Highlights
* Fourth quarter operating income up 49% to EUR 365 million
* Fourth quarter net income up 9% to EUR 285 million
* Full year operating income up 12% to EUR 1.2 billion
* Full year net income EUR 1.1 billion
* Full year underlying retail operating margin 5%
* Dividend increased by 12% to EUR 0.18 per share
Ahold today published its summary financial report for the
fourth quarter and full year 2008. CEO John Rishton said: "In 2008,
we delivered solid performance with particularly strong results in
the last quarter and achieved an underlying retail operating margin
of 5% for the full year. We have achieved our annual targets for
each of the last three years thanks to the hard work and dedication
of our employees. I am pleased to announce that we propose to
increase our annual dividend for 2008 by 12% to EUR 0.18 per common
share.
"During 2008, we completed the Value Improvement Program,
including the rebranding of Stop & Shop and Giant-Landover.
This strengthened our relative price position and led to market
share gains and improved financial results in the second half of
the year. Meanwhile, Giant-Carlisle continued its strong
performance, gaining significant market share. In Europe, Albert
Heijn had another excellent year, including the conversion of 54
Schuitema stores to the Albert Heijn banner following the
divestment of our stake in Schuitema. Albert/Hypernova was able to
maintain its market position and break even in very competitive
markets in the Czech Republic and Slovakia.
"Although the economic environment continues to deteriorate, we
believe that the business is well prepared to respond to the
effects of recession. We have a strong balance sheet and we have
repositioned our businesses over recent years to give better value
to our customers. We continue to improve our offer and reduce
costs. As a business, we have the skills and capabilities to
respond quickly and effectively to changes in consumer behavior.
Despite the continued deterioration of the economic environment, in
the first weeks of 2009 we have seen no significant changes in
consumer behavior.
"We are confident that we have the right strategy, business
model and customer offering. However we recognize that in the
current conditions we may need to adjust the balance between sales,
market share, profits and cash even more rapidly than we have in
the past. Consequently, we will work to balance these elements in
the near-term to ensure we are able to deliver our longer-term
goals of sustainable 5% sales growth and 5% retail operating
margin.
"Capital expenditure in 2009 will be below EUR 1 billion. At
current exchange rates, we expect our net interest expense to
increase and be in the range of EUR 290 million to EUR 310 million,
primarily due to the stronger dollar and lower yields on cash."
Financial performance
Fourth quarter 2008
Net sales were EUR 6.6 billion, up 12.9% from the same period
last year. At constant exchange rates, net sales increased by
5.9%.
Operating income was EUR 365 million, EUR 120 million higher
than in the same period last year. Retail operating income was EUR
392 million, a retail operating margin of 5.9% compared to 4.9% in
the same quarter last year. Corporate Center costs were EUR 27
million for the quarter, down EUR 6 million from the same period
last year.
Net income was EUR 285 million, up EUR 23 million compared to
the same quarter last year, reflecting a higher operating income,
partially offset by lower income from discontinued operations and
higher income taxes.
Cash flow before financing was EUR 319 million, EUR 263 million
lower than in the same period last year, primarily as a result of
higher capital expenditures (related to both remodeling at
Giant-Landover and converting former Schuitema stores into the
Albert Heijn format) and proceeds from the divestment of Tops in
the fourth quarter of 2007.
Full year 2008
Net sales were EUR 25.7 billion, up 3.3% compared to last year.
At constant exchange rates, net sales increased by 6.9%.
Operating income was EUR 1.2 billion, EUR 130 million higher
than last year. Retail operating income was EUR 1.3 billion, an
underlying retail operating margin of 5.0%. This was in line with
the 4.8% to 5.3% guidance for 2008. Corporate Center costs were EUR
96 million, down EUR 24 million from a year ago.
Net income was EUR 1.1 billion, down EUR 1.9 billion compared to
last year, which included a EUR 2.0 billion gain on
divestments.
Cash flow before financing was EUR 1.3 billion, EUR 5.4 billion
lower than last year which included EUR 5.4 billion proceeds from
the divestments of U.S. Foodservice, Tops and Ahold's operations in
Poland.
(Euros in Q4 Q4 % FY FY %
millions) 2008 2007 Change 2008 2007 Change
Net sales 6,595 5,840 12.9%* 25,722 24,893 3.3%*
Operating income 365 245 49.0% 1,198 1,068 12.2%
Income from
continuing 283 205 38.0% 868 753 15.3%
operations
Net income 285 262 8.8% 1,079 2,945 (63.4%)
* At constant exchange rates, net sales increased by 5.9% in the
fourth quarter and 6.9% in the full year.
Performance by business segment
Stop & Shop/Giant-Landover
For the fourth quarter, net sales of $ 4.0 billion were up 2.8%
from the same period last year. Net sales included $ 15 million of
sales to Tops (prior to its divestment, such sales were recorded as
inter-company sales). Identical sales were up 2.3% at Stop &
Shop (4.0% excluding gasoline net sales) and up 1.1% at
Giant-Landover (1.0% excluding gasoline net sales), despite lower
pharmacy sales. Operating income was $ 207 million (or 5.1% of net
sales), up $ 84 million from the same period last year.
For the full year, net sales of $ 17.1 billion were up 2.4%
compared to last year. Net sales included $ 114 million of sales to
Tops. Identical sales were up 2.4% at Stop & Shop (2.1%
excluding gasoline net sales) and down 0.4% at Giant-Landover (0.5%
excluding gasoline net sales), impacted by lower pharmacy sales.
Operating income was $ 701 million (or 4.1% of net sales), up $ 39
million from last year.
Giant-Carlisle
For the fourth quarter, net sales of $ 1.1 billion were up 7.9%
compared to the same period last year. Identical sales were up 4.6%
(5.7% excluding gasoline net sales). Operating income was $ 60
million (or 5.4% of net sales), up $ 12 million compared to the
same period last year.
For the full year, net sales of $ 4.7 billion were up 10.0%
compared to last year. Identical sales were up 6.3% (4.7% excluding
gasoline net sales). Operating income was $ 233 million (or 4.9% of
net sales), up $ 20 million compared to last year.
Albert Heijn
For the fourth quarter, net sales of EUR 2.2 billion were up
11.6% compared to the same period last year. Net sales increased at
Albert Heijn supermarkets by 12.2% to EUR 2.0 billion due in part
to the conversion of former Schuitema stores into the Albert Heijn
format in the second half of the year. Identical sales at Albert
Heijn supermarkets increased 5.2%. Operating income was EUR 180
million (or 8.1% of net sales), up EUR 19 million from last
year.
For the full year, net sales of EUR 9.0 billion were up 12.9%
compared to last year. Identical sales at Albert Heijn supermarkets
were up 9.2%. Operating income was EUR 648 million (or 7.2% of net
sales), up EUR 75 million compared to last year, benefiting from
lower pension charges.
Albert / Hypernova (Czech Republic and Slovakia)
For the fourth quarter, net sales increased 3.0% to EUR 440
million. At constant exchange rates, net sales decreased 2.7%.
Identical sales were down 3.1%. Operating income was EUR 9 million,
up EUR 4 million from the same period last year.
For the full year, net sales increased 13.9% to EUR 1.8 billion.
At constant exchange rates, net sales increased 2.8%. Identical
sales were up 3.2%. Operating income was EUR 1 million, up EUR 1
million from last year.
Unconsolidated joint ventures
For the fourth quarter, Ahold's share in income of joint
ventures decreased 6.5% to EUR 29 million. For the full year,
Ahold's share in income of joint ventures was down 21.0% to EUR 109
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.
* Net sales in local currency. In certain instances, net sales are
presented in local currency. Ahold's management believes this
measure provides a better insight into the operating performance
of Ahold's foreign subsidiaries.
* 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 growth of its
identical store 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 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) Q4 2008 Q4 2007 FY 2008 FY 2007
Cash flow before 319 582 1,272 6,627
financing
Net cash from (214) (1,051) (1,717) (5,140)
financing activities
Net cash from
operating, investing 105 (469) (445) 1,487
and
financing activities
Ahold's financial year
* Ahold's reporting calendar is a 52 or 53 week period ending on
the Sunday nearest to December 31 in any given year.
* The 2008 reporting calendar was a 52 week period ending December
28, 2008. The quarters were:
First Quarter (16 weeks) December 31, 2007 through April 20, 2008
Second Quarter (12 weeks) April 21 through July 13, 2008
Third Quarter (12 weeks) July 14 through October 5, 2008
Fourth Quarter (12 weeks) October 6 through December 28,
* The 2009 reporting calendar will be a 53 week period ending on
January 3, 2010. The quarters in 2009 are:
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 through January 3, 2010
This earnings release should be read in conjunction with Ahold's
summary financial report for the full year and fourth quarter,
which is available on www.ahold.com and Ahold's 2008 annual report,
which is expected to be published on March 9, 2009.
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 annual dividend for 2008,
Ahold's response to the economic environment and its ability to
give better value to its customers and to continue to improve its
offer and cost reduction, Ahold's ability to respond to changes in
consumer behavior and market conditions, Ahold's strategy and
business model and the expected sales growth, underlying retail
operating margin, capital expenditure and net interest expense for
full year 2009. 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 Fourth Quarter and Full Year 2008 Summary Financial Report
: http://hugin.info/130711/R/1294179/293474.pdf
This announcement was originally distributed by Hugin. The
issuer is solely responsible for the content of this
announcement.
Copyright � Hugin AS 2009. All rights reserved.
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