Metro International Swings To Profit In 2Q, But Margins Falling

By: E&P Staff Metro International, the big publisher of free commuter dailies around the world, reported Monday that it returned to profitability in the second quarter -- but that profit margins at its papers have fallen to single digits.

Luxembourg-based Metro said it recorded a net profit of $900,000 in the second quarter, compared to a $4.6 million profit in the 2006 second quarter. Metro reported a loss in the first quarter of this year.

Net sales increased by 6.9% to $119.8 million from $112.1 million a year ago. Excluding newspapers sold off or closed in Finland and Poland, sales growth was 11.7%, Metro said.

The average 12-month rolling margin, calculated by Metro as earnings before interest and taxes, on operations older than three years has fallen to 9.9% from 14% in the first quarter of 2007. Metro said this was due to lower margins at its Swedish papers, and the inclusion of its New York City paper for the first time. Excluding New York the second-quarter margin would be 11.6%, it said.

"Margins in Denmark, although still very strong, have declined due to competitive pressure; French margins are lower due to higher circulation costs and lower volumes following ad rate increases; and US margins are lower due to investments in the sales forces and marketing events that have driven sales growth of 13% in the U.S., Metro President and CEO Pelle Tornberg said in a statement.

He added that the New York paper's margins "are gradually improving."

Metro publishes free commuter papers in over 100 major cities in 20 countries across Europe, Asia, and North and South America.


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