Ahold Delhaize reports Q4 results; strengthens position as
industry-leading local omnichannel retailer in 2021 and beyond
- In 2020, the Ahold Delhaize brands focused on fulfilling their
vital role in society and meeting the challenges of COVID-19 by
contributing €680 million to support customers, associates, and
communities with COVID-19 relief care; brands
also committed to contribute €1.4 billion to improve the security
of associates' pension benefits.
- Associates across all the brands of Ahold Delhaize worked
diligently to successfully maintain food and product supplies to
local communities, to implement measures to keep customers and
their colleagues safe, to care for their local communities, and to
drive substantial progress in ESG initiatives in 2020; their
efforts have helped Ahold Delhaize and its local brands solidify
their positions as industry-leading local omnichannel retailers
in each of their markets in 2021 and beyond.
- Net sales were €19.6 billion, up 18.0% in Q4 and up 14.2% in
2020 at constant exchange rates.
- In the U.S. and Europe, comparable sales excluding gas grew
11.2% and 10.6% in Q4, respectively, and were up 14.4% and
9.6% in 2020, respectively.
- Net consumer online sales grew 84.2% in Q4 and 67.4% in 2020 at
constant exchange rates, including U.S. growth of 128.5% in Q4 and
105.1% in 2020.
- Underlying operating margin was 4.1% in Q4 and 4.8% in 2020;
diluted underlying EPS was €0.53 in Q4 and €2.26 in 2020.
- IFRS-reported operating margin was 0.1% in Q4 and 2.9% in 2020,
impacted by the U.S. pension plan withdrawals; as such, diluted EPS
was €(0.01) in Q4 and €1.30 in 2020.
- 2020 free cash flow was €2.2 billion compared to guidance of at
least €1.7 billion, despite a total of €609 million related to
pension plan withdrawals and incremental pension funding payments,
and net capital expenditures of €2.6 billion.
- 2021 outlook: Group net consumer online sales to grow over 30%;
underlying operating margin to be at least 4%; underlying EPS
to grow by mid- to high-single digits versus 2019; free cash flow
to be approximately €1.6
billion, resulting in €5.6 billion in cumulative free cash flow
from 2019-2021, which exceeds the Capital Markets Day 2018 target
of €5.4 billion.
Zaandam, the Netherlands, February 17, 2021 – Ahold Delhaize,
one of the world’s largest food retail groups and a leader in both
supermarkets and e-commerce, reports fourth quarter results
today.
The summary report for the fourth quarter can be viewed and
downloaded at www.aholddelhaize.com.
Summary of key financial data
|
Ahold Delhaize Group |
The United States |
Europe |
Ahold Delhaize Group |
The United States |
Europe |
€
million, except per share data |
Q4 2020 |
% change constant rates |
Q4 2020 |
% change constant rates |
Q4 2020 |
% change constant rates |
2020 |
% change constant rates |
2020 |
% change constant rates |
2020 |
% change constant rates |
(14 weeks 2020 vs. 13 weeks 2019) |
(53 weeks 2020 vs. 52 weeks 2019) |
Net
sales1 |
19,600 |
|
18.0 |
% |
11,425 |
|
18.7 |
% |
8,175 |
|
17.1 |
% |
74,736 |
|
14.2 |
% |
45,470 |
|
15.6 |
% |
29,266 |
|
12.1 |
% |
Comparable sales growth excl. gas |
11.0 |
% |
|
11.2 |
% |
|
10.6 |
% |
|
12.5 |
% |
|
14.4 |
% |
|
9.6 |
% |
|
Online sales1 |
1,869 |
|
75.1 |
% |
632 |
|
128.5 |
% |
1,236 |
|
56.5 |
% |
5,547 |
|
59.8 |
% |
1,968 |
|
105.1 |
% |
3,579 |
|
42.7 |
% |
Net
consumer online sales1 |
2,604 |
|
84.2 |
% |
632 |
|
128.5 |
% |
1,972 |
|
73.4 |
% |
7,576 |
|
67.4 |
% |
1,968 |
|
105.1 |
% |
5,608 |
|
57.4 |
% |
Operating income (loss) |
16 |
|
(97.7) |
% |
(417) |
|
NM2 |
481 |
|
46.5 |
% |
2,191 |
|
(16.6) |
% |
1,006 |
|
(43.0) |
% |
1,380 |
|
21.4 |
% |
Operating margin |
0.1 |
% |
(4.2) |
pts |
(3.6) |
% |
NM2 |
5.9 |
% |
1.2 |
pts |
2.9 |
% |
(1.1) |
pts |
2.2 |
% |
(2.0) |
pts |
4.7 |
% |
0.4 |
pts |
Underlying operating income |
811 |
|
10.8 |
% |
442 |
|
7.9 |
% |
418 |
|
18.4 |
% |
3,594 |
|
31.2 |
% |
2,466 |
|
45.5 |
% |
1,325 |
|
10.3 |
% |
Underlying operating margin1 |
4.1 |
% |
(0.3) |
pts |
3.9 |
% |
(0.4) |
pts |
5.1 |
% |
0.1 |
pts |
4.8 |
% |
0.6 |
pts |
5.4 |
% |
1.1 |
pts |
4.5 |
% |
(0.1) |
pts |
Diluted EPS |
(0.01) |
|
NM2 |
|
|
|
|
1.30 |
|
(16.8) |
% |
|
|
|
|
Diluted underlying EPS1 |
0.53 |
|
7.3 |
% |
|
|
|
|
2.26 |
|
35.3 |
% |
|
|
|
|
Free
cash flow |
262 |
|
(73.1) |
% |
|
|
|
|
2,199 |
|
22.2 |
% |
|
|
|
|
- For comparable information on a pro forma 13/52-week basis,
refer to section Pro forma information: financial data on a
13/52-week basis in this press release.
- Not meaningful, as operating income in the U.S. was a loss and
diluted underlying EPS was negative in Q4 2020.
Comments from Frans Muller, President and CEO of
Ahold Delhaize
"In 2020, the effects of COVID-19 and social unrest deeply
impacted the communities we serve, and created unprecedented
challenges for the Ahold Delhaize brands. Despite these challenges,
the hundreds of thousands of associates across all our brands,
distribution centers, and support offices demonstrated courage and
care in protecting the safety of our stores and distribution
centers, while providing great customer service and community
support. I would like to once again thank each and every one of
them for their tremendous efforts in 2020.
"To support the efforts of associates across our brands and
businesses, we made significant investments in additional safety
measures, enhanced associate pay and benefits, and substantial
charitable donations, which resulted in approximately
€210 million in COVID-19-related costs in the fourth quarter,
and a total of approximately €680 million in 2020. We also
committed to contribute over €1.4 billion to improve the security
of pension benefits for associates and reduce financial risk for
Giant Food and Stop & Shop. In addition, we shifted capital
expenditure spending in 2020 to accelerate investments in digital
and omnichannel capabilities. As a result of these combined
efforts, we believe we ended 2020 in a strategically stronger
position than before the COVID-19 pandemic began. We remain focused
on making additional investments, as needed, to meet associate,
customer and community needs – including continued support of
health and safety, which remains a top priority to enable us to
further strengthen our brands' positions as leading local
omnichannel retailers, now and in the future.
"We are pleased with the underlying Q4 performance in both the
U.S. and Europe. Our leading local omnichannel platform generated
nearly 130% net consumer online sales growth in the U.S. and nearly
75% growth in Europe in the quarter, at constant exchanges rates.
This strong Q4 performance allowed us to exceed our underlying EPS
outlook and produce €2.2 billion in free cash flow in 2020, despite
significant payments to withdraw or improve the security of pension
plans in the U.S. and the Netherlands, and our accelerated
investments in digital and omnichannel capabilities.
"Last quarter, we outlined plans to invest in our business to
solidify our position as an industry-leading local omnichannel
retailer in 2021 and beyond in order to increase our share of the
consumer wallet, and find ways to improve our online productivity.
Since then, we continued to bring to life, and build upon, several
important initiatives, including significantly increasing our
online capacity, driven in part by opening over 1,130 U.S.
click-and-collect locations to date; launching the GIANT Company
Choice Pass on January 19th, which offers unlimited free grocery
delivery and pickup with an annual membership fee of $98; and
rolling out the no-fee home delivery service AH Compact to
additional markets in the Netherlands. We are also exceeding the
key multi-year financial targets we outlined at our 2018 Capital
Markets Day. As a result, we feel increasingly confident about our
prospects in 2021 and beyond, and are now setting more ambitious
targets in several key areas of our business, which include:
- Group net consumer online sales grew to €7.6 billion in 2020,
exceeding our target of €7 billion one year early. This includes
bol.com net consumer online sales of €4.3 billion in 2020, which
surpassed our target of €3.5 billion, also one year early. With
increased capacity and continued momentum, we now expect Group net
consumer online sales to grow over 30% in 2021, which includes over
60% growth in U.S. online sales and achieving a new target of at
least €5 billion in net consumer online sales at
bol.com.
- Improving online productivity across all of our brands is one
of our highest priorities for 2021 and beyond. We will accelerate
U.S. online grocery fulfillment productivity growth through
end-to-end improvement of processes, systems, operating practices
and innovation, beginning in 2021 and continuing through the end of
2022, which should result in a lower cost to serve. To improve
efficiency even further, we will open an additional
micro-fulfillment center with Autostore/Swisslog inside of a new
omnichannel fulfillment center in Philadelphia in Q4 2021. In both
the U.S. and Europe, we will utilize technology to improve route
optimization in order to reduce last-mile costs. At bol.com, we are
pleased with the team's ability to drive positive operating profits
and double-digit return on capital in 2020, and we expect this to
continue in 2021.
- We are raising our cumulative cost savings target for 2019-2021
to €2.3 billion, up from our previous target of €1.9 billion. We
achieved €844 million in cost savings in 2020 and expect to achieve
at least €750 million in additional cost savings in 2021, which is
above our previous annual targets of €600 million for both years.
These cost savings efforts will enable our brands to invest in
providing more value and convenience to customers, and help us
mitigate cost pressures in the business, which we expect will lead
to a solid Group underlying operating margin profile in 2021, which
is expected to be at least 4%.
"Importantly, for the benefit of all our stakeholders, we aim to
strike the appropriate balance between investing in the health and
safety of associates and customers, supporting our local
communities, prioritizing environmental, social, and governance
(ESG) initiatives, and returning capital to shareholders. We
therefore propose a cash dividend of €0.90 for the financial year
2020, an increase of 18.4% compared to 2019, reflecting our
ambition to sustainably grow our dividend per share. This
represents a payout ratio of 40%, based on the expected dividend
payment on underlying income from continuing operations on a
comparable 52-week period."
Continued progress on initiatives to solidify
position as industry-leading local omnichannel retailer in
2021+
Ahold Delhaize will continue to solidify its position as
industry-leading local omnichannel retailer in 2021 and beyond,
concentrating on (1) significantly stepping up online capacity,
supply chain and technological capabilities; (2) advancing
omnichannel offerings to customers; and (3) addressing the call to
action in ESG. We would like to highlight the following
initiatives, which add to and build upon many of the initiatives
announced in Q3 2020:
Continuing to solidify our position as an industry-leading local
omnichannel retailer in 2021+ |
- We will expand our reach to additional customers in the New
York trade area, adding incremental sales in the U.S., with the
acquisition of Fresh Direct, an online grocer based in New York
City, which closed on January 5, 2021.
- The acquisition of 39 stores from Deen Supermarkets in the
Netherlands will expand our reach to additional customers in the
region. The deal is expected to close in the second half of
2021.
- We will continue to optimize our fulfillment capabilities,
while maintaining the flexibility to adapt with the marketplace; to
this end, we announced a new partnership with Autostore/Swisslog to
open a micro-fulfillment center inside of a new omnichannel
fulfillment center in Philadelphia in Q4 2021.
- Albert Heijn expanded its "AH Compact" no-fee home delivery
service targeting smaller households to additional markets in the
Netherlands, with plans to expand to more markets in 2021.
- In November, Ahold Delhaize was recognized as a world leader in
the Food and Staples Retailing sector according to the 2020 Dow
Jones Sustainability World Index (DJSI World), based on climbing to
the #1 position in the U.S./Europe and #2 globally in the S&P
Global CSA. Our score of 83 out of 100 was a 14-point improvement
on 2019 and well above the industry average of 31 points.
- We are committed to science-based targets for 2030 to halve
carbon emissions from our operations and reduce value chain
emissions by 15%. The Company achieved 17% emissions reduction from
own operations in 2020 compared to 2018.
- In January, Albert Heijn announced it halved carbon emissions
per store since 2008 and switched to 100% Dutch wind energy.
- U.S. is partnering with HowGood to bring customers an
easy-to-use environmental and social impact rating system. Giant
Food, The GIANT Company, and Stop & Shop began to offer the
rating system to customers shopping online last week.
- U.S. brands joined the CEO Action for Diversity & Inclusion
program, the largest CEO-driven business commitment to advance
diversity and inclusion in the workplace.
- U.S. brands were recognized as "Best Places to Work for LGBTQ+
Equality," receiving a perfect score on the Human Rights Campaign
Foundation's 2021 Corporate Equality Index.
- In December, we closed a €1 billion sustainability-linked
revolving credit facility. The facility draws a connection between
its cost of borrowing and the achievement of the Company's
ambitions to reduce food waste, reduce carbon emissions, and
promote healthier eating as measured by percentage of own-brand
food sales from healthy products.
|
Q4 Financial highlights
Group net sales were €19.6 billion, up 12.8%, or 18.0% at
constant exchange rates, driven largely by 11.0% comparable sales
growth excluding gasoline. Group comparable sales were positively
impacted by demand related to COVID-19. Group net consumer online
sales grew 84.2% in Q4 at constant exchange rates. Group underlying
operating margin in Q4 was 4.1%, down 0.3 percentage points from
the prior year at constant exchange rates. Underlying operating
margin was impacted by significant costs related to COVID-19, which
amounted to approximately €210 million in Q4, a planned
pension expense increase in the Netherlands, transition expenses
related to the U.S. supply chain transformation initiative, and
other one-time items in the U.S. These impacts were partly offset
by a margin benefit of 0.2 percentage points from the calendar
effect of a 14-week quarter, compared to 13-week quarter in 2019.
Group IFRS-reported operating margin was 0.1% in Q4, impacted by
the U.S. multi-employer pension plan withdrawal and settlement
agreements.
U.S. comparable store sales excluding gasoline grew 11.2%, due
largely to the COVID-19 outbreak. Brand performance was strong
across the board. Online sales in the segment were up 128.5% in
constant currency. Underlying operating margin in the U.S. was
3.9%, down 0.4 percentage points from the prior year at constant
exchange rates, impacted by significant costs related to COVID-19.
One-time items and the previously announced transition expenses
related to the U.S. supply chain transformation initiative also
unfavorably impacted margins by 0.5 percentage points. These
impacts were partly offset by a margin benefit of 0.4 percentage
points from the calendar effect of a 14-week quarter, compared to
13-week quarter in 2019.
Europe's comparable sales excluding gasoline grew 10.6%,
positively impacted by demand related to COVID-19. Net consumer
online sales in the segment were up 73.4%. Underlying operating
margin in Europe was 5.1%, up 0.1 percentage points from the prior
year at constant exchange rates. Operating leverage from higher
sales growth was offset in part by higher costs related to COVID-19
as well as €11 million of
pension expense in the Netherlands during the quarter. There was a
margin benefit of 0.1 percentage points from the calendar effect of
a 14-week quarter, compared to a 13-week quarter in 2019.
At bol.com, the online retail platform in the Benelux included
within the Europe segment's results, net consumer sales grew by
69.6%. Bol.com's sales from third-party sellers grew 110% in the
quarter, with over 41,000 merchant partners on the platform.
Underlying income from continuing operations was
€561 million, down 1.0% in the quarter. Ahold Delhaize's net
loss was €9 million, down in the quarter due primarily to
previously announced provisions for U.S. multi-employer pension
plan withdrawal and settlement agreements, which amounted to €841
million. Diluted EPS was €(0.01) and diluted underlying EPS was
€0.53, up 2.8%. In the quarter, 12.3 million shares were purchased
for €296 million, bringing the total amount to €1,001 million
in 2020.
Outlook
COVID-19 continues to create significant uncertainty in 2021. In
addition, COVID-19, and to a smaller extent, a 53-week calendar,
significantly distorted Ahold Delhaize's 2020 financial results.
Lapping these effects will impact 2021 results, which returns to a
52-week calendar.
In 2021, underlying operating margin is expected to be at least
4%. This outlook reflects a balanced approach with cost savings
largely offsetting cost pressures. As there continues to be
significant uncertainty due to COVID-19, a more specific range is
not provided.
Underlying EPS is expected to grow by mid- to high-single digits
relative to 2019. Management believes that framing 2021 underlying
EPS guidance relative to 2019, which was prior to COVID-19 and also
on a 52-week calendar, provides a helpful context.
Free cash flow is expected to be approximately €1.6 billion.
This puts the Company on track to
reach €5.6 billion in cumulative free
cash flow from 2019-2021 (averaging nearly €1.9 billion annually),
which exceeds the Capital Markets Day 2018 target of €5.4 billion
(averaging €1.8 billion annually). Capital expenditure is expected
to be around €2.2 billion, and reflects the Company's accelerated
investments in digital and omnichannel capabilities and investments
needed to improve recent M&A operations and capabilities. In
addition, Ahold Delhaize remains committed to its dividend policy
and share buyback program in 2021, as previously stated.
|
Full-year outlook |
|
Underlying operating margin1 |
Underlying EPS |
Save for Our Customers |
|
Capital expenditures |
Free cash flow2 |
|
Dividend payout ratio3 4 |
Share buyback4 |
Updated outlook |
2021 |
|
At least 4% |
Mid- to high-single-digit growth vs. 2019 |
> €750 million |
|
~ €2.2 billion |
~ €1.6 billion |
|
40-50% year-over-year increase in dividend
per share |
€1 billion |
- No significant impact to underlying operating margin from
returning to a 52-week calendar versus a 53-week calendar in 2020,
though the return to a 52-week calendar will negatively impact net
sales for the full year by 1.5-2.0%. Comparable sales growth will
be presented on a comparable 52-week basis. The margin includes a
dilution of $50 million in transition expenses from the U.S. supply
chain initiative.
- Excludes M&A.
- Calculated as a percentage of underlying income from continuing
operations.
- Management remains committed to the share buyback and dividend
program, but given the uncertainty caused by COVID-19, they will
continue to monitor macroeconomic developments. The program is also
subject to changes in corporate activities, such as material
M&A activity.
Pro forma information: financial data on a 13/52-week
basis
Considering that the financial year consisted of 53 weeks in
2020, compared with 52 weeks in 2019, with the last quarter of 2020
having 14 weeks, compared to 13 weeks in 2019, Ahold Delhaize has
prepared pro forma information in order to provide a comparable
base for the results. The pro forma information presented below is
intended to provide comparable information on a 13-week basis for
the fourth quarter and 52-week basis for the full year of 2020
versus 2019.
This pro forma information represents an estimate of the results
related to a 13-week period for Q4 2020 and a 52-week period for
the full-year 2020, and is calculated by deducting the estimated
results related to the 53rd week of 2020 from the reported results
for the fourth quarter and the full-year 2020, as presented in the
other sections of this press release.
|
Pro forma information |
|
Ahold
Delhaize Group |
The
United States |
Europe |
Ahold
Delhaize Group |
The
United States |
Europe |
€
million, except per share data |
Q4 2020 |
% change constant rates |
Q4 2020 |
% change constant rates |
Q4 2020 |
% change constant rates |
2020 |
% change constant rates |
2020 |
% change constant rates |
2020 |
% change constant rates |
(13 weeks 2020 vs. 2019) |
(52 weeks 2020 vs. 2019) |
Net
sales |
18,415 |
|
10.9 |
% |
10,627 |
|
10.3 |
% |
7,788 |
|
11.6 |
% |
73,551 |
|
12.4 |
% |
44,673 |
|
13.4 |
% |
28,879 |
|
10.6 |
% |
Online sales |
1,743 |
|
63.4 |
% |
581 |
|
109.5 |
% |
1,163 |
|
47.2 |
% |
5,422 |
|
56.2 |
% |
1,916 |
|
99.4 |
% |
3,506 |
|
39.8 |
% |
Net
consumer online sales |
2,428 |
|
71.7 |
% |
581 |
|
109.5 |
% |
1,848 |
|
62.5 |
% |
7,400 |
|
63.5 |
% |
1,916 |
|
99.4 |
% |
5,483 |
|
53.9 |
% |
Underlying operating margin |
3.9 |
% |
(0.5) |
pts |
3.5 |
% |
(0.8) |
pts |
5.0 |
% |
— |
pts |
4.8 |
% |
0.6 |
pts |
5.4 |
% |
1.0 |
pts |
4.5 |
% |
(0.1) |
pts |
Diluted
underlying EPS |
0.47 |
|
(6.0) |
% |
|
|
|
|
2.20 |
|
31.4 |
% |
|
|
|
|
Cautionary notice
This communication contains information that qualifies as inside
information within the meaning of Article 7(1) of the EU Market
Abuse Regulation.
This communication includes forward-looking statements. All
statements other than statements of historical facts may be
forward-looking statements. Words and expressions such as
strengthens, 2021 and beyond, committed, improve, maintain(ing),
constant, guidance, target, accelerate, remain(s), focus(ed),
continued, further, future, to date, exceeding, increasingly,
confident, prospects, ambitious, now, expect(ed), through, end of,
2022, should, enable, aim, propose, will, second half of 2021,
plans, 2030, by, to bring, uncertain(ty), believes, provides,
strategy, intended, subject to or other similar words or
expressions are typically used to identify forward-looking
statements.
Forward-looking statements are subject to risks, uncertainties
and other factors that are difficult to predict and that may cause
the actual results of Koninklijke Ahold Delhaize N.V. (the
“Company”) to differ materially from future results expressed or
implied by such forward-looking statements. Such factors include,
but are not limited to, risks relating to the Company’s inability
to successfully implement its strategy, manage the growth of its
business or realize the anticipated benefits of acquisitions; risks
relating to competition and pressure on profit margins in the food
retail industry; the impact of economic conditions on consumer
spending; turbulence in the global capital markets; political
developments, natural disasters, pandemics; climate change; raw
material scarcity and human rights developments in the supply
chain; disruption of operations and other factors negatively
affecting the Company’s suppliers; the unsuccessful operation of
the Company’s franchised and affiliated stores; changes in supplier
terms and the inability to pass on cost increases to prices; risks
related to corporate responsibility and sustainable retailing; food
safety issues resulting in product liability claims and adverse
publicity; environmental liabilities associated with the properties
that the Company owns or leases; competitive labor markets, changes
in labor conditions and labor disruptions; increases in costs
associated with the Company’s defined benefit pension plans; the
failure or breach of security of IT systems; the Company’s
inability to successfully complete divestitures and the effect of
contingent liabilities arising from completed divestitures;
antitrust and similar legislation; unexpected outcomes in the
Company’s legal proceedings; additional expenses or capital
expenditures associated with compliance with federal, regional,
state and local laws and regulations; unexpected outcomes with
respect to tax audits; the impact of the Company’s outstanding
financial debt; the Company’s ability to generate positive cash
flows; fluctuation in interest rates; the change in reference
interest rate; the impact of downgrades of the Company’s credit
ratings and the associated increase in the Company’s cost of
borrowing; exchange rate fluctuations; inherent limitations in the
Company’s control systems; changes in accounting standards; adverse
results arising from the Company’s claims against its
self-insurance program; the Company’s inability to locate
appropriate real estate or enter into real estate leases on
commercially acceptable terms; and other factors discussed in the
Company’s public filings and other disclosures.
Forward-looking statements reflect the current views of the
Company’s management and assumptions based on information currently
available to the Company’s management. Forward-looking statements
speak only as of the date they are made, and the Company does not
assume any obligation to update such statements, except as required
by law.
- 210216_AD_Q4FY_Press release
- 210216_AD_Q4FY_Summary report
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