The newly formed Ahold Delhaize is looking to take the market by storm, as the company has released strong reports for its Q2 2016 financial. Ahold and Delhaize, which will begin reporting joint financials in Q3, both saw better than expected earnings results, giving a small boost to stop pricing.
"We have started our new chapter as Ahold Delhaize with good momentum, with these two strong sets of pre-merger results,” explained Dick Boer, CEO of Ahold Delhaize. “Building on our solid financial foundation, common values, and great local brands, we are driving ahead with full energy to deliver even more for customers and communities, associates, and shareholders. We look forward to continuing to shape Ahold Delhaize, with a strong commitment to delivering great food, value, and innovations for customers across our 11 markets, both in stores and online.”
In its quarterly report, Ahold saw an 8 percent increase in operating profit, putting the number at $400.35 million (€355 million). Operating profits for Delhaize were also up, rising 12.1 percent to reach approximately $278.55 (€247 million) on a constant currency basis. Previously, analysts at Reuters projected Ahold’s income at $380.06 (€337 million).
Globally, sales at Ahold increased around 3.6 percent, with Delhaize’s rising 4.3 percent. According to the company’s website, share prices for the combined company, AD, were up less than one percent to reach $24.50 (€21.72).
The growing profit rates seen in the now combined companies were due partially better performance than expected in the U.S., which has been dealing with the ramifications of deflation for several quarters.
The Financial Times reported that the U.S. accounts for two-thirds of the company’s total sales, with even further rising volumes in the second quarterly report. Sales for Ahold’s U.S. business rose 1.2 percent.
As we reported previously, 86 U.S. locations will be divested as part of the U.S. Federal Trade Commission’s approval. These divestment’s proceeds are estimated to be around $174 million, which will result in no significant divestment gain or less. According to a press release, these 86 stores represented $1.4 billion in net sales, as well as $88 million of underlying operating income in 2015.
As Ahold Delhaize approaches its first combined quarterly report, for 2016’s Q3, Deli Market News will keep you updated on the leaders and shakers in the buy-side industry.