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Press release
Ahold Delhaize reports another strong quarter with operating income up 10.5% at constant exchange rates
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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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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