Highlights
* Sales increased 7.6% at constant exchange rates
* Operating income EUR 262 million, up EUR 26 million
* Net income EUR 195 million, down EUR 19 million
* Improved identical sales at Stop & Shop and
Giant-Landover
* Underlying retail operating margin guidance unchanged
Amsterdam, the Netherlands - Ahold today published its interim
financial report for the first three quarters of 2008. Ahold CEO
John Rishton said "We delivered a solid performance in our third
quarter. I was particularly pleased with the increase in identical
sales at Stop & Shop and Giant-Landover as a result of the
actions we have taken under the Value Improvement Program over the
last two years.
"The company has a healthy balance sheet and is well-positioned
to offer value to our customers in the current economic
environment. The price investments made in recent years have
strengthened the competitive position of all our banners, but we
remain vigilant and will respond to changes in consumer and
competitor behavior.
"Underlying retail operating margin guidance for the year
remains unchanged at 4.8%- 5.3%."
Financial performance
Third Quarter
Net sales were EUR 5.8 billion, up 3.9% from the same period
last year. At constant exchange rates, net sales increased by
7.6%.
Operating income was EUR 262 million, EUR 26 million higher than
in the same period last year. Retail operating income was EUR 285
million, a retail operating margin of 4.9% compared to 4.8% in the
same period last year. Corporate Center costs were EUR 23 million
for the quarter, down EUR 3 million from the same period last
year.
Net income was EUR 195 million, down EUR 19 million compared to
the same quarter last year, reflecting higher income taxes and
lower income from joint ventures.
Cash flow before financing was EUR 47 million, EUR 322 million
lower than in the same period last year, primarily as a result of
higher income taxes paid, higher capital expenditures (related to
both remodeling at Giant-Landover and converting former Schuitema
stores into the Albert Heijn format), and lower interest
received.
Year-to-date
Net sales were EUR 19.1 billion, up 0.4% from the same period
last year. At constant exchange rates, net sales increased by
7.2%.
Operating income was EUR 833 million, EUR 10 million higher than
in the same period last year. Retail operating income was EUR 902
million, a retail operating margin of 4.7% compared to 4.9% in the
same period last year. Corporate Center costs were EUR 69 million,
down EUR 18 million from the same period last year.
Net income was EUR 794 million, down EUR 1.9 billion compared to
the same period last year, which included a EUR 2 billion gain on
divestments.
Cash flow before financing was EUR 953 million, EUR 5.1 billion
lower than in the same period last year which included EUR 5.2
billion proceeds from the divestment of U.S. Foodservice and the
Company's operations in Poland.
(Euros in Q3 Q3 % Change Q3 YTD Q3 YTD % Change
millions) 2008 2007 2008 2007
Net sales 5,806 5,587 3.9%* 19,127 19,053 0.4%*
Operating 262 236 11.0% 1.2%
income 833 823
Income from
continuing 187 222 (15.8%) 585 548 6.8%
operations
Net income 195 214 (8.9%) (70.4%)
794 2,683
* At constant exchange rates, net sales increased by 7.6% in the
third quarter and 7.2% in the first three quarters of the year.
Performance by business segment
Stop & Shop/Giant-Landover
For the third quarter, net sales of USD 3.9 billion were up 4.4%
compared to the same quarter last year. Net sales included USD 14
million of sales to Tops (prior to its divestment, such sales were
recorded as inter-company sales). Identical sales were up 4.6% at
Stop & Shop (3.8% excluding gasoline net sales) and up 0.7% at
Giant-Landover (0.6% excluding gasoline net sales), despite lower
pharmacy sales. Operating income was USD 167 million (or 4.3% of
net sales), up USD 17 million from the same period last year.
Year-to-date, net sales of USD 13.1 billion were up 2.3%
compared with the same period last year. Net sales included USD 99
million of sales to Tops. Identical sales were up 2.5% at Stop
& Shop (1.5% excluding gasoline net sales) and down 0.9% at
Giant-Landover (1.0% excluding gasoline net sales). Operating
income was USD 494 million (or 3.8% of net sales), down USD 45
million from the same period last year.
Giant-Carlisle
For the third quarter, net sales of USD 1.1 billion were up
11.8% compared to the same quarter last year. Identical sales were
up 8.0% (5.4% excluding gasoline net sales). Operating income was
USD 50 million (or 4.6% of net sales), up USD 8 million compared to
the same period last year.
Year-to-date, net sales of USD 3.6 billion were up 10.7%
compared with the same period last year. Identical sales were up
6.8% (4.3% excluding gasoline net sales). Operating income was USD
173 million (or 4.8% of net sales), up USD 8 million compared to
the same period last year.
Albert Heijn
For the third quarter, net sales of EUR 2 billion were up 12.2%
compared to the same quarter last year. Net sales increased at
Albert Heijn supermarkets by 12.6% to EUR 1.9 billion. Identical
sales at Albert Heijn supermarkets increased 8.3%. Operating income
was EUR 141 million (or 7.0% of net sales), up EUR 9 million from
the prior year, primarily due to lower pension charges.
Year-to-date, net sales of EUR 6.8 billion were up 13.3%
compared to the same period last year. Identical sales at Albert
Heijn supermarkets were up 10.5%. Operating income was EUR 468
million (or 6.9% of net sales), up EUR 56 million from the same
period last year.
Albert / Hypernova (Czech Republic and Slovakia)
For the third quarter, net sales increased 15.8% to EUR 411
million. At constant exchange rates, net sales increased 1.5%.
Identical sales were up 2.6%. Operating losses were EUR 3 million,
compared to a EUR 5 million operating loss in the same quarter last
year.
Year-to-date, net sales increased 17.9% to EUR 1.3 billion. At
constant exchange rates, net sales increased 4.8%. Identical sales
were up 5.5%. Operating losses were EUR 8 million compared to a EUR
5 million operating loss in the same period last year.
Unconsolidated joint ventures
For the third quarter, Ahold's income from joint ventures
decreased 43.4% to EUR 30 million. Year-to-date, Ahold's share in
income of joint ventures was down 25.2% to EUR 80 million. The
decrease was primarily due to ICA, mainly as a result of lower
gains on the sale of assets and weak performance in Norway.
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 and related charges.
Ahold's management believes this measure provides better insight
into the underlying operating performance of Ahold's retail
operations.
* 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) Q3 2008 Q3 2007 Q3 YTD Q3 YTD
2008 2007
Cash flow before financing 47 369 953 6,045
Net cash from financing (85) (3,617) (1,503) (4,089)
activities
Net cash from operating,
investing and (38) (3,248) (550) 1,956
financing activities
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 three quarters 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 impact of the actions under
the Value Improvement Program on sales, Ahold's performance in the
current economic enivronment, the impact of price investments on
Ahold's competitive position, Ahold's response to changes in
consumer and competitor behavior and the expected underlying retail
operating margin 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".
This announcement was originally distributed by Hugin. The
issuer is solely responsible for the content of this
announcement.
Ahold Earnings Q3 2008:
http://hugin.info/130711/R/1271617/282034.pdf
Ahold Earnings Q3 2008 Interim Financial Report:
http://hugin.info/130711/R/1271617/282035.pdf
Copyright � Hugin AS 2008. All rights reserved.
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