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MONTREAL -- Citing cost savings from the integration of A&P Canada, supermarket operator Metro, Inc. here posted net earnings of $67.9 million in the first quarter of 2007, compared with CAN $32 million for the year-ago period -- a whopping 112.2 percent increase -- while fully diluted net earnings per share grew 107.1 percent, to 58 cents from last year's 28 cents.
Excluding integration and rationalization costs of CAN $5.6 million before taxes in 2007 and of CAN $18.3 million before taxes in 2006 and the additional tax expense of $5.3 million in 2006, adjusted net earnings for the first quarter of 2007 would have been CAN $71.6 million, a 44.4 percent increase, and adjusted fully diluted net earnings per share would have been 62 cents, an increase of 44.2 percent.
Meanwhile, first-quarter sales came to CAN $2,515 million, a dip of 0.3 percent compared with year-ago first-quarter sales of CAN $2,521.7 million. Excluding lower sales of tobacco products and lost sales due to the disposal, in the fourth quarter of 2006, of the company's interest in a grocery wholesaler, sales would have grown 2.8 percent. The drop in tobacco sales is mainly the result of a tobacco supplier's decision to sell directly to retailers, beginning in the early autumn of 2006, instead of going through wholesalers.
Additionally, synergies of CAN $19 million were achieved in the first quarter, vs. CAN $7.9 million in the same quarter last year.
The company characterized its financial position at the end of the first quarter of fiscal 2007 as "very solid," noting that it has CAN $124.1 million in cash and cash equivalents, and that it hasn't used its approved CAN $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. "We are satisfied with our progress to date, and are confident that Metro is well positioned to pursue its growth in the Canadian grocery market."
Following the August 2005 acquisition of A&P Canada, the company developed a three-part plan to integrate and rationalize its operations, focusing on the areas of its store network, the integration of its overall operations, and the implementation of its information systems at A&P. Over fiscal 2006, integration and rationalization plan costs reached CAN $28 million, and the retailer said it expected to spend another CAN $27 million in 2007. Costs incurred over the first quarter totaled CAN $5.6 million. Metro said that it expects cost savings of CAN $80 million this fiscal year.
Other subjects raised by the retailer were its recently declared dividend of 12 cents per share, a 9.5 percent increase over the dividend declared in the year-ago period, and a CAN $ 1 billion lawsuit brought by beneficiaries of a multiemployer pension plan, in which Metro was named as a defendant. Responding to the plaintiffs' allegations that plan assets were mismanaged, the company said that it played no part in administering the plan and "forcefully contest[ed] the suit's merits."