Dutch retailer Ahold Delhaize has posted a 0.9% increase in net sales (at constant exchange rates) in the second quarter of its financial year, to €15.5 billion.
Net profit stood at €410 million, which was an increase of 20.0% at constant exchange rates, with the group also reporting strong free cash flow for the period, of €693 million (up €293 million), due to improved working capital.
“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,” commented Frans Muller, the group’s chief executive.
Regional Performance
In the Netherlands, net sales rose by 3.0%, to €3.54 billion (+2.9%, in comparable terms), in the second quarter.
The group’s net consumer online sales went up 28.9% in the period, with the group reporting a strong performance in its AH.nl and BOL.com platforms, with the latter seeing significant growth in third-party sales.
In Belgium, net sales went up 1.9%, to €1.29 billion, compared to the same quarter last year, with the group saying that its Delhaize retail arm posted a market share increase in the period.
Central and South-Eastern Europe posted a 2.7% increase (at constant exchange rates), to €1.5 billion, with sales boosted by the addition of a net 120 new stores, particularly in the convenience channel.
“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,” said Muller.
“In Belgium, Delhaize's 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 South-Eastern Europe, comparable sales growth was 0.5%, or 1.1% – adjusted for the timing of Easter,” he added.
US Market
The group’s core US market saw a marginal decline, however, of 0.3% for the period (at constant exchange rates), to €9.2 billion.
“Volumes at Hannaford and Food Lion remained positive, but were challenged at the other US brands,” Muller added. “We expect the implementation of our brand-centric organisation to result in an improvement in sales trends in the third quarter.”
Looking ahead, Ahold Delhaize said that it was on track to realise some €420 million worth of net synergies, of which €268 million was realised in 2017, ahead of a final target of €750 million in synergies by the end of 2019.
It expects free cash flow for full-year 2018 to be around €1.9 billion, and it will spend the same amount on capital expenditure this year.
Analyst Viewpoint
Commenting on the group’s performance, Bruno Monteyne of Bernstein Research said, “There was some investor concern going into Q2 regarding the US business, but it held up well, given negative calendar impacts – 110bps on comparable sales. US comparable sales of -0.1% was 60 bps behind consensus of +0.5%.
“Volumes were notably challenged in Stop & Shop. Underlying operating margins of 4.0% were 10bps lower than consensus. Synergies drove YoY margin improvement – +10bps – but this was offset by wage inflation and transport costs. For all the repeated concerns about AD, they keep delivering,” Monteyne added.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
