Ahold 1st Quarter 1999 net earnings increase by 31.6% to E 175.1 million

Thursday, June 10, 1999

Earnings per common share amounted to E 0.27 (1998: E 0.24), an increase of 12.3%. Excluding currency fluctuations, mainly the lower average exchange rates of the US Dollar and Brazilian Real, earnings per common share rose by 19.3%. Sales and results in Euros were negatively impacted by the lower Dollar (E 0.90 vs E 0.93) and Real (E 0.53 vs E 0.82).

Consolidated sales in Euros rose 27.2% to E 9.3 billion (1998: E 7.3 billion). Operating results rose 33.8% to E 345.9 million (1998: E 258.6 million). Expressed as a percentage of net sales, operating results rose from 3.5% to 3.7%. Operating results before depreciation (EBITDA) rose 32.6% to E 584.2 million (1998: E 440.5 million). Expressed as a percentage of net sales, EBITDA increased from 6.0% to 6.3%.

United States In the United States, sales increased by 36.7% to USD 6.1 billion (1998: USD 4.5 billion). This sales rise largely reflects the consolidation of Giant-Landover, without which US sales would have risen 6.3%. All US operating companies, Stop & Shop in particular, contributed to this sales rise. Substantial identical sales growth was an important factor. Operating results in the United States rose 46.2% to USD 266.7 million (1998: USD 182.4 million). Excluding the consolidation of Giant-Landover, operating results rose 14.7%. The ongoing synergy activities among the US chains contributed markedly to the results. All Ahold's US companies, in particular Stop & Shop, generated higher operating results. BI-LO's new marketing programs made a significant contribution, Tops exercised strict and efficient cost control while Giant-Carlisle successfully grew market share. Giant-Landover's operating results surpassed expectations.

The Netherlands In The Netherlands, sales rose 3.4% to E 2.4 billion (1998: E 2.3 billion). Sales at Albert Heijn increased by 2.5%. Primarily as a result of no major price promotions as in the very strong first quarter of last year, market share decreased slightly. Sales at Schuitema rose 7.3% and market share increased proportionally. Sales at the specialty stores rose slightly. Sales at Ahold Institutional Food Supply (GVA) were markedly higher. Operating results in The Netherlands climbed 10.2% to E 90.7 million (1998: E 82.3 million). Albert Heijn improved its results considerably while Schuitema and Ahold Institutional Food Supply also delivered a distinctly improved performance over last year. Results at Ahold's specialty stores were practically identical to last year.

Other European countries Sales in other European countries (Portugal, Spain, Poland and the Czech Republic) rose 39.1% to E 517.4 million (1998: E 372.0 million). All operating companies contributed to this sales increase. The Spanish supermarket chains acquired in January 1999 were consolidated for the first time in this quarter. Operating results in the region rose 18.5 % to E 21.1 million (1998: E 17.8 million). In Portugal, the Pingo Doce supermarkets and Feira Nova hypermarkets again achieved higher operating results. Operating results in Spain were practically break-even. Poland and the Czech Republic sustained slight operating losses, reflecting the high development costs of a large number of store openings in 1998. In the Czech Republic, results at the new hypermarkets surpassed expectations.

Latin America In Latin America, sales rose to E 769.4 million (1998: E 384.6 million). This doubling of sales mainly reflects the consolidation of Disco in Argentina and the Chilean chain Santa Isabel. Consolidated sales in Euros were negatively impacted by the devaluation of the Real in January; sales in Brazil in local currency rose further in the first quarter. Operating results in Latin America increased to E 19.4 million (1998: E 9.2 million), the rise largely reflecting improved results at Bompreço and the consolidation of Disco in Argentina. The devaluation of the Real impacted negatively on the consolidated result in Euros. Santa Isabel continued to sustain operating losses.

Asia In Asia, consolidated sales rose 28.7% to E 131.9 million (1998: E 102.5 million), partially reflecting the opening of new stores in Malaysia in 1998. Operating losses in the region amounted to E 14.2 million (1998: E 9.6 million). For the full year, improvement in Thailand and Singapore is anticipated.

Net financial expense Net financial expense amounted to E 117.6 million (1998: E 71.6 million). The increase largely reflects consolidation of the interest expenses of Disco, Santa Isabel and Giant-Landover. As a result of the devaluation of the Real, E 24.8 million was charged to net financial expense. Interest coverage amounted to 3.15 (1998: 3.01) and net gearing totaled 227% (1998 year-end: 238%).

Tax rate The tax rate, expressed as a percentage of pre-tax earnings, amounted to 25.1% (1998: 25.5%).

Equity ratio Group equity, expressed as a percentage of the balance sheet total, amounted to 16.8% (1998 year-end: 15.7%). Group equity would have totaled 22.4% following conversion of the convertible subordinated bonds. Capital accounts totaled 23.9% (1998: 23.2%).

Stockholders' equity amounted to E 1.8 billion (1998 year-end: E 1.6 billion). Net earnings after deduction of the preferred dividend over the 1999 first quarter were added to stockholders' equity, as were the proceeds of exercised option rights and the positive balance of currency fluctuations. Goodwill amounting to E 72.9 million paid upon acquisitions (primarily those of Dialco and Dumaya in Spain) was fully charged to stockholders' equity.

1999 Outlook Based on the current state of business, the Ahold Corporate Executive Board confirms its expectation expressed earlier that 1999 sales and results will improve in all regions. Ahold President & CEO Cees van der Hoeven said results achieved in the first quarter are 'clear confirmation of the fact that the company is well on track. Specifically our successful operations in The Netherlands and the United States continue to provide the platform for our newly-developed activities in Latin America and Asia. In Europe, our performance is in line with expectations.' Excluding currency influences, Ahold anticipates earnings per share to rise by 15 to 20%. 'We are highly positive about the current state of business and about our future,' concludes Van der Hoeven.

Highlights:

• Net earnings surge 31.6% to E 175.1 million
• Operating results rise 33.8% to E 345.9 million
• Sales up 27.2% to E 9.3 billion
• Earnings per common share rise 12.3% (from E 0.24 to E 0.27) and 19.3% excluding currency fluctuations
• Corporate Executive Board confirms expectation of higher 1999 sales and results in all regions and earnings per share growth of 15-20%, excluding currency influences.