A Metro grocery store in Toronto.Peter Power/The Globe and Mail
Metro Inc. says its second-quarter profit was up 12 per cent from a year earlier, beating analyst estimates by 2 cents per share, as revenue increased more modestly in line with expectations.
Metro's second-quarter profit rose to $96.1-million or 94 cents per share, up 12 per cent from a year ago while sales improved 4 per cent, to about $2.65-billion.
The company paid 12.5 cents per share in dividends during the quarter, the first payout to investors since Metro announced an 11.7-per-cent increase to its dividend rate.
Analysts had expected earnings of 92 cents per share on $2.67-billion of revenue, according to a consensus estimate compiled by Thomson Reuters.
"We are pleased with our strong second-quarter performance and our first-half results are encouraging as we continue to grow," said Eric La Fleche, Metro's president and chief executive officer.
Even though the market remains highly competitive, Metro's earnings were expected to be helped by operating efficiency, contribution from Mediterranean grocer Adonis acquired in October and a lower share count.
Adonis contributed $59-million of revenue to Metro in the second quarter, which ended March 10.
Analysts expect the retail food industry will face big challenges in 2012 with intensifying competition from Wal-Mart ahead of the arrival in 2013 of Target.
However, Metro is a preferred food retailer for many industry observers.
Besides its own operations, Metro also owns a stake in convenience store operator Alimentation Couche-Tard, which announced earlier Wednesday that it's making its first major European acquisition.
Metro is Quebec's leading grocery chain with nearly 34 per cent market share. It has more than 65,000 employees in Quebec and Ontario.
The Montreal-based company operates a network of close to 600 food stores under several banners including Metro, Metro Plus, GP, Super C and Food Basics, as well as over 250 drugstores under the Brunet, Brunet Plus, Clini Plus, The Pharmacy and Drug Basics banners.