Press release
CEO Dick Boer said: “By investing in value for our customers, we were able to grow sales by 3.9% at constant exchange rates and we gained market share in all our major markets in a challenging economic environment. Despite a weak performance at Albert Heijn, underlying operating margin for the Group was in line with last year.
“We saw ongoing high levels of promotional activity in both the United States and the Netherlands with retail price inflation coming down, particularly in the United States. Our businesses in the United States achieved strong margins through stringent cost control. Margins in the Netherlands were negatively impacted by increased price investments and an unsuccessful promotional campaign. Our business in the Netherlands now includes bol.com, following the successful completion of the acquisition on May 9.
“We expect market conditions to remain difficult and are cautious about the potential impact of rising food commodity costs, particularly in the United States for the balance of the year. We are confident that we are well on track to deliver on our strategy and we will continue to invest in growth. We are pleased with the conversion of 15 Genuardi’s stores to Giant Food Stores in the United States. We also completed the transaction with Jumbo concerning 82 stores in the Netherlands and we will start to convert the first 14 to Albert Heijn.”
Cautionary notice
This interim report includes 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 forward-looking statements include, but are not limited to, statements as to Ahold’s investments in profitable growth; expectations on market conditions and competitor and consumer behavior; the progress and deliverance of Ahold’s strategies and cost savings program; the impact of rising food commodity costs; Ahold’s response to market opportunities; the synergy of business combinations; the performance of Ahold’s stores; the expansion of Ahold’s online presence, product offering and geographical reach; Ahold’s focus on cost reductions and process simplification and improving its competitive position; the causes of margin performance; completion of the transaction with Jumbo; and the conversion and reopening of the C1000/Jumbo stores to the Albert Heijn banner and the timeframe thereof. These forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond Ahold’s ability to control or estimate precisely, such as the effect of general economic or political conditions, fluctuations in exchange rates or interest rates, increases or changes in competition, Ahold’s ability to implement and complete successfully its plans and strategies, the benefits from and resources generated by Ahold’s plans and strategies being less than or different from those anticipated, changes in Ahold’s liquidity needs, the actions of competitors and third parties and other factors discussed in Ahold’s public filings and other disclosures. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this interim report. Ahold does not assume any obligation to update any public information or forward-looking statements in this interim report to reflect subsequent events or circumstances, 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.”
Financial Summary Second Quarter 2012 (at identical exchange rates)
Pierre-Olivier Beckers, President and Chief Executive Officer of Delhaize Group, commented: “We are pleased to report that during the second quarter a number of our initiatives produced good results and we are confident that they will support our revenue growth in the second part of the year. Specifically, the investments at Food Lion continued to pay off as the Phase One stores sustained strong revenue growth in their second year after launch. Phase 2 stores have enjoyed similar positive momentum in the initial months following their launch in March 2012. With the launch of Phase 3 in July 2012, we have now repositioned more than 700 Food Lion stores, or 65% of the network. Our experience with Food Lion´s repositioning gives us confidence that steps being taken elsewhere in the Group will also start to bear fruit. Turning to Belgium, we are encouraged by the positive comparable store sales growth recorded during the second quarter and believe we will see further positive impact resulting from additional price investments, new store openings and remodelings. While Greece continues to dominate the headlines, Alfa Beta managed to gain market share and to grow its profitability,”
“Despite these positive trends and as expected, our growth initiatives continued to impact our underlying operating profit. We confirm that we will reach our full year underlying operating profit guidance. However, we expect to achieve the bottom-end of the range as we remain committed to improving our customers experience in terms of both price and service. Given the decline in our operating profit and the challenging environment, we recognize the need to redouble our efforts and sharpen our focus. As previously described, we expect to exceed our current cost savings program and deliver € 550 million by year-end, and we are working on a multi-year plan focused on achieving greater efficiency.”