeks / Fiscal Year
dollars, 2010 2009
unless ------------------------------------------------------------
otherwise EBITDA Sales EBITDA/ EBITDA Sales EBITDA/
indicated) Sales (%) Sales (%)
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EBITDA 353.7 5,221.7 6.8 332.8 5,150.2 6.5
Banner
conversion
costs 0.9 - 5.8 -
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Adjusted
EBITDA 354.6 5,221.7 6.8 338.6 5,150.2 6.6
Share of
earnings
from our
investment in
Alimentation
Couche-Tard (17.3) - (20.5) -
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Adjusted EBITDA
excluding share
of earnings 337.3 5,221.7 6.5 318.1 5,150.2 6.2
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DEPRECIATION AND AMORTIZATION AND FINANCIAL COSTS


Total amortization expenses for the second quarter and the first 24 weeks of fiscal 2010 amounted to $47.0 million and $93.7 million respectively, compared with $42.6 million and $84.2 million for the same periods last year. Second quarter financial costs totalled $10.3 million in 2010 versus $10.8 million last year, while 2010 24-week financial costs totalled $21.3 million versus $23.3 million last year. Interest rates for the first 24 weeks of 2010 averaged 3.9% versus 4.8% for the corresponding period last year.


INCOME TAXES


The 2010 second quarter and 24-week period income tax expenses of $34.0 million and $60.3 million represented the effective tax rates of 29.7% and 25.3% respectively. In 2009, the second quarter and 24-week period income tax expenses of $32.9 million and $67.9 million represented an effective tax rate of 30.1% for both periods. In the first quarter of 2010, we benefited from a $10.0 million reduction in our net future income tax liabilities and income tax expenses. Excluding this reduction, our effective tax rate for the first 24 weeks of 2010 was 29.5%.


NET EARNINGS


The 2010 second quarter net earnings were $80.3 million compared to $76.3 million for the corresponding quarter last year, an increase of 5.2%. Fully diluted net earnings per share rose 8.8% to $0.74 from $0.68 last year.

Net earnings for the first 24 weeks of 2010 reached $178.4 million versus $157.4 million last year, up 13.3%. Fully diluted net earnings per share were $1.65 compared to $1.41, an increase of 17.0%. Excluding the first quarter income tax expense decrease of $10.0 million in 2010 and pre-tax banner conversion costs of $0.9 million in 2010 and $5.8 million in 2009, adjusted net earnings(1) for the 2010 24-week period were $169.0 million, up 4.8% from the $161.3 million for the corresponding period of 2009. Adjusted fully diluted net earnings per share(1) were $1.56, up 8.3% from $1.44 last year.


Net Earnings Adjustments




12 weeks / Fiscal Year

2010 2009 Change (%)
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(Millions Fully (Millions Fully Net Fully
of diluted of diluted earnings diluted
dollars) EPS dollars) EPS EPS
(Dollars) (Dollars)
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Net earnings 80.3 0.74 76.3 0.68 5.2 8.8
Banner
conversion
costs after
taxes - - 0.9 -
Decrease in
tax expense - - - -
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Adjusted net
earnings(1) 80.3 0.74 77.2 0.68 4.0 8.8
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24 weeks / Fiscal Year

2010 2009 Change (%)
------------------------------------------------------------
(Millions Fully (Millions Fully Net Fully
of diluted of diluted earnings diluted
dollars) EPS dollars) EPS EPS
(Dollars) (Dollars)
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Net earnings 178.4 1.65 157.4 1.41 13.3 17.0
Banner
conversion
costs after
taxes 0.6 - 3.9 0.03
Decrease in
tax expense (10.0) (0.09) - -
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Adjusted net
earnings(1) 169.0 1.56 161.3 1.44 4.8 8.3
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Quarterly Highlights




(Millions of dollars, unless 2010 2009 2008 Change
otherwise indicated) (%)
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Sales
Q1 2,645.0 2,600.5 - 1.7
Q2 2,576.7 2,549.7 - 1.1
Q3 - 3,513.3 3,370.0 4.3
Q4 - 2,532.5 2,476.0 2.3
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Net earnings
Q1 98.1 81.1 - 21.0
Q2 80.3 76.3 - 5.2
Q3 - 112.6 91.9 22.5
Q4 - 84.4 72.5 16.4
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Adjusted net earnings(1)
Q1 88.7 84.1 - 5.5
Q2 80.3 77.2 - 4.0
Q3 - 111.8 91.9 21.7
Q4 - 85.9 72.5 18.5
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Fully diluted net earnings
per share (Dollars)
Q1 0.91 0.73 - 24.7
Q2 0.74 0.68 - 8.8
Q3 - 1.01 0.81 24.7
Q4 - 0.77 0.65 18.5
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Adjusted fully diluted net
earnings per share(1) (Dollars)
Q1 0.82 0.76 - 7.9
Q2 0.74 0.68 - 8.8
Q3 - 1.01 0.81 24.7
Q4 - 0.78 0.65 20.0
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First and second quarter sales for 2010 were up 1.7% and 1.1% respectively over those for 2009. These increases were achieved despite a slight drop in the value of our basket, whereas last year high food price inflation and the temporary closing of several stores of a competitor due to a labour conflict, had a positive impact on our first and second quarter sales.

Third and fourth quarter sales for 2009 were up 4.3% and 2.3% respectively over those for 2008. Effective merchandising programs allowed us to post increases. Excluding decreased tobacco sales, 2009 third and fourth quarter sales were up 5.2% and 3.2% respectively over 2008.

First quarter net earnings and fully diluted net earnings per share for 2010 were up 21.0% and 24.7% respectively over those for 2009. Excluding banner conversion costs of $0.9 million and $4.5 million before taxes recorded respectively in the first quarters of 2010 and 2009, as well as the income tax expense decrease of $10.0 million in the first quarter of 2010 further to future decreases in the Ontario tax rate, adjusted net earnings(1) were up 5.5% and adjusted fully diluted net earnings per share(1) were up 7.9%.

Second quarter net earnings and fully diluted net earnings per share for 2010 were up 5.2% and 8.8% respectively from those in 2009.

Our sales growth and ongoing efforts to improve store operations in Ontario allowed us to increase our gross margins in the third and fourth quarters of 2009.

Third quarter net earnings and fully diluted net earnings per share in 2009 were up 22.5% and 24.7% respectively from 2008. Excluding non-recurring items recorded in the third quarter of 2009, namely $2.9 million before taxes to convert our Ontario supermarkets to the Metro banner as well as an income tax expense decrease of $2.7 million, adjusted net earnings(1) and adjusted fully diluted net earnings per share(1) for the third quarter of 2009 were up 21.7% and 24.7%, compared to adjusted net earnings(1) and adjusted fully diluted net earnings per share(1) for the third quarter of 2008.

Fourth quarter net earnings and fully diluted net earnings per share in 2009 were up 16.4% and 18.5% over those for 2008. Excluding 2009 fourth quarter banner conversion costs of $2.3 million before taxes, adjusted net earnings(1) and adjusted fully diluted net earnings per share(1) for the fourth quarter of 2009 were up 18.5% and 20.0% over adjusted net earnings(1) and adjusted fully diluted net earnings per share(1) for the fourth quarter of 2008.

SOURCE: CNW Newswire Press Release