November 15, 2005

November 15, 2005 - METRO INC. 11.1% Net Earnings increase in the Fourth Quarter of 2005

Fourth quarter highlights

Acquisition of A&P Canada
4th quarter results include six weeks of A&P Canada operations
39.3% sales growth
11.1% increase in net earnings to $50.2 million

(Montréal, November 15, 2005)— With the acquisition of A&P Canada in the fourth quarter, METRO INC. took a major step in its expansion plan. It becomes the second leading food retailer in Canada's two largest markets. Six weeks of results have been recorded during the quarter since the acquisition, and the integration process has begun. In the coming months, we will continue to deploy all our efforts in order to maximize the business potential of this acquisition, and realize over the next two years $60 million in synergies as expected.

Results of Operations
SALES
Sales grew 39.3% in the fourth quarter and 11.6% in fiscal 2005 to $1,958.9 million and $6,695.9 million respectively. Excluding the $523.6 million increase in sales resulting from the acquisition of A&P Canada, sales would have grown 2.1% in the fourth quarter and 2.9% over the fiscal year. Same-store sales were up 3% for the fourth quarter and 3.3% for fiscal 2005.

EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA) 1
Fourth quarter earnings before interest, taxes, depreciation and amortization (EBITDA) rose to $106.1 million or 5.4% of sales compared to $82.2 million or 5.8% of sales for the same quarter last year. Excluding the acquisition of A&P Canada, fourth quarter EBITDA would have been 6.1% of sales compared to 5.8% for the corresponding quarter last year. This improvement is due in large part to our reduced operating costs and increased sales.

EBITDA for fiscal 2005 were $366 million or 5.5% of sales versus $320 million or 5.3% of sales for fiscal 2004. Equity earnings from our Alimentation Couche-Tard investment totalled $20.6 million for fiscal 2005 compared to $12.6 million last year. Excluding these equity earnings, our EBITDA to sales ratios would have been 5.2% for fiscal 2005 and 5.1% for 2004.

DEPRECIATION AND INTEREST
Depreciation costs totalled $29.1 million for the fourth quarter compared to $17.2 million for the same quarter of the previous fiscal year and $87.2 million for fiscal 2005 compared to $71.7 million for the previous year. Borrowing costs totalled $5.4 million for the fourth quarter versus $0.6 million for the same quarter of the previous fiscal year and $7.4 million for fiscal 2005 versus $3.5 million for fiscal 2004. These increases are due primarily to the acquisition of A&P Canada.

INCOME TAXES
The tax rate for fiscal 2005 was 29.8% versus 31% for fiscal 2004. The decrease is due mainly to the increase of our equity earnings from Alimentation Couche-Tard Inc. taxed at a lower rate as compared with other taxable income.

NET EARNINGS
Fourth quarter net earnings reached $50.2 million, up 11.1% from the previous fiscal year's fourth quarter net earnings of $45.2 million. Net earnings as a percentage of sales stood at 2.6% in 2005 compared to 3.2% for the same quarter last year. Fully diluted net earnings per share increased to $0.48 from $0.47 last year. Without the acquisition of A&P Canada, 2005, fourth quarter net earnings would have grown by 6.2%, and net earnings on sales would have been 3.3%, while fully diluted net earnings per share would have been $0.49.

Net earnings for fiscal 2005 reached $190.4 million, up 12.8% from the figure of $168.8 million for the previous fiscal year. Net earnings as a percentage of sales stood at 2.8%, the same as for fiscal 2004. Fully diluted net earnings per share increased 11.6% to $1.92 from $1.72 in 2004. Excluding the acquisition of A&P Canada, the fiscal 2005 increase in net earnings would have been 11.5%, and net earnings on sales would have been 3%, while fully diluted net earnings would have been $1.93.

Cash Position
OPERATING ACTIVITIES
Operating activities generated $150.6 million in funds in the fourth quarter of fiscal 2005, compared to $106.8 million for the same quarter last year. In fiscal 2005, operating activities generated $281.9 million in funds compared to $309.4 million last year. The decrease for the fiscal year is due mainly to the collection, in 2004, of $116 million in government receivables resulting from tax planning and the payment, in 2005, of the $40 million tax balance for fiscal 2004 also resulting from this tax planning.

INVESTING ACTIVITIES
Fourth quarter and fiscal 2005 investment activities, when excluding the net cash payment of $1,162.8 million relating to the acquisition of A&P Canada, required outflows of $57 million in the fourth quarter of 2005 versus $35.8 million in the same quarter last year and $156.8 million in fiscal 2005 versus $135.6 million in fiscal 2004.

FINANCING ACTIVITIES
Excluding the $526,8 million (on an adjusted base – See note 3 of the financial statements) share issue and $1,250 million increase in long-term debt in connection with the acquisition of A&P Canada, 2005 fourth quarter financing activities required an outflow of $109.8 million compared to $46.8 million in the corresponding quarter of the previous year. No Class A Subordinate Shares were redeemed in the fourth quarter of 2005, when in 2004 the Company had redeemed some for $14 million. We also repaid $101.4 million of long-term debt in fiscal 2005.

In fiscal 2005, cash flows from financing activities, excluding financing for the acquisition of A&P Canada, totalled $161.5 million compared to $153.3 million last year. In fiscal 2005, the Company redeemed 1,509,400 Class A Subordinate Shares for a total consideration of $37 million at an average price of $24.49 per share, compared to 1,602,700 Class A Subordinate Shares for a total consideration of $29.3 million at an average price of $18.25 per share last year. We also repaid $104.8 million of long-term debt in fiscal 2005.

Financial Position
Even with A&P Canada's acquisition for $1,700 million, the Company's financial position is very solid. The ratio of long-term debt to shareholder equity ratio is 0.8:1. The acquisition price was paid with a $526.8 million of Class A Subordinate Shares to A&P Luxembourg S.à.r.l., an indirect subsidiary of The Great Atlantic and Pacific Company, Inc., and a cash payment of $1,200 million financed through two credit facilities at floating rates provided by a banking syndicate. The first credit facility for $500 million matures in three years; the second for $750 million matures in five years.

On October 12, 2005, the Company issued $200 million worth of 10-year medium-term notes at 4.98% and $400 million worth of 30 year notes at 5.97%. Part of the proceeds from this public issue was used to repay the first credit facility in full. The balance, $100 million, enable us to reduce the second facility to $650 million. S&P and DBRS corporate credit ratings for the Company's medium-term notes were confirmed at investment grade BBB. The Company also has at its disposal a revolving credit facility for $400 million maturing in five years.

RETAIL INVESTMENT PROGRAM
Our retail grocery network now totals 18.5 million square feet. We continued our long-term network development strategy in fiscal 2005, investing, along with the retailers, $199.1 million. Major renovations and expansions of 23 stores were completed, 14 new stores were opened, and 15 were closed for a net increase of 142 000 square feet.

DIVIDENDS
On September 20, 2005, the Company's Board of Directors declared a quarterly dividend of $0.10 per Class A Subordinate Share and Class B Share payable November 22, 2005, an increase of 17.6% over the dividend for the corresponding quarter last year. In fiscal 2005, declared dividends totalled $38.9 million, which represents 23% of 2004 net earnings.

SHARE TRADING
The value of METRO INC. shares remained in the range of $18.50 to $35.50 in fiscal 2005. During this period, a total of 39.5 million shares were traded on the Toronto Stock Exchange. The closing price on Friday, September 23, 2005 was $34.25 compared with $18.66 at the end of fiscal 2004, an increase of 83.5%.

Outlook
“We are pleased to report a 15th consecutive year of net earnings growth. The landmark event of fiscal 2005 was the acquisition of A&P Canada, which allowed the Company to gain a solid footing in Ontario with a 24% market share and become a new Canadian grocery power with nearly $11 billion in annual sales. We face the future with confidence, determined to make this integration a success,” stated the President and Chief Executive Officer, Mr. Pierre H. Lessard.

Conference Call
Financial analysts are invited to participate in a conference call at 4:30 p.m. EDT November 15 on fourth quarter and fiscal 2005 results. To access the conference call, please dial 416-644-3423 or 514-807-8791. The media and public are invited to listen to the call in real time or delayed time on the METRO INC. Web site at www.metro.ca.

Projections
Any statement contained in the present press release which does not constitute an historic fact, may be deemed a projection. Verbs such as “believe”, “foresee”, “estimate” and other similar expressions appearing in this press release generally indicate projections. These projections do not provide guarantees as to the future performance of METRO INC. and are subject to risks, both known and unknown, as well as uncertainties which may cause the outlook, profitability and actual results of METRO INC. to differ significantly from the profitability or future results stated or implied in these projections.

1 Earnings are presented for information purposes only. They do not have a standardized meaning prescribed by Canadian GAAP and therefore may not be comparable to similar measures presented by other public companies.

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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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