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Metro International Luxembourg, 21st July 2008 - Metro International S.A. ("Metro") (MTROA, MTROB), today announced its financial results for the second quarter ended 30th June 2008. The Group's consolidated results have been prepared according to International Financial Reporting Standards ("IFRS").
HIGHLIGHTS FOR Q2 2008
* Operational sales decreased by 4.1 percent to EUR 77.3 million (2007: EUR 80.6 million), excluding closed/divested operations and Bostad. In real terms adjusting for the effect of the USD depreciation the sales decrease is 2 percent.
* Total net sales decreased by 8.6 percent to EUR 81.5 million (2007: EUR 89.2 million).
* The operating profit was EUR 0.6 million (2007: EUR 3.6 million profit).
* The contribution from subsidiary newspaper operations was an operating profit of EUR 5.4 million (2007: EUR 7.2 million profit).
* Metro International recorded a net loss of EUR 1.9 million (2007: net profit EUR 1.0 million).
* Schibsted will acquire 35 percent of the shares in Metro's Swedish subsidiary at a purchase price of SEK 350 million. The transaction is subject to regulatory approval and is currently being reviewed by the competition authorities. This pending transaction does not affect performance in Q2 2008.
* JP/Politiken, the Danish newspaper group, acquired 24.5 percent of metroXpress Denmark in exchange for transferring the 24 Timer newspaper to the Metro group. 24 Timer's results will be consolidated from Q3 2008 onwards.
* In June, Metro acquired an additional 14 percent in our Mexican joint venture operation taking our stake to 49 percent - the maximum allowed foreign ownership
* Following the decision to report in Euros (EUR), translation differences are restricted to the non-Euro businesses. Year-on-year the currency fluctuations increase or decrease the reported revenues as follows - US and Hong Kong revenues are reduced by 16 percent.
* The net loss per share for the second quarter 2008 was EUR 0.004 (2007: profit EUR 0.002).
FIRST HALF RESULTS
* Operational sales decreased by 3.7 percent to EUR 146.3 million excluding closed/divested operations and Bostad (2007: EUR 151.8 million). In real terms adjusting for the effect of the USD depreciation the sales decrease is 1.7 percent.
* Total net sales decreased by 7.4 percent to EUR 154.9 million (2007: EUR 167.3 million).
* The operating loss was EUR 4.9 million (2007: EUR 5.2 million loss).
* The contribution from subsidiary newspaper operations was an operating profit of EUR 5.0 million (2007: EUR 3.8 million profit).
* Metro International recorded a net loss of EUR 8.3 million (2007: net loss EUR 9.8 million).
Per Mikael Jensen, Chief Executive Officer and President of Metro International, said: "Metro International's second quarter 2008 has seen much activity with deals in Sweden, Denmark and Mexico which will contribute to earnings from Q3 2008. The three deals are in line with the strategy which was approved by the Board in May and unveiled at the Capital Markets Day on 3rd June in Amsterdam. Consolidating some of our markets is an ongoing process.
On a like-for-like basis, excluding divested and closed operations, Metro's operational sales declined by 4.1 percent year-on-year. In real terms, after adjusting for the depreciation of the US dollar, sales decreased by 2.0 percent. This is a commendable result in difficult market conditions. As usual, the underlying performance in most of our markets is quite good but a few operations drag the Group results down. Those are Spain and the US most importantly and secondly Denmark and Portugal. All markets except for US, Spain, Denmark and Canada showed a profit in Q2 2008.
In markets like Sweden, Netherlands, Hong Kong, Latin America and others, Metro continues to perform very well with profit margins in double digits.
The advertising market is responding to gloomy economic news around the world but Metro is answering by emphasising our unique access to the metropolitan demographic and our price differential against paid for newspapers. We are also continuing to drive costs down in all of our countries and at HQ.
The deal with Schibsted was announced on 21st May and it is expected to deliver exciting opportunities for new advertisement packages for customers that will drive additional revenues in Sweden. Completion of the transaction is subject to regulatory approval. Conclusion of the review by the competition authority is expected in Q4 2008. The Schibsted deal has no impact on Q2 2008 results.
The deal with JP/Politiken ("JP/Pol") in Denmark was announced on 23rd May and it is expected to deliver synergies across the two titles, metroXpress and 24 Timer in the Danish market. JP/Pol acquired 24.5 percent of metroXpress and 24 Timer became part of Metro's growing stable of group titles. The deal was finally signed in late June so the first results will be included in the Q3 2008 results.
On 11th July we announced that we had increased our stake in the Mexican joint venture operation to 49 percent. The Mexican JV has been performing well and is delivering monthly profits on a regular basis and has been profitable in H1 2008. Group EBIT in the second quarter has declined by EUR 3.0 million to EUR 0.6 million profit year-on-year. The source of the decline is our controlled operations (-EUR 2.0 million), Joint Ventures (-EUR 0.2 million), Websites (-EUR 0.3 million) and HQ & Other (-EUR 0.2 million).
In our JV operations Brazil and Mexico have moved into profitability for the quarter and franchise fees have been maintained at last year's level.
The launch of the new French website in March has been followed by the launch of the new Spanish website on 23rd June. Our capital spend on the global Online project in Q2 2008 was EUR 0.4 million which brings our capital spend to date to EUR 2.6 million. This development cost is being recharged to each country as it rolls out the new website.
HQ costs are at the same level as in 2007 but cost-saving measures have been implemented in July to reduce headcount by 14 percent which will deliver lower costs in Q3 2008.
Outlook and Risks
Conditions for advertising in Europe and North America are gloomy, regardless of the category. Markets for advertising in paid-for titles have been hit badly in some countries - particularly US, UK and Southern Europe - and less so in other markets in Northern Europe.
In South America, Asia and Russia, the outlook is much brighter. Spending is expected to grow significantly in the market where Metro is published, in some areas with double digits. This is partly due to the better general economic situation, but also due to an increase in media spending.
With this mixed outlook Metro is obviously most vulnerable in the US, Canada and Europe. Hence, the defined strategy to grow in Asia, South America and Russia becomes even more relevant.
Per Mikael Jensen
CEO and President Metro International
For further information, please visit www.metro.lu , email info@metro.lu or contact:
Per Mikael Jensen, CEO & tel: +44 (0) President 20 7016 1300 Frank Mooty, CFO tel: +44 (0) 20 7016 1300 Birgitta Henriksson, IR contact tel: +46 (0) 708 12 86 39
ABOUT METRO INTERNATIONAL AND METRO
Metro is the largest international newspaper in the world. Metro is published in over 150 major cities in 21 countries across Europe, North & South America and Asia. Metro has a unique global reach - attracting a young, active, well-educated Metropolitan audience of over 20 million daily readers. Metro's advertising sales have grown at a compound annual rate of 38% since the launch of the first edition in 1995.
Metro International 'A' and 'B' shares are listed on the OMX Nordic Exchange's Nordic List under the symbols MTRO SBD A and MTRO SBD B.
CONFERENCE CALL
The company will host a conference call today at 10.00 (CET). The call will also be webcast on Metro's website at www.metro.lu. To participate in the conference call, please dial in on the following numbers:
