Ahold cuts forecasts for 2006

29/03/06 Dutch retailer Ahold has cut its 2006 forecasts for its retail operations due to tougher than expected competition and cost pressures and said it would review underperforming assets. Ahold reported a fourth-quarter operating profit of 292 million euros ($351 million), including 92 million euros of insurance proceeds.

Anders Moberg, President and CEO of Ahold, said today: "2005 has been a difficult year with mixed performance in our key business areas. We continue to experience strong competitive pressures in our retail operations, with considerable challenges at the Stop & Shop / Giant-Landover Arena. Tops (in particular in northeast Ohio) and the Central Europe Arena continue to underperform. On the other hand, our repositioning programs at Albert Heijn and ICA have resulted in strong market leadership and growth, and we launched our long-term strategy to drive the profitable growth of U.S. Foodservice. In addition, we achieved a number of important strategic milestones, most importantly the preliminary court approval of our settlement of the securities class action and the conclusion of our EUR 3.1 billion divestment program, enabling us now to focus fully on managing our businesses for the future.

"The financial targets we originally set for retail in 2003 have become increasingly challenging. Competitive and operating cost pressures have been greater than expected and the turnaround at certain businesses has been slower than planned. Based on the retail trends we have seen for the year to date, we expect our retail net sales growth this year to be between 2.5% and 3.0% (at constant exchange rates, and excluding divestments made in 2005). In addition, we expect that our retail operating margin will be between 4.0% and 4.5% in 2006. U.S. Foodservice targets remain unchanged.

"Driving top line growth and achieving a 5% retail operating margin remain our overall priorities," Moberg said.