Ahold Delhaize's strong global portfolio delivers growth in Q1 net
sales and diluted EPS; 2022 outlook increased
- Q1 Group net sales increased 8.3% at actual rates to €19.8
billion. At constant exchange rates, net sales were up 3.6% as
food-at-home consumption continues to prove resilient.
- Q1 comparable sales excluding gas grew 3.3% (3.9% excluding
weather and calendar impacts) in the U.S. and declined 3.1% in
Europe (excluding weather and calendar impacts, declined
2.8%).
- Net consumer online sales declined 1.0% at constant exchange
rates following growth of 103.3% during Q1 in the prior year.
Excluding bol.com, net consumer online sales increased 4.6% at
constant rates.
- Driven proactively by Save For Our Customers cost savings
initiatives and working hard with suppliers to keep price increases
as low as possible, Ahold Delhaize’s great local brands are
supporting customers to manage their shopping baskets efficiently,
ensuring access to affordable and healthy food options in this
inflationary environment.
- By providing easy access to affordable and healthy food
options, expanding high-quality low-cost own-brand assortments and
bulk-item offerings, as well as further deploying highly tailored
omnichannel loyalty programs, Ahold Delhaize saw increased market
share across its key markets in the quarter.
- Q1 underlying operating margin was 4.2%, in line with the
Company's historical profile, versus last year's COVID-19-supported
Q1 underlying operating margin of 4.6%.
- Q1 IFRS-reported operating income was €818 million and Q1
IFRS-reported diluted EPS was €0.54.
- Q1 diluted underlying EPS was €0.55, an increase of 1.3% over
the prior year at actual rates.
- The Company now expects underlying EPS to be comparable with
2021 levels (previously: down low- to mid-single-digits). Higher
than expected Q1 earnings coupled with a more resilient consumer
climate in the U.S. as well as a more favorable U.S. dollar are
forecast to more than offset the challenging economic backdrop in
Europe.
- The Company reiterates the rest of the 2022 full-year outlook
including: underlying operating margin to be at least 4%; free cash
flow of approximately €1.7 billion; and net capital expenditures of
€2.5 billion.
Zaandam, the Netherlands, May 11, 2022 – Ahold Delhaize, one of
the world’s largest food retail groups and a leader in both
supermarkets and e-commerce, reports first quarter results
today.
Summary of key financial data
|
|
Ahold Delhaize Group |
The United States |
Europe |
€ million, except per share data |
|
Q1 2022 |
% change |
% changeconstantrates |
Q1 2022 |
% changeconstantrates |
Q1 2022 |
% changeconstantrates |
13 weeks 2022 vs. 2021 |
Net sales |
|
19,774 |
8.3 % |
3.6 % |
12,199 |
5.8 % |
7,575 |
0.3 % |
Comparable sales growth excl. gas |
|
0.7 % |
|
|
3.3 % |
|
(3.1) % |
|
Online sales |
|
2,059 |
3.9 % |
0.7 % |
961 |
4.6 % |
1,098 |
(2.4) % |
Net
consumer online sales |
|
2,715 |
1.3 % |
(1.0) % |
961 |
4.6 % |
1,754 |
(3.8) % |
Operating income |
|
818 |
(1.2) % |
(5.4) % |
540 |
2.7 % |
255 |
(29.9) % |
Operating margin |
|
4.1 % |
(0.4) pts |
(0.4) pts |
4.4 % |
(0.1) pts |
3.4 % |
(1.5) pts |
Underlying operating income |
|
829 |
(2.3) % |
(6.6) % |
542 |
(2.5) % |
263 |
(26.2) % |
Underlying operating margin |
|
4.2 % |
(0.5) pts |
(0.5) pts |
4.4 % |
(0.4) pts |
3.5 % |
(1.2) pts |
Diluted EPS |
|
0.54 |
2.6 % |
(1.7) % |
|
|
|
|
Diluted underlying EPS |
|
0.55 |
1.3 % |
(3.1) % |
|
|
|
|
Free cash
flow |
|
(21) |
NM1 |
NM1 |
|
|
|
|
- Not meaningful, as free cash flow is negative in Q1 2022.
Comments from Frans Muller, President and CEO of
Ahold Delhaize
"I am pleased to report a strong start to the year for Ahold
Delhaize. In times like these, our strong global portfolio of local
brands provides distinct competitive and societal advantages. This
allows us to successfully navigate short-term market volatility
and, at the same time, provide financial stability and operational
bandwidth to focus on our long term growth agenda.
"Brand strength and relative market share are our most important
measures of success. Our performance on these metrics again shone
through in our results, with 8.3% growth in net sales to €19.8
billion and diluted underlying earnings per share up 1.3% to €0.55,
exceeding our original expectations. Through our 19 great local
brands, on the whole, we lapped prior year pandemic lockdowns with
further market shares gains and healthy growth rates in our online
grocery business while, at the same time, preserving our
industry-leading profitability metrics.
"For consumers, Q1 was characterized by significant challenges
both within and outside of our markets, headlined by the war in
Ukraine. While we do not have direct operations in Ukraine or
Russia, I am extremely proud of associates at our brands who
quickly jumped into action to provide crucial support to those
affected by the war. Our brands in Europe, together with Ahold
Delhaize, donated more than €1.5 million worth of cash and in-kind
support, and generated an additional €1.2 million in customer and
associate donations to organizations like the Red Cross. Several
brands are supporting associates who are volunteering their time to
provide on the ground support, and are actively promoting jobs to
Ukrainian people displaced by the violence. We will continue to
provide support for as long as it’s needed.
"We also know that consumers globally are feeling the pressure
of high inflation rates. We are working hard with suppliers to
mitigate price increases where possible and ensuring that increases
are realistic and necessary. Moreover, Ahold Delhaize’s local
brands are helping customers manage their shopping baskets
efficiently, by providing great value offers spearheaded by
omnichannel loyalty programs, prioritizing healthy food options
through Guiding Stars- and Nutri-Score-linked promotions, and
expanding the assortment and availability of high-quality
lower-cost own-brand products and bulk offerings.
"For example, The GIANT Company doubled points earned on the
purchase of all Guiding Stars-rated items. Meanwhile, Giant Food
expanded its “More for You” value campaign with the introduction of
a bulk item aisle, offering consumers savings on larger-sized
products. Also in Europe, a good example is Alfa Beta, which
launched a new promotional campaign called Top Hits, offering
discounts on key items. By the end of the first half of 2022, all
European markets will have their own tailored entry price favorites
programs.
"Our brands are laser focused on helping consumers manage their
spending, proactively highlighting savings opportunities. For
example, own-brand assortments, which offer great quality at a
reduced cost versus national brands, are being positioned more
prominently and conveniently in stores and the omnichannel shopping
journey. In the Benelux, our own-brand portfolios represent over
half of all our brands' food sales. In the U.S., own-brand
penetration stands at approximately 30% and our brands will
continue to invest in and extend their own-brand presence and
visibility throughout 2022.
"Looking at our regional performance in more detail, in the
U.S., we were able to grow comparable sales by 3.9%, excluding
weather and calendar shifts, and maintained relatively stable
underlying operating profit in U.S. dollars, as strong food-at-home
demand and our cost savings initiatives enabled our brands to
mitigate incremental cost pressures. Food Lion, in particular, with
its 38th consecutive quarter of growth is one of the top performing
brands in the U.S. right now with close to double-digit comparable
sales.
"In Europe, the reopening of societies across our markets and a
return to normal life for most citizens created a challenging
comparison in the Benelux, as we lapped the year-ago quarter when
strict lockdown measures boosted sales for both our grocery
business and bol.com. This resulted in declining Q1 comparable
sales and underlying operating profits for Europe. We see customer
trust and loyalty as an important indicator of how well we are
doing. This is clearly reflected in the fact that our overall
market share is increasing, being particularly robust at Albert
Heijn and bol.com.
"To counter the broader market conditions we see in Europe,
particularly challenging markets like Belgium, we are focusing on
two main approaches to strengthen our brands and connection with
customers. Firstly, we are strengthening our commercial proposition
by ramping up the rollout of successful pricing and loyalty
programs for customers in all our markets and broadening our
product offering to ensure affordable options for every wallet.
Secondly, cost savings are currently more important than ever to be
able to offer customers the most competitive price without
sacrificing investments in growth. As such, in the more challenged
markets, on top of our running cost savings programs, we are
committed to review additional structural costs more aggressively
to better align them to the underlying dynamics of the market.
"While short term mitigation actions will keep us busy this
year, our Leading Together strategic priorities also remain front
and center in our work. Our omnichannel transformation agenda is
core to this. Coming off a very strong 2021 which saw a further
step up in online gains due to the pandemic, our energy to drive
stickiness in our omnichannel ecosystem is paying off. In Q1, Group
net consumer online sales only declined by 1.0% at constant
exchange rates. This includes 4.6% growth in the U.S., offset by a
3.8% decline in Europe. Excluding bol.com, net consumer online
sales increased 4.6%, as online grocery penetration rates continued
to increase. We continue to use a blend of organic investment and
strategic partnerships to make smart choices as we expand our
proposition and reach. For example, in the U.S., we now have over
1,400 pick-up points and have added new instant delivery options
with partners. In Europe, Albert Heijn expanded its existing
partnership with Deliveroo and Thuisbezorgd.nl.
"At bol.com, sales declined 7% in the quarter, against a market
backdrop which is estimated to have been down mid-teens. The strong
position of bol.com with customers and partners has therefore again
yielded strong market share gains. We continue to make very good
progress with the bol.com management team in our preparations to
have bol.com ready for a sub-IPO in the second half of 2022,
subject of course to market conditions, and other factors. We
believe strongly in the value and potential of bol.com. Our
intentions remain firmly focused on securing the right future path
to unlock value and provide further funding for bol.com and Ahold
Delhaize to execute our winning strategy.
"Speaking of the long term, we remain strongly focused on our
ESG ambitions, and continued to make strides in this area during
Q1. Albert Heijn and bol.com were recognized as industry leaders by
the 2022 Sustainable Brand Index. Albert Heijn was voted the most
sustainable supermarket chain in the Netherlands for the sixth year
in a row and bol.com was recognized as the most sustainable
e-commerce brand for the second year in a row. As we continue to
support the transition to a healthy and sustainable food system,
our U.S. brand Hannaford announced plans to be fully powered by
renewable energy by 2024.
"All in all, I am pleased with the performance of the business
in what is an increasingly challenging environment. Overall, Q1
results were better than our expectations, despite macro-economic
pressures arising from the war in Ukraine. The second quarter is
seeing many of the trends from Q1 continuing. Therefore, taking all
moving parts together, we expect underlying EPS to be comparable to
2021 with the rest of our full-year guidance metrics
unchanged."
Q1 Financial highlights
Group highlights
Group net sales were €19.8 billion, an increase of 3.6% at
constant exchange rates, and up 8.3% at actual exchange rates.
Group net sales were driven by positive contributions from
comparable sales growth excluding gasoline of 0.7%, foreign
currency translation benefits, acquisitions, and higher gasoline
sales. Q1 Group comparable sales had a net negative impact of
approximately 0.5 percentage points from weather and calendar
shifts, primarily relating to the timing of Easter.
In Q1, Group net consumer online sales declined by 1.0% at
constant exchange rates, as growth in the U.S. was offset by the
cycling of a strong Q1 2021 in Europe, particularly at bol.com,
arising from last year's lockdowns and the subsequent reopening of
societies in Q1 2022. Excluding bol.com, net consumer online sales
increased 4.6% at constant exchange rates.
In Q1, Group underlying operating margin was 4.2%, down 0.5
percentage points compared to Q1 2021 at constant exchange rates,
reflecting higher labor, distribution and energy costs than in the
prior year period. In Q1, Group IFRS-reported operating income was
€818 million, representing an IFRS-reported operating margin
of 4.1%.
Underlying income from continuing operations was
€555 million, down 2.0% in the quarter at actual rates. Ahold
Delhaize's IFRS-reported net income in the quarter was €546
million. Diluted EPS was €0.54 and diluted underlying EPS was
€0.55, up 1.3% at actual currency rates compared to last year's
results. In the quarter, 9.4 million own shares were purchased
for €268 million.
U.S. highlights
U.S. net sales were €12.2 billion, an increase of 5.8% at
constant exchange rates, and up 13.6% at actual exchange rates.
Sales also benefited from favorable foreign currency translation
rates, last year's acquisition of stores from Southeastern Grocers,
and higher fuel sales. U.S. comparable sales excluding gasoline
increased 3.3%. This was partially offset by an unfavorable Q1 net
impact to sales of 0.6 percentage points from weather and calendar
shifts, primarily relating to the timing of Easter. Brand
performance continued to be led by Food Lion, which has now
delivered 38 consecutive quarters of positive sales growth.
In Q1, online sales in the segment were up 4.6% in constant
currency. This builds on top of the significant 188.3% constant
currency growth in the same quarter last year.
Underlying operating margin in the U.S. was 4.4%, down 0.4
percentage points at constant exchange rates from the prior year
period driven by increased labor, distribution and energy costs,
which were partially offset by higher pricing and cost savings
initiatives. In Q1, U.S. IFRS-reported operating margin was
4.4%.
Europe highlights
European net sales were €7.6 billion, an increase of 0.3%
at constant exchange rates and 0.6% at actual exchange rates,
driven by the 2021 acquisition of 38 stores from DEEN in the
Netherlands. Europe's comparable sales excluding gasoline declined
3.1%. We saw a net negative impact on Q1 comparable sales in Europe
of approximately 0.3 percentage points from weather and calendar
shifts, primarily relating to the timing of Easter.
Declining Q1 comparable sales in Europe came as the segment
lapped strong comparable sales growth excluding gasoline in Q1 2021
of 8.3%. The reopening of societies, particularly in the Benelux,
and the resulting shift of some consumer spending back to travel
and restaurants contributed to this development. Nonetheless, our
market shares across Europe remained strong. Albert Heijn was a
particular standout in the quarter, with robust market share gains
attributed to strong execution, successful marketing campaigns,
sales uplifts resulting from the brand’s store remodeling
activities and contributions from the acquired DEEN stores.
In Q1, net consumer online sales in the segment were down 3.8%,
following 78.6% growth in the same period last year. At bol.com,
our online retail platform in the Netherlands and Belgium, net
consumer online sales were €1.3 billion in Q1. This follows
net consumer online sales of €1.4 billion in the same quarter
last year, when sales at bol.com were aided by lockdown measures
limiting brick-and-mortar retail stores.
Bol.com's percentage of net consumer online sales from
third-party sellers was 60% in Q1, with nearly 49,000 merchant
partners active on the platform.
Underlying operating margin in Europe was 3.5%. This compares to
an underlying operating margin of 4.7% in the prior year quarter
when margins sustained unusual benefits as a result of lockdown
conditions in Europe. Additionally, higher overall costs also
impacted margins in Q1. Europe's Q1 IFRS-reported operating margin
was 3.4%.
Outlook
While ongoing high rates of inflation, rising costs and supply
chain disruptions represent 2022 headwinds, management remains
confident in its 2022 outlook following the Company's Q1
results.
Ahold Delhaize's 2022 Group underlying operating margin is
expected to be at least 4.0%, in line with the Company's historical
profile. Management believes that the Company's brands continue to
offer consumers a strong shopping proposition and are
well-positioned to maintain profitability in the current
inflationary environment. Despite significant product cost
increases, Ahold Delhaize's Save for Our Customers initiative is
expected to deliver more than €850 million in savings, which should
help offset cost pressures related to inflation and supply chain
issues, along with the negative impact to margins from increased
online sales penetration.
Higher than expected Q1 earnings coupled with a more resilient
consumer climate in the U.S. as well as a more favorable U.S.
dollar and benefits from favorable insurance results from rising
interest rates are forecast to more than offset the challenging
economic backdrop in Europe. Based on the current macro-economic
outlook, we now expect underlying EPS to be comparable to 2021,
compared to our previous guidance of a low- to mid-single-digits
decline.
Free cash flow is expected to be approximately €1.7 billion. Net
capital expenditures are expected to total a maximum of €2.5
billion, reflecting a step up in the Company's investments in its
digital and omnichannel offering to support accelerated sales
growth. On the latter, given higher labor and raw material costs,
Management remains committed to executing and phasing the timing of
investments with the same discipline and focus on achieving
required hurdle rates and return on capital metrics. In addition,
Ahold Delhaize remains committed to its dividend policy and share
buyback program, as previously stated. We expect to again increase
our full-year dividend, and we are executing our €1 billion share
repurchase program in 2022 as planned.
|
Full-year outlook |
|
Underlying operating margin |
Underlying EPS |
Save for Our Customers |
|
Net capital expenditures |
Free cash flow1 |
|
Dividend payout ratio2.3 |
Share buyback3 |
Outlook |
2022 |
|
At least 4% |
Comparable to 2021 |
>€850 million |
|
~ €2.5 billion |
~ €1.7 billion |
|
40-50% payout;YOY growth in dividend per
share |
€1 billion |
- Excludes M&A.
- Calculated as a percentage of underlying income from continuing
operations.
- Management remains committed to the share buyback and dividend
program, but, given the uncertainty caused by COVID-19, will
continue to monitor macro-economic developments. The program is
also subject to changes resulting from corporate activities, such
as material M&A activity.
- Ahold Delhaize Q1 2022 Interim report
- Ahold Delhaize Q1 2022 Press release
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