August 6, 2009 / 9:05 PM / 9 years ago

UPDATE 2-Metro Inc profit climbs on prices, productivity

* EPS C$1.01/shr vs C$0.81/shr year earlier

* Revenue rises 4.3 pct

* Same store sales rise 4.2 pct

* Stock climbs 3.2 percent to C$35.50 (Recasts, adds OTTAWA dateline)

OTTAWA, Aug 6 (Reuters) - Metro Inc MRUa.TO, Canada’s third-largest grocer, said on Thursday that improved operations in Ontario helped push its quarterly profit up 22.5 percent, beating expectations.

The supermarket chain — which operates in Quebec and Ontario under such banners as Metro, A&P, Dominion and Food Basics — also posted record high sales in the quarter, which it said resulted from better merchandising.

In a note, RBC Capital Markets analyst Irene Nattel said Metro’s results benefited from food price inflation and productivity improvements.

Last year, Metro began consolidating its five Ontario supermarket banners under the Metro name, to try to boost efficiency and growth. In the same period it also overhauled its computer system to try to boost efficiency.

The company has now converted 128 of 159 Ontario stores to the Metro banner, spending C$2.9 million in its financial third quarter and C$8.7 million in the first 40 weeks of 2009 on the change.

Metro said it earned C$112.6 million ($105.1 million), or C$1.01 a share, in the quarter ended July 4, up from C$91.9 million, or 81 Canadian cents a share, a year earlier.

Revenue climbed 4.3 percent to C$3.51 billion.

Same-store sales, which track the performance of stores open for at least one year, rose by 4.2 percent on higher prices and increased sales volumes.

Analysts were expecting profit of 93 Canadian cents a share and revenue of C$3.53 billion, on average, according to Reuters Estimates.

Metro increased its dividend by 10 percent to 13.75 Canadian cents a share.

The company’s shares closed at C$35.20 on Thursday on the Toronto Stock Exchange. ($1=$1.08 Canadian) (Reporting by Susan Taylor, additional reporting by Isheeta Sanghi in Bangalore; editing by Peter Galloway)

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