[caption id="attachment_78300" align="aligncenter" width="674"] *from continuing operations attributable to common shareholders
Source: Company reports/Coresight Research[/caption] 4Q18 and FY18 Results Ahold Delhaize reported 4Q18 and FY18 results. 4Q18 Highlights:

• Ahold Delhaize grew net sales 3.0% year over year at constant exchange rates to €16.54 billion (up 5.0% as reported), compared to 3.6% growth at constant exchange rates (+4.3% as reported) in the previous quarter, marginally beating the consensus estimates of €16.5 billion by S&P Capital IQ. The growth was driven by strong sales in the US and aided by synergies.
• The company grew online revenues 18.5% year over year at constant exchange rates to €866 million (up 19.4% as reported), compared to 21.1% growth at constant exchange rates (up 21.5% as reported) in the previous quarter.
• The gross margin expanded 60 basis points (bps) to 27.1%.
• The operating margin expanded 20 basis points to 3.8%, due to higher selling, general and administrative costs. 
• Underlying EBITDA was up 2.4% at constant exchange rates to €1.13 billion (up 4.5% as reported), compared to 4.6% growth at constant exchange rates (up 5.4% as reported) in the previous quarter.
• The company reported diluted EPS from continuing operations of €0.45, down 23.7% year over year, compared to 37.9% growth in the previous quarter and beating the consensus estimate of €0.42 by S&P Capital IQ.

By geography:

• Strong momentum in the US continued as revenues were up 2.6% at constant exchange rates to €9.8 billion (up 5.9% year over year as reported), compared to 3.2% growth on constant currency basis (up 4.3% as reported) in the previous quarter, with same-store sales growth of 2.7% excluding fuel. The underlying operating margin for the US expanded 20 bps to 4.3%. The company noted it increased market share across its brands.
• For the Netherlands, revenues increased 3.6% year over year to €3.8 billion, compared to 5.8% growth in the previous quarter, led by same-store sales growth of 3.3%. The underlying operating margin for the Netherlands expanded 20 bps to 4.9%.
• Net sales in Belgium were €1.34 billion, up 3.6% year over year compared to 1.0% growth in the previous quarter, led by same-store sales growth of 3.0%. Underlying OPM for Belgium expanded 190 bps to 2.9%.
• For Central and Southeastern Europe (CSE), revenues increased 3.9% year over year at constant exchange rates to €1.6 billion (up 3.5% as reported), compared to a 3.0% constant currency growth (up 3.4% as reported) in the previous quarter, with same-store sales growth of 2.0% excluding fuel. The underlying operating margin for CSE contracted 10 bps to 5.3%.

FY18 Highlights:

• Net sales fell 0.2% year over year to €62.8 billion as reported; sales were up 2.5% at constant exchange rates, but slightly above the consensus estimate of €62.5 billion by S&P Capital IQ.
• The company grew online revenues by 17.7% year over year to €2.8 billion (up 19.3% at constant exchange rates).
• The gross margin expanded 30 bps to 27.0% driven by synergies.
• Operating margin expanded 30 basis points to 3.8%, mainly led by gross margin expansion.
• Underlying EBITDA increased 1.4% year over year (up 4.1% at constant exchange rates).
• The company reported diluted EPS from continuing operations of €1.52, up 6.3% year over year and above the consensus estimate of €1.49 by S&P Capital IQ.

By geography:

• At constant exchange rates, US revenues were up 1.9%, though, as reported, they fell 2.5% year over year to €37.5 billion; the company grew same-store sales 2.1% excluding fuel. The underlying operating margin for the US expanded 20 bps to 4.2%.
• For the Netherlands, revenues increased 3.7% year over year to €14.2 billion, led by same-store sales growth of 3.8%. The underlying operating margin for the Netherlands expanded 10 bps to 5.0%. The Albert Heijn banner grew comparable sales in supermarkets and online, but reported a decline in market share. 
• Net sales in Belgium were €5.1 billion, up 2.9% year over year, led by same-store sales growth of 2.2%. The underlying operating margin for Belgium expanded 60 bps to 2.8%.
• For CSE, revenues increased 3.1% year over year at constant exchange rates to €6.02 billion (up 3.9% as reported), with same-store sales growth of 0.9% excluding fuel. The underlying operating margin for CSE contracted 30 bps to 3.9%.

Expansion Plans and Strategy US In the US, the Stop & Shop banner announced it will roll out its “reimagining Stop & Shop” program to the rest of the store network in the coming years, providing a new look to the, along with an expanded fresh range and home meal solutions, lower prices and optimized assortments. Stop & Shop has agreed to acquire King Kullen Grocery, a family-owned retailer on Long Island, New York. Food Lion continued to benefit from the rollout of the "Easy, Fresh and Affordable" program, now in 70% of its stores. Management noted that as part of its technology transformation strategy in US, the Stop & Shop and Giant/Martin's brands will introduce robots to their stores, marking one of the largest deployments of robotics in the US grocery industry. Ahold Delhaize USA brands increased the total number of click-and-collect locations, with the Food Lion To Go service available at 53 Food Lion stores, which lets customer orders online and pick up in store. In addition, Peapod expanded its grocery delivery capacity with its fifth Peapod wareroom on Long Island, increasing order delivery capacity 10% in the New York region. Stop & Shop launched its first micro fulfillment center and is planning to build several more in 2019, with further expansion into 2020. The Netherlands Ahold Delhaize announced it is partnering with Delft University of Technology in the Netherlands to expand its Artificial Intelligence for Retail (AIR) Lab with a robotics research program and test site, aimed at developing state-of-the-art innovations in the retail industry. Belgium Ahold Delhaize plans to open around 100 new supermarkets in the next three to four years. In 2019, Delhaize will start a collaboration with bol.com, adding in-store bol.com pick-up points for orders from the largest online retailer in the Benelux. Albert Heijn plands to continue its expansion by opening 30 to 50 new supermarkets in the Flanders region in the next few years (reported under Netherlands). Outlook For FY19, Ahold Delhaize expects to report the following:

• Gross synergies will deliver €750 million in savings in 2019, resulting in €500 million net synergies from the integration of the two companies.
• Savings of €540 million in 2019 as part of its €1.8 billion “Save for Our Customers” program for 2019-2021.
• Underlying income per share from continuing operations to grow by high single digits as a percentage compared to last year. 
• Free cash flow in 2019 to be about €2.0 billion, as the company expects to increase its capital expenditures to €2.0 billion mainly directed towards its Stop & Shop and e-commerce business, and in strengthening its digital capabilities.

In FY19, the consensus estimates collated by StreetAccount call for Ahold Delhaize to report revenues of €65.14 billion, up 3.7% year over year, and EPS of €1.67, up 9.9% year over year.