25 janvier 2005

25 janvier 2005 - METRO INC. enregistre une augmentation de son bénéfice net de 13,5% au premier trimestre de 2005

First Quarter Highlights

3.9% sales growth
13.5% increase in net earnings
17.6% increase in fully diluted net earnings to $0.40 per share
17.6% increase in quarterly dividend to $0.10 per share

(Montréal, January 25, 2005) – METRO INC. announced today that its earnings for the first quarter ended December 18, 2004 grew 13.5% to $38.6 million versus $34 million for the same quarter of the previous fiscal year. Fully diluted net earnings per share for the first quarter reached $0.40, up 17.6% from $0.34 for the corresponding quarter last year.

Results of Operations
SALES
The Company's sales increased 3.9% in the first quarter of fiscal 2005 to $1,446.1 million compared to $1,392.4 million in the same quarter of the last fiscal year.

Labour conflicts, in corporate stores, reduced by $20 million our sales during the first quarter of 2005. This decrease was compensated by nearly $10 million of sales increase linked to the purchase of 15 affiliated Metro supermarkets during the third quarter of last fiscal year. The sales growth, excluding these events, would have been 4.6%. The labour dispute at one of the corporate stores was settled and the store reopened on December 26, 2004.

Food Segment
Despite continuing strong competition in the first quarter, our merchandising strategies and retail investment program enabled us to sustain our sales growth for this segment with a 3.2% increase compared to the corresponding quarter of 2004 and 3.9% excluding the impact of labour conflicts in corporate stores and the purchase of 15 affiliated Metro supermarkets. Same store sales rose 3% in the first quarter of fiscal 2005.

We have invested with the retailers $70 million, resulting in a net increase of 125,000 square feet, an increase of nearly 1.3% for our retail network. Major expansion and renovations were completed in eight stores, while seven new stores were opened.

Pharmaceutical Segment
For this segment, sales reached $123.1 million compared to $110 million last year, an increase of 11.9%. This increase is mainly the result of internal growth. At the end of the first quarter, the number of Brunet and Clini-Plus drugstores stood at 177 compared to 175 at the end of the corresponding quarter of the previous fiscal year.

EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA)
Earnings before interest, taxes, depreciation and amortization for the first quarter of fiscal 2005 was $72.1 million, representing 5% of sales, compared to $66.4 million or 4.8% for the same quarter last year. These increases are due mainly to sales growth and equity earnings from our investment in Alimentation Couche-Tard Inc., which reached $5.2 million compared to $2.7 million for the same quarter last year. The equity earnings increase raised our EBITDA as a percentage of sales by 0.2%. However, labour conflicts in corporate stores reduced our EBITDA as a percentage of sales by 0.2%.

INTEREST, DEPRECIATION AND AMORTIZATION
Total depreciation and amortization expense for the first quarter rose to $17 million compared with $15.9 million for the corresponding quarter of the previous fiscal year. This increase results primarily from investments in our retail network.

First quarter interest expenses totalled $0.6 million compared to $1.2 million last year. Financing costs averaged 3.6% for the first quarter compared to 3.5% for the corresponding period of the previous fiscal year. This decrease in interest expenses is due to a reduction of nearly $122 million in average use of bank loans. The decrease in bank loans is due mainly to tax planning implemented in prior fiscal years, under which we had to finance government receivables of $116 million that were collected at the end of the first quarter of the previous fiscal year.

INCOME TAXES
First quarter income tax expense represents an effective tax rate of 29.2% versus 31% for the corresponding quarter of fiscal 2004. The rate decrease is due mainly to a lower tax rate on our equity earnings compared with other taxable income and to the 2% reduction in federal tax rates on January 1, 2004.

NET EARNINGS
First quarter net earnings reached $38.6 million, up 13.5% from the previous fiscal year's first quarter net earnings of $34 million. Net earnings as a percentage of sales stood at 2.7% in 2005 and 2.4% for the same quarter last year. Fully diluted net earnings per share increased 17.6% to $0.40 from $0.34 last year.

Cash Position
OPERATING ACTIVITIES
Operating activities, which had been a source of $51.8 million in funds in the first quarter of fiscal 2004, required outflows of $51.9 million in the first quarter of 2005. These outflows in the first quarter of 2005 are due in large part to the holiday period and its resultant increase in debtors, inventory and creditors as compared to 2004 year-end. In the first quarter of 2004, government receivables of $116 million collected in the quarter exceeded holiday funding requirements. In the first quarter of 2005, we also paid the $40 million tax balance for fiscal 2004 arising from tax planning, which contributed to first quarter funding requirements.

INVESTMENT ACTIVITIES
Investing activities required outflows of $33.4 million in the first quarter of 2005 compared to $55.9 million in the same quarter last year. This variation is due mainly to the $23.6 million investment in Alimentation Couche-Tard Inc. in the first quarter of 2004. This investment had a book value of $74.8 million on December 18, 2004, and a market value of $389.2 million on January 14, 2005.

FINANCING ACTIVITIES
Cash flows from financing activities totalled $60.1 million in the first quarter of 2005 compared to an outflow of $2.7 million in the same quarter last year. The variation is due mainly to the repayment of bank loans following the collection of $116 million in government receivables at the end of the first quarter of fiscal 2004. In the first quarter, the Company redeemed 384,500 Class A Subordinate Shares for a total consideration of $8.1 million at an average price of $20.92 per share, whereas it had made no share purchases for the corresponding quarter last year.

Financial Position
Our financial position is very solid. At the end of the first quarter of 2005, long-term debt was $10.6 million, while shareholders' equity was $877.2 million and total assets were $1,648.2 million compared to $9.4 million in long-term debt, $852.1 million in shareholders' equity and $1,560 million in total assets at the end of fiscal 2004 as stated in the Management's Discussion and Analysis section of the 2004 Annual Report. Contractual obligations at the end of the first quarter of 2005 have not changed significantly from September 25, 2004.

CAPITAL STOCK
On January 14, 2005, the Company had 95,037,373 Class A Subordinate Shares (95,621,688 on September 25, 2004) and 977,040 Class B Multiple Voting Shares (977,040 on September 25, 2004) outstanding. At the same date, 5,065,000 stock options (5,072,180 on September 25, 2004) were outstanding at exercise prices between $7.93 and $23.34 (2004 - $7.93 and $21.75), for a weighted average per-share price of $18.00 (2004 - $17.91) with maturity dates until 2011.

STOCK BUYBACK PROGRAM
Subject to regulatory approval, the Board of Directors has authorized the Company to purchase, in the normal course of its activities, from February 4, 2005 to February 3, 2006, up to 5 million of its Class A Subordinate Shares, representing approximately 8.8% of the outstanding public float of such shares on January 21, 2005 at the close of the Toronto Stock Exchange. The purchases will be made at market prices through the facilities of such exchange in accordance with its rules and policies. The Class A Subordinate Shares thereby purchased will be cancelled. Since February 4, 2004, the Company has purchased in the normal course of its activities 2,506,600 of its Class A Subordinate Shares at an average price of $19.81 per share. Shareholders may obtain without charge a copy of the documents filed with the regulatory authorities concerning this program by writing to the legal department of the Company. The Company believes that the purchase of its Class A Subordinate Shares represents an effective use by the Company of its funds and is in the best interest of the Company and its shareholders.

DIVIDENDS
On January 24, 2005, the Company's Board of Directors declared a quarterly dividend of $0.10 per Class A Subordinate Share and Class B Share payable March 1, 2005, an increase of 17.6% over the dividend for the corresponding quarter last year. On a yearly basis, this dividend represents 23% of 2004 net earnings.

SHARE TRADING
The value of METRO shares remained in the range of $18.50 to $23.50 in the first quarter of fiscal 2005. During this period, a total of 7.9 million shares were traded on the Toronto Stock Exchange. The closing price on Friday, January 14, 2005 was $23.60, compared with $18.66 at the end of fiscal 2004, an increase of 26.5%.

Changes in accounting policies
At the end of fiscal 2004, we have adopted two new accounting standards: “Consolidation of Variable Interest Entities” (AcG-15) and “Accounting by a Customer (Including a Reseller) for Certain Considerations Received from a Vendor” (EIC-144). The financial statements of prior fiscal and interim periods have been restated to reflect these changes.

Outlook
We are confident that we will continue, in the coming quarters, to benefit from our merchandising strategies and retail investment program aimed at maintaining its competitive position.

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SOURCE : METRO INC.

INFORMATION : L.G. Serge Gadbois, FCA
Senior Vice-President,
Finance and Treasurer
(514) 643-1003

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