Ahold Delhaize Posts ‘Strong’ Q2 Pre-merger Results
Following its July 24 merger, Ahold Delhaize has posted Ahold’s second-quarter and half-year report for the period ended July 17, and, as an appendix, Delhaize Group’s summarized second-quarter and half-year report for the period ended June 30. The reason for the separate financials was that the merger became effective after the end of both companies' second-quarter reporting periods.
Ahold’s second-quarter underlying operating income of 355 million euros (US $400 million) represented an 8 percent increase at constant exchange rates, while Delhaize Group’s underlying operating profit of 247 million euros (US $279 million) for the quarter was up 12.1 percent at constant exchange rates.
“We have started our new chapter as Ahold Delhaize with good momentum, with these two strong sets of pre-merger results,” said Ahold Delhaize CEO Dick Boer. “Building on our solid financial foundation, common values and great local brands, we are driving ahead with full energy to deliver even more for customers and communities, associates and shareholders. We look forward to continuing to shape Ahold Delhaize, with a strong commitment to delivering great food, value and innovations for customers across our 11 markets, both in stores and online."
Ahold USA’s second-quarter net sales were 5,526 million euros (US $6.233 billion), up 2.4 percent, or 3.4 percent at constant exchange rates. Excluding gas, sales grew 4.6 percent at constant exchange rates. The acquisition of 25 former A&P stores in the New York metro area in the fourth quarter of 2015 was the main contributor to the overall sales growth and led to an overall market share improvement in both dollars and volume. Identical-sales growth, excluding gas, of 1.2 percent was attributable to volume growth and partly offset by price investments as part of company investments in its customer proposition, and meat and dairy category deflation.
“In the United States, we saw sales trends improving, with volume growth in a deflationary environment,” said Boer. “The program to improve our customer proposition resulted in an increased market share.”
For the first six months of 2016, Ahold’s underlying operating income was 804 million euros (US $907 million), up 83 million euros from 721 million euros (US $813 million) in 2015, while underlying operating margin was 3.9 percent, compared with 3.6 percent last year. Net income was 450 million euros (US $508 million), an increase of 42 million euros from last year.
Delhaize America, meanwhile, saw second-quarter revenues of 2.9 percent, supported by comparable-store sales growth of 2.9 percent (3.9 percent real growth) and fueled by continued positive real growth at both Food Lion and Hannaford, although partly offset by negative retail inflation of -1.0 percent.Underlying operating margin was 4.1 percent.
“Delhaize America continued to experience good sales momentum both at Food Lion and at Hannaford, while inflation remained negative,” noted Delhaize Group President and CEO Frans Muller.
For the first half of 2016, Delhaize Group’s revenues rose 4.2 percent and 4.3 percent at actual and identical exchange rates, respectively, and organic revenue growth was 4.3 percent. In the United States, revenue growth in local currency was 2.4 percent, and comps were up 2.7 percent, excluding a 0.1 percent negative calendar impact.
In addition to the 86 U.S. stores divested by Ahold and Delhaize ahead of the merger to gain approval from the U.S. Federal Trade Commission, proceeds from which are estimated at $174 million, resulting in no significant divestment gain or loss, Ahold Delhaize expects to shed another 10 stores in the Richmond, Va., area. In Belgium, Ahold Delhaize is divesting 13 stores, as part of the approval by the Belgian Competition Authority.
As of the third quarter of 2016, Ahold Delhaize will report its quarterly financial performance for five business segments – The Netherlands, Belgium, Central and Southeastern Europe – and two reporting segments in the United States. To provide a comparable base, the company will publish pro-forma historical quarterly segment information will on Oct. 6.
The company will also hold a Capital Markets Day on Dec. 7 in London, where it will provide an update on its future strategy framework, share more details on integration and synergies, and give guidance on its capital structure going forward.