Wednesday, June 07, 2000
Royal Ahold, the food provider, achieved net earnings of Euro 230.2 million for the first quarter of 2000 (16 weeks ended April 23), an increase of 31.5% (1999: Euro 175.1 million). Net earnings after deduction of the preferred dividend amounted to Euro 226.5 million (1999: Euro 171.4 million).
Earnings per common share amounted to Euro 0.35 (1999: Euro 0.27), an increase of 30.8%. Excluding currency fluctuations, mainly the higher average exchange rate of the U.S. Dollar, earnings per common share rose 18.8%. Sales and results in Euros were positively impacted by the higher Dollar (Euro 1.02 vs Euro 0.90).
Consolidated sales in Euros rose 18.0% to Euro 11.0 billion (1999: Euro 9.3 billion). Operating results rose 30.8% to Euro 452.4 million (1999: Euro 345.9 million). Expressed as a percentage of net sales, operating results rose from 3.7% to 4.1%. Operating results before depreciation (EBITDA) rose 27.3% to Euro 743.8 million (1999: Euro 584.2 million). Expressed as a percentage of net sales, EBITDA increased from 6.3% to 6.8%.
United States
In the United States, sales increased by 5.0% to USD 6.4 billion (1999: USD 6.1 billion), largely attributable to strong identical sales growth at Stop & Shop and Giant-Landover. The other U.S. chains also contributed to sales growth. Operating results rose 17.6% to USD 313.7 million (1999: USD 266.7 million). All U.S. companies, in particular Giant-Landover and Stop & Shop, generated higher operating results. The ongoing synergy activities among the U.S. chains and strict cost control contributed considerably to the improved operating results.
Europe
In Europe, sales rose 11.0% to Euro 3.2 billion (1999: Euro 2.9 billion). In The Netherlands, sales were 8.8% higher and other European countries (Portugal, Spain, the Czech Republic and Poland) also contributed strongly to the sales rise. Operating results climbed 9.5% to Euro 122.4 million (1999: Euro 111.8 million). In The Netherlands, operating results increased by 8.5%.
Latin America
In Latin America, sales surged by 44.7% to Euro 1.1 billion (1999: Euro 769.4 million), mainly reflecting the consolidation of La Fragua in Guatemala. Sales of Bompreo in Brazil and Disco in Argentina also improved strongly. Operating results increased by 47.9% to Euro 28.7 million (1999: Euro 19.4 million), the rise largely reflecting the consolidation of La Fragua in Guatemala and improved results at Disco in Argentina.
Asia
In Asia, sales amounted to Euro 103.3 million (1999: Euro 131.9 million), a decrease caused by the divestment at the end of last year of activities in Singapore and China. Operating losses in the region amounted to Euro 6.1 million (1999: Euro 14.2 million).
Corporate costs
Corporate costs amounted to Euro 13.0 million (1999: Euro 11.6 million).
Net financial expense
Net financial expense amounted to Euro 128.4 million (1999: Euro 119.1 million). The increase largely reflects the financing of acquisitions and the consolidation of La Fragua's interest expenses. Interest coverage amounted to 3.40 (1999: 3.51) and the rolling annual net debt / EBITDA ratio was 2.1 (1999: 1.8).
Tax rate
The tax rate, expressed as a percentage of pre-tax earnings, amounted to 26.5% (1999: 25.3%).
Equity ratio
Group equity, expressed as a percentage of the balance sheet total, amounted to 15.6% (1999 year-end: 17.2%). Group equity is 19.3% assuming full conversion of the subordinated convertible notes. Capital accounts totaled 20.3% (1999: 23.3%). Stockholders' equity amounted to Euro 2.5 billion (1999 year-end: Euro 2.1 billion). Net earnings after deduction of the preferred dividend over the 2000 first quarter were added to stockholders' equity, as were the proceeds of exercised option rights and the positive balance of currency fluctuations. Goodwill paid for acquisitions was fully charged to stockholders' equity. U.S. Foodservice, acquired on April 12, 2000, will be consolidated as of the second quarter. The purchase price of Euro 2.8 billion was consolidated in the balance sheet under financial fixed assets.
Remarks by Cees van der Hoeven, President & CEO Royal Ahold
Commenting on the first-quarter results, Ahold President & CEO Cees van der Hoeven said: 'These results are fully in line with our expectations. Ahold is right on track. The acquisition of U.S. Foodservice and our 50% stake in the ICA Group will be consolidated as of the second quarter and will then start to contribute to the company's growth. Our strategy of servicing the customer through a network of store chains and food service companies, complemented by e-commerce activities, offers new growth opportunities in all trade areas for both our current operations and those to come. We are in excellent shape.'
Outlook full-year 2000
Ahold confirms that sales and operating results are expected to improve further in all trade areas, reflecting healthy autonomous growth and new acquisitions. Ahold anticipates that net earnings will be strongly higher. Including the acquisition of U.S. Foodservice and excluding currency impact, Ahold expects earnings per share growth for the full-year 2000 to amount to 17-20%.
Highlights:
Net earnings surge 31.5% to Euro 230.2 million
Operating results rise 30.8% to Euro 452.4 million
Sales up 18.0% to Euro 11.0 billion
Earnings per common share rise 30.8% to Euro 0.35
Outlook for full-year 2000: earnings per share growth of 17-20%,
excluding currency influences
Editor's note: Please be advised that you are cordially invited to listen in to an analyst conference call with members of the Corporate Executive Board on www.ahold.com today, June 7, 2000, at 4:00 P.M. (local time).