METRO INTERNATIONAL S.A.: FINANCIAL RESULTS FOR THE SECOND QUARTER
ENDED 30th JUNE 2007
Luxembourg, 23rd July 2007 - Metro International S.A. ("Metro") (MTROA, MTROB), today announced its financial results for the second quarter ended 30th June 2007. The Group's consolidated accounts have been prepared according to International Financial Reporting Standards (IFRS).
HIGHLIGHTS FOR Q2 2007
* Net sales increased by 6.9% to US$ 119.8 million (2006: US$ 112.1 million). Excluding Bostad, other income and divested operations (Finland & Poland) the sales growth was 11.7%: in real terms sales growth was 4.5%. * Group operating profit of US$ 4.6 million (2006: US$ 6.5 million profit) is below 2006 due to reduced margins in Sweden, France and Denmark and investments in the US and Online. Q206 also benefited from advertising spend related to the Swedish parliamentary elections. * Contribution from subsidiary newspaper operations: operating profit of US$ 9.5 million (2006: US$ 11.3 million profit). * The average 12 month rolling EBIT margin on operations older than 3 years has fallen to 9.9% from 14% in Q107. This is due to lower margins in Sweden and the inclusion of New York for the first time. Excluding New York the Q207 margin would be 11.6%. * Net HQ costs of US$ 5.5 million (2006: US$ 5.6 million) excluding franchise income * Net profit of US$ 0.9m (2006: US$ 4.6 million profit).
FIRST HALF RESULTS
* 8.3% year- on- year increase in net sales to US$ 222.3 million (2006:US$205.3 million); flat in real terms due to the decline in Bostad and Sweden's Metro * Total operating loss of US$ 6.9 million ( 2006: profit US$2.6 million). * Loss before tax of US$ 8.8 million ( 2006: profit US$0.4 million). * Net loss of US$13.4 million ( 2006: net loss of US$ 1.1 million).
Pelle Törnberg, President and CEO of Metro International, commented:
"The second quarter is a seasonally strong quarter for Metro and this is no different in 2007 as we delivered a return to profit in Q2. However, as we stated in the Q1 release, the business issues identified in Sweden continue to affect the results in Q2 although their impact is lessened as we progress through the quarter.
In real terms, owned operations net sales growth excluding Bostad and the divested operations in Finland and Poland, was 4.5% year-on-year. This result is not a complete surprise given the strong Q2 2006. Metro has shown strong sales growth in many markets including Holland, Italy, Portugal, and the US. However, price pressures in Spain, and low volumes in France and Sweden delivered modest growth in the quarter.
In Sweden, Q2 has been a period of turnaround for the Swedish titles. Bostad, the real estate product in Stockholm and Malmo has been stabilised at break-even but real sales are 30% lower than 2006. Green Metro has made significant progress. Despite a 7% real drop in sales versus Q206, margins are not significantly lower due to a stronger focus on customer profitability and cost control.
Sales for Sweden's Green Metro in May were close to 2006 levels and EBIT margin approached last year's level. However, Bostad remains at break-even, so in Q2 Sweden's EBIT variance is a negative $1.8m.
Group EBIT from operations is $1.8m lower at $9.5m. Margins in Denmark, although still very strong, have declined due to competitive pressure; French margins are lower due to higher circulation costs and lower volumes following ad rate increases; and US margins are lower due to investments in the sales forces and marketing events that have driven sales growth of 13% in the US.
Higher margins and good sales growth are features of many of our businesses including Holland, Greece, Portugal and Chile. New York's margins are gradually improving based on sales growth in excess of 20%. As we advised at the Q1 release, margins in the more than three year old editions for Q2 07 fall from 11.6% to 9.9% due to the inclusion of New York for the first time. We continue to develop the New York business to attract national advertising revenues.
Metro's board recently confirmed our commitment to developing our Online business with pilot web sites in France and Spain. We will test a new interactive approach in Metro's metropolitan areas to strengthen links with our readers and to provide advertisers with a cost-effective route to our unique demographics. The 2007 investment is now forecast at less than $4m for the year. Further investments will be decided based on the performance of the pilots. Our existing websites will continue to be developed to test alternative concepts eg Metrobloggen in Sweden.
Gross HQ costs are 6.6% higher than in Q206 at $6.7m. This is mainly due to the investment in Online. However, excluding Online and other business unit costs, the core HQ costs have remained flat at $5m. In real terms core HQ costs have declined by 7%. This is the result of an ongoing review of costs.
The selection process for a new chief executive is progressing well. For confidentiality reasons, the board is not in a position to make an announcement today, but it hopes to confirm the appointment of a new chief executive shortly.
For further information, please visit www.metro.lu, email email@example.com or contact:
Pelle Törnberg, President & CEO tel: +44 (0) 20 7016 1300 Frank Mooty, CFO tel: +44 (0) 20 7016 1374 Birgitta Henriksson, Brunswick Group, IR tel: +46 708 12 86 39 contact
Metro is the largest and fastest growing international newspaper in the world. Metro is published in over 100 major cities in 20 countries across Europe, North & South America and Asia. Metro has a unique global reach - attracting a young, active, well-educated Metropolitan audience of over 20 million daily readers. Metro's advertising sales have grown at a compound annual rate of 41% since the launch of the first edition in 1995.
Metro International S.A. 'A' and 'B' shares are listed on the Stockholmsbörsen 'MID CAP-List' under the symbols MTROA and MTROB.
The company will host a conference call today at 10.00 (CET). The call will also be webcast on Metro's website at www.metro.lu. To participate in the conference call, please dial in on the following numbers:
UK / International: +44 (0)20 8817 9301 Sweden: +46 (0) 8 505 202 70 US: +1 718 354 1226
A replay facility will be available shortly after the conclusion of the call at www.metro.lu
The full report with tables can be downloaded from the following link: