Zaandam, The Netherlands, May 7, 2002 - Ahold, the food retailer and foodservice operator, generated consolidated net sales (excluding VAT) over the first quarter of the year (16 weeks through April 21, 2002) of Euro 22.2 billion, a rise of 22.0%. Worldwide organic sales, excluding currency fluctuations, grew 5.4%.
Ahold USA - retail operations: sales up 16.2% to USD 7.9 billion
In the United States, retail sales increased 16.2% to USD 7.9 billion. Organic retail sales grew 5.7%, comparable retail sales 2.0% and identical retail sales 1.3%. Lower fuel prices depressed identical retail sales growth by approximately 0.4%. All retail operating companies, except for BI-LO, contributed to sales growth. Sales at the recently acquired supermarket company Bruno's were better than anticipated.
Ahold USA - foodservice operations: sales up 56.9% to USD 5.4 billion
Foodservice sales in the United States grew 56.9% to USD 5.4 billion mainly due to the consolidation of Alliant. Organic foodservice sales for the quarter were 4.3% higher. Voluntary market exits depressed organic sales growth by 1.2%. The integration of distribution facilities is moving as scheduled. The current plan is to consolidate 10 more facilities. U.S. Foodservice expects to have completed the major part of the integration process by year-end 2002.
Europe: sales increase 6.4% to Euro 6.1 billion
In Europe, sales rose 6.4% to Euro 6.1 billion. Organic retail sales, excluding currency impact, grew by 5.8%. In The Netherlands, sales were 6.1% higher. Operations in Scandinavia, Central Europe and Spain also contributed to the sales rise. Sales in Portugal were lower.
South America: sales total Euro 840 million
In Brazil, Argentina, Chile and Peru, sales amounted to Euro 840 million, down 32% from last year. Organic retail sales, excluding currency impact, increased by 4.3%. In local currencies, Bompreço in Brazil and Santa Isabel in Chile generated higher sales. Sales at Disco in Argentina were essentially the same as last year.
Central America: sales total Euro 410 million
Starting January 1, 2002, Paiz Ahold, the joint venture of Ahold and La Fragua in Central
America, formed a new regional joint venture with CSU named CARHCO. La Fragua sales are deconsolidated since January 1, 2002. The results from CARHCO will be reported as income from unconsolidated subsidiaries. Sales of CARHCO amounted to Euro 410 million. Organic sales growth in Central America, excluding currency impact, increased by 10.5%.
Asia: sales total Euro 121 million
In Asia, sales rose 19.7% to Euro 121 million. In local currencies, sales in all countries were higher than last year. Organic retail sales rose by 14.7%.
Outlook full-year 2002
Ahold companies, particularly the prominent ones, continue to perform well. There are however two factors that could potentially impact the growth performance of the company as a whole. The integration of Ahold Spain and Superdiplo on the Spanish mainland is taking longer than anticipated. As a consequence, earnings from Spain will fall short of our target.
In addition, the situation in Argentina is highly uncertain. The severe economic slow-down may impact operating earnings growth at Disco. The sustained weakness in the exchange rate will increase the cost of Disco's debts, denominated in U.S. Dollars, and may affect net earnings at Disco yet further. Disco is held through a partnership, Disco Ahold International Holdings. Ahold no longer adjusts the negative net income in Disco Ahold International Holdings for minority interests, thereby increasing the negative impact of the currency devaluation on Ahold's net earnings.
The Executive Board expects consolidated sales in 2002 to increase organically by 6 - 8% and operating earnings to increase organically by approximately 15%. The implied strong margin expansion is derived from significant additional economies of scale, synergies and operational enhancements. Including the acquisitions of Alliant and Bruno's, but excluding currency impact, operating earnings are expected to increase by approximately 20%.
Ahold's net earnings per share growth target of 15%, excluding currency differences and goodwill amortization, is ambitious. Yet it is justified by current operational performance. However, reaching the earnings per share growth target will depend on developments in Spain and Argentina as well as the level of gains from the sale of real estate.
Ahold expects its earnings to grow significantly faster in the second half of 2002 than in the first half of the year. This backloading reflects the integration of Alliant into U.S. Foodservice and anticipated improved results in the second half at BI-LO as well as in Spain and Portugal.
Earnings per share growth, excluding currency fluctuations and goodwill amortization, for first quarter 2002 is expected to be almost identical to first quarter 2001. On a fully-comparable basis, excluding one-time gains and losses, earnings per share are expected to rise by about 5-7%. Ahold will publish its first quarter results (16 weeks) on June 6, 2002 at 8.00 a.m. (CET).
Per 2002 year-end Ahold will reconcile net earnings under Dutch GAAP to US GAAP. The Executive Board expects the revaluation of goodwill paid for certain assets acquired in the past may cause a non-cash impairment charge to earnings under US GAAP.
