SOURCE: Ahold NV

June 06, 2008 00:45 ET

Ahold Earnings Q1 2008

AMSTERDAM, NETHERLANDS--(Marketwire - June 6, 2008) -


Q1 2008 highlights

  * Operating income up EUR 23 million to EUR 336 million
  * Net income EUR 261 million
  * Roll-out of Value Improvement Program remains on track
  * Albert Heijn operating income up by 26% to EUR 189 million
  * Agreement reached on sale of majority interest in Schuitema

Amsterdam, the Netherlands - Ahold today published its interim financial report for the first quarter 2008. Ahold CEO John Rishton said "We are pleased with the overall first quarter results that reflect continued good progress with our strategy for profitable growth.

"In the United States, the roll-out of our Value Improvement Program at Stop & Shop/Giant-Landover remains on track. The price investments related to the roll-out continue to impact margins and sales, with improvements expected later in the year. Giant-Carlisle reported solid sales and margin growth and continues to gain share in a very competitive market. We continue to respond to the turbulent economic environment and its impact on consumer and competitor behavior. We are confident that the actions we are taking to bring value to our customers are the right ones.

"In Europe, Albert Heijn produced impressive results for the quarter. As announced in April, we have reached agreement on the sale of our majority interest in Schuitema to CVC Capital Partners, as part of Ahold's strategy to drive further growth at Albert Heijn.

"Following the agreement on the sale of Schuitema, we have adjusted our guidance accordingly: underlying retail operating margin for the year is adjusted up by 30 basis points to 4.8%-5.3%, capital expenditure remains around EUR 1.1 billion and net interest expense is adjusted down by EUR 40 million to a range of EUR 230 million to EUR 250 million".


Financial performance

First Quarter 2008

Net sales were EUR 7.5 billion, down 1.3% from the same period last year. At constant exchange rates, net sales increased by 6.8%.

Operating income was EUR 336 million, EUR 23 million higher than in the same period last year. Retail operating income was EUR 370 million, an operating margin of 4.9% compared to 4.8% in the same period last year. Core Corporate Center costs were EUR 25 million for the quarter, down EUR 8 million from the same period last year. Total Corporate Center costs were negatively impacted by a decline in the discount rate applied to the Company's self-insurance provision.

Income from continuing operations was EUR 221 million, EUR 65 million higher than the same period last year. Net income was EUR 261 million, up EUR 20 million compared to the same quarter last year, which still included income from U.S. Foodservice.

Cash flow before financing was EUR 271 million, EUR 273 million better than the same period last year due to the Company making its final payment (EUR 284 million) under the class action settlement in the first quarter of 2007.



(Euros in millions)               Q1 2008   Q1 2007      % Change
Net sales                          7,538     7,634        (1.3%)*
Operating income                     336       313        7.3%
Income from continuing operations    221       156       41.7%
Net income                           261       241        8.3%

* At constant exchange rates, net sales increased by 6.8%.

Performance by business segment

Stop & Shop/Giant-Landover

For the first quarter, net sales of USD 5.1 billion were up 1.3% compared with the same period last year. Net sales included USD 56 million of sales to Tops. Prior to its divestment, such sales were recorded as inter-company sales. Identical sales were up 1.2% at Stop & Shop (0.2% excluding gasoline net sales) and down 1.5% at Giant-Landover (1.6% excluding gasoline net sales), impacted by lower pharmacy sales. Operating income was USD 202 million (or 3.9% of net sales), down USD 26 million from the same period last year. Margins and sales were impacted by price investments related to the roll-out of the Value Improvement Program, with improvements expected later in the year.

Giant-Carlisle

For the first quarter, net sales of USD 1.4 billion were up 9.2% compared with the same period last year. Identical sales were up 5.7% (3.7% excluding gasoline net sales). Operating income was USD 72 million (or 5.1% of net sales) up USD 10 million compared to the same period last year.

Albert Heijn

For the first quarter, net sales of EUR 2.7 billion were up 13.5% compared with the same period last year. Identical sales increased at Albert Heijn supermarkets by 11.3%. Operating income was EUR 189 million (or 7.0% of net sales), up EUR 39 million from the prior year, primarily due to strong growth in identical sales as well as lower pension charges.

Albert / Hypernova (Czech Republic and Slovakia)

Net sales increased 18% to EUR 512 million. At constant exchange rates net sales increased 7.9%. Identical sales were up 7.8%. Operating losses were EUR 1 million compared to a loss of EUR 5 million in the same period last year.

Schuitema

Schuitema has been classified as a discontinued operation as of the first quarter 2008.

Unconsolidated joint ventures

For the first quarter, Ahold's share in income of joint ventures decreased 40.9% to EUR 13 million. The decrease was primarily due to ICA, resulting mainly from lower gains on the sale of assets.


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


Other information

Non-GAAP financial measures

  * Net sales, at constant exchange rates. Net sales, at constant
    exchange rates, exclude the impact of using different currency
    exchange rates to translate the financial information of Ahold
    subsidiaries or joint ventures to euros. Ahold's management
    believes this measure provides a better insight into the
    operating performance of Ahold's foreign subsidiaries or joint
    ventures.

  * Identical sales, excluding gasoline net sales. Because gasoline
    prices have experienced greater volatility than food prices,
    Ahold's management believes that by excluding gasoline net sales,
    this measure provides a better insight into the effect of
    gasoline net sales on Ahold's identical sales.

  * Underlying retail operating income. Total retail operating
    income, adjusted for impairment of non-current assets, gains and
    losses on the sale of assets and restructuring charges. Ahold's
    management believes this measure provides better insight into
    underlying operating performance of Ahold's retail operations.

  * Core Corporate Center costs. Core Corporate Center costs relate
    to the core responsibilities of the Corporate Center, including
    Corporate Finance, Corporate Strategy, Internal Audit, Legal,
    Human Resources, Information Technology, Communications, and the
    Corporate Executive Board. Total corporate costs also include
    results from other activities co-ordinated centrally but not
    allocated to any operating company. Management believes that this
    measure provides a better insight into the Company's operating
    performance.

  * Operating income in local currency. In certain instances
    operating income is presented in local currency. Ahold's
    management believes this measure provides better insight into the
    operating performance of Ahold's foreign subsidiaries.

  * Cash flow before financing activities. Cash flow before financing
    activities is the sum of net cash from operating activities and
    net cash from investing activities. Ahold's management believes
    that because this measure excludes net cash from financing
    activities, this measure is useful where such financing
    activities are discretionary, as in the case of voluntary debt
    prepayments.



(Euros in millions)                                 Q1 2008   Q1 2007
Cash flow before financing                              271       (2)
Net cash from financing activities                    (120)     (255)
Net cash from operating, investing and financing
activities                                              151     (257)


Ahold's financial year

  * Ahold's reporting calendar is based on 13 periods of four weeks.
    The quarters in 2008 are as follows:

First Quarter           December 31, 2007 through April 20, 2008
Second Quarter          April 21 through July 13, 2008
Third Quarter           July 14 through October 5, 2008
Fourth Quarter          October 6 through December 28, 2008

This earnings release should be read in conjunction with Ahold's interim financial report for the first quarter 2008, which is available on www.ahold.com. The data provided in this earnings release are unaudited and are accounted for in accordance with IFRS, unless otherwise stated.


Cautionary notice

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 the progress with Ahold's strategy on profitable growth, the expected impact of price investments related to the roll-out of the Value Improvement Program on margins and sales, the closing of Ahold's sale of its majority interest in Schuitema and the expected underlying retail operating margin, capital expenditure and net interest expense for full year 2008. 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".


Ahold Earnings Q1 2008: http://hugin.info/130711/R/1225694/259218.pdf

Ahold Earnings Q1 2008 Interim Financial Report: http://hugin.info/130711/R/1225694/259219.pdf



Copyright © Hugin AS 2008. All rights reserved.

Contact Information