Ahold Profit Beats Estimates on U.S. Revamp, Dutch Growthby
Underlying operating income jumped 12% to 319 million euros
Delhaize merger still on schedule to be completed mid-2016
Royal Ahold NV, the Dutch grocery chain in the process of merging with Delhaize Group, reported third-quarter profit that topped analysts’ estimates, helped by a revamp of stores in the U.S. and more goods sold online in the Netherlands.
Underlying operating income rose 12 percent to 319 million euros ($343 million), the Zaandam, Netherlands-based company said in a statement Wednesday. On average, analysts surveyed by Bloomberg estimated earnings of 306 million euros.
Ahold has reduced prices and invested in a better produce selection in the U.S. to tackle the increased competition with chains such as Wal-Mart Stores Inc. After the merger with Belgium’s Delhaize, the company will have more than 4 percent of the U.S. grocery market. Globally the combination will have 6,500 stores and annual sales exceeding 54 billion euros.
U.S. margins and Dutch identical sales growth were the big surprises in the results, Fernand de Boer, an analyst for Petercam, said by phone.
The stock rose 2.4 percent to 19.38 euros as of 9:04 a.m. in Amsterdam. Ahold has gained 31 percent this year, giving it a market value of about 16 billion euros.
Dutch identical sales rose 4.0 percent. U.S. underlying operating margin improved to 4.0 percent from 3.8 percent a year ago. The company posted more than 30 percent sales growth at its bol.com and Albert Heijn online stores in its home market.
The company may introduce customer loyalty programs in the U.S. similar to offers in the Netherlands in which customers can save up for awards such as free restaurant visits, crystal glasses or knife sets, Boer said during a conference call with journalists on Wednesday. Such programs cost money but result in an uplift in sales, he added.
Ahold is on track to deliver results in line with full-year expectations and the proposed merger is still on schedule to be completed mid-2016, it said today. The European Union has delegated its regulatory investigation to Belgium, Boer said during the call, after authorities in Serbia and Montenegro already approved the merger earlier this year.