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Ahold Delhaize continues to deliver strong earnings and free cash flow growth
Zaandam, the Netherlands, August 8, 2018 – Ahold Delhaize, one of the world’s largest food retail groups and a leader in both supermarkets and e-commerce, reports a solid second quarter with increased sales and margins, unfavorably impacted by the timing of Easter, and delivery of strong earnings and free cash flow growth.
Frans Muller, CEO of Ahold Delhaize, said: “During the second quarter of 2018 our business continued to perform well and we remain on track with the execution of our strategy, building great local brands and strengthening our leading positions in our major markets, both in our stores and online.
"Second quarter sales rose 0.9% at constant exchange rates, and 2.4% adjusted for Easter and remedy stores sold in 2017. Net consumer online sales grew 23% across the group, keeping us on pace to realize nearly €5 billion in online consumer sales by 2020.
"We continue to innovate and improve our offering, focusing on health and convenience. During the quarter, various initiatives were deployed both in the United States and in Europe, offering our customers choices for a more healthy lifestyle. These initiatives included the launch of the My Nutritional Value online tool to help Albert Heijn customers gain more insight into the nutritional value of their groceries. Throughout our network, we continue to make shopping more convenient in our stores, by expanding our range of meal kits and freshly made meals, providing an easy solution for time-constrained customers, and by piloting and rolling out seamless checkout options for customers.
"In the United States, comparable sales growth excluding gasoline was -0.1%, or 1.0% adjusted for the timing of Easter. Volumes at Hannaford and Food Lion remained positive but were challenged at the other US brands. We expect the implementation of our brand-centric organization to result in an improvement in sales trends in the third quarter.
"In the Netherlands, comparable sales growth was 2.9%, or 3.8% adjusted for the timing of Easter, supported by the ongoing strong growth of bol.com and ah.nl. In Belgium, Delhaize comparable sales growth was 1.4%, or 2.3% adjusted for the timing of Easter, as the brand continues to improve its commercial and operational performance. For Central and Southeastern Europe, comparable sales growth was 0.5%, or 1.1% adjusted for the timing of Easter. The strong performance in Romania and the Czech Republic was offset by the impact of ongoing changes in the competitive landscape in Greece.
"Free cash flow was €693 million, confirming our target of about €1.9 billion for 2018. The strong cash-generating capacity of our businesses allows us to keep investing in our store network and in our rapidly growing online businesses. During the quarter, we announced a significant investment at bol.com, more than doubling its warehouse capacity by 2021.
"As part of these investments, we have announced the launch of Peapod Digital Labs, which will drive innovation, expertise and accelerate growth by creating a shared e-commerce infrastructure for all of our brands in the United States. We look forward to provide more detail on this at our Capital Markets Day on November 13 in New England. In addition, we will be sharing our exciting initiatives to update the Stop & Shop brand, our largest business in the United States, with a fresh new format which will be launched later this year."
This press release contains information that qualifies as inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation.
This communication includes forward-looking statements. All statements other than statements of historical facts may be forward-looking statements. Words such as ongoing, by 2020, remain, on track, are, to be, target, confident, will, keeping, is, continue, trends, expected, plans/planned, remains, outlook, improving, expanding, developing, forward/look forward, 2018, upcoming, progressing, to, applies, strategy, future, could, estimated, improvement or other similar words or expressions are typically used to identify forward-looking statements. Forward-looking statements are subject to risks, uncertainties and other factors that are difficult to predict and that may cause actual results of Koninklijke Ahold Delhaize N.V. (the “Company”) to differ materially from future results expressed or implied by such forward-looking statements. Such factors include, but are not limited to risks relating to competition and pressure on profit margins in the food retail industry; the impact of the Company’s outstanding financial debt; future changes in accounting standards; the Company’s ability to generate positive cash flows; general economic conditions; the Company’s international operations; the impact of economic conditions on consumer spending; turbulences in the global credit markets and the economy; the significance of the Company’s U.S. operations and the concentration of its U.S. operations on the east coast of the U.S.; increases in interest rates and the impact of downgrades in the Company’s credit ratings; competitive labor markets, changes in labor conditions and labor disruptions; environmental liabilities associated with the properties that the Company owns or leases; the Company’s inability to locate appropriate real estate or enter into real estate leases on commercially acceptable terms; exchange rate fluctuations; additional expenses or capital expenditures associated with compliance with federal, regional, state and local laws and regulations in the U.S., the Netherlands, Belgium and other countries; product liability claims and adverse publicity; risks related to corporate responsibility and sustainable retailing; the Company’s inability to successfully implement its strategy, manage the growth of its business or realize the anticipated benefits of acquisitions; its inability to successfully complete divestitures and the effect of contingent liabilities arising from completed divestitures; unexpected outcomes with respect to tax audits; disruption of operations and other factors negatively affecting the Company’s suppliers; the unsuccessful operation of the Company’s franchised and affiliated stores; natural disasters and geopolitical events; inherent limitations in the Company’s control systems; the failure or breach of security of IT systems; changes in supplier terms; antitrust and similar legislation; unexpected outcome in the Company’s legal proceedings; adverse results arising from the Company’s claims against its self-insurance programs; increase in costs associated with the Company’s defined benefit pension plans; and other factors discussed in the Company’s public filings and other disclosures. Forward-looking statements reflect the current views of the Company’s management and assumptions based on information currently available to the Company’s management. Forward-looking statements speak only as of the date they are made, and the Company does not assume any obligation to update such statements, except as required by law.