ZAANDAM, The Netherlands, Nov. 27, 2001 (PRIMEZONE) -- Ahold (NYSE:AHO), the international food provider, achieved third quarter (12 weeks from July 16 through October 7) 2001 net earnings of Euro 333.1 million, an increase of 28.3% (2000: Euro 259.6 million). Sales in the quarter rose 12.6% to Euro 15.5 billion and operating earnings increased by 21.7% to Euro 667.2 million.
Highlights
- Net earnings 3rd quarter rise 28.3% to Euro 333.1 million
- Sales rise 12.6% to Euro 15.5 billion
- Operating earnings increase 21.7% to Euro 667.2 million
- Strong organic operating earnings growth (+ 16.4%) and strong
organic sales growth (+ 6.4%)
- Earnings per share increase by 14.6% to Euro 0.38 (+16.1%
excluding currency impact)
- Confirmation of 15% EPS growth for full-year 2001 excl. currency
impact, goodwill amortization and exceptional charge
Net earnings after goodwill amortization amounted to Euro 304.2 million. Earnings per common share for the quarter rose 14.6% to Euro 0.38 (2000: Euro 0.33). Excluding currency fluctuations, specifically the effect of the slightly lower average exchange rate of the U.S. dollar, the Swedish Krona and the Brazilian Real, earnings per common share grew 16.1%.
Remarks by Cees van der Hoeven, Ahold President and CEO
Ahold President and CEO Cees van der Hoeven said that the third quarter results were of excellent quality: "With an organic sales growth of 6.4% and an organic operating earnings growth of 16.4% our company proved its capability to also perform well in somewhat weakened economic conditions. Particularly in the United States retail and foodservice achieved very good results. In Europe results were also solid. Notwithstanding difficult circumstances our Latin American operations performed well. We gained market share practically everywhere, while simultaneously achieving strongly improved operating margins."
Van der Hoeven said Ahold delivered its 23rd consecutive quarter of double-digit earnings per share growth. He expressed satisfaction at the substantial synergies achieved worldwide and within the regions. He commented on the earlier announced U.S. acquisitions of Alliant Foodservice and Bruno's Supermarkets and on the joint venture with CSU in Central America: "We are very pleased about the prospect of completing these transactions in such a short time-frame. The companies will be contributing to our full-year 2002 results."
Sales and results in the third quarter were negatively impacted by lower average exchange rates of the U.S. dollar (U.S. $0.90 vs U.S. $0.89), the Swedish Krona (SEK 9.5 vs SEK 8.4) and the Brazilian Real (BRL 2.3 vs BRL 1.6). Consolidated sales increased by 12.6% to Euro 15.5 billion. Operational cash flow (EBITDA) increased by 23.1% to Euro 1,024.6 million. Operating earnings before goodwill amortization (EBITA) increased by 21.7% to Euro 667.2 million. Excluding currency impact, organic sales growth increased by 6.4% and organic operating earnings by 16.4%. Earnings per share before goodwill amortization increased by 14.6% to Euro 0.38; excluding currency impact this increase amounted to 16.1%.
United States (Food retail)
Retail sales in the United States increased by 6.6% to USD 5.4 billion. Starting 2001, Ahold USA is using a different definition of net sales; using the previous definition, retail sales growth would have amounted to 11%. Organic sales growth increased by 7.0%. Comparable sales increased by 3.8% and identical sales by 3.4%. This sales increase reflects positive identical growth at Stop & Shop, Giant Landover, Giant Carlisle and Tops. Operating earnings increased by 27.2% to USD 295.5 million. This sharp improvement mainly reflects an improved operating margin due to excellent cost control and synergies. The Grand Union stores, converted during the first six months, also contributed to improved results. Internet grocer Peopod had operating losses of U.S. $11.0 million (2000: loss of U.S. $10 million). Operating earnings, excluding Peapod, amounted to 5.7% of sales (2000: 4.8%).
United States (Foodservice)
At U.S. Foodservice sales increased by 39.2% to U.S. $2.8 billion, mainly reflecting the acquisition at year-end 2000 of PYA/Monarch, and to a lesser extent due to the Mutual and Parkway acquisitions this year. Organic sales growth amounted to 9.0%. After September 11 events organic sales growth was around 7%.
The operating earnings of U.S. Foodservice increased by 38.3% to U.S.$113.3 million. This increase reflects the good performance of U.S. Foodservice, the three acquisitions and the accompanying synergies and cost savings. The operational margin amounted to 4.0% (2000: 4.1%). This slightly lower margin reflects the consolidation of PYA/Monarch. The full-year margin is expected to be equal to last year.
Europe
In Europe sales increased by 15.7% to Euro 5.2 billion, specifically as a result of the year-end 2000 acquisition of the Spanish supermarket company Superdiplo. All European companies generated higher sales. Organic sales growth in Europe amounted to 6.3%.
In The Netherlands sales increased, primarily due to the acquisition of A&P stores by Schuitema, and organic sales growth of the C1000 stores. Albert Heijn, Deli XL and the specialty stores also improved sales. Sales at ICA Ahold in Scandinavia increased. The opening of new stores in the Czech Republic led to a very strong sales growth.
Operating earnings in Europe increased by 15.2% to Euro 186.8 million. The increase can partly be attributed to the acquisition of Superdiplo in Spain. All Dutch operations had a solid performance. ICA-Ahold in Scandinavia also contributed to improved results, despite the lower exchange rate. Operating earnings in Portugal were lower due to lower margins and higher expenses.
Latin America
At Euro 1.2 billion, sales in Latin America were 11.5% lower than in 2000. Organic sales decreased by 1.3%. The sales decline expressed in Euros was mostly the result of strong devaluation of the Brazilian Real. Although sales at Disco in Argentina were lower than last year reflecting the economic recession, market share of Disco increased. Bompreco in Brazil, Santa Isabel in Chile and La Fragua in Guatemala generated higher sales in local currencies despite a difficult economic environment.
Operating earnings of Euro 42.8 million were lower than last year, partially the result of lower earnings at Bompreco and reflecting the devaluation of the Brazilian Real. La Fragua in Guatemala generated higher results and earnings of Disco in Argentina stayed at about the same level. Santa Isabel improved its results but remained slightly negative.
Asia
Sales in Asia amounted to Euro 93.5 million and were slightly lower than last year as a result of closing a few stores in Malaysia and Thailand. Organic growth amounted to 3.3%. The operating loss amounted to Euro 4.1 million.
Corporate costs
Corporate costs amounted to Euro 11.7 million.
Net financial expense
Net financial expense amounted to Euro 192.1 million. The increase largely reflects the consolidation of interest expenses at PYA/Monarch and Superdiplo and financing of acquisitions.
The rolling annual interest coverage ratio was 3.3 and the rolling annual ratio of net interest bearing debt/EBITDA amounted to 2.6.
Tax rate
The tax rate, expressed as percentage of pre-tax earnings, amounted to 26.0% (2000: 25.6%).
Group equity
Group equity, expressed as a percentage of balance sheet total, amounted to 21.9% (at year-end 2000: 12.5%). After conversion of convertible subordinated notes outstanding, group equity amounted to 27.6% of the balance sheet total. Capital accounts amounted to 28.1% (at year-end 2000:19.5%). Shareholders' equity amounted to Euro 5.6 billion. During the third quarter of 2001, proceeds from the issue of common shares in September and from exercised option rights were added to shareholders' equity.
Net earnings of the third quarter 2001 were added to shareholders' equity after deduction of dividend on preferred shares and cash interim dividend on common shares. The negative balance of exchange rate fluctuations was also charged to shareholders' equity.
Acquisition Alliant Foodservice
Ahold expects to close the Alliant acquisition November 30, 2001. Ahold will take a U.S. $220 million restructuring provision for the integration of Alliant into U.S. Foodservice, of which U.S. $110 million will be an exceptional charge to operating earnings in the 4th quarter. After taxes, the net impact of this charge will total U.S. $65 million.
Acquisition Bruno's Supermarkets
Completion of the Bruno's acquisition is expected in December. Bruno's will cooperate closely with the other Ahold U.S.A. retail sister companies.
Ahold Note Issue to Refinance Existing Debt
To refinance existing debt, Ahold has announced it will make use of the current favorable climate to issue the equivalent of approximately Euro 1.0 billion in public debt under its Euro Medium Term Note (EMTN) program. The proceeds will be used to refinance short-term debt and, upon completion of the acquisition, existing debt with Alliant.
Confirmation full-year 2001 outlook
The Ahold Corporate Executive Board maintains its expectation that sales and operating earnings will improve, reflecting organic growth and contributions from acquisitions. Net earnings are expected to be sharply higher than last year. Earnings per common share for full-year 2001 are expected to rise by 15%, excluding currency impact and goodwill amortization and before the exceptional charge related to the Alliant acquisition.
Explanation of terms:
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.
The full press release and accompanying tables can be found at the following link: http://reports.huginonline.com/841696/97312.pdf
This press release contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking statements within the meaning of the safe-harbor provisions of the U.S. federal securities laws. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward looking statements as more fully discussed in Ahold's Annual Report on Form 20-F. Many of these risks and uncertainties relate to factors that are beyond Ahold's ability to control or estimate precisely, such as future market and economic conditions, the behavior of other market participants, the ability to successfully integrate acquired businesses and achieve anticipate synergies and the actions of government regulators. These and other risk factors are detailed in
Ahold's publicly filed reports. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Ahold does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of these materials.