Speech Ahold President Cees van der Hoeven, press conference 2000 full year results.

Tuesday, March 06, 2001

In general, our ongoing business performed very well. Almost without exception we strengthened our market position and improved operating margins. Our competitive strength in existing markets is clearly evident as we leverage economies of scale, exchange best practice and focus on our local customers. We are equally pleased with the integration of newly acquired companies. U.S. Foodservice already proves to be a major contributor, exceeding our expectations. The multi-channel strategy is taking shape and we are on the right track to generate substantial benefits in and between the two channels, food retailing and food service. Also, our newly formed joint venture with ICA in Scandinavia performed very well as did the joint venture with La Fragua in Central America.

In both instances we clearly see our ability to contribute to profitable growth of these two well-managed companies. We also look forward to working with our two most recent acquisitions PYA/Monarch and Superdiplo. The early signs for successful integration are excellent.

Ladies and Gentlemen, this is the 13th consecutive year of net earnings growth and I am particularly pleased to say that never during this period did we underperform against market expectation. Few of you may realize that during the past ten years Ahold sales increased six-fold, net earnings nine-fold and market capitalization eighteen-fold. You may recall that we were seen as very ambitious when in 1995 we set a goal for 2000 of NLG 50 billion sales and NLG 1 billion net earnings. We have exceeded those numbers last year, be it in Euros rather than guilders.

I realize that making these statements may sound as if its all over, but I can assure you that this is certainly not the case. We have a great future ahead of us and thats why I would like to share our vision and strategy with you today. But first, let me address the food retail environment.

The general trend of a declining share of food retail expenditure of gross national product continues everywhere. Food inflation continues to be lower than general price inflation. Also, total expenditure on food continues to grow twice as fast outside than inside the home. Against the background of slowing economic growth, this is not very encouraging. However, from our perspective there is very clear silver lining to the clouds. First, as a consequence of our multi-channel strategy, we participate in every meal occasion: at home, in a restaurant, at work, in a hospital, while on the move or just out in the street. Second, in retail as well as in food service we see unprecedented opportunities to improve market share and do new acquisitions. As competition continues unabated it is quite clear that many companies are better off teaming up with a strong, well-organized partner than to pursue long-term independence. The Ahold advantage is that we have a superb track record of integrating companies very successfully. We preserve the brand name, the heritage, keep management in place and provide all the necessary ingredients for faster profitable growth. Therefore, you will see further acquisitions, but there is none to be announced today.

Looking forward, we feel good about our multi-channel, multi-brand, multi-format and multi-regional strategy. It looks complicated from the outside as if we are trying to do too many things at the same time. However, I can assure you that it is very manageable and that in our perception it is the right way to attract our customers wherever, whenever, or whoever they are. We do not offer one-size-fits-all solutions, but instead an array of meal occasions and meal solutions to very individual, unpredictable and ever-changing consumer needs. It is our task to be flexible and respond to these needs as they arise. It also broadens our scope tremendously and puts us on an unabated growth path for the future. There is certainly no lack of opportunities, it is more a matter of choosing the right ones. As an organization we are ready for it and we look forward with confidence and excitement.

The focus inside our existing business is mainly on five points.

First, to step up organic sales growth not only by expanding square footage, but even more specifically by building sales per square foot. In a market where new stores grow faster than consumer demand this is challenging. We intend to differentiate our assortment better than ever before to local market circumstances and to offer more services to our customers. Our strong customer card programs in many countries will assist us here.

Second, we intend to further improve our margins, not by raising retail prices but by better joint sourcing of all product categories and by offering more value added products and services.

Third, we will vigorously pursue our efforts to take costs out of the business. All our processes and actions will be tested against two guiding principles: do they improve customer satisfaction and/or associate motivation. If the answer is nothing or little, we will change the process or declare it redundant.

Fourth, we will step up our efforts to use capital efficiently. This applies to working capital as well as fixed assets. Our cashflow will be put to better use and our call on outside funds, relative to our growth, should be decreased.

Fifth, we are very much aware of one of our most important assets, our brand equity. Special attention will be paid to further investment in the brand of our retail chains as well as our foodservice operations.

And last but not least, we continue to invest in our people. Management development, training, diversity of the workforce, internal communication and active participation in decision taking are all key programs which have been stepped up substantially.

With all these programs in place we have a full plate. However, we do not want to loose sight of some other initiatives.

Since knowledge of people constitutes our most important asset, Ahold Networking is a crucial element of our strategy. The intranet to which currently 6000 associates are actively connected ensures that the whole of Ahold is greater than the sum of its parts. Our overall business is broken up in fourteen knowledge areas and in each of these several network groups are operative. Targets are set to leverage scale, benchmark important ratios and exchange best practice when opportunities are identified. It is a very rewarding process because it raises the bar for performance and also excites our troops as their world opens up to much broader horizons.

Being actively involved in the environment in which we operate presents its own challenges. Ahold has taken a leading role in a worldwide food safety initiative, designed to set standards in the industry, to ensure coordinated and rapid response to incidents and to improve consumer awareness. We have also embarked on several programs to further our community involvement and upgrade our role as responsive citizens to society. We see this as a natural consequence of our position as being one of the worlds leading food providers. But, we also believe that the best companies take their larger responsibility as a matter of course in the interest of all stakeholders.

Ladies and Gentlemen, we are proud of our accomplishments and excited about our future. Ahold is in excellent shape and ready to make another leap forward. I have told you before that we intended to double the size of our company between 1999 and 2002. It now looks as if we will almost do that already in 2001, this year. Our sales this year are projected around Euro 65 billion, excluding further acquisitions and of course allowing for currency exchange fluctuations.

Once again, we expect 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% than in 2000.

I would like to thank our 420.000 associates around the world for their hard work and significant contributions.

With this I would like to hand over to Michael Meurs for his review of our financial performance.