Luxembourg, 22nd October 2007 - Metro International S.A. ("Metro")
(MTROA, MTROB), today announced its financial results for the third
quarter ended 30th September 2007. The Group's consolidated accounts
have been prepared according to International Financial Reporting
Standards (IFRS).
HIGHLIGHTS FOR Q3 2007
* Net sales increased by 5.1% to US$ 91.5 million (2006: US$ 87.1
million).
* Group operating loss of US$ 18.2 million (2006: US$ 8.9 million
loss, excluding divestments). Reduced margins in Sweden, France
and Spain and investments in the US impacted the results
negatively
* US$ 5.5m of the variance is due to investment in Online,
consulting costs relating to the strategic review and contractual
payments to the former chief executive.
* Contribution from subsidiary newspaper operations: operating loss
of US$ 7.3 million (2006: US$ 2.3 million loss).
* The average 12 month rolling EBIT margin on operations older than
3 years is 9.6%.
* Net loss of US$ 19.4 million (2006: net profit US$ 2.6 million).
2006 results included a capital gain of US$ 12.3m from the
disposal of Finland in the third quarter 2006.
FIRST NINE MONTHS RESULTS
* 7.3% year- on- year increase in net sales to US$ 313.8 million
(2006:US$ 292.4 million).
* Group operating loss of US$ 25.1 million ( 2006: loss of US$ 6.3
million excluding the capital gain of $ 12.3m from the sale of
Finland).
* Contribution from subsidiary newspaper operations is a loss of
US$ 2.0 million (2006: US$ 10.6 million profit).
* Net loss of US$ 32.7 million ( 2006: net profit of US$ 1.5
million).
Chris Spalding, Interim CEO of Metro International, commented:"The 3rd quarter is a seasonally weak quarter for Metro and this has
been compounded by low ad volumes in the Swedish market. Third
quarter EBIT has been impacted by one-off costs of $4.7m for
strategic consultancy and contractual payments to the former chief
executive, who has worked for and built Metro International since it
was launched 12 years ago.
In real terms, allowing for the depreciation of the US dollar, owned
operations net sales growth excluding Bostad and the divested
operations in Finland and Poland, was 2.7% year-on-year. This is
primarily due to lower sales for Green Metro in Sweden which declined
by 13%. Excluding Sweden, the rest of the group delivered 7.4% growth
with especially strong growth in Holland, Portugal, France, Italy,
New York and Hong Kong. France achieved record sales in September.
Excluding the results from the Polish and Finnish divestments, the
owned Metro operations delivered $6m lower EBIT than last year ($7m
loss v $1m loss) due to variances in Sweden, France, Spain and the
US. In Sweden, the improvements we saw in the 2nd quarter have been
followed by disappointing results in the 3rd quarter. Although
discounts are being controlled and prices increased, Green Metro
volumes have declined against the strong 3rd quarter sales in 2006,
partly because of the 2006 parliamentary elections which led to
strong sales figures last year. Bostad is operating at slightly
below break-even level and we continue to evaluate opportunities to
generate a profit in 2008.
French margins are lower due to higher circulation costs but ad
volumes are increasing following the latest readership survey which
showed strong readership numbers for Metro. October sales in France
are expected to be strong; Spain's total sales are lower than last
year's 3rd quarter but the core agency business is showing
encouraging, underlying growth in prices and volumes; margins in
Denmark, although still strong, have declined due to competitive
pressure; and US margins are lower due to bad debt provisions and a
drop in sales in Boston and Philadelphia. New York sales growth is
18% in Q3.
Higher margins and good sales growth are features of several of our
businesses including Holland, Italy, Portugal and Hong Kong.
Excluding exceptional bad debt provisions, New York's margins are
gradually improving based on strong sales growth.
Our joint venture operations have delivered an additional $0.4m EBIT
in Q3 despite start up losses in Brazil. The improvement arises from
the operations in Mexico, Korea and Canada which all continue to
deliver improving profits.
On 10th September, Metro commenced a new distribution deal to provide
Metro newspapers at the gates to British Airways aircraft prior to
departure. Metro is the only free newspaper supplying BA flights.
Seven countries are included in the deal - France, Czech Republic,
Portugal, Denmark, Italy, Spain and Finland - and more may follow.
Metro's board recently confirmed our commitment to developing our
Online business with pilot web sites in France, Spain and Holland. 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 $3.1m for the year. Further investments will be
decided based on the performance of the pilots.
Metro launched its first city edition in Stockholm 12 years ago, and
has since successfully expanded its innovative free sheet concept to
more than 20 countries, with more than 20 million daily readers.
Metro combines a local presence and understanding of each market with
the synergies of being a global brand. The group has recently
strengthened its position in several markets by launching national
editions and is today the largest newspaper in 9 countries. The
rationale has been to create a strong media brand name and act fast
to build a solid base of readers across many attractive markets.
The environment in which Metro operates is changing fast. The number
of free newspaper competitors is increasing in most markets and
online development and ongoing media convergence impact Metro's
business strategy. These various changing factors not only pose a
threat to current strategy but also highlight new opportunities for
development and growth.
In order to ensure that the resources of Metro are invested in the
most efficient way, the Company has initiated a strategic review. The
strategic review has mainly focused on the company's strategy going
forward as it relates to certain underperforming operations. The
findings of the review outlines both a short and long term agenda
including actions to strengthen core markets as well as guidance on
turning around non-performing editions by identifying and building
strategic clusters, which might include new launches or franchises.
Non-core operations will potentially be partly or fully divested.
In addition, the strategic review emphasises the importance of
further developing the product concept, both online and offline, and
increasing Metro's differentiation to its competition and identifying
key similarities in the experience for readers and promoting them.
The readers expect more from Metro as competition has intensified, so
quality and exclusivity of content will be an important focus moving
forward. Through a further enhanced product, Metro will secure its
role as a highly-valued partner for advertisers, on a global,
regional and local level. The evaluation of future action plans will
continue and will be led by Metro's new Chief Executive Officer, Per
Mikael Jensen, who will join the Company on November 1st.
For further information, please visit www.metro.lu, email
info@metro.lu or contact:
Chris Spalding, Interim CEO tel: +44 (0) 20 7016 1300
Frank Mooty, CFO tel: +44 (0) 20 7016 1374
Birgitta Henriksson, IR contact tel: +46 (0) 708 12 86 39
Metro is the largest and fastest growing international newspaper in
the world. Metro is published in over 100 major cities in 21
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 'A' and
'B' shares are listed on the OMX Nordic Exchange's Nordic List under
the symbols MTRO SBD A and MTRO SBD B. .
CONFERENCE CALL
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:
METRO INTERNATIONAL S.A.: FINANCIAL RESULTS FOR THE THIRD QUARTER ENDED 30th SEPTEMBER 2007
| Source: Metro International S.A.
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