Ahold Delhaize reports a strong quarter with sales growth and higher margins driven by synergies
- Net sales increased by 67.3% to €16.1 billion (up 64.6% at constant exchange rates)
- Net income increased by 68.2% to €355 million (up 66.5% at constant exchange rates)
- Pro forma net sales increased by 3.4% to €16.0 billion (up 1.8% at constant exchange rates)
- Pro forma underlying operating income increased by €64 million to €626 million, up 11.4%
- Pro forma underlying operating margin increased to 3.9%, compared to 3.6% in Q2 2016
- Strong free cash flow of €400 million, guidance of €1.6 billion for full year 2017 reiterated
- Integration on track, with net synergies of €117 million delivered in the first half of 2017
- Total expected merger synergies increased to €750 million, reinvesting €250 million in our brands
Watch the video Spotlight on Q2 2017
Zaandam, the Netherlands, August 9, 2017 - Ahold Delhaize, a leader in supermarkets and eCommerce with market-leading local brands in 11 countries, published strong second quarter 2017 results today, driven by an improvement in sales and merger synergies resulting in higher margins.
Dick Boer, CEO of Ahold Delhaize, said: “We are pleased to report a strong set of results. Sales improved across the board and the group underlying operating margin increased by 30 basis points to 3.9% as merger synergy savings continued to track ahead of projections.
“A year after the merger between Ahold and Delhaize, the integration of the two companies is fully on track and delivering results as we continue to focus on strengthening our local brands through our Better Together strategy. We expect to achieve gross synergies of €750 million by 2019, of which €250 million will be reinvested in our brands.
“We look toward the second half of the year with confidence and expect our underlying operating margin for the full year 2017 to be broadly in line with the first half of the year, with €220 million net synergies for 2017.
“We have a successful omni-channel strategy in place that combines a thriving network of brick-and-mortar stores with leading online businesses. We are accelerating investments in our eCommerce operations to further unlock their promising growth potential. We expect close to €3 billion of online consumer sales in 2017, putting us on track to achieve nearly €5 billion by 2020.
“In the United States, our sales performance improved with returning inflation, while margins expanded on the back of strong synergy savings. Our U.S. brands are well-placed in a fast-changing competitive landscape. We continue to improve the price positioning of our Ahold USA brands and have developed effective competitive plans for Food Lion, facing new competition.
"In the United States we are making good progress in setting up Retail Business Services, combining scale and building expertise in own brands, digital and IT. Additionally, we are implementing a brand-centric operating model to strengthen local competitiveness in our markets and we expect a one-off restructuring charge of €70 million related to this, mainly in 2017.
“The Netherlands reported another strong quarter with robust sales growth in both supermarkets and eCommerce. Albert Heijn continues to improve and innovate its assortment, providing a fresh and healthy offering and more convenient solutions for customers. We are proud that bol.com was recognized as the strongest retail brand in the Netherlands, for three years in a row.
“We continue to return excess capital to shareholders through our ongoing share buyback program of €1 billion, which we expect to complete by the end of 2017. Furthermore, we reiterate our guidance of €1.6 billion free cash flow for the year after €1.8 billion in capital expenditure.”
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Forward-looking statements are subject to risks, uncertainties and other factors that are difficult to predict and that may cause actual results of Koninklijke Ahold Delhaize N.V. (the “Company”) to differ materially from future results expressed or implied by such forward-looking statements. Such factors include, but are not limited to risks relating to competition and pressure on profit margins in the food retail industry; the impact of the Company’s outstanding financial debt; future changes in accounting standards; the Company’s ability to generate positive cash flows; general economic conditions; the Company’s international operations; the impact of economic conditions on consumer spending; turbulences in the global credit markets and the economy; the significance of the Company’s U.S. operations and the concentration of its U.S. operations on the east coast of the U.S.; increases in interest rates and the impact of downgrades in the Company’s credit ratings; competitive labor markets, changes in labor conditions and labor disruptions; environmental liabilities associated with the properties that the Company owns or leases; the Company’s inability to locate appropriate real estate or enter into real estate leases on commercially acceptable terms; exchange rate fluctuations; additional expenses or capital expenditures associated with compliance with federal, regional, state and local laws and regulations in the U.S., the Netherlands, Belgium and other countries; product liability claims and adverse publicity; risks related to corporate responsibility and sustainable retailing; the Company’s inability to successfully implement its strategy, manage the growth of its business or realize the anticipated benefits of acquisitions; its inability to successfully complete divestitures and the effect of contingent liabilities arising from completed divestitures; unexpected outcomes with respect to tax audits; disruption of operations and other factors negatively affecting the Company’s suppliers; the unsuccessful operation of the Company’s franchised and affiliated stores; natural disasters and geopolitical events; inherent limitations in the Company’s control systems; the failure or breach of security of IT systems; changes in supplier terms; antitrust and similar legislation; unexpected outcome in the Company’s legal proceedings; adverse results arising from the Company’s claims against its self-insurance programs; increase in costs associated with the Company’s defined benefit pension plans; and other factors discussed in the Company’s public filings and other disclosures.
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