AHOLD BEATS EXPECTATIONS

Ahold, a food and health and beauty retail group based in the Netherlands, has reported that fourth quarter (13 weeks through December 31, 2015) net sales excluding fuel were up 4.3% at constant rates and adjusted for an extra week of trading. For fiscal year 2015 (through December 31, 2015), sales were up 3.8% on the same basis Group revenue excluding fuel was €9.8 billion (US$10.7 billion) for the fourth quarter and €38.2 billion (US$42.4 billion) for the fiscal year, ahead of consensus estimates of €9.5 billion (US$10.4 billion) and €37.7 billion (US$41.8 billion) for the two periods, respectively, according to S&P Capital IQ. Total reported revenues benefited from an extra selling week in the fourth quarter and from favorable currency effects. The group’s unadjusted growth at current exchange rates was 21.4% for the fourth quarter and 16.6% for the fiscal year. The expansion of Ahold’s store network in the Netherlands and the US, along with a series of store closures by competitors in the US, a strong holiday season in the Netherlands and robust growth in online sales, contributed to results.

Source: Company reports

STRONG SALES IN THE NETHERLANDS, THE US AND ONLINE

In the Netherlands, adjusted net sales increased by 5.5% in the fourth quarter of 2015 and by 6.3% for the full fiscal year. The group’s revenue in the market benefited from a strong holiday season and from growth in online sales. In the US, adjusted net sales in US dollars excluding gasoline increased by 4.1% and 1.8% in the fourth quarter and fiscal year 2015, respectively. The group’s share of the US market increased year over year thanks to the expansion of its store networks, including the conversion of 25 previously acquired former A&P stores and a series of competitors’ store closures in New York. The Czech Republic was the only region in which the company reported negative growth when adjusted for the extra trading week. Adjusted sales in the Eastern European market in Czech koruna terms were (1.8)% and (13.3)% for the fourth quarter and fiscal year 2015, respectively. Adjusted online sales in constant rates were up 24.5% in the fourth quarter and 19.6% in fiscal year 2015, respectively. The growth of online revenue in the Netherlands was particularly strong, with Bol.com and Albert Heijn Online increasing their sales by more than 30% in the fourth quarter of 2015 compared to the same period in 2014. The group’s adjusted store sales in constant rates also grew in the fourth quarter and fiscal year, by 2.2% and 1.6%, respectively. The US saw net store openings increase by 20 in 2015, while the Netherlands saw them increase by 29. In the Czech Republic, the total number of stores fell by two from 2014 to 2015.

Further Expansion Planned in the US Market

Ahold expects underlying operating margins for the fourth quarter to be in line or higher than those of the previous quarter, and it expects its free cash flow position for fiscal year 2015 to have improved compared to fiscal year 2014. S&P Capital IQ estimates that the group’s net income for fiscal year 2015 will come in at €833.07 million (US$909.9 million), representing 40.2% growth year over year. Ahold will release fourth quarter and fiscal year 2015 earnings on March 3, 2016. Looking ahead, Ahold is working toward its planned merger with Delhaize Group. The US$29 billion merger, announced on June 24, 2015, is expected to be completed by mid-2016, and will create one of the largest supermarket operators in the US.