Ahold Delhaize sales growth increased to 2.1%, with strong synergy delivery resulting in margin expansion
- Net sales increased by 7.4% to €15.1 billion (up 10.9% at constant exchange rates)
- Net income increased by 54.0% to €362 million (up 59.5% at constant exchange rates)
- Pro forma net sales decreased by 1.1% to €15.1 billion (up 2.1% at constant exchange rates)
- Strong sales performance in the U.S., gaining market share across our brands
- Online businesses growing total net consumer sales by more than 20%
- Pro forma underlying operating margin increased to 3.9%, up 40 basis points compared to Q3 2016
- Strong free cash flow of €426 million, up €340 million, with guidance of €1.6 billion for FY 2017 reiterated
- Free cash flow for FY 2018 expected to increase, including capital expenditure to step up to €1.9 billion
- New €2 billion share buy back program for 2018, following completion of the €1 billion program in 2017
Watch the Spotlight on Q3 2017 video:
Zaandam, the Netherlands, November 8, 2017 - Ahold Delhaize, a leader in supermarkets and eCommerce with market-leading local brands in 11 countries, continued to show strong performance during the third quarter of 2017 with increasing sales growth and improved margins.
Dick Boer, CEO of Ahold Delhaize, said: “We reported a strong financial performance again this quarter as margins increased significantly, driven by synergies while savings from our "save for our customers" programs are continuously being reinvested in the business. We continue to successfully implement our Better Together strategy and expect cumulative net synergies for the full year of 2017 to increase from €220 million to €250 million.
In the United States, inflation returned at low levels, and sales performance further improved. We gained market share across our brands in a competitive landscape with new entrants. Food Lion continued to report strong volume growth, supported by the rollout of its "Easy, Fresh & Affordable" strategy, whereas Stop & Shop New England benefited from a strong summer holiday season.
In Europe, our Dutch business continued to show good momentum with solid comparable sales growth and strong margins, driven by synergies and other cost savings. Albert Heijn further improved the quality of hundreds of own-brand products and was recognized for having the most attractive promotions, providing great value for customers. New products and services were introduced, such as a subscription option at ah.nl for home delivery, offering free of charge delivery at a fixed fee.
As part of our omni-channel strategy, we continue to enhance the leading position of our online businesses both in the U.S. and Europe, which in total grew more than 20% this quarter. We continue to invest in online warehouse capacity and are on track to realize almost €3 billion in online consumer sales this year and nearly €5 billion by 2020.
We are also investing to further improve our portfolios of own-brand products, providing healthy and convenient choices for customers and leveraging expertise from both sides of the Atlantic. This includes combining our Ahold USA and Delhaize America natural and organic own-brands with a total annual sales of $1 billion, into our Nature's Promise brand that we will introduce across our other businesses.
Moreover, we are building our digital capabilities and expertise and continue to invest to offer customers a personalized experience, both in our stores and online, using data analytics to develop digital loyalty programs and unique offers and promotions, benefiting from expertise and skills across our businesses. With the introduction of "My Hannaford Rewards" program, all our U.S. brands have now implemented a digital customer loyalty program.
We reiterate our guidance of €1.6 billion free cash flow for the full year 2017. Looking forward to 2018, we will maintain our balanced approach between managing our debt, funding growth and returning excess liquidity to our shareholders. For 2018, we expect free cash flow to increase and we anticipate capital expenditure to step up to €1.9 billion, focused on improving our store network, expanding our omni-channel offering and further developing our digital capabilities. In addition, we announced today a new 12 month €2 billion share buy back program starting at the beginning of 2018, reflecting confidence in our Better Together strategy.
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