April 23, 2009 / 11:35 AM / in 9 years

UPDATE 2-Metro Inc posts higher earnings, boosts dividend

* EPS C$0.68 vs C$0.48

* Boosts dividend by 10 pct to C$0.1375/shr

* Same store sales rise 7.3 percent

* Shares down 0.2 percent at C$37.57 (Adds background and analysts’ comments. Updates share price)

By Scott Anderson

TORONTO, April 23 (Reuters) - Metro Inc MRUa.TO, Canada’s third-largest grocer, reported a higher quarterly profit and boosted its dividend by 10 percent on Thursday as it benefited from the effects of the economic downturn.

The supermarket chain -- which operates in Quebec and Ontario under such banners as Metro, A&P, Dominion and Food Basics -- made gains on higher food prices as well as a recession-driven shift in consumer trends toward simpler, less expensive meals and away from restaurant visits and high-end goods.

The company said its same-store sales, a figure that tracks the performance of stores open for at least a year, rose 7.3 percent, helped by higher prices and increased sales volumes.

“While food price inflation is expected to ease in the latter half of the year, (Metro) remains well positioned to capitalize on changing consumer spending patterns and should be able to continue to generate double-digit earnings growth,” Irene Nattel, an analyst at RBC Capital Markets, in Montreal, said in an investor note.

The company’s shares, which have risen about 60 percent in the past year, were off 0.7 percent at C$37.39 on the Toronto Stock Exchange on Thursday morning, mirroring general weakness in the consumer sector.

Metro boosted its quarterly dividend by 10 percent to 13.75 Canadian cents. It earned C$76.3 million ($61.8 million), or 68 Canadian cents a share, in the second quarter ended March 14, up from C$54 million, or 48 Canadian cents a share, a year earlier.

Revenue was C$2.55 billion, up 7.5 percent from C$2.37 billion.

Analysts were expecting an average of 61 Canadian cents a share and revenue of C$2.47 billion, according to Reuters Estimates.

Despite the strong quarter, David Hartley, an analyst at BMO Capital Markets, said the true test of how well the company is faring will come in its next quarterly report.

“The environment was conducive for them,” Hartley said. “We didn’t have a true view of how resilient their business is in the slowdown in this quarter. I think we will get a better view of that next quarter.”

$1=$1.23 Canadian Reporting by Scott Anderson; editing by Peter Galloway

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