Ahold Delhaize Reports Strong Financial Results, Significantly Expands Margin

Though Ahold Delhaize have settled in as one whole, it seems it is still reaping the rewards of its recent merger by the looks of the newly-announced third quarter 2017 report.

In it, the retailer notes significant increases to sales and income.

“We reported a strong financial performance again this quarter as margins increased significantly, driven by synergies while savings from our ‘save for our customers’ programs are continuously being reinvested in the business,” commented CEO Dick Boer. “We continue to successfully implement our Better Together strategy and expect cumulative net synergies for the full year of 2017 to increase from €220 million to €250 million (from approximately $255 million to $290 million USD).”

Highlights from the report include:

• Sales growth increased to 2.1%, with strong synergy delivery resulting in margin expansion
• Net sales increased by 7.4% to €15.1 billion ($17.5 billion)—up 10.9% at constant exchange rates
• Net income increased by 54.0% to €362 million ($419 million)—up 59.5% at constant exchange rates
• Pro forma net sales decreased by 1.1% to €15.1 billion ($17.5 billion)—up 2.1% at constant exchange rates
• Strong sales performance in the U.S., gaining market share across our brands
• Online businesses growing total net consumer sales by more than 20%
• Pro forma underlying operating margin increased to 3.9%, up 40 basis points compared to Q3 2016
• Strong free cash flow of €426 million ($493 million), up €340 million ($394 million), with guidance of €1.6 billion ($1.85 billion) for FY 2017 reiterated
• Free cash flow for FY 2018 expected to increase, including capital expenditure to step up to €1.9 billion
• New €2 billion ($2.31 billion) share buyback program for 2018, following completion of the €1 billion ($1.16 billion) program in 2017

Boer said that, as part of Ahold Delhaize’s omni-channel strategy, the company continues to enhance the leading position of its online businesses both in the U.S. and Europe, which in total, grew more than 20% this quarter.

“We continue to invest in online warehouse capacity and are on track to realize almost €3 billion ($3.47 billion) in online consumer sales this year and nearly €5 billion ($5.79 billion) by 2020,” he added, also noting that the company reaffirmed its fiscal guidance.

“We reiterate our guidance of €1.6 billion ($1.85 billion) free cash flow for the full year 2017,” said Boer. “Looking forward to 2018, we will maintain our balanced approach between managing our debt, funding growth and returning excess liquidity to our shareholders. For 2018, we expect free cash flow to increase and we anticipate capital expenditure to step up to €1.9 billion ($2.2 billion), focused on improving our store network, expanding our omni-channel offering and further developing our digital capabilities.”

He said that Ahold Delhaize would continue to invest in expanding “digital capabilities and expertise,” reiterating the company’s confidence in its Better Together strategy.

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