Metro Inc Begins 2014 With Stagnant Growth (Distagro)

First quarter ended December 21, 2014 - Quebec grocery leader Metro Inc reports no growth.. again.

Sales: $2701.3 million (vs $2704.7m -0.1%) on account of competition (same store sales down 0.5% but still better than the second half of 2013 when they were down -1.8% & -0.9%).

  • note - over the past year sales declined each quarter: 4q13 -8.8%, 3q13 -0.8%, 2q13 -2.6%.

Margins:  Gross margins DOWN: 19.0% -> 18.8% attributable to new merchandising strategies to improve sales.  Operating costs were stable.  ebitda/sales: 6.3% (vs 6.8%), adj ebtida/sales: 6.6% (vs 6.8%).

Ebitda:  -7.3% -> $171.1 million (vs $184.5m).  When adjusted for closure costs associated with a new Laval distribution centre: ebitda -3.8% -> $177.5 million.

Costs:  Average financing rate up (4.5% -> 5.4%; 2013 $330m credit facility carried a lower interest rate), Depreciation & Ammortization: flat at $41.0m, net financial costs down: $13.0m -> $10.3m.

Taxes:  At 25.4% the effective tax rate remained unchanged; For the 1Q14 income taxes totaled $33.7m down from $37.7m last year.

Earnings: $99.2 million (vs $117.3m -15.4%) or $1.06 per share (vs $1.19).  Last year's results included a $7m gain from the sale of foodservice unit Distagro to Sysco.  Adjusted for one time tax expense ($6.4m in 1q2014) and other one time items adjusted earnings are down by $7 million ($103.9m vs $110.9m / per share -1% to $1.11 vs $1.12).

  •           $13.1m of earnings (13% of company total) came from ownership of Couche-Tard; this is down from $19.0m the previous year.
  • net earnings for the two quarters immediately previous to current period:  4q13 -44.25, 3q13 +2.3%.

Dividend: On January 27, 2014 the board approved a hike to $0.30 (+20%).

Debt:  quarterly debt ratio now stands at 22.5% (vs 22.4% at Sobeys).

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