Ahold Delhaize reports higher margins with strong synergy delivery and resilient sales
- Net sales increased by 65.1% to €15.9 billion (up 61.4% at constant exchange rates)
- Net income increased by 72.8% to €356 million (up 68.2% at constant exchange rates)
- Pro forma Q1 net sales increased by 2.9% to €15.8 billion (up 0.6% at constant exchange rates)
- Pro forma underlying operating income increased by €45 million to €604 million, up 8.1%
- Pro forma Q1 underlying operating margin increased to 3.8%, compared to 3.6% in Q1 2016
- Strong free cash flow of €197 million, with increased capital expenditure compared to Q1 2016
- Integration on track, with net synergies of €56 million delivered in the first quarter
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Zaandam, the Netherlands, May 10, 2017 - Ahold Delhaize, a leader in supermarkets and eCommerce with market-leading local brands in 11 countries, published solid first quarter results for 2017 today, including an improved pro forma underlying operating margin for the Group.
Dick Boer, CEO of Ahold Delhaize, said: “We are pleased to report a resilient first quarter performance with an increase in margins for the Group despite the ongoing deflationary environment in the United States. We continue to make significant progress on the implementation of our Better Together strategy, investing in our customer proposition, while improving margins.
“Ten months after the merger of Ahold and Delhaize, we are fully on track with the integration and we are delivering on our synergy targets. We are driving forward our integration programs and continue to focus on sharing best practices across and within regions, as we aim to further strengthen our great local brands to ensure they remain customer-focused, close to their communities and positioned to win in their markets.
“In the United States, although sales were impacted by continuing price deflation, adverse weather and the timing of Easter, we were able to offset the impact on margins due to the delivery of strong synergy savings in the quarter. Although deflationary pressure was in line with previous quarters, it improved towards the end of the first quarter and we expect sales performance to improve in the second quarter and to operate in a slightly inflationary environment in the second half of the year.
“The Netherlands again reported strong performance. Albert Heijn continued to improve and renew its product range, both in supermarkets and online. Bol.com grew its share of Plaza sales, now offering more than 15 million products, and increased its customer base in Belgium.
“In Belgium, sales performance was stable compared to the previous quarter, and underlying operating margin was broadly in line with last year. Sales growth in Central and Southeastern Europe was driven by Romania and Serbia, with stable margins for the region, supported by margin improvements in the Czech Republic and Serbia.
“We are encouraged by the positive development of the combined free cash flow for the Group despite higher capital expenditure. This allows us to continue investing in key channels and businesses, while returning excess liquidity to our shareholders.
“For the full year, we reiterate our target of realizing €220 million net synergies, including €56 million realized year to date and expect that the full year 2017 underlying operating margin for the Group will increase compared to 2016.”
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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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