Ahold Delhaize provides Q1 update and reiterates 2020 profit outlook and strong cash position
07 April 2020 - 6:02PM
Ahold Delhaize provides Q1 update and reiterates 2020 profit
outlook and strong cash position
Zaandam, the Netherlands, April 7, 2020 – Ahold
Delhaize, one of the world’s largest food retail groups and a
leader in both supermarkets and eCommerce, provides an update on Q1
results and the 2020 guidance outlook today.
Q1 Update Regarding preliminary Q1 results,
which will be reported in full on May 7th, Frans Muller, President
and CEO of Ahold Delhaize, said: “We are extremely proud of the
talented and hardworking associates across our brands around the
globe, who have worked tirelessly to serve their local communities
in this time of need during the COVID-19 crisis. Every one of our
local brands remains committed to protecting the health and safety
of associates and customers, and some of the steps being taken are
detailed in a recent press release, which can be found
here.
“Due to COVID-19, demand across our multichannel network in the
Eastern U.S. and Europe increased significantly in Q1. As a
result, we expect Group net sales growth of approximately 15% in
Q1, or 13% in constant currency. Comparable sales growth excluding
gasoline is expected to be approximately 14% in the U.S., and 10%
in Europe in Q1. In the U.S., we saw customers begin stockpiling in
March, and experienced approximately 34% comparable sales growth
excluding gasoline in the month. In Europe, we saw slightly earlier
customer stockpiling, beginning in late February, which accelerated
into March. Europe comparable sales excluding gasoline were up
approximately16% in March.
“We expect underlying operating margin in Q1 to be above the
prior year. This is partly due to a timing effect. The Q1 margin
has benefitted from the higher sales trends experienced at an
earlier stage compared to the timing of the significant investments
made enhancing associate pay and benefits and implementing
additional safety and protective measures, which have become
material towards the end of Q1.”
Reiterating 2020 profit outlook and expecting to exceed
prior FCF Guidance Regarding the 2020 outlook, Frans
Muller said: ‘’COVID-19 has created uncertainty for our 2020
outlook, and it is too early to know how this will ultimately
impact our great local brands and the communities that they serve.
Although we continued to experience higher than normal sales growth
through the end of March, there is increased uncertainty in sales
over the course of the year, especially as it applies to changes in
consumer shopping patterns and behavior.
“Uncertain times call for a commitment to our purpose and
especially our values, one of which is care. We are committing to
this in abundance as we focus on operating our brands and supply
chains smoothly, with associate and customer health and safety as
our first and foremost priority. Investing in safeguarding
associate and customer wellbeing will ensure our brands will
continue to be able to serve the communities that rely on us in
this time of great need.
“The timing of these investments in associate and customer
safety and protection have become material towards the end of Q1.
This means we are not likely to sustain the underlying operating
margin level experienced in Q1. Nevertheless, we maintain our full
year outlook, that the group underlying operating margin will be
broadly in line with 2019. We continue to expect underlying
earnings per share growth in the mid-single-digit range for the
year.
“We expect free cash flow to exceed our previous guidance of
€1.5 billion, due to our expectation that some capital programs
will likely be delayed due to COVID-19. The free cash flow guidance
expressly excludes M&A activity.
“Our cash and liquidity positions remain strong. We propose a
cash dividend of €0.76 per common share for the financial year
2019, up 8.6% from last year. Our policy continues to be to target
a dividend payout of 40-50% of underlying income from continuing
operations in 2020. We have acquired €348.7 million of our own
shares this year as of April 3, and intend to continue repurchases
under the €1 billion share buyback program. However, given the
uncertainty caused by COVID-19, we will continue to assess these
policies throughout the year.
“We look forward to reporting our Q1 earnings in full on May 7,
2020.”
Cautionary noticeThis communication contains
information that qualifies as inside information within the meaning
of Article 7(1) of the EU Market Abuse Regulation.
This communication includes forward-looking statements. All
statements other than statements of historical facts may be
forward-looking statements. Words such as outlook, guidance
outlook, remains, expect, expected to be, ultimately, are, ensure,
will, continue, sustain, expecting to exceed, expectation, likely
to, to target, continues to, intend, look forward or other similar
words or expressions are typically used to identify
forward-looking statements.
Forward-looking statements are subject to risks, uncertainties
and other factors that are difficult to predict and that may
cause actual results of Koninklijke Ahold Delhaize N.V. (the
“Company”) to differ materially from future results expressed
or implied by such forward-looking statements. Such factors
include, but are not limited to, the risk factors set forth in
the Company’s public filings and other disclosures.
Forward-looking statements reflect the current views of the
Company’s management and assumptions based on information currently
available to the Company’s management. Forward-looking
statements speak only as of the date they are made and the Company
does not assume any obligation to update such statements,
except as required by law.
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