(Adds details, comments from conference call, closing stock price. Changes dateline, previous TORONTO)
By Susan Taylor
OTTAWA, Dec 13 (Reuters) - Second-quarter profit at Empire Co Ltd EMPa.TO rose nearly 5 percent, the company said on Thursday, bettering analyst expectations largely on gains at its Sobeys supermarket chain, Canada’s second biggest.
Net income increased to C$58.4 million ($57.2 million), or 89 Canadian cents a share, from C$55.8 million, or 85 Canadian cents a share, in the same period a year earlier.
On average, analysts polled by Reuters Estimates expected a profit of 86 Canadian cents a share before exceptions.
“Our growth in Q2 earnings before capital gains and other items is largely the result of having a 100-percent ownership of Sobeys following the privatization completed last June,” Chief Executive Paul Sobey said on a conference call with analysts.
“Sobeys continued to generate solid same-store sales growth and operating income resulting from consistently competitive pricing and programs, innovation, cost-management initiatives and improving day-to-day execution.”
Empire acquired the 28 percent of Sobeys stock that it did not already own and took the company private in a C$1.06 billion deal in June.
Earnings before capital gains and other items rose to C$59.9 million, or 91 Canadian cents a share, from C$49.8 million, or 76 Canadian cents a share, a year earlier.
Revenue for the Stellarton, Nova Scotia-based company was up 3.9 percent at C$3.48 billion. Sales at Sobeys stores open at least one year increased by 2.3 percent.
Revenue got a C$103.5 million boost in the quarter from Achille de la Chevratier Ltee stores, which Empire acquired in August, and Thrifty Foods stores, acquired in September for C$261.8 million.
“Competition coast to coast, but particularly in Ontario, is intense,” Sobeys Chief Executive Bill McEwan told analysts. “In spite of some persistent challenges and in spite of some rather radical competitive activity, we continue to make progress.”
The company, which will pay a dividend of C$0.165 per share on Jan. 31, added 26 stores in the quarter.
Empire shares rose 3 percent, or C$1.38, to close at C$43.40 on the Toronto Stock Exchange on Thursday. So far this year, the stock has gained about 5 percent. ($1=$1.02 Canadian) (Reporting by Jonathan Spicer and Susan Taylor; Editing by Peter Galloway)