News Column

Ahold Q2 Profit Down; Sees Improved Sales

August 20, 2014

AMSTERDAM (dpa-AFX) - Dutch supermarket chain Koninklijke Ahold NV (AHODF.PK, AHONY.PK) Thursday reported a sharp decline in second-quarter profit, reflecting higher charges and weaker sales, hurt mainly by the timing of Easter. Looking ahead for fiscal 2014, the company projects improving sales trends.

For the second quarter, net income attributable to common shareholders declined 28.6 percent to 147 million euros (about $194.72 million) from 206 million euros in the previous year. The prior-year results have been restated. Income from continuing operations fell 22.5 percent year-over-year to 158 million euros.

The latest results included 29 million restructuring charge, resulted by the implementation of European reorganization, as well as additional discontinued operation costs of 12 million euros related to the Waterbury litigation.

Underlying operating income declined 15.5 percent year-over-year to 288 million euros, and underlying operating margin dropped to 3.9 percent from 4.4 percent last year, following pressure on volumes and price investments.

Net sales for the quarter declined 4.1 percent to 7.420 billion euros from 7.738 billion euros in the previous year. At constant exchange rates, sales dropped 1.1 percent, hurt by the post-Easter week falling into second quarter this year.

Online sales, however, climbed 18.6 percent to 273 million euros on an identical basis.

Ahold USA's sales dropped 6.2 percent. Identical sales excluding gas declined 1.8 percent. Comparable sales growth excluding gasoline was negative 1.7 percent, compared to a 0.4 percent increase last year.

In its home market, sales edged up 0.1 percent, despite the negative effect of a change in legislation related to VAT on tobacco and the post-Easter week impact. Identical sales, excluding VAT on tobacco sales, declined 1.7 percent, mainly as a result of a lower average basket of Albert Heijn customers in the Dutch supermarkets. Comparable sales dropped 1.5 percent.

The company still expects to deliver close to 300 million euros in cost savings for the year from Simplicity program, in line with last year, which will be reinvested to improve competitiveness.

In Amsterdam, Ahold shares lost 0.15 euros or 1.16 percent on Wednesday, and settled at 13.16 euros.

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Source: dpa-AFX International Compact

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