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MONTREAL - Still digesting its merger with A&P Canada, Metro, Inc. here posted net earnings of $61.8 million for the second quarter of 2007, compared to $57 million last year, an increase of 8.4 percent, while fully diluted net earnings per share came to 53 cents, a rise of 8.2 percent from 49 cents in the year-ago period.
This earnings growth came despite the fact that sales declined 2.3 percent, to $2,356.2 million, attributable to lower sales of tobacco products, lost sales due to the disposal of the company's interest in a grocery wholesaler in the fourth-quarter of 2006, and the occurrence of Christmas week in the retailer's first quarter of 2007 rather than in the second quarter, as in 2006.
Synergies of $20.6 million were achieved in the second quarter, vs. $9.2 million in the same quarter last year. "We expect to achieve close to $90 million of synergies in fiscal 2007," Metro said in a statement.
The company additionally said that its three-part strategy to integrate and rationalize its operations after the 2005 acquisition of A&P Canada, was ongoing during the quarter. The scheme involves the grocer's store network, overall operations, and the implementation of its IT systems at A&P.
Also during the second quarter, Metro completed the implementation of its SAP and EXE purchasing and distribution systems in all of its Ontario warehouses. The company additionally implemented its retail information systems in 10 stores and began implementing payroll and human resource management systems.
During the next quarter, the implementation those systems would continue, noted the company, adding, "We expect to complete these implementations in the fourth quarter of 2007 as planned and stop outsourcing A&P U.S. information systems."
Fiscal 2006 integration and rationalization plan costs were $28 million, and Metro said it expected to spend another $27 million in 2007.
During the first 24 weeks of 2007, Metro invested $144.2 million in its store base, opening 10 new stores, and renovating and expanding 23 stores.
The company described its financial status at the end of the quarter as "very solid," citing such evidence as $181.9 million in cash and cash equivalents, and the fact that it hasn't used its approved $400 million line of credit.
"Over the next quarters, we shall pursue our integration and rationalization plan related to the acquisition of A&P Canada, which is on schedule and proceeding as planned," noted Metro president and c.e.o. Pierre H. Lessard.