Ahold's Q1 Earnings Dip 55 Percent

AMSTERDAM, Netherlands -- Ahold's first quarter earnings sank 55 percent, to 134 million euros ($162 million) from 298 million euros a year ago, the company said yesterday. Sales for the period declined less than 1 percent, to 12.97 billion euros ($15.69 billion) from 13.09 billion euros in the first quarter of 2004.

The retailer blamed its earnings decline on a weaker U.S. dollar and the impact of divestments it has made. During the quarter, Ahold, was able to reduce its debt by 600 million euros ($726 million) to 6.5 billion euros ($7.86 billion), as it moved toward completing the sale of European and U.S. divisions worth 2.5 billion euros ($3 billion).

Anders Moberg, c.e.o., said he was satisfied with the quarterly results, and added Ahold remains on track to improve its operating margins, which he believes will hit the five percent target established for 2006.

"The year has only just begun," Moberg said in a conference call, noting that the benefits of store remodeling projects would kick in over coming quarters. The turnaround of U.S. Foodservice is on track, Moberg added, noting that Ahold continues to simplify the way it runs its business.

The Netherlands-based global retailer is midway through a major restructuring program to repair damages resulting from a major accounting scandal that erupted at its U.S. Foodservice unit in early 2003. Seventy percent of its total revenues are derived from United States subsidiaries.

Among the company's key priorities for the rest of 2005: The successful execution of its Road to Recovery strategy, including completion of its divestment program; implementation of a retail business model to drive sales volume throughout Ahold; further improvements to the operational performance U.S. Foodservice; and formulating its strategy for 2006 and beyond, following completion of the Road to Recovery plan.
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