SOURCE: Ahold

March 04, 2010 01:04 ET

Ahold Q4/Full Year Results Q4 and 2009

AMSTERDAM, NETHERLANDS--(Marketwire - March 4, 2010) -


Highlights

--  Fourth quarter operating income EUR 341 million

--  Fourth quarter net income EUR 267 million

--  Full year underlying retail operating margin 5.1%

--  Dividend increased by 28% to EUR 0.23 per share

--  Share buyback program of EUR 500 million

Amsterdam, the Netherlands - Ahold today published its summary report for the fourth quarter and full year 2009. CEO John Rishton said: "In the fourth quarter, we delivered a solid performance in a challenging environment. Sales and margins continued to be impacted by deflation, trading down and increased promotions. We successfully managed, however, the balance between sales and margins, and we improved market share and increased volumes in the Netherlands and the United States.

"For the full year 2009, our underlying retail operating margin was 5.1%, the same as 2008 and consistent with our mid-term target of 5%.

"The economic environment remains challenging, but we have a proven ability to adapt and respond quickly and effectively to changes. We will continue to reduce costs so that we can invest in our offering to improve value for our customers. We will manage the balance between sales, margin and market share and use the strength of our balance sheet to seize opportunities as they arise.

"Reflecting the confidence in our strategy, our ability to generate cash and our strong balance sheet we announced a EUR 500 million share buyback program to be completed over the next 12 months and propose a 28% increase in our dividend to EUR 0.23 per common share.

"We reiterate our mid-term targets to achieve a net sales growth of 5% (mainly from identical sales growth) and a retail operating margin of 5%, while maintaining an investment grade credit rating".

At current exchange rates, Ahold expects its net interest expense for 2010 to be in the range of EUR 260 million to EUR 280 million and its capital expenditure to be around EUR 1.1 billion.

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

Group performance

---------------------------------------------------------------------------
                               Q4      Q4     %                       %
 (EUR million)                2009   2008*  change   2009   2008*   change
---------------------------------------------------------------------------

 Net sales                    6,801  6,576  3.4%**  27,925  25,648   8.9%**

 Operating income               341    369  (7.6)%   1,297   1,202     7.9%

 Income from continuing         273    292  (6.5)%     972     887     9.6%
 operations

 Net income                     267    291  (8.2)%     894   1,082  (17.4)%
---------------------------------------------------------------------------
* Comparative figures reflect the changes in accounting policies and
retrospective amendments as disclosed in Note 2 to the summary financial
statements.

** At constant exchange rates, net sales increased by 11.0% in Q4 2009 (YTD
2009: 6.0%) and increased 2.1% (YTD 2009: 3.9%) when adjusting for the
impact of the 53rd week.

Fourth quarter 2009 (compared to fourth quarter 2008)

Net sales were EUR 6.8 billion, up 3.4%. At constant exchange rates, net sales increased by 11.0%, positively impacted by an additional week. Net sales increased by 2.1% at constant exchange rates on an adjusted basis.

Operating income was EUR 341 million, down 7.6%. Despite volume growth in all markets, the margins were impacted by deflation, trading down by customers and increased promotional activity.

Retail operating income was EUR 351 million, a retail operating margin of 5.2% compared to 6.0% last year. Underlying retail operating margin was 5.4% compared to 6.1% last year. Corporate Center costs were EUR 10 million for the quarter, down EUR 13 million. Excluding the impact of the Company's insurance activities, Corporate Center costs were EUR 16 million, EUR 3 million lower.

Income from continuing operations declined 6.5% to EUR 273 million, reflecting lower operating income and higher net financial expense, partly offset by lower income taxes. Net income was EUR 267 million, down EUR 24 million.

Cash flows before financing activities were EUR 236 million, EUR 83 million lower, mainly due to EUR 289 million investment in short-term deposits; higher cash flow from operating activities and lower capital spend were a partial offset.

Full year 2009 (compared to full year 2008)

Net sales were EUR 27.9 billion, up 8.9%. At constant exchange rates, net sales increased by 6.0%. Net sales were up 3.9% at constant exchange rates on an adjusted basis.

Operating income was EUR 1.3 billion, up 7.9%, despite higher impairments (EUR 26 million) and lower gains on sale of assets (EUR 39 million). Lower restructuring and related charges (EUR 13 million) and one-off net insurance results (EUR 16 million) were a partial offset.

Retail operating income was EUR 1.4 billion, a retail operating margin of 4.9%, compared to 5.0% last year. Underlying retail operating margin was 5.1% (2008: 5.1%). Corporate Center costs were EUR 63 million, down EUR 28 million. Excluding the impact of the Company's insurance activities, Corporate Center costs were EUR 74 million, down EUR 8 million.

Income from continuing operations was up 9.6% to EUR 972 million, reflecting a higher operating income and lower income taxes, partly offset by higher net financial expense and lower share in income of joint ventures. Income taxes were lower due to, amongst other items, the recognition of EUR 101 million of deferred tax assets, primarily arising from U.S. net operating lossescarried over from previous years. Net income of EUR 894 million was down EUR 188 million, impacted significantly by discontinued operations. Discontinued operations in 2009 included a net provision of EUR 62 million, representing Ahold's estimate of obligations under the lease guarantees of its former subsidiaries BI-LO and Bruno's, whereas in 2008 it included a EUR 161 million gain related to the divestment of Schuitema.

Cash flows before financing activities were EUR 939 million, EUR 332 million lower than last year, which included net proceeds from divestments, primarily Schuitema. Furthermore, cash flows before financing activities in 2009 included EUR 289 million of investment in short-term deposits and EUR 112 million of additional contributions to pension plans. Lower capital spend of EUR 249 million was a partial offset.

Performance by segment

Stop & Shop/Giant-Landover

For the fourth quarter, net sales were $ 4.4 billion, up 10.5%. Net sales increased 1.8% when compared to the adjusted fourth quarter 2008 sales. Identical sales were up 1.0% at Stop & Shop (down 0.4% excluding gasoline) and up 2.4% at Giant-Landover (1.6% excluding gasoline). Operating income was $ 238 million (or 5.4% of net sales), up $ 31 million. Operating income was negatively impacted by impairment charges of $ 4 million and restructuring and related charges of $ 3 million. A one-off net income of $ 3 million related to pensions was a partial offset. Last year fourth quarter operating income included impairment losses of $ 5 million and restructuring and related charges of $ 12 million, consisting of a loss as a result of withdrawing from a multi- employer pension plan and store closure costs.

For the full year, net sales were $ 17.9 billion, up 4.6%. Net sales increased 2.6% when compared to the adjusted full year 2008 sales. Identical sales were up 1.6% at Stop & Shop (2.2% excluding gasoline) and up 3.0% at Giant-Landover (2.6% excluding gasoline). Operating income was $ 869 million (or 4.9% of net sales), up $ 168 million. Included in the operating income were impairments of $ 22 million, a non-recurring rent charge of $ 15 million and one-off net charges related to pensions of $ 6 million. These were partly offset by a $ 28 million release of insurance provisions. Last year, restructuring, severance and related charges were $ 44 million, impairments were $ 15 million and gains on the sale of assets were $ 30 million. Furthermore, 2008 included one-off rebranding costs of $ 8 million.

Giant-Carlisle

For the fourth quarter, net sales increased 15.0% to $ 1.3 billion. Net sales increased 6.0% when compared to the adjusted fourth quarter 2008 sales. Identical sales increased 2.8% (1.0% excluding gasoline). Operating income was $ 54 million (or 4.2% of net sales), down $ 6 million compared to the same period last year. Restructuring and related charges of $ 1 million were recognized in the fourth quarter of 2009.

For the full year, net sales were $ 5.0 billion, up 4.6%. Net sales increased 2.6% when compared to the adjusted full year 2008 sales. Identical sales increased 0.3% (2.2% excluding gasoline). Operating income was $ 218 million (or 4.4% of net sales), down $ 15 million compared to last year. Operating income included a $ 4 million release of insurance provisions, partly offset by restructuring and related charges of $ 1 million. In 2008, operating income included restructuring, severance and related charges of $ 11 million.

Albert Heijn

For the fourth quarter, net sales were EUR 2.5 billion, up 12.3%. Net sales increased 3.0% when compared to the adjusted fourth quarter 2008 sales. Net sales at Albert Heijn supermarkets were EUR 2.3 billion, up 12.4%. Net sales at Albert Heijn supermarkets increased 3.2% compared to the adjusted fourth quarter 2008 sales. Identical sales at Albert Heijn supermarkets increased 1.2%. Operating income of EUR 168 million (or 6.7% of net sales), was down EUR 12 million from the fourth quarter 2008, impacted by EUR 17 million higher pension costs and a non-recurring wage tax provision of EUR 7 million. Fourth quarter 2008 operating income included costs of EUR 10 million for the integration of former Schuitema storesinto Albert Heijn.

For the full year, net sales were EUR 9.8 billion, up 9.7%. Net sales increased 7.3% when compared to the adjusted full year 2008 sales. Net sales at Albert Heijn supermarkets were EUR 9.0 billion, up 9.7%. Compared to the adjusted full year 2008 sales, net sales at Albert Heijn supermarkets increased 7.4%. This was mainly due to the conversion of former Schuitema stores into the Albert Heijn format in the second half of 2008. Identical sales at Albert Heijn supermarkets increased 1.7%. Operating income was EUR 654 million (or 6.6% of net sales), up EUR 7 million compared to last year, despite EUR 70 million higher pension costs and a non-recurring wage tax provision of EUR 7 million. In 2008, operating income included gains on the sale of assets of EUR 24 million.Also included in year 2008 operating income were costs of EUR 14 million for the integration of former Schuitema stores into Albert Heijn.

Albert/Hypernova (Czech Republic and Slovakia)

For the fourth quarter, net sales decreased 1.8% to EUR 431 million (0.1% at constant exchange rates). When compared to the adjusted fourth quarter 2008 sales, net sales decreased 7.0% at constant exchange rates. Sales were negatively impacted by store closures and downsizings as part of our restructuring program. Identical sales decreased 1.4% (2.3% excluding gasoline). Operating loss for the quarter was EUR 16 million, compared to an income of EUR 9 million last year. Impairments in the quarter were EUR 5 million. Restructuring charges, mainly for the closure of underperforming stores and downsizing of large hypermarkets in the Czech Republic, were EUR 10 million for the quarter.

For the full year, net sales decreased 5.0% to EUR 1.7 billion (0.6% at constant exchange rates). When compared to the adjusted full year 2008 sales, net sales decreased 2.4% at constant exchange rates. Identical sales decreased 1.2% (1.2% excluding gasoline). Operating loss for the year was EUR 76 million, compared to an income of EUR 1 million last year. Impairments for the full year were EUR 17 million. Restructuring charges, mainly for the closure of underperforming stores and downsizing of large hypermarkets in the Czech Republic, were EUR 24 million. Net costs related to the rebranding into a single Albert brand were EUR 10 million.

Unconsolidated joint ventures

For the fourth quarter, Ahold's share in income of joint ventures increased 14.7% to EUR 39 million, driven by better operating margins, partially offset by higher income taxes at both ICA and JMR. Ahold's 49% stake in JMR was reclassified from assets held for sale to investments in joint ventures as of 2009.

For the full year, Ahold's share in income of joint ventures was down 14.5% to EUR 106 million. The decrease was mainly driven by ICA, where better operating results were more than offset by higher income taxes.

Sales and operating margins are summarized as follows:

Identical/comparable sales growth (% year over year)

---------------------------------------------------------------------------
                          Q4 2009                           2009
                Q4 2009 identical    Q4 2009      2009 identical       2009
              identical excluding comparable identical excluding comparable
                         gasoline                       gasoline
---------------------------------------------------------------------------


 Stop & Shop       1.0%      (0.4)%      1.3%      1.6%      2.2%      2.1%

 Giant-Landover    2.4%       1.6%       2.9%      3.0%      2.6%      3.5%

 Giant-Carlisle    2.8%       1.0%       4.0%      0.3%      2.2%      1.3%

 Albert Heijn[1]   1.2%       1.2%                 1.7%      1.7%

 Albert/Hypernova (1.4)%     (2.3)%               (1.2)%    (1.2)%
---------------------------------------------------------------------------
[1]Identical sales represent the identical sales of Albert Heijn
supermarkets.

Operating margin

Operating margin is defined as operating income as a percentage of net sales. For a discussion of operating income, see Note 3 to the summary financial statements.

---------------------------------------------------------------------------
                                  Q4         Q4
                                2009       2008*         2009       2008*
---------------------------------------------------------------------------


  Stop & Shop/Giant-Landover    5.4%        5.1%         4.9%        4.1%

  Giant-Carlisle                4.2%        5.4%         4.4%        4.9%

  Albert Heijn                  6.7%        8.1%         6.6%        7.2%

  Albert/Hypernova             (3.7)%       2.1%        (4.5)%       0.1%
---------------------------------------------------------------------------
  Total retail                  5.2%        6.0%         4.9%        5.0%
---------------------------------------------------------------------------
* Comparative figures reflect the changes in accounting policies and
retrospective amendments as disclosed in Note 2 to the summary financial
statements.

Financial calendar

Ahold's financial year consists of 52 or 53 weeks and ends on the Sunday nearest to December 31.

Ahold's 2009 financial year consisted of 53 weeks and ended on January 3, 2010. The quarters in 2009 were:

  First Quarter (16 weeks)     December 29, 2008 through April 19, 2009

  Second Quarter (12 weeks)    April 20 through July 12, 2009

  Third Quarter (12 weeks)     July 13 through October 4, 2009

  Fourth Quarter (13 weeks)    October 5, 2009 through January 3, 2010

Ahold's 2010 financial year will consist of 52 weeks and will end on January 2, 2011. The quarters in 2010 are:

  First Quarter (16 weeks)     January 4, 2010 through April 25, 2010

  Second Quarter (12 weeks)    April 26 through July 18, 2010

  Third Quarter (12 weeks)     July 19 through October 10, 2010

  Fourth Quarter (12 weeks)    October 11, 2010 through January 2, 2011

Ahold Finance U.S.A., LLC

The annual report for 2009 of Ahold's wholly owned subsidiary Ahold Finance U.S.A., LLC is available at www.ahold.com.

Cautionary notice

This summary report 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 response to changes in the economic environment and opportunities in the market, Ahold's instruments to improve value for customers, the balance between sales, margins and market share, Ahold's considerations to initiate the share buyback program, the completion of the share buyback program, the payment of dividend to shareholders in 2010, Ahold's targets on sales growth, retail operating margin and credit rating, Ahold's plans to publish its 2009 Annual Report (including financial statements) and the expected contents thereof, the expected net interest expense and capital expenditures in 2010, Ahold's contingent liability related to BI-LO and BrunoZs leases, estimates in relation to pension liabilities in the U.S., the (finalization of the) settlement with the Department of Justice in the U.S and Ahold's liability in relation thereto, the course and outcome of the ICA tax claims proceedings, the start of the operation of the Ukrop's stores and the vesting of shares granted to Ahold employees and CEB. 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 summary report. Neither Koninklijke Ahold N.V. nor Ahold Finance U.S.A., LLC assumes any obligation to update any public information or forward-looking statements (referred to) in this report 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".

[HUG#1390765]

Ahold Q4/Full Year Results Q4 and 2009: http://hugin.info/130711/R/1390765/348686.pdf

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