Ahold Delhaize sales growth increased to 2.1%, with strong synergy delivery resulting in margin expansion

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Beleggingsadvies 08/11/2017 06:47
Net sales increased by 7.4% to €15.1 billion (up 10.9% at constant exchange rates)
Net income increased by 54.0% to €362 million (up 59.5% at constant exchange rates)
Pro forma net sales decreased by 1.1% to €15.1 billion (up 2.1% at constant exchange rates)
Strong sales performance in the U.S., gaining market share across our brands
Online businesses growing total net consumer sales by more than 20%
Pro forma underlying operating margin increased to 3.9%, up 40 basis points compared to Q3 2016
Strong free cash flow of €426 million, up €340 million, with guidance of €1.6 billion for FY 2017 reiterated
Free cash flow for FY 2018 expected to increase, including capital expenditure to step up to €1.9 billion
New €2 billion share buy back program for 2018, following completion of the €1 billion program in 2017
Zaandam, the Netherlands, November 8, 2017 - Ahold Delhaize, a leader in supermarkets and eCommerce with market-leading local brands in 11 countries, continued to show strong performance during the third quarter of 2017 with increasing sales growth and improved margins.

Dick Boer, CEO of Ahold Delhaize, said: "We reported a strong financial performance again this quarter as margins increased significantly, driven by synergies while savings from our "save for our customers" programs are continuously being reinvested in the business. We continue to successfully implement our Better Together strategy and expect cumulative net synergies for the full year of 2017 to increase from €220 million to €250 million.

In the United States, inflation returned at low levels, and sales performance further improved. We gained market share across our brands in a competitive landscape with new entrants. Food Lion continued to report strong volume growth, supported by the rollout of its "Easy, Fresh & Affordable" strategy, whereas Stop & Shop New England benefited from a strong summer holiday season.

In Europe, our Dutch business continued to show good momentum with solid comparable sales growth and strong margins, driven by synergies and other cost savings. Albert Heijn further improved the quality of hundreds of own-brand products and was recognized for having the most attractive promotions, providing great value for customers. New products and services were introduced, such as a subscription option at ah.nl for home delivery, offering free of charge delivery at a fixed fee.

As part of our omni-channel strategy, we continue to enhance the leading position of our online businesses both in the U.S. and Europe, which in total grew more than 20% this quarter. We continue to invest in online warehouse capacity and are on track to realize almost €3 billion in online consumer sales this year and nearly €5 billion by 2020.

We are also investing to further improve our portfolios of own-brand products, providing healthy and convenient choices for customers and leveraging expertise from both sides of the Atlantic. This includes combining our Ahold USA and Delhaize America natural and organic own-brands with a total annual sales of $1 billion, into our Nature's Promise brand that we will introduce across our other businesses.

Moreover, we are building our digital capabilities and expertise and continue to invest to offer customers a personalized experience, both in our stores and online, using data analytics to develop digital loyalty programs and unique offers and promotions, benefiting from expertise and skills across our businesses. With the introduction of "My Hannaford Rewards" program, all our U.S. brands have now implemented a digital customer loyalty program.

We reiterate our guidance of €1.6 billion free cash flow for the full year 2017. Looking forward to 2018, we will maintain our balanced approach between managing our debt, funding growth and returning excess liquidity to our shareholders. For 2018, we expect free cash flow to increase and we anticipate capital expenditure to step up to €1.9 billion, focused on improving our store network, expanding our omni-channel offering and further developing our digital capabilities. In addition, we announced today a new 12 month €2 billion share buy back program starting at the beginning of 2018, reflecting confidence in our Better Together strategy.

Group performance on an IFRS basis
€ million, except per share data
Q3 2017 Q3 20161 % change % change constant rates Q3 YTD 2017 Q3 YTD
20161 % change % change constant rates
Net sales 15,136 14,088 7.4% 10.9% 47,127 33,336 41.4% 41.6%
Operating income 545 388 40.5% 45.2% 1,661 1,048 58.5% 58.5%
Income from continuing operations 362 235 54.0% 59.3% 1,073 651 64.8% 64.8%
Net income 362 235 54.0% 59.5% 1,073 652 64.6% 64.6%
Basic earnings per share from
continuing operations 0.29 0.20 45.0% 50.0% 0.85 0.69 23.2% 23.1%
Free cash flow2
426 125 240.8% 264.1% 1,023 585 74.9% 74.3%

1. Results from former Delhaize segments are included as of July 24, 2016.
2. Free cash flow is a non-GAAP measure. For a description of non-GAAP measures, refer to section Use of non-GAAP
financial measures at the end of this report.

Group performance on a pro forma basis
€ million, except per share data Pro forma
Pro forma Q3 2016 % change % change constant rates Pro forma Q3 YTD
2017 Pro forma Q3 YTD 2016 % change % change constantrates
Net sales 15,121 15,282 (1.1)% 2.1% 46,931 46,115 1.8% 1.5%
Operating income 540 451 19.7 % 23.9% 1,677 1,448 15.8% 15.6%
Income from continuing operations 359 277 29.6 % 34.2% 1,084 902 20.2% 19.8%
Basic earnings per share from
continuing operations1 0.29 0.22 31.8 % 38.1% 0.86 0.71 21.1% 21.1%
Underlying EBITDA 1,029 981 4.9 % 8.4% 3,166 2,971 6.6% 6.3%
Underlying EBITDA margin 6.8% 6.4% 6.7% 6.4%
Underlying operating income 595 542 9.8 % 13.3% 1,825 1,663 9.7% 9.5%
Underlying operating margin 3.9% 3.5% 3.9% 3.6%
Underlying earnings per share
from continuing operations1 0.32 0.27 18.5 % 23.1% 0.95 0.83 14.5% 14.5%

1. For more information on the (underlying) earnings per share from continuing operations, refer to table on page 29.

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tijd 09.29
Ahold Delh. EUR 16,91 +73ct vol. klein 3 miljoen.

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