April 15, 2008 / 7:17 PM / in 10 years

UPDATE 1-Competition hurts grocer Metro's profit

(Adds details, stock price)

TORONTO, April 15 (Reuters) - Grocery chain Metro Inc MRUa.TO reported a 6 percent dip in second-quarter profit on Tuesday, as competition in the key province of Ontario hurt results.

Canada’s third-biggest grocer said earnings fell to C$58.1 million ($57 million), or 51 Canadian cents a share, from a profit of C$61.8 million, or 53 Canadian cents per share, in the same period last year.

Sales inched higher to C$2.37 billion from C$2.36 billion, Metro said.

“Although lower than last year due to the competitive environment that still prevails in Ontario, these results are an improvement over those of the first quarter of the current fiscal year,” the company said in a statement.

Metro also declared a quarterly dividend of 12.5 Canadian cents per share, an increase of 8.7 percent over the dividend for the same quarter last year.

Canadian grocers have been hurt by a price-chopping campaign initiated by sector leader Loblaw Cos (L.TO) as a strategy to keep its customers from straying to Wal-Mart Stores Inc (WMT.N).

Metro operates about 750 food stores under such banners as Metro, A&P, Loeb, Food Basics and Marche Richelieu. It also runs about 260 pharmacies under the Brunet, Clini Plus, The Pharmacy and Drug Basics names.

Metro’s shares were up 5 Canadian cents at C$24.09 shortly after the results were released.

$1=$1.02 Canadian Reporting by Wojtek Dabrowski; editing by Rob Wilson

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