Ahold Delhaize Posts Healthy Q4, Full-Year Growth

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Ahold Delhaize Posts Healthy Q4, Full-Year Growth

02/27/2019
Ahold Delhaize Posts Healthy Q4, Full-Year Growth
Ahold Delhaize is in a good position to continue to grow its in-store and online brands, according to President and CEO Frans Muller

After an eventful 2018 capped by the rollout of its three-year growth strategy last November, Ahold Delhaize reported 29.6 percent growth of full-year underlying earnings per share from continuing operations, at constant exchange rates.

In its fourth quarter, the retail conglomerate posted net sales of €16.5 billion (US $18.6 billion), up 3 percent at constant exchange rates; a 25 percent increase in net consumer online sales, at constant exchange rates; an operating income rise of 9.1 percent to €627 million (US $713 million), at constant exchange rates; and an underlying operating margin of 4.2 percent, a 0.2 percent uptick, supported by synergies.

“In 2018, we essentially completed the merger integration process and delivered on the synergies we promised,” noted Frans Muller, president and CEO of Zaandam, Netherlands-based Ahold Delhaize. “At the same time, we continued our strong business performance, while investing in meeting the needs of our customers in a rapidly changing industry. Today, Ahold Delhaize is fit for the future, with a very robust financial profile and the right structure to further grow our brands, both in-store and online.”

Added Muller: “With our Leading Together strategy in place, our focus turns to further strengthening our great local brands by accelerating investments in omnichannel growth, technology, and a healthy and sustainable offering to customers. The Save for Our Customers program will support the funding of our investments in future profitable growth.”

According to the chief executive, total net consumer online sales came to €3.5 billion (US $4 billion) in 2018, increasing by 24.8 percent at constant exchange rates, and is expected to double to around €7 billion (US $8 billion) in 2021. “Throughout our business, we are adding capacity and developing and sharing digital capabilities to stay ahead and meet increasing customer expectations regarding range, speed and convenience,” he said.

The company’s U.S. banners, meanwhile, “continued to see good momentum in [their] financial performance,” observed Muller, who singled out the repositioning of the Stop & Shop brand and the aggressive expansion of click-and-collect options across Ahold Delhaize’s U.S. brands as particular highlights. Additionally, Food Lion posted its 25th consecutive quarter of positive comps and volumes, backed by the ongoing rollout of its Easy, Fresh and Affordable store makeover program.

Net sales at the U.S. banners were up 2.6 percent at constant rates to €9,798 million (US $11.1 billion), compared to the year ago period, with comparable-sales growth excluding gas up 2.7 percent, including a slightly favorable weather impact. U.S. online sales rose 12.1 percent at constant exchange rates to €203 million (US $230.7 million), which Ahold Delhaize attributed to e-grocery division Peapod and the Hannaford To Go program, as well as to its same-day delivery partners.

Muller also noted that for 2019, Ahold Delhaize expected to realize €540 million (US $511.5 million) in cost savings, which would allow it to invest in organic and inorganic growth while keeping group margins in line with 2018. The company also expects to spend €2 billion (US $2.3 billion) on capital expenditures, particularly in Stop & Shop, ecommerce and its digital capabilities. This will likely include more mini fulfillment centers like the one the company debuted in its reimagined Windsor, Conn., Stop & Shop store, as Reuters noted in a report on Ahold Delhaize's business.

In other Ahold Delhaize news, the company has nominated Katie Doyle and Peter Agnefjäll to its supervisory board, effective April 10. Doyle and Agnefjäll will replace Rob van den Bergh and Mark McGrath, both of whom have decided to retire.

Doyle, an American national, is CEO and a board director of Swanson Health Products, a Fargo, N.D.-based health-and-wellness brand, and also serves as a board director at Neenah, Wis.-based packaging manufacturer Bemis Co., and at the Museum of Science and Industry in Chicago. Agnefjäll, a native of Sweden, was President and CEO of IKEA Group from 2013 to 2017 after holding several senior management roles within the furniture retailer. He currently serves on the boards of directors of Orkla, a supplier of branded consumer goods, and an airline, Wizz Air, as well as sitting on the advisory board of Deichmann, a family-owned European shoe company.

Ahold Delhaize USA, the company’s Carlisle, Pa.-based American division, is No. 4 on Progressive Grocer’s 2018 Super 50 list of the top grocers in the United States.