Ahold 1st quarter 2001 earnings rise 50.6% to Euro 346.6 million

Zaandam, The Netherlands, June 7, 2001 - Royal Ahold, the international food retail and foodservice company, today announced a 50.6% rise in first quarter 2001 earnings (first 16 weeks of the year through April 22, 2001) before goodwill amortization to Euro 346.6 million (2000: Euro 230.2 million). After goodwill amortization as of first quarter 2001, earnings total Euro 316.0 million. Earnings per common share before goodwill amortization rose 18.3% to Euro 0.41 (2000: Euro 0.35). Excluding currency fluctuations, mainly the higher average exchange rate of the U.S. dollar, earnings per share increased by 13.2%.

Remarks by Cees van der Hoeven, President & CEO Royal Ahold
Commenting on the first-quarter results, Ahold President & CEO Cees van der Hoeven said: 'Once again our operating companies generated excellent results in the first quarter. In the United States, both our food retail and foodservice activities boosted earnings substantially. The costs of remodeling the Grand Union stores to the Stop & Shop and Tops format are incorporated in these results. In addition, operating losses at Peapod were smaller than anticipated. The integration of ICA in Scandinavia and Superdiplo in Spain strengthened our position in Europe, to which our Dutch operations also contributed significantly. Our Latin American activities had outstanding performance, certainly in the light of the economic circumstances in the region. Ahold is on track to deliver on its objectives for full-year 2001.'

Sales and results in the first quarter were positively impacted by the higher average exchange rate of the U.S. dollar (0.92 vs 0.98). Consolidated sales rose 65.9% to Euro 18.2 billion (2000: Euro 11.0 billion). Excluding currency fluctuations, organic sales growth amounted to 7.4% and organic earnings growth to 15.8%. Operational cash flow (EBITDA) rose 49.9% to Euro 1,114.7 million. Operating earnings before goodwill amortization (EBITA) increased by 57.2% to Euro 711.0 million (2000: Euro 452.4 million). Earnings after goodwill amortization (EBIT) amounted to Euro 671.2 million. Earnings per share before goodwill amortization amounted to Euro 0.41, a rise of 18.3%. Excluding currency impact, the rise amounted to 13.2%.

United States

Sales in the United States rose 60% to USD 10.2 billion, mainly reflecting the consolidation of U.S. Foodservice and PYA/Monarch. Sales from Ahold's retail operations in the U.S. grew to USD 6.8 billion. Organic retail sales rose 7.2%, comparable retail sales 3.3% and identical retail sales 2.9%. All five Ahold USA retail operating companies contributed to sales growth. U.S. Foodservice had sales of USD 3.4 billion and organic sales growth amounted to 16.0%.

Operating earnings rose 44.9% to USD 454.4 million, partially reflecting the consolidation of U.S. Foodservice and PYA/Monarch. Operating earnings for retail amounted to USD 331.8 million. The costs of remodeling the Grand Union stores (USD 13.9 million) were charged to operating results. The operating loss of internet grocer Peapod amounted to USD 14.4 million. Operating earnings for foodservice amounted to USD 122.6 million.

Europe

In Europe, sales rose 77.9 % to Euro 5.7 billion, mainly reflecting the consolidation of the ICA Group in Scandinavia and Superdiplo in Spain. In The Netherlands, sales were positively impacted by Schuitema's acquisition of the A&P stores. Albert Heijn also had excellent sales growth. All European operating units generated higher sales. Organic retail sales growth amounted to 8.0%.

Operating earnings rose 53.8% to Euro 188.3 million, partly reflecting the consolidation of the ICA Group and Superdiplo. In The Netherlands, Albert Heijn, Schuitema and Deli XL were the main contributors to the increase in operating earnings. In the Czech Republic, results improved over last year. The operating loss in Poland is partially due to the cost of opening new hypermarkets. In Portugal, operating earnings were virtually unchanged.

Latin America

In Latin America, sales rose 9.2% to Euro 1.2 billion. Despite difficult economic circumstances, all operating units achieved higher sales. Organic retail sales growth amounted to 6.5%. Operating earnings increased by 64.5% to Euro 47.2 million. All operating units, particularly Bompreço in Brazil and Disco in Argentina, contributed to the further increase in operating results.

Asia

In Asia, the impact of currency fluctuations marginally depressed sales compared to last year, although in local currency sales were higher. Operating losses for the region amounted to Euro 4.9 million (2000 loss: Euro 6.1 million).

Corporate costs
Corporate costs amounted to Euro 15.1 million (2000: Euro 13.0 million).

Net financial expense rose to Euro 228.2 million, mainly reflecting financing of acquisitions and consolidation of interest expenses at U.S. Foodservice, PYA/Monarch, the ICA Group and Superdiplo. The rolling interest coverage ratio was 3.1. The rolling ratio of net interest-bearing debt to EBITDA was 2.7.

Tax rate
The tax rate, expressed as a percentage of pre-tax earnings, was 25.3% (2000: 26.5%).

Group equity
Group equity, expressed as a percentage of the balance sheet total, amounted to 13.4% (at year end 2000: 12.5%). Assuming conversion of the convertible subordinated notes outstanding, group equity amounts to 19.7%. Capital accounts amounted to 20.3% of the balance sheet total (at year end 2000: 19.5%). Stockholders' equity amounted to Euro 2.8 billion. In the first quarter of 2001, net earnings after deduction of the dividend on preferred shares were added to stockholders' equity. In addition, the proceeds from exercised option rights were added to stockholders' equity. The negative balance of exchange rate fluctuations was deducted from stockholders' equity. Goodwill related to acquisitions through November 2000 was charged to stockholders' equity. Goodwill related to acquisitions after November 2000 was capitalized.

Outlook for full-year 2001 confirmed
The Corporate Executive Board expects that sales and operating earnings will improve in all trade areas in 2001, reflecting increased 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 and goodwill amortization are expected to be 15% higher than in 2000. Earlier disclosed extraordinary items are included in this expectation.