Frans Muller, the chief executive of Ahold Delhaize, has said that he is confident that the retailer is "well prepared to navigate the complexities of the current business environment", noting the impact of social tensions and climate effects, including the fires in Greece, on its business.
Muller was commenting as Ahold Delhaize reported better-than-expected second-quarter underlying operating income of €904 million, as a result of good U.S. margins and strong European sales growth.
That topped the €859 million expected by analysts in a company-compiled poll.
Sales Performance
Ahold Delhaize, which operates the Stop & Shop, Giant, Food Lion and Hannaford chains in the United States, its biggest market, and the Albert Heijn and Delhaize chains in the Netherlands and Belgium, posted sales up 4.3% at constant exchange rates to €22.1 billion.
Comparable sales (excluding gas) rose by 3.6% in the US and by 6.3% in Europe.
Excluding recent strikes in Belgium, which relate to the retailer's decision to move to an independent store model for its Delhaize brand, comparable sales in Europe were up 7.3%, it added.
In the US, its underlying operating income totalled €623 million, with an underlying margin of 4.6%. In Europe, it posted an underlying operating income of €267 million, and an underlying margin of 3.2%.
'Passed its Peak'
"On a positive note, we see more evidence that inflation has passed its peak," Muller commented. However high prices are still affecting performance, due to higher energy, commodity, transport and labour costs, "all of which are having a particularly notable impact on our European margins", he added.
The company raised its forecast for 2023 free cash flow to €2 billion to €2.2 billion, from around €2 billion.
Other forecasts remained unchanged, including a full year underlying operating margin around 4% and EPS at around the same level as in 2022.
'Agility And Flexibility'
"The agility and flexibility that our brands and associates are showing, adjusting quickly to meet customers’ needs while, at the same time, diligently staying the course on our various transformation projects, underpinned the company's strong performance this past quarter," Muller commented.
"All these efforts remain particularly important as the external environment continues to be dynamic."
Additional reporting by ESM
