Highlights from the Ahold 1999 Annual Report

Monday, April 10, 2000

Ahold expects that sales and operating earnings in 2000 will rise in all trade areas, reflecting healthy autonomous growth and new acquisitions. The company anticipates that net earnings will be strongly higher than in 1999. Earnings per share, excluding currency fluctuations, are expected to increase by at least 15%. The acquisition of U.S. Foodservice is expected to further enhance this growth to 17-20% in 2000.
U.S. Foodservice ? a major strategic step
In the report Ahold President & CEO, Cees van der Hoeven explains in the 'Message from the Corporate Executive Board', that Ahold in 1999 once again delivered an excellent year with record sales and results in almost all segments of the company's worldwide business. He highlights Ahold's expansion into the food service business through its acquisition of U.S. Foodservice, announced in March 2000. 'The acquisition of U.S. Foodservice is a very significant strategic step forward in the US. It elevates Ahold to the position of national food provider in the United States with distribution, sales offices and marketing operations, including e-commerce and internet shopping, across the country. It provides us with an additional platform for significant growth. With our economies of scale, synergy benefits and expertise, we can jointly build U.S. Foodservice into a powerful and much larger operation. In this way we benefit from the food service industry consolidation, which has only just begun, leaving room for further improvements in performance. This acquisition makes Ahold USA a true multi-channel food company with a national presence.'

World operations
In Europe, Ahold sees significant future growth through the ICA 50/50 joint venture and among others, 'sustained organic growth and ongoing innovation in The Netherlands. The possibility of a major alliance with a sizeable European company is still very much alive. While we believe Ahold is in an excellent position to make such a move, we are also poised to become one of Europe's strongest players through organic growth and other mid-sized acquisitions and joint ventures.'
'We feel very good about our business and the way we are growing into a multi-channel food provider, blending together successful new technology elements with those of an established food distributor,' Mr Van der Hoeven states. 'We continue to grow, accelerate where we can, innovate constantly and keep the customer first and foremost to benefit all our stakeholders in the way they've become accustomed.'
The Ahold 1999 Annual Report contains various other details regarding the current year. For its operations in the United States, Ahold expects for 2000 identical sales growth of more than 2% while autonomous growth will amount to about 7%. Current Ahold USA operating companies will open over 50 new supermarkets and remodel a further 200 existing stores. This will boost the number of Ahold's US supermarkets to about 1100 (1999 year-end 1063). Investment in current US business is expected to total approximately USD 1.1 billion (1999: USD 0.9 billion). Operating margin is expected to rise again, reflecting considerable synergy benefits and strict cost control.
In Europe, Ahold expects its activities to show average autonomous growth of approximately 11%. Current Ahold and Ahold-associated companies are expected to open about 170 new stores in 2000 and remodel a further 400 this year, bringing Ahold's operations in Europe to about 2600 stores (1999 year-end 2442). This figure excludes the ICA Group (3100 stores). Total investment in Ahold's current European business is expected to total approximately Euro 710 million. (1999: Euro 533 million). Operating margin is expected to rise in all trade areas.
Ahold expects autonomous sales growth in 2000 of approximately 11% in Latin America. Its current joint ventures are expected to open 30 large new stores and remodel a further 50, bringing the total to about 557 stores, including La Fragua. (1999 year-end 408). Investment in Latin America in existing operations is expected to total approximately Euro 370 million (1999: Euro 303 million).
In Asia Ahold expects autonomous growth of approximately 10%. At the end of 2000 about 100 Tops stores are expected to be in operation. (1999 year-end: 80 stores).

The Future of Food Retailing
The report also contains a special insert on the future of food retailing, detailing the rapidly evolving technologies available to the industry, customer demands in the future and e-commerce expectations. 'Ahold welcomes the changes in tomorrow's world. The company has positioned itself strategically to enhance its role as an innovative food provider.
In the insert the impact of new technology is described in relation to the consumer, his home and the way he will look after his food needs by the year 2010. Also the impact on business is discussed: 'Ahold sees its store operations developing into a network of sales and service channels for the customer and other parties. In addition to stores, Ahold also offers its enhanced services on the internet, smart telephones and other technology driven channels. Its store formats will have expanded considerably by 2010 and will range from large luxurious centers with food, restaurants and freshly made take-out meals, to convenience stores, close to residential areas looking after primary needs. They will also function as pick-up center for other services ordered by phone or electronically from our specialized distribution centers.'

Multi-channel food provider
'Ahold is preparing to become a multi-channel food provider, serving millions of customers at any one time, not just at home but in locations we can hardly envision now: fuel stations, restaurants, sport stadiums, colleges, hospitals, religious centers, anywhere people gather on a regular basis. In 2010 Ahold's food service operations will include an outstanding network of contemporary stores and direct delivery to businesses and consumers, complemented with virtual shopping on interactive TV screens. What's more, thanks to smart technology in the kitchen, for example refrigerators with scanners that check stock levels, it will be possible to buy and prepare food with less human intervention.'

Corporate Citizenship
On corporate citizenship, the Annual Report details Ahold's principal social responsibilities as enshrined in its Corporate Culture Statement. Besides aiming for continuity and growth in mature and new markets, Ahold's management and associates view their social responsibility as a core part of everyday work and the report details how the company achieves these objectives.
The Annual Report will be discussed at the Annual General Meeting of Stockholders on May 16, 2000.