Ahold Second Quarter 2007 Earnings

Amsterdam, the Netherlands - Ahold today published its interim financial report for the second quarter and half year 2007. John Rishton, CFO and Acting President and CEO, said "The results show that we are continuing to make progress with our strategy for profitable growth. Of particular importance is that the roll-out of the Value Improvement Program at Stop & Shop and Giant-Landover remains on track, with customer perception of price reductions continuing to improve.

 

"I am pleased to announce that, as a consequence of the successful sale of U.S. Foodservice and our Polish operations, we have decided to return a further €1 billion to our shareholders by way of a share buyback program.  This, together with the recently completed reverse stock split and €3 billion capital repayment, takes the total value to be returned to shareholders to €4 billion. 

 

"With lower net debt we are revising our guidance on annual net interest expense for 2007 from a range of €400 to €450 million to between €320 and €340 million".

 

As announced earlier today, Ahold has decided to delist from the New York Stock Exchange. The decision is consistent with the company's strategy of improving its cost effectiveness by reducing complexity without detracting from the integrity of its governance and control processes. Ahold's ADRs will continue to be traded on the over-the-counter (OTC) market in the United States.

 

 

 

Net sales were €6.6 billion, up 2% from the same period last year. At constant exchange rates, net sales increased by 5.6%.

 

Operating income was €291 million, €11 million lower than last year, reflecting an adverse currency exchange impact. Retail operating income was €313 million, an operating margin of 4.7%. Core Corporate Center costs were €22 million for the quarter, down €13 million from a year ago.

 

Net income was €2.2 billion, up €2 billion from the same period last year as a result of the divestment of U.S. Foodservice and the company's Polish operations.

 

Cash flow before financing was €5.7 billion positive for the quarter, €5.1 billion better than the same period last year, mainly as a result of the proceeds from the sale of U.S. Foodservice and  the company's Polish operations.

 

Net sales were €15.2 billion, up 1.6% from the same period last year. At constant exchange rates, net sales increased by 6.1%.

 

Operating income was €626 million, €24 million lower than last year, reflecting an adverse currency exchange impact. Retail operating income was €696 million, an operating margin of 4.6%. Core Corporate Center costs were €55 million, down €29 million from a year ago.

 

Net income was €2.5 billion, up €2 billion from the same period last year as a result of the divestment of U.S. Foodservice and the company's Polish operations.

 

Cash flow before financing was €5.7 billion positive for the first half, €5.2 billion better than the same period last year.

 

 

 

For the second quarter, net sales were $3.9 billion, up 1.9% compared with the same period last year; identical sales were up 1.1% at Stop & Shop (0.6% excluding gasoline net sales) and down 1% at Giant-Landover. Operating income was $161 million, or 4.1% of net sales - down $62 million from the same period last year. Margins were impacted by price investments related to the further roll-out of the Value Improvement Program. Furthermore, second quarter 2007 included restructuring charges of $26 million, partially offset by gains on the sale of assets of $13 million.

 

For the first half, net sales were $9 billion, up 1.8% compared with the same period last year; identical sales were up 0.7% at Stop & Shop (0.2% excluding gasoline net sales) and down 1.1% at Giant-Landover. Operating income was $389 million, or 4.3% of net sales, down $123 million from the same period last year.

 

For the second quarter, net sales were $1 billion, up 13.7% from the same period last year, due in part to the acquisition of the Clemens Markets stores in the fourth quarter of 2006; identical sales were up 2.7% (2.6% excluding gasoline net sales). Operating income increased by $7 million to $56 million or 5.6% of net sales. Similar to the second quarter last year, operating income was favorably impacted by seasonal holiday sales and low promotional spend.

 

For the first half, net sales were $2.3 billion, up 15% from the same period last year, due in part to the acquisition of the Clemens Markets stores in the fourth quarter of 2006; identical sales were up 3.7% (3.3% excluding gasoline net sales). Operating income increased by $13 million to $113 million or 4.9% of net sales.

 

For the second quarter, net sales were €1.8 billion, up 10.3% compared with the same period last year, due in part to the acquisition of the Konmar stores in the fourth quarter of 2006. Identical sales increased at Albert Heijn supermarkets by 6.2%. Operating income was €130 million, or 7.1% of net sales, up €28 million from the same period last year, as a result of higher identical sales, effective cost control and lower pension charges. Operating income in the second quarter of 2007 included gains on the sale of assets of €9 million.

 

For the first half, net sales were €4.2 billion, up 11.6% compared with the same period last year, due in part to the acquisition of the Konmar stores in the fourth quarter of 2006. Identical sales increased at Albert Heijn supermarkets by 7.6%. Operating income was €280 million, or 6.7% of net sales, up €76 million from the same period last year.

 

For the second quarter, net sales increased 10.7% to €342 million. At constant exchange rates, net sales increased 9.4%. Identical sales increased 6.5%. Operating income was €5 million compared to a €4 million operating loss in the same period last year.

 

For the first half, net sales increased 10.2% to €776 million. At constant exchange rates, net sales increased 7.9%. Identical sales increased 4.7%. Operating income was nil compared to an operating loss of €14 million in the same period last year.

 

For the second quarter, net sales grew 0.5% to €771 million. Identical sales decreased 0.6%. Operating income was €17 million, or 2.2% of net sales, down €8 million from the same period last year as a result of improved conditions for Schuitema's franchisees and increased commercial activities.

 

For the first half, net sales grew 2.3% to €1.8 billion. Identical sales increased 1.5%. Operating income was

€39 million, or 2.2% of net sales, down €16 million from the same period last year.

 

For the second quarter, Ahold's share in income of joint ventures and associates was €32 million, down

€1 million from the same period last year as a consequence of lower net income at ICA.

 

For the first half, Ahold's share in income of joint ventures and associates was €54 million, down €8 million from  the same period last year.

 

 

 

Non-GAAP financial measures:

 

This earnings release should be read in conjunction with Ahold's interim financial report for the second quarter and half year 2007, which is available on www.ahold.com. This release contains certain non-GAAP financial measures which are further discussed in the interim financial report. The data provided in this earnings release are un-audited and are accounted for in accordance with IFRS unless otherwise stated.

 

Certain statements in this earnings release are forward-looking statements within the meaning of the U.S. federal securities laws. These statements include, but are not limited to, statements as to plans for a €1 billion share buyback program and the timing thereof, plans to delist from the NYSE and plans and expectations for the Value Improvement Program.  These forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond Ahold's ability to control or estimate precisely, the actions of Ahold's shareholders, competitors, customers, and other third parties, Ahold's liquidity needs exceeding expected levels, the effect of general economic or political conditions, fluctuations in exchange rates or interest rates, increases or changes in competition, Ahold's ability to implement and complete successfully its plans and strategies and to meet its targets, the benefits from Ahold's plans and strategies being less than those anticipated, and other factors discussed in Ahold's public filings. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this earnings release. Ahold does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this earnings release, except as may be required by applicable securities laws. Outside the Netherlands, Koninklijke Ahold N.V., being its registered name, presents itself under the name of "Royal Ahold" or simply "Ahold."