Ahold Delhaize delivers strong sales and earnings growth, increasing free cash flow guidance for 2018
- Net sales of €15.8 billion, up 3.6% at constant exchange rates
- US comparable sales up 3.0% (excluding hurricane up 2.5%) with positive volume growth
- Net consumer online sales up 27.6% at constant exchange rates
- Underlying operating margin of 4.1%, up 0.2% points, supported by synergies
- Net income up 26.7% to €459 million, up 26.0% at constant exchange rates
- Strong free cash flow of €538 million, up €112 million, full year guidance raised to at least €2.0 billion
Watch the video 'Q3 2018 Business Highlights'
Zaandam, the Netherlands, November 7, 2018 – Ahold Delhaize, one of the world’s largest food retail groups and a leader in both supermarkets and e-commerce, reports a strong third quarter with improved sales across the board and strong growth of underlying operating income.
Frans Muller, CEO of Ahold Delhaize, said: “We are pleased with these results, demonstrating the strength of our great local brands, which is underpinned by their leading market positions. We are proud of the strong engagement of our 370,000 associates serving local communities and especially those that were affected by natural disasters.
“Third quarter sales rose 3.6% at constant exchange rates, while margins improved by 0.2% points to 4.1%, supported by synergies. Net consumer online sales were up 27.6%, boosted by another very strong quarter for bol.com. This puts us firmly on track to realize at least €5 billion in net consumer online sales by 2020.
“We continued to renew our store network and invest in our digital capabilities and new technologies to make shopping easier for customers, while offering them even more options to live healthier lives. In the U.S., Stop & Shop remodeled all its stores in the Hartford area, as the first phase of its repositioning program. In the Netherlands, Albert Heijn to go opened its first checkout-free stores, offering customers super-fast shopping without waiting in line. Delhaize Belgium became our latest brand to provide customers with at-a-glance guidance on the nutritional quality of own brand products.
“In the United States, comparable sales grew significantly by 3.0% compared to the previous quarter, excluding gasoline, with positive volume growth. Comparable sales were up 2.5% adjusted for the impact of extreme weather events on the performance of Food Lion. Online sales rose 11.8%, supported by improving sales trends at Peapod.
“In the Netherlands, performance was very strong with comparable sales up 5.9%. Net consumer online sales grew 33.2% as bol.com continued its rapid growth as the leading e-commerce platform in the Benelux. In Belgium, Delhaize grew sales and margins as the implementation of its new strategy and improvement plans continued to make steady progress. In Central and Southeastern Europe, we are particularly pleased by the performance of our Czech business. Sales in the segment were impacted by negative comparable sales in Greece, which we expect to improve during the fourth quarter of 2018.
“Free cash flow was €538 million and we expect free cash flow this year to be at least €2.0 billion, exceeding our previous guidance of €1.9 billion. Our strong cash generation enables us to provide a balance between investing in further growth of our business, while at the same time returning excess liquidity to shareholders through our share buyback program in 2018.
“Ahold Delhaize will provide an update on our strategy at the Capital Markets Day on November 13 in New York City. We’re excited to share our plans on e-commerce and digital in the U.S. and Europe and on the repositioning program at Stop & Shop along with further plans to drive growth in the years ahead as we continue the expansion of the leading position of our great local brands.”
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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 outcomes 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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