Ahold delivered a strong start to the year with good momentum across all markets
Zaandam, The Netherlands – Ahold today announced a strong start to the year, reflecting good performances across all its markets. This included net sales of €11.8 billion, driven by solid store operations and a continued strong increase in online sales, improved profitability and a strong free cash flow.
Ahold CEO Dick Boer said: “We continue to deliver on our strategic objectives, with a good operational and financial performance in the first quarter. Our focus remains on serving our customers and delivering on our Simplicity program, in order to invest in our great local brands to ensure that we provide even more value and innovation.
"In the Netherlands, we were pleased to continue to deliver strong identical sales growth, as our customers respond positively to the ongoing improvements we are making to our stores, assortment and service. Our online businesses, bol.com and ah.nl, delivered excellent growth of over 30% in net consumer sales during the quarter. In the United States, we had a solid performance and continued to invest in our customer proposition, including the rollout of our new bakery departments. Peapod reported double-digit sales growth, further expanding its customer base in New York City. We were pleased with the encouraging performance in the Czech Republic, where the sales trend of the larger former SPAR stores further improved.
"Finally, we continue to make good progress on our proposed merger with Delhaize, which we expect to complete in mid-2016. Working together towards this common goal reaffirms our view that the merger will create a better and more innovative retailer, capable of delivering enhanced value for our customers, associates and shareholders.”
This communication contains forward-looking statements, which do not refer to historical facts but refer to expectations based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those included in such statements. These statements or disclosures may discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to Ahold, based on current beliefs of management as well as assumptions made by, and information currently available to, management. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “plan,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “may,” “possible,” “potential,” “predict,” “project” or other similar words, phrases or expressions.
This communication contains Ahold forward-looking statements as to, amongst others, the intended merger between Ahold and Delhaize, serving customers, Ahold's Simplicity program, investments in local brands and expected value and innovations, price investments, underlying operating margins, new and revised IFRSs, dividend, reverse stock split and capital return.
Many of the risks and uncertainties relate to factors that are beyond Ahold’s control. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the occurrence of any change, event or development that could give rise to the termination of the merger agreement, the risk that the necessary regulatory approvals may not be obtained or may be obtained subject to conditions that are not anticipated, failure to satisfy other closing conditions with respect to the transaction on the proposed terms and time frame, the possibility that the transaction does not close when expected or at all, the risks that the new businesses will not be integrated successfully or promptly or that the combined company will not realize the expected benefits from the transaction, Ahold’s ability to successfully implement and complete its plans and strategies and to meet its targets, risks related to disruption of management time from ongoing business operations due to the proposed transaction, the benefits from Ahold’s plans and strategies being less than anticipated, the effect of the announcement or completion of the proposed transaction on the ability of Ahold to retain customers and retain and hire key personnel, maintain relationships with suppliers, and on their operating results and businesses generally, litigation relating to the transaction; the effect of general economic or political conditions, Ahold’s ability to retain and attract employees who are integral to the success of the business, business and IT continuity, collective bargaining, distinctiveness, competitive advantage and economic conditions; information security, legislative and regulatory environment and litigation risks and product safety, pension plan funding, strategic projects, responsible retailing, insurance and unforeseen tax liabilities and other factors as discussed in Ahold's public filings and other disclosures.
The foregoing list of factors is not exhaustive. Investors and shareholders are cautioned not to place undue reliance on such statements. Forward-looking statements speak only as of the date they are made. Ahold does not assume any obligation to update any public information or forward-looking statement in this communication to reflect events or circumstances after the date of this communication, except as may be required by applicable laws.
Outside the Netherlands, Koninklijke Ahold N.V., being its registered name, presents itself under the name of "Royal Ahold" or simply "Ahold."
Frans Muller, President and Chief Executive Officer of Delhaize Group, commented: “We have started 2016 with further improving revenue trends. In the U.S., although we continued to see deflation, we are also realizing ongoing solid 3.7% real growth. In Belgium, we reported good comparable store sales growth of 2.9% and a 50 basis points improvement in our market share compared to the first quarter of last year. While our sales trend continued to be largely driven by the Affiliated network, we remained focused on improving execution in our integrated stores. Finally, our Southeastern European operations reported an outstanding performance. In Greece, our Alfa Beta stores, uniquely positioned, have implemented successful promotional and marketing plans, in a grocery market that continues to shrink. In Romania, our operations continued to build on their strong momentum and commercial programs and benefited from favorable economic conditions, driven by lower VAT. Finally, we also enjoyed positive comparable store sales growth in Serbia.”
“We realized a robust performance in our first quarter profitability with a 3.6% underlying operating margin. Although the group benefited from a slightly stronger gross margin mainly in the U.S., profitability was especially boosted by lower SG&A as a percentage of revenues in Belgium and Southeastern Europe. We reported a negative free cash flow in the first quarter but we remain confident to generate a healthy free cash flow for the full year. ”
“Following shareholders’ approval for the merger obtained on March 14, our main focus for this year is to complete the merger with Royal Ahold on schedule. The remaining major milestone is to receive approval from the U.S. Federal Trade Commission in order to be able to complete the transaction by mid-2016.”