Ahold Delhaize has reported a "solid end to the year", according to chief executive Frans Muller, with net sales in the group's European operations rising 6.2% at constant exchange rates to €8.6 billion in Q4.
In Europe, comparable sales excluding gasoline increased by 5.7%, with sales positively impacted by approximately 0.1 percentage points as a result of calendar shifts.
Online sales in the group's Europe division rose by 0.6 percentage points in the quarter, despite what the group said was a 'challenging non-food e-commerce market in the Benelux'. This follows on from 7.4% growth in the same period last year.
Due to escalating energy costs and volume deleveraging, Ahold Delhaize's underlying operating margin in Europe was 4.0% in Q4, down 0.2 percentage points from the prior year. The decline was offset by disciplined cost-management measures, it noted.
"While I am particularly proud of the mitigating actions and cost savings delivered by the region in Q4 and throughout the year, striking the right balance between savings and investments in 2023 will be even more important," Muller commented.
Albert Heijn Initiatives
In its home market of the Netherlands, its Albert Heijn banner has implemented 'dynamic digital discounting' in its stores, enabling customers to purchase products that are approaching the end of their shelf life with discounts ranging from 25% to 70%.
Elsewhere, Albert Heijn banner has entered into a partnership with Jan Linders Supermarkets. The vast majority of Jan Linders stores are set to become Albert Heijn franchisees upon receiving the requisite approvals.
Looking ahead, the group acknowledged that the economic environment has become 'increasingly difficult' for consumers with inflation levels rising to to their highest levels in four decades.
The company anticipates that inflation will 'remain elevated', particularly in the first half of 2023. To mitigate this, the company said that it was focused on reducing costs and creating additional efficiencies to keep prices as low as possible.
"Despite increasing macro-economic and geopolitical challenges, we expect to deliver consistent results in 2023, with a strong focus on cash-flow generation," said Muller.
"I am particularly excited about our plans around monetisation, mechanisation and our digital ecosystem, which I am convinced will drive long-term competitive advantage and benefits for our customers. In the short term, with inflation remaining high, we will also continue to lean in and explore new opportunities to lower our costs."
Group net sales for the fourth quarter were €23.4 billion for the quarter, a 8.1% increase.
Commenting on the retailer's performance, Danny Yeo, equity analyst at CFRA Research, said, "Ahold Delhaize achieved higher underlying operating income at €3.7 billion, above consensus of €3.6 billion. Free cash flow in 2022 reached €2.2 billion, higher than AD’s guidance of c.€2.0 billion.
"While Ahold Delhaize has largely maintained the same guidance into 2023, we see room for improvement in margin, premised on the continued success of its cost saving program which generated €979 million, above target of €850 million in 2022 (2023 target: above €1.0 billion)."