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    Metro Canada's Q3 Net Surges Nearly 50 Percent

    MONTREAL -- Thanks in large part to its acquisition of A&P Canada, Canadian supermarket operator Metro, Inc. yesterday posted net earnings of $85.1 million for the third quarter of 2006, compared with $56.9 million in the year-ago -- an increase of 49.6 percent. The company posted earnings per share of 73 cents, a rise of 25.9 percent from 58 cents last year.

    MONTREAL -- Thanks in large part to its acquisition of A&P Canada, Canadian supermarket operator Metro, Inc. yesterday posted net earnings of $85.1 million for the third quarter of 2006, compared with $56.9 million in the year-ago -- an increase of 49.6 percent. The company posted earnings per share of 73 cents, a rise of 25.9 percent from 58 cents last year.

    Excluding these nonrecurring items, adjusted net earnings would have been $78.3 million, an increase of 37.6 percent over the same quarter last year, and adjusted fully diluted net earnings per share would have been 68 percent, a rise of 17.2 percent, according to the retailer.

    Metro's sales went up 75.8 percent to $3,336.7 million. Excluding the acquisition of A&P Canada, decreased sales of tobacco products and discontinuance, at the end of 2005, of certain low-margin supply contracts, the sales increase would have been 2.9 percent.

    Net earnings for the first 40 weeks soared 24.2 percent to $174.1 million, as opposed to $140.2 million last year. Fully diluted net earnings per share rose 4.2 percent to $1.50, compared with $1.44 in the year-ago period. Excluding account integration and rationalization costs of $24.8 million and the income tax gain of $4.1 million, adjusted net earnings for the 40-week period would have been $186.6 million, an increase of 33.1 percent from the corresponding period last year, and fully diluted net earnings per share would have been $1.61, a rise of 11.8 percent over last year.

    "The growth registered in the first three quarters of 2006 vs. that in the fourth quarter of 2005 was affected by the acquisition of A&P Canada," the company noted in a statement. "Growing synergies since the acquisition of A&P Canada and the beneficial effect of our integration and rationalization plan's progress contributed to the growth of our adjusted net earnings in each of the first three quarters of 2006."

    Following the acquisition of A&P Canada, Metro created an integration plan, concentrating on stores, operations, and information systems at A&P, in which the company reported significant progress in the third quarter. Metro also finished converting its Ontario Super C discount stores to the Food Basics banner, and implemented new organizational structures that optimize its Quebec and Ontario divisions as a national procurement group to provide the company's banners with the best possible prices.

    In response to the recent acquisition by Canadian grocery retailer Sobeys of Quebec-based wholesaler Achille de la Chevrotiere Limitee, Metro noted that it previously owned about 14 percent of the company since 1986 and had the right of first refusal on the sale.

    "We decided not to exercise our right, deeming the investment required to purchase and modernize the network seemed too high to earn an adequate return on capital," the company explained. "We have sales [on] the order of $125 million a year with this company. We foresee no material decrease in profitability resulting from this disposal. The anticipated net gain after taxes from this transaction would be [on] the order of some $8 million."

    Noted Metro president and c.e.o. Pierre H. Lessard: "We are pursuing our integration and rationalization plan and the achievement of synergies. We shall exceed our original targets of $35 million in synergies in the first year and $60 million in the second year after the acquisition of A&P Canada. A year after the acquisition of A&P, 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."

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