Ahold Delhaize Sees Merger Benefits As Dutch Earnings Beat Estimates
Ahold, the Dutch grocer that merged with Belgium’s Delhaize last month, forecast a boost to second-half profit from joining forces after second-quarter earnings beat analysts’ estimates.
Operating income for the Dutch company rose 8 percent to 355 million euros ($400 million) on an adjusted basis, the Zaandam, Netherlands-based owner of the Stop & Shop chain said in a statement Thursday. Analysts expected 336 million euros. Savings from the deal should boost Ahold Delhaize’s second-half profit by 30 million euros, the grocer said.
The combined company has 6,500 stores around the world and annual sales exceeding 60 billion euros, mostly from the U.S., where it also owns the Food Lion and Giant chains. Ahold has forecast 350 million euros in cost savings this year, which will help offset reduced prices and increased investments in higher-quality produce selection in the U.S. as competition from Wal-Mart Stores Inc. increases. The stock rose as much as 1.5 percent.
It’s a “good start to married life,” Andrew Gwynn, an analyst at Exane BNP Paribas, wrote in a note.
The second-quarter operating margin in the Netherlands, where Ahold operates Albert Heijn stores and Internet retailer bol.com, widened to 5.2 percent, topping an analyst estimate of 4.6 percent.
Ahold and Delhaize completed their merger last month. The Belgian company previously said second-quarter operating profit rose 12 percent to 247 million euros, excluding currency shifts.
The companies repeated they expect the merger to lead to annual savings of 500 million euros by mid-2019. The merger will also lead to one-time costs of 350 million euros, of which 80 million euros will be booked in the second half.
The retailer also said it plans to divest 10 more stores near Richmond, Virginia, after agreeing to divest 86 stores in the U.S. in July.
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