ZAANDAM, Netherlands Aug. 30, 2001 (PRIMEZONE) - Ahold (NYSE:AHO) 2nd Quarter Highlights:
-- Net earnings rise 37.2% to Euro 351.6 million
-- Sales increase 29.3% to Euro 16.1 billion, operating
earnings increase 28.7% to Euro 694.9 million
-- Strong organic sales (+8.4%) and earnings (+18.3%) growth
-- Earnings per share rise 20.8% to Euro 0.41 (+15.5% excluding
currency impact)
-- Interim dividend rises 22% to Euro 0.22
-- Confirmation anticipated earnings per share growth for full-year
2001: 15%, excluding currency impact and before goodwill
amortization
Ahold, the international food retail and foodservice company, achieved second quarter 2001 net earnings before goodwill amortization of Euro $351.6 million (2000: Euro $256.2 million), a 37.2% increase. After amortization of goodwill, net earnings amounted to Euro $323.8 million. Earnings per share, before amortization of goodwill, rose 20.8% to Euro $0.41 (2000: Euro $0.34). Excluding currency fluctuations, specifically the higher average exchange rate of the U.S. dollar, earnings per common share grew 15.5%.
For the first half year, sales increased by 46.4% to Euro $34.3 billion, operating earnings (EBITA) grew 41.7% to Euro $1.4 billion and earnings per share rose 18.7% to Euro $0.82 (excluding currency fluctuations +13.5%).
Remarks by Ahold President & CEO Cees van der Hoeven
Ahold President and CEO Cees van der Hoeven commented that the 2nd quarter and 1st half results clearly demonstrate the company is right on track and continues to grow briskly, both organically as well as through acquisitions. 'We are pleased with the strong growth in organic.sales (+8.4%) and organic operating earnings (+18.3%) during the 2nd quarter. In the United States, our organic sales growth numbers were very good, both in retail activities as well as in foodservice. Earnings at U.S. Foodservice, in particular, were extremely strong and confirm our vision to pursue further growth in this sector. The fact that earnings are on target whilst we consummated the impact of adverse economic conditions in Latin America as well as the conversion costs of Grand Union stores and start-up losses of Peapod, shows the underlying strength of our company. The outlook remains bright for the remainder of the year and we reconfirm that our net earnings will be sharply higher.'
Ahold 2nd quarter / 1st half 2001 results compared to 2000
In the second quarter, sales and earnings were positively influenced by the higher average exchange rate of the U.S. dollar (Euro $0.86 vs. Euro $0.93). Consolidated sales rose 29.3% to Euro $16.1 billion (2000: Euro $12.4 billion). Operational cash flow (EBITDA) also surged by 29.3% to Euro $1,053.9 million. Operating earnings before goodwill amortization (EBITA) increased by 28.7% to Euro $694.9 million (2000: Euro $539.9 million). Excluding currency impact, organic sales growth amounted to 8.4% and organic operating earnings growth totaled 18.3%. Earnings per share before goodwill amortization grew 20.8% to Euro $0.41. Excluding currency impact, earnings per share rose 15.5%.
United States (food retail)
In the United States, food retail sales rose 8.0% to U.S. $5.4 billion. As of January 1, 2001, U.S. food retail adapted its definition of net sales. Based on the former definition, net sales growth would have been 12.0%. All five retail operating companies contributed to sales growth. Organic retail sales grew 8.5%. Comparable sales rose 5.5% and identical sales increased by 5.1%. The remodeling of the 56 Grand Union stores was completed in the 2nd quarter. Costs incurred through the remodeling amounted to U.S. $13.8 million in the 2nd quarter and were charged to operating results. The results of these remodeled stores were positive at the end of the 2nd quarter. Internet grocer Peapod sustained an operating loss of U.S. $11.4 million. Excluding Grand Union and Peapod, operating earnings were 6% of sales.
United States (foodservice)
Sales at U.S. Foodservice surged 59.1% to U.S.$ 2.8 billion. This increase mainly reflects the consolidation of PYA/Monarch at year-end 2000. The acquisition of Mutual and Parkway earlier this year also contributed to sales growth. Organic sales growth amounted to 11.1%. Operating earnings at U.S. Foodservice rose 60.3% to U.S. $122.6 million. This increase reflects the consolidation of three acquisitions, but synergy benefits and cost savings also contributed significantly to enhanced earnings.
Europe
European sales rose 36.5% to Euro $5.3 billion, mainly reflecting the consolidation of Superdiplo in Spain and the ICA Group in Scandinavia. All Ahold companies in other European countries also generated higher sales. Organic growth of retail sales was 9.2%. In The Netherlands, sales growth partially reflects Schuitema's acquisition of the A & P stores and sales increases at its C1000 stores. Albert Heijn, Deli XL and the specialty stores also generated higher sales. Sales also grew in Poland, partly reflecting the new stores opened last year. In the Czech Republic, the hypermarkets and newly-opened stores contributed to sales growth. Portugal experienced satisfactory sales growth.
Operating earnings increased by 34.9% to Euro $191.7 million, attributable in part to the consolidation of Superdiplo and the ICA Group, where results were in line with expectations. In The Netherlands, Albert Heijn, Schuitema, Deli XL and the specialty stores contributed to the earnings increase. Activities in Poland and the Czech Republic sustained operating losses. Earnings in Portugal were lower as a result of lower gross margin.
Latin America
Latin American sales rose 1.8% to Euro 1.2 billion. Despite difficult economic conditions, Bompreco in Brazil, Santa Isabel in Chile and La Fragua in Guatemala all achieved higher sales, while at Disco in Argentina, sales lagged slightly. Organic retail sales grew 2.0%. Operating earnings amounted to Euro $34.8 million and was almost identical to last year. Due to weak economic conditions, growth of operating earnings slowed down. La Fragua realized higher operating earnings.
Asia
In Asia, sales amounted to Euro $96.7 million, identical to last year, and the operating loss totaled $Euro 4.6 million. Thailand generated a modest profit in the second quarter.
Corporate Costs
Corporate costs amounted to Euro $12.3 million.
Net Financial Expense
Net financial expense amounted to Euro $206.5 million, reflecting the consolidation of interest expenses at PYA/Monarch and Superdiplo and financing of acquisitions. The higher average exchange rate of the U.S. dollar also impacted negatively.
The rolling annual interest coverage ratio was 3.1 and the rolling annual ratio of net interest bearing debt/EBITDA amounted to 2.7.
Tax rate
The tax rate, expressed as a percentage of pre-tax earnings, amounted to 26.0% (2000: 25.5%).
Group equity
Group equity, expressed as a percentage of the balance sheet total, amounted to 14.4% (at year-end 2000: 12.5%). After conversion of the outstanding convertible subordinated notes, group equity amounts to 20.4% of the balance sheet total. Capital accounts amounted to 21.0% (year-end 2000: 19.5%). Shareholders' equity amounted to Euro 3.2 billion. During the second quarter of 2001, net earnings, after deduction of the preferred dividend and the final cash dividend over 2000, were added to shareholders' equity. In addition, proceeds from the issue of common stock related to exercised option rights and the positive balance of exchange rate fluctuations were added to shareholders' equity. Goodwill related to acquisitions before December 2000 was charged to shareholders' equity. Goodwill related to acquisitions from December 2000 was capitalized.
Interim dividend
The Corporate Executive Board, with the approval of the Supervisory Board, has decided to declare an interim dividend per common share outstanding of Euro $0.22 in cash (+22%), or as a pay-out of 1% in shares per outstanding common share (2000: Euro $0.18 or 1% in common shares). The interim dividend is payable as of September 10, 2001. Also payable from that date is the interim dividend on cumulative preferred financing shares.
Outlook for full year 2001 confirmed
Ahold confirms its expectation that sales and operating results for the full-year 2001 will increase, reflecting healthy organic growth and the contribution from recent acquisitions. It is expected that net earnings will be sharply higher than last year. For full-year 2001, earnings per common share, excluding currency impact and before goodwill amortization, are expected to rise by 15%.
Editor's note, not for publication:
The Ahold Corporate Executive Board will be reviewing the results and corporate outlook during a press conference to be held this afternoon at 2 p.m. at Ahold corporate headquarters on the Albert Heijnweg 1 in Zaandam, The Netherlands.
The full text report can be found at the following link: http://reports.huginonline.com/832763/93937.pdf
-0- Definitions:
Organic sales exclude sales from acquisitions. Identical sales compare sales from exactly the same stores. Comparable sales are identical sales plus sales from replacement stores.