Ahold Delhaize reports solid Q1 results with an accelerated
two-year comparable sales growth rate**; raises full-year earnings
guidance
- In Q1, the COVID-19 pandemic continued to impact the local
communities and brands of Ahold Delhaize, resulting in
approximately €150 million spent to support customers, associates
and communities with COVID-19 relief care.
- On a two-year comparable sales growth basis**, comparable sales
excluding gas in the U.S. increased 15.5% and in Europe were up
18.1% in Q1 2021, a sequential acceleration versus growth in Q4
2020 of 13.5% and 13.9%, respectively.
- Net sales were €18.3 billion, up 5.8% in Q1 at constant
exchange rates.
- In the U.S. and Europe, comparable sales excluding gas grew
1.7% and 8.3% in Q1, respectively.
- Net consumer online sales sequentially accelerated to 103.3% in
Q1 at constant exchange rates, including U.S. growth of 188.3% and
78.6% growth in Europe.
- Underlying operating margin was 4.6%; diluted underlying EPS
was €0.54.
- IFRS-reported operating income was €828 million in Q1;
IFRS-reported diluted EPS was €0.53.
- Raising 2021 underlying EPS and Group net consumer online sales
outlook; expect underlying EPS to grow in the low- to mid-teen
range versus 2019 and Group net consumer online sales to grow over
40% versus the prior year.**Two-year comparable sales growth is a
stack of the comparable sales growth excluding gasoline in the
current year period added to the comparable sales growth excluding
gasoline in the prior year period. This measure may be helpful to
improve the understanding of trends in periods that are affected by
variations in prior year growth rates.
Zaandam, the Netherlands, May 12, 2021 – 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.
The interim report for the first quarter 2021 can be viewed and
downloaded at www.aholddelhaize.com.
Summary of key financial data
|
|
Ahold Delhaize Group |
The United States |
Europe |
€ million, except per share data |
|
Q12021 |
% changeconstantrates |
Q12021 |
% changeconstantrates |
Q12021 |
% changeconstantrates |
|
|
|
|
|
|
|
|
Net sales |
|
18,264 |
5.8 |
% |
10,738 |
3.6 |
% |
7,526 |
9.4 |
% |
Comparable sales growth excl. gas |
|
4.2 |
% |
|
1.7 |
% |
|
8.3 |
% |
|
Online sales |
|
1,981 |
103.9 |
% |
855 |
188.3 |
% |
1,126 |
66.9 |
% |
Net
consumer online sales |
|
2,679 |
103.3 |
% |
855 |
188.3 |
% |
1,824 |
78.6 |
% |
Operating income |
|
828 |
(8.8) |
% |
489 |
(28.0) |
% |
363 |
22.3 |
% |
Operating margin |
|
4.5 |
% |
(0.8) |
pts |
4.6 |
% |
(2.0) |
pts |
4.8 |
% |
0.5 |
pts |
Underlying operating income |
|
849 |
(6.1) |
% |
517 |
(25.0) |
% |
355 |
25.4 |
% |
Underlying operating margin |
|
4.6 |
% |
(0.6) |
pts |
4.8 |
% |
(1.8) |
pts |
4.7 |
% |
0.6 |
pts |
Diluted EPS |
|
0.53 |
(5.9) |
% |
|
|
|
|
Diluted underlying EPS |
|
0.54 |
(2.6) |
% |
|
|
|
|
Free cash
flow |
|
295 |
(74.5) |
% |
|
|
|
|
Comments from Frans Muller, President and CEO of Ahold
Delhaize
"As we pass the one-year mark of the COVID-19 pandemic, its
effects continue to have an impact across our geographies. In Q1,
our brands, together with our suppliers, remained focused on
fulfilling their vital role in society by maintaining food and
product supplies to local communities. In addition, our U.S. brands
have supported vaccination efforts. I remain thankful for the
efforts of associates across all our stores, distribution centers
and support offices during these challenging times. Our consistent
focus on safety, while at the same time providing great customer
service and community support, have helped drive a strong quarter
relative to our expectations. Although COVID-19 continues to impact
our results, we have now entered a period where our year-over-year
growth rates are affected by the lapping of difficult prior year
comparisons.
"That said, we begin 2021 in a strategically stronger position
than before the COVID-19 pandemic began. We remain focused on
making additional investments to meet associate, customer and
community needs – including approximately €20 million pledged
evenly between the U.S. and Europe for charitable donations this
year, as well as continued support of health and safety measures,
which remains a top priority to enable us to further strengthen our
brands' positions as leading local omnichannel retailers. These
investments in COVID-19-related care total approximately €150
million, more than double the €70 million incurred in the same
quarter last year.
"We are pleased with the underlying Q1 performance in both the
U.S. and Europe. The two-year comparable sales stack sequentially
accelerated in Q1 2021 versus Q4 2020 in both the U.S. and Europe,
as we've been able to retain a strong level of underlying consumer
demand by continuing to adapt to the enduring consumer behavior
changes, including increased working from home, preference for
healthy and fresh products, and higher online demand. Our brands
were well positioned to satisfy the changing needs and preferences
of their customers, many of which were trends already developing
prior to COVID-19. As these trends accelerated during COVID-19, our
brands have evolved more quickly to adapt. Growth in our leading
local omnichannel platform also sequentially accelerated, with
nearly 190% net consumer online sales growth in the U.S. and nearly
80% growth in Europe in the quarter, at constant exchange rates.
Underlying operating margins were strong in the context of
historical levels prior to COVID-19. While COVID-19 continues to
create significant uncertainty in 2021, the outstanding Q1 results
provide us with the confidence to raise our underlying EPS and
Group net consumer online sales growth outlook for the year.
"Investing in our business in order to solidify our position as
an industry-leading local omnichannel retailer in 2021 and beyond
remains a key priority. We continued to build upon several
important initiatives to increase our share of the consumer wallet
and improve online capabilities, including increasing our online
capacity, driven in part by our recently opened U.S.
click-and-collect locations; moving forward with the launch of
Ship2Me in the U.S., an “endless aisle” offering of over 100,000
general merchandise and food items, in the second half of the year;
and rolling out the no-fee home delivery service AH Compact to
additional markets in the Netherlands. With increased capacity and
strong momentum, we now expect Group net consumer online sales to
grow by over 40% in 2021 versus 30% previously. This includes the
raised expectations for over 70% growth in U.S. online sales,
versus over 60% growth previously, and at least €5.5 billion in net
consumer online sales at bol.com, versus at least €5 billion
previously.
"We also continue to make progress in elevating our Health and
Sustainability strategy, and recently announced a new goal for all
of our brands to achieve net-zero carbon emissions by 2050. In
March, Albert Heijn was voted by consumers as the Netherlands' most
sustainable supermarket chain in the Sustainable Brand Index 2021
ranking for the fifth consecutive year. The GIANT Company in the
U.S. announced a new partnership with the Rodale Institute in
February to develop solutions for the regenerative organic
agriculture movement. We also successfully priced our inaugural
sustainability-linked bond in March, amounting to €600 million with
a term of nine years, linked to achieving targets in reducing food
waste and scope 1 and 2 carbon emissions by 2025."
Q1 Financial highlights
Group highlights
Group net sales were €18.3 billion, up 0.3% at actual exchange
rates and up 5.8% at constant exchange rates, driven largely by
4.2% comparable sales growth excluding gasoline. Group comparable
sales were positively impacted in part by demand related to
COVID-19, particularly within Europe. To a lesser extent,
comparable sales benefited by approximately 1.3 percentage points
from favorable calendar shifts and a weather impact in 2021. On a
two-year comparable sales stack basis, growth for the group
sequentially accelerated to 16.4% in Q1 2021 versus 13.7% in Q4
2020. Group net consumer online sales grew 103.3% in Q1 at constant
exchange rates, aided by the FreshDirect acquisition, which closed
on January 5.
Group underlying operating margin in Q1 was 4.6%, down 0.6
percentage points from the prior year at constant exchange rates,
as margins lapped unusually high levels in the prior year due to
COVID-19. Margins in 2020 benefited largely from the timing of
unexpectedly higher sales that preceded the timing of significant
costs related to COVID-19 in the U.S., an effect which did not
recur this year. The group underlying operating margin in Q1 was
therefore negatively impacted by COVID-19-related costs of
approximately €150 million. Group IFRS-reported operating margin
was 4.5% in Q1.
Underlying income from continuing operations was
€566 million, down 11.9% in the quarter. Ahold Delhaize's
IFRS-reported net income in the quarter was €550 million. Diluted
EPS was €0.53 and diluted underlying EPS was €0.54, down (8.4)%
compared to last year's record Q1 results. Management believes that
framing 2021 diluted underlying EPS growth relative to 2019 (prior
to COVID-19) provides a helpful context for investors. Therefore,
compared to Q1 2019, diluted underlying EPS in the quarter was up
approximately 38%. In the quarter, 13.6 million own shares
were purchased for €312 million.
U.S. highlights
U.S. comparable sales excluding gasoline grew 1.7%, positively
impacted by demand related to COVID-19, particularly in January and
February. To a lesser extent, comparable sales were also favorably
impacted by approximately 1.7 percentage points from calendar
shifts and a weather impact. This was offset, in part, by a decline
in March's comparable sales, which were unfavorably impacted by the
lapping of significant consumer stock-up activity related to
COVID-19 in 2020, when comparable sales excluding gasoline grew
33.8%. On a two-year comparable sales stack basis for Q1 2021,
growth was 15.5%, a sequential acceleration versus the 13.5% growth
in Q4 2020. Brand performance was led by Food Lion.
Online sales in the segment were up 188.3% in constant currency,
driven in part by the aforementioned FreshDirect acquisition.
Excluding the FreshDirect acquisition, the U.S. online sales growth
rate in Q1 2021 sequentially accelerated to 135.2% growth versus
the 128.5% growth Q4 2020.
Underlying operating margin in the U.S. was 4.8%, down 1.8
percentage points from the prior year at constant exchange rates,
as margins lapped unusually high levels in the prior year due to
COVID-19. Margins in 2020 benefited largely from the timing of
unexpectedly higher sales that preceded the timing of significant
costs related to COVID-19, an effect which did not recur in Q1
2021.
Europe highlights
Europe's comparable sales excluding gasoline grew 8.3%,
positively impacted by demand related to COVID-19, particularly in
January and February. To a lesser extent, Q1 comparable sales were
favorably impacted by approximately 0.5 percentage points from
calendar shifts in 2021. Comparable sales remained positive in
March despite the lapping of significant consumer stock-up activity
related to COVID-19 in 2020, when comparable sales excluding
gasoline grew 15.9%. On a two-year comparable sales stack basis for
Q1 2021, growth was 18.1%, a sequential acceleration versus the
13.9% growth in Q4 2020. The strong growth was led by the brands in
the Benelux and Czech Republic.
Net consumer online sales in the segment were up 78.6% in Q1
2021, a sequential acceleration versus the 73.4% growth in Q4 2020.
At bol.com, the online retail platform in the Benelux included
within the Europe segment's results, net consumer sales grew by
76.6%, a sequential acceleration versus the 69.6% growth in Q4
2020. Bol.com's sales from third-party sellers grew 101% in the
quarter, with nearly 45,000 merchant partners on the platform.
Underlying operating margin in Europe was 4.7%, up 0.6
percentage points from the prior year at constant exchange rates.
Margin expansion was driven by operating leverage from strong sales
growth as a result of COVID-19.
Outlook
While COVID-19 continues to create significant uncertainty for
the remainder of 2021, the strong Q1 results provide management the
confidence to raise the underlying EPS growth outlook for the
year.
As a reminder, COVID-19, and to a lesser extent, a 53-week
calendar, significantly distorted Ahold Delhaize's 2020 financial
results. Lapping these effects will impact results in 2021, which
returns to a 52-week calendar.
In 2021, the underlying operating margin outlook of at least 4%
is unchanged. This outlook reflects a balanced approach, with cost
savings of over €750 million largely offsetting cost pressures
related to COVID-19, that are expected to continue (albeit at a
lower level than 2020), and the impact from increased online sales
penetration.
The underlying EPS guidance was raised and now expected to grow
in the low- to mid-teen range relative to 2019 versus mid- to
high-single-digit growth previously. Management believes that
framing 2021 underlying EPS guidance relative to 2019, which was
prior to COVID-19 and also on a 52-week calendar, provides a
helpful context for investors.
The free cash flow outlook is unchanged at approximately €1.6
billion. This puts the Company on track to reach €5.6 billion in
cumulative free cash flow from 2019-2021 (averaging nearly €1.9
billion annually), which exceeds the Capital Markets Day 2018
target of €5.4 billion (averaging €1.8 billion annually). Capital
expenditure is expected to be around €2.2 billion, and reflects the
Company's higher investments in digital and omnichannel
capabilities and for improvements related to recent M&A. In
addition, Ahold Delhaize remains committed to its dividend policy
and share buyback program in 2021, as previously stated.
|
Full-year outlook |
|
Underlying operating margin1 |
Underlying EPS |
Save for Our Customers |
|
Capital expenditures |
Free cash flow2 |
|
Dividend payout ratio3, 4 |
Share buyback4 |
Updated outlook |
2021 |
|
At least 4% |
Low- to mid-teen growth vs. 2019 |
> €750 million |
|
~ €2.2 billion |
~ €1.6 billion |
|
40-50% year-over-year increase in dividend
per share |
€1 billion |
Previous outlook |
2021 |
|
At least 4% |
Mid- to high-single-digit growth vs. 2019 |
> €750 million |
|
~ €2.2 billion |
~ €1.6 billion |
|
40-50% year-over-year increase in dividend per share |
€1 billion |
- No significant impact to underlying operating margin from
returning to a 52-week calendar versus a 53-week calendar in 2020,
though the return to a 52-week calendar will negatively impact net
sales for the full year by 1.5-2.0%. Comparable sales growth will
be presented on a comparable 52-week basis.
- 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, they will
continue to monitor macroeconomic developments. The program is also
subject to changes in corporate activities, such as material
M&A activity.
- Ahold Delhaize Q1 2021 Interim report
- Ahold Delhaize Q1 2021 Press release
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