Metro ‘gloomy’ outlook for Europe and N-America

The Metro International ‘Q2 2008′ and ‘first 6 months 2008′ results show an overall decline in revenues compared to the same periods in 2007. Market conditions (competition) and the economic situation (recession) apparently had an impact.

For the second quarter operational sales decreased by 4.1% while total net sales decreased by 8.6%. The operating profit was €0.6m (2007: €3.6 million profit). Metro recorded a net loss of €1.9m (2007: net profit €1.0m).

In Q2 Metro sold 35% of the Swedish shares to Schibsted and 24.5% of the Danish operation to JP/Politiken. The ‘price’ of this last operation was free daily “24timer” which now is part of the Metro group.

For the first six months of 2008 operational sales decreased by 3.7% while total net sales decreased by 7.4%. The operating loss was EUR 4.9 million (2007: €5.2m loss. The net loss of €8.3m was only slightly less than the loss in 2007 (€9.8m).

According to CEO Per Mikael Jensen Spain and the US were the most problematic markets, followed by Denmark and Portugal. In particular these last two markets are remarkable as they were mentioned in the 2007 annual report as ‘very strong’. Heavy competition in both Denmark and Portugal might be explanations.

“All markets except for US, Spain, Denmark and Canada showed a profit in Q2 2008″ according to the press release. Also Canada was still ‘very strong’ in 2007.

Double digits profit margins are realized in “Sweden, Netherlands, Hong Kong, Latin America and others”. Which means that Sweden is back on track after the problems in the last quarter of 2007.

The outlook for the future is mixed: “Conditions for advertising in Europe and North America are gloomy, regardless of the category. (…) 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.”

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