April 23, 2008 09:53 ET

Ahold's AGM addressed for the first time by John Rishton as CEO

AMSTERDAM, NETHERLANDS--(Marketwire - April 23, 2008) - Ahold's Annual General Meeting of Shareholders on April 23 included a speech by Ahold Chief Executive Officer John Rishton. Addressing the annual meeting for the first time as CEO, Rishton credited Ahold's employees for delivering a successful 2007 and thanked shareholders for their support over the past year. The text of the speech has been made available on Ahold's website.

Good afternoon everyone and welcome.

I am pleased to be able to address you for the first time as CEO.

2007 was a successful year for Ahold. Since we last met, our share price outperformed the AEX Index by more than 15%.

We've continued to make good progress on our strategy for profitable growth that we announced in November 2006. It was designed to accelerate identical sales growth, improve profit returns, and strengthen our foundation for future expansion, creating additional value for you, our shareholders. The strategy focuses on our portfolio, company structure, growth plans, and financial targets.

We are focusing on food retail markets where we believe we can secure a number one or two position and that have clear prospects for profitable growth. During 2007, we sold U.S. Foodservice, Tops and our operations in Poland, exceeding expectations in terms of price and timing. I am confident that we will sell our holding in JMR this year. We announced this morning the agreed sale of our majority stake in Schuitema to CVC Capital Partners. The transaction includes the transfer of 58 C1000 stores to Albert Heijn, real estate, and cash. In addition, we will obtain a 20% share in the new entity being formed. We believe this transaction will give us the ability to grow our very successful Albert Heijn business.

Our divestments last year generated enough proceeds to enable us to return EUR 4 billion euros to shareholders and will allow us to reduce gross debt by EUR 2 billion.

Thanks to the strengthening of our balance sheet and the future business outlook, we have regained investment grade status from the rating agencies - which is particularly important in light of the current turbulent economic environment.

I am delighted that our improved performance also means we are able to reinstate an annual dividend.

As part of our strategy to improve cost-effectiveness by reducing complexity, we have delisted our ADRs from the New York Stock Exchange and deregistered from the U.S. Securities and Exchange Commission. This will not reduce our focus on corporate governance and control processes.

In 2007, we completed the reorganization of the company into two continental structures - Europe, under the leadership of Dick Boer, and the United States, led by Larry Benjamin. We have also brought in new talent to our executive teams, both internally and externally, to strengthen our capabilities and give us the skills to address the challenges we face. I am particularly pleased that we have Kimberly Ross as our new CFO and proposed member of our Corporate Executive Board and that Peter Wakkie has decided to stand for re-election today. You will vote on these appointments shortly.

The reorganization has already proven valuable, enabling us to share and transfer knowledge more easily.

Much of our focus over the past year has, of course, been on growth and, in particular, on building strong local consumer brands.

Let me start by talking about Albert Heijn. Here in the Netherlands, we have an exceptionally strong brand. We are, in fact, the largest private employer in the country with more than 66 thousand people working for us. One in every five people in the Netherlands has worked at Albert Heijn at some point in their life, for many as their first working experience. The performance at Albert Heijn has been exceptional in the past year and, thanks to the hard work of all our employees, today we have almost 12 million transactions every week in our stores, and had a market share in 2007 of just under 30%.

I'm also pleased to report that our Etos chain has just been named the number one drugstore in the Netherlands by market research bureau GfK.

In the United States, we launched what we call the "Value Improvement Program" at Stop & Shop and Giant-Landover in September 2006. The program is designed to give customers better value, better quality, lower prices and a more relevant assortment. The program is on track and we had completed over 70% of the roll out by the end of 2007.

Giant-Carlisle continues its impressive performance in a competitive market, reporting its 51st consecutive quarter of positive ID sales growth and 36th year of record sales and profits.

In the Czech Republic, we announced, and are progressing well with the repositioning of our operations that will allow us to move to a single brand in that market in the future.

At ICA, we had good profits in Sweden and the Baltics, partially offset by losses in Norway. The team there is focused on improving results in all countries, with particular emphasis on a major repositioning program in Norway.

Turning now to Corporate Social Responsibility: in 2007, we made CSR a key element of our global strategy. We believe CSR is essential to the longer-term success - even survival - of the business.

During the past year we organized our efforts into four key priorities: Healthy Living, Sustainable Trade, Climate Action, and Community Engagement. These areas are important to our stakeholders, and are where we can make the greatest contribution. All of our operating companies have Corporate Social Responsibility programs underway in each of these areas.

Just as you have asked, from this year on we will publish a CSR report annually, and at the same time as our annual report. Our 2007 CSR report, which we published last month, contains many examples of the great initiatives our teams are delivering across the business - I hope you will take the time to read it.

Though we have many activities underway, we still have much to learn and much to do, especially in complex areas such as climate action. We are participating enthusiastically with industry bodies and others to seek solutions and make improvements to the way we are tackling these issues. We are also in the process of setting clear targets within our own business.

Looking to the future, our focus will remain on our strategy for profitable growth. We will continue to deliver on our promises and fulfill our commitments to our key stakeholder groups: customers, suppliers, investors, employees and the communities we serve.

We are building on the strong foundations we have created in both Europe and the United States to improve our product and service offering to customers. At Albert Heijn, for example, we are rolling out our new store prototype - which I hope you all have the opportunity to visit soon. We will also open more of our 'Albert Heijn to go' convenience stores and our larger XL stores.

In the United States, we are simplifying our stores at Stop & Shop and Giant-Landover - making our selection more relevant and appealing.

Giant-Carlisle continues to roll out innovative features in its new and remodeled stores, to maintain a competitive edge and attract new customers.

And we are developing our private brands. These product lines range from store brands that focus on value to premium and natural brands like Albert Heijn Excellent in the Netherlands and Nature's Promise in the United States. We continue to invest in price everywhere we operate. We are determined to offer great value at fair prices to customers and to communicate that message clearly.

To invest in better prices and products for our customers, we must continue to take costs out of our business. We are on track to achieve our target of 500 million euro savings by the end of 2009. We have already reached our cost reduction target for the Corporate Center ahead of plan.

To keep pace with the changing needs of our customers, we are focusing on applying consumer insight. Our ability to interpret customer data continually improves. We are increasingly sharing methodologies and practices between our companies in Europe and the United States to further develop our expertise in this area.

We continue to strengthen our continental sourcing and I am particularly pleased with the focus and success of ICA and Albert Heijn in this area.

Today, Ahold is a stronger business. I am confident that we can achieve the targets we set for 2008. We know what our customers want, we have clear plans for the future, and we will continue to deliver.

2008 will be an interesting year with, I am sure, some new challenges. As we have said before, in the United States, price investments related to the acceleration and further roll-out of the Value Improvement Program will continue to impact both sales and margins in the first part of the year - with improvements expected later in the year. We are confident that the actions we are taking to bring value to our customers are the right ones. We remain vigilant about the changing economic environment and rising food prices.

I am proud of the work that we've done to put Ahold on a solid foundation although I know we have a lot more to do. We have great teams in all of our companies and I am confident that we will overcome any challenges that come our way. Our people delivered in 2006 and 2007 - they will deliver in 2008 and beyond. I am grateful for their dedication. Thank you for coming today - and for your support over the past year.

Ahold Press Office: +31 (0)20 509 5291

Cautionary notice

The speech contained in this press release includes forward-looking statements, which do not refer to historical facts but refer to expectations based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those included in such statements. These forward-looking statements include, but are not limited to, statements as to Ahold's strategy, the intended sale of JMR, the sale of Ahold's majority stake in Schuitema, Ahold's dividend policy, the expected impact of the Value Improvement Program, the Corporate Social Responsibility programs and timing of the publication of the CSR Report, innovations, the development of private brands, cost reductions and the strengthening of continental sourcing. These forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond Ahold's ability to control or estimate precisely, such as the effect of general economic or political conditions, fluctuations in exchange rates or interest rates, increases or changes in competition, Ahold's ability to implement and complete successfully its plans and strategies, the benefits from and resources generated by Ahold's plans and strategies being less than or different from those anticipated, changes in Ahold's liquidity needs, the actions of competitors and third parties and other factors discussed in Ahold's public filings. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Koninklijke Ahold N.V. does not assume any obligation to update any public information or forward-looking statements in this release to reflect subsequent events or circumstances, except as may be required by securities laws. Outside the Netherlands, Koninklijke Ahold N.V., being its registered name, presents itself under the name of "Royal Ahold" or simply "Ahold".

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Contact Information

  • Ahold Press Office:
    +31 (0)20 509 5291