Ahold net earnings surge 48% to Euro 1.1 billion

Tuesday, March 06, 2001

Consolidated statement of earnings of Royal Ahold (Microsoft Word)

Ahold, the food provider, achieved net earnings for the full-year 2000 (52 weeks) of Euro 1.1 billion

(1999: Euro 752 million), a rise of 48%. Operating results increased by 61% to

Euro 2.3 billion (1999: Euro 1.4 billion) and rose to 4.3% of net sales (1999: 4.2%).

Earnings per common share rose 32% to Euro 1.51 (1999: Euro 1.14). Excluding currency fluctuations, primarily the impact of the higher average exchange rate of the U.S. dollar, earnings per common share rose 19%.

Consolidated sales in 2000 rose 56% to Euro 52.5 billion (1999: 33.6 billion). Operating

cash flow (EBITDA) increased by 51% to Euro 3.5 billion (1999: Euro 2.3 billion).

EBITDA amounted to 6.6% of net sales (1999: 6.8%). Net earnings after deduction of preferred dividend totaled Euro 1.1 billion (1999: Euro 740 million).

Remarks by Ahold President & CEO Cees van der Hoeven

Commenting on the results, Ahold President & CEO Cees van der Hoeven said: This is the

13th consecutive year in which our net earnings have grown significantly. Ahold has always met

or exceeded expectations during this 13 year period and we intend to continue to do so. Results for the year 2000 indicate that we are on the right track with our multi-channel strategy. We have seen strong organic sales (6.6%) and organic earnings (13.6%) growth, while all new acquisitions have performed very well. We planned to double the size of our company between 1999 and 2002, but it now looks as if we will almost reach that goal by the end of 2001, with sales expected to be about Euro 65 billion. We look forward to the future with confidence and excitement.

Ahold 4th quarter and full year quarter 2000 results, compared to 1999

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United States

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Sales in the United States rose 36% to USD 27.8 billion. This substantial increase partially reflects the acquisition in April of U.S. Foodservice. Sales were higher at all retail operating companies, particularly at Stop & Shop and Giant-Landover. Identical sales growth was 2.1% and comparable sales grew by 2.8%.

U.S. operating results rose 34% to USD 1.3 billion, partially reflecting the consolidation of

U.S. Foodservice. Results at U.S. Foodservice exceeded expectations at the time of acquisition. Excluding Edwards, all supermarket chains showed market share gains, improved operating margins, significant synergy benefits and ongoing cost control. During the second half of the year, 63 Edwards stores were converted to the successful Stop & Shop format. Approximately

USD 30 million for this conversion was charged to operating results. The operating losses of internet grocer Peapod amounted to USD 32 million.

Europe

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In Europe, sales rose 59% to Euro 16.6 billion. This sharp increase partially reflects consolidation of the ICA Group effective the second quarter. In Spain, the sales rise was largely due to the acquisition of the Kampio supermarket chain. In Portugal, sales also increased. In the Czech Republic and Poland, the sales increase was mainly attributable to the opening of new supermarkets and hypermarkets. In The Netherlands, Albert Heijn, Schuitema and Deli XL achieved marked sales growth.

Operating results in Europe rose 46% to Euro 670 million, partly reflecting the consolidation of the ICA Group, which performed according to expectation. Operating results in The Netherlands, the Czech Republic and Spain also contributed to this increase. Operating results in Portugal were lower than last year, partially reflecting the costs of implementation of a new logistics system.

The operating loss in Poland is due to the high cost of opening a large number of new stores.

Latin America

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In Latin America, sales rose 45% to Euro 5.1 billion, reflecting in part the consolidation of

La Fragua in Guatemala. Food retailer Bompreo in Brazil and the supermarket chains Disco in Argentina and Santa Isabel in Chile also contributed to the increased sales.

Operating results in Latin America increased by 111% to Euro 204 million, partly attributable to La Fragua, where results exceeded expectation. Substantially higher operating results at Bompreo and Disco also contributed to the rise. Operating results at Santa Isabel were positive for the fourth quarter, although a slight loss was recorded for the year as a whole.

Asia

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In Asia, sales decreased by 15% to Euro 402 million, reflecting the sale of store chains in Shanghai and Singapore in 1999. Operating losses for the region amounted to Euro 20 million.

In Thailand, operating results turned positive in 2000. Malaysia and Indonesia sustained operating losses.

Corporate costs

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Corporate costs amounted to Euro 46 million (1999: Euro 44 million).

Net financial expense

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Net financial expense rose to Euro 669 million, mainly reflecting the joint venture with the

ICA Group and the acquisition of U.S. Foodservice as well as the higher U.S. dollar exchange rate. The interest coverage ratio was 3.15 (1999: 3.91). The ratio of net interest-bearing debt to operating cash flow was 2.42 (1999: 2.0).

Tax rate

The tax rate, expressed as a percentage of pre-tax earnings, was 25.0% (1999: 27.0%) due to changes in the composition of earnings before taxes.

Equity position

At year-end 2000, the balance sheet total increased to Euro 25.5 billion, reflecting the consolidation of acquisitions and investments in the existing business. Shareholders equity amounted to Euro 2.5 billion at year-end 2000. Added to shareholders equity were the proceeds of the public offering of common stock (Euro 4.1 billion), cumulative preferred financing shares issued (Euro 395 million), exercised option rights (Euro 56 million) and net results over the fiscal year after preferred dividend and cash dividend on common shares (Euro 1.1 billion). Goodwill amounting to Euro 5.4 billion, primarily for U.S. Foodservice and the ICA Group, was fully charged to shareholders equity. Goodwill paid for the acquisition of PYA/Monarch and Superdiplo was capitalized in the balance sheet in accordance with Dutch Standard Accounting Principles published in November 2000. The negative impact of exchange rate fluctuations

(Euro 25 million) was also charged to shareholders equity. Group equity, the sum of shareholders equity and minority interests, amounted to Euro 3.2 billion at year-end 2000.

Capital accounts totaled Euro 5.0 billion, 19.5% of the balance sheet total.

Fourth Quarter 2000 net earnings rise 56% to Euro 370 million

In the fourth quarter of 2000, net earnings rose 56% to Euro 370 million (1999: Euro 237 million). Earnings per common share rose 29% to Euro 0.46 (1999: Euro 0.36). Earnings in Euro in this quarter were impacted by the higher average exchange rate of the U.S. dollar. At a constant

U.S. dollar exchange rate, earnings per share rose 15%.

Fourth-quarter consolidated sales rose 78% to Euro 15.3 billion (1999: Euro 8.6 billion), partly reflecting the consolidation of the ICA Group and U.S. Foodservice. Organic sales growth for the quarter was 6.9%.

Operating results rose 75% to Euro 734 million (1999: Euro 420 million) and amounted to

4.8% of net sales (1999: 4.9%). Operating cash flow (EBITDA) rose 66% to Euro 1.1 billion

(1999: Euro 641 million), 7.0% of net sales (1999: 7.5%).

In the United States, sales rose 54% to USD 7.6 billion (1999: USD 4.9 billion), partly due to

the consolidation of U.S. Foodservice, Golden Gallon and Sugar Creek. The retail operating companies generated strong identical sales growth (3.2%) and comparable sales growth (4.1%).

Operating results rose 35% to USD 361 million (1999: USD 267 million), which includes the consolidation of U.S. Foodservice. The transition of the Edwards stores to the Stop & Shop format was completed in the fourth quarter and approximately USD 15 million was charged to operating results. Internet grocer Peapod recorded operating losses of USD 22 million.

In Europe, sales rose 85% to Euro 5.0 billion (1999: Euro 2.7 billion), reflecting in part the consolidation of the ICA Group in Scandinavia and the acquisition by Schuitema of A&P in

The Netherlands. Operating results rose 66% to Euro 243 million (1999: Euro 147 million), in part due to the ICA Group. In The Netherlands, Albert Heijn had a strong fourth quarter. In the

Czech Republic, operating results improved sharply. Portugal recorded lower results than last year. In Poland, operating losses are attributed to the high cost of supermarket and hypermarket openings.

In Latin America, sales rose 47% to Euro 1.4 billion (1999: Euro 981 million), partially reflecting the consolidation of La Fragua in Guatemala. All operating companies generated higher sales, specifically Bompreo in Brazil and Disco in Argentina. Operating results rose 178% to

Euro 90 million (1999: Euro 33 million), partly due to the consolidation of La Fragua.

Operating results at Bompreo and Disco were sharply higher. Santa Isabel achieved positive operating results for the fourth quarter.

In Asia, sales rose 3% to Euro 105 million (1999: Euro 101 million). Operating losses were reduced to Euro 4 million (1999 loss: Euro 6 million). Operating results were positive in Thailand, while Malaysia and Indonesia recorded marginal operating losses.

Corporate costs amounted to Euro 11 million (1999: Euro 11 million).

Net financial expense increased to Euro 210 million (1999 expense: Euro 87 million),

mainly reflecting the joint venture with the ICA Group and the acquisition of U.S. Foodservice.

The higher average exchange rate of the U.S. dollar also contributed to the increase.

The tax rate was 23.3% (1999: 26.7%).

2000 dividend proposal

It is proposed that a dividend of Euro 0.63 (1999: Euro 0.49) per common share of Euro 0.25 par value be paid from the 2000 results; Euro 0.18 of this amount has already been paid as interim dividend. Stockholders can choose to receive the 2000 final dividend of Euro 0.45 in the form of a cash pay-out or 2% in common shares, charged to the additional paid-in capital. This dividend will be made payable as of May 23, 2001.

Annual General Meeting of Stockholders

The General Meeting of Stockholders will be held at the Circus Theater in The Hague on

Tuesday May 15, 2001 at 1:30 pm.

The 2000 annual report will be available as of April 9, 2001.

Outlook for 2001

The Corporate Executive Board expects that sales and operating results will improve in all trade areas in 2001, reflecting healthy organic growth as well as the contribution of recent acquisitions. It is anticipated that net earnings will be strongly higher. Earnings per share, excluding currency fluctuations, extraordinary items and goodwill amortization are expected to be 15% higher than in 2000.

Consolidated statement of earnings of Royal Ahold (Microsoft Word)