Metro International reports poor third quarter results

by Jacquie Bowser, Brand Republic 22-Oct-07, 11:15

LONDON - Metro International has unveiled disappointing third quarter results, reporting a loss of $18.2m (£8.9m), more than double that of last year, as margins fell across Europe and the US.

The loss is more than twice that of last year's $8.8m deficit. Part of the operating loss, $5.5m, is the result of investments in online activity and consulting costs relating to a strategic review and contractual payments to the former chief executive, Pelle Tornberg.

Chris Spalding, interim chief executive of Metro International, said: "The third quarter is a seasonally weak quarter for Metro and this has been compounded by low ad volumes in the Swedish market."

French margins were lower due to higher circulation costs but ad volumes were reportedly increasing in the market, while Spain's total sales were lower, but the company core business is showing encouraging underlying growth in price and volume.

US margins were lower due to bad debt provisions and a drop in sales in Boston and Philadelphia, although New York recorded sales growth of 18% in the third quarter.

Spalding said: "The environment in which Metro operates is changing fast. The number of free newspaper competitors is increasing in most markets and online development and ongoing media convergence impact Metro's business strategy.

"These various changing factors not only pose a threat to current strategy but also highlight new opportunities for development and growth."

Earlier this month, Metro International began a strategic review of its short and long-term agenda, with a view to strengthening core markets and enhancing its product, which may include new launches or franchises.

The company said non-core operations will potentially be partly or fully divested.

Per Mikael Jensen, Metro International's new chief executive, who is due to join the company on November 1, will continue the company's evaluation of future action plans.

Metro International publishes its free newspapers in more than 100 cities across Europe, the US and Asia, including Paris, Amsterdam, New York and Hong Kong.