Ahold Delhaize reports another strong quarter with operating income up 10.5% at constant exchange rates
- Net sales of €14.9 billion, up 2.5% at constant exchange rates
- Net consumer online sales up 23.2% at constant exchange rates
- Underlying operating margin up 0.2%-point to 4.0%, underlying operating income €600 million
- Net income up 25.7% at constant exchange rates to €407 million
- Improved comparable sales growth in the U.S., with synergies driving further margin expansion
- Encouraging sales trends in Belgium as a result of improved commercial and operational performance
- Strong free cash flow of €441 million, up €244 million, mainly due to improved net working capital
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Zaandam, the Netherlands, May 9, 2018 - Ahold Delhaize, one of the world’s largest food retail groups and a leader in both supermarkets and e-commerce, reports another strong quarter with solid sales growth and higher margins, resulting in marked growth of operating income and strong growth of net income at constant exchange rates.
Dick Boer, CEO of Ahold Delhaize, said: "We are pleased with our performance during the first quarter, proving that the execution of our Better Together strategy continues to bear fruit, delivering sales growth and synergies throughout the business. Benefiting from our scale and building on our leading positions on the U.S. East Coast and in Europe, our great local brands demonstrated their capabilities and agility to meet rapidly changing consumer needs and preferences.
“First-quarter sales rose 2.5% at constant exchange rates to €14.9 billion, supported by a solid performance in our brick-and-mortar stores and ongoing strong growth of online businesses. Our underlying operating margin expanded to 4.0% from 3.8% in the same period last year, primarily driven by synergies. Net consumer online sales grew 23% across the group, maintaining our momentum to realize nearly €5 billion in online consumer sales by 2020.
"The U.S. brands, which are reported as one segment as of January 1, reported improved comparable sales growth excluding gasoline of 2.8%, supported by the favorable impact of holidays and some weather impact. The underlying operating margin rose 30 basis points to 4.3%, driven by synergies and with our “save for our customers” program offsetting cost inflation. In a competitive market with new entrants, Food Lion reported its 23rd consecutive quarter of comparable volume growth, as its "Easy, Fresh and Affordable" program is now deployed in more than 500 of its stores. Furthermore, online sales grew 9% across all our U.S. brands.
"The Netherlands reported comparable sales growth of 3.2%. Bol.com and ah.nl continued their strong performance, driving the 28% growth in net consumer sales, supported by ongoing investments. In Belgium, Delhaize reported encouraging sales figures, with comparable sales growth of 4.1%, as new management is starting to implement commercial and operational improvements. In Central and Southeastern Europe, Romania posted 19% sales growth, driven by strong comparable sales growth and new store openings, while sales in Greece were impacted by competition recovering, re-opening and remodeling their stores.
“We delivered €100 million of net cumulative synergy savings in the quarter, of which €44 million is incremental to the first quarter last year, and we remain firmly on track to realize €750 million of gross synergies by 2019, of which €250 million are to be reinvested in our brands.
"Free cash flow was €441 million, putting us on track to deliver on our target of around €1.9 billion, allowing us to keep investing in our omni-channel offering to provide customers with a convenient shopping experience and competitive prices.
“With Frans Muller succeeding me as CEO on July 1, I am confident our strong leadership team will continue to drive innovation and growth in stores and online as we create value for all our stakeholders and live up to our promise to be a better place to shop.”
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