Ahold Profit Slips in Q4, Pledges to Cut Costs

27 Feb 2014 --- Ahold has published its summary report for the fourth quarter and full-year 2013. For the fourth quarter sales of €7.5 billion were down 1.1% at constant exchange rates, with underlying operating income €320 million, down 7.5% at constant exchange rates. Underlying operating margin 4.3% (Q4 2012: 4.6%), while operating income was €311 million, up 3.8% at constant exchange rates.

CEO Dick Boer said: "In the fourth quarter our sales remained broadly flat at constant exchange rates, adjusted for the impact of Hurricane Sandy in 2012 and VAT from tobacco sales in the Netherlands in 2013, reflecting a low level of inflation and pressure on volumes. Our underlying operating margin was somewhat under pressure, while our free cash flow remained strong at €0.5 billion.”

"In a challenging environment customers remained focused on value and were cautious in their spending, particularly in the second half of the year. For the year we grew sales by 2.0% at constant exchange rates and slightly increased market share in all our major markets. Supported by good progress on our cost savings program, underlying operating income remained almost flat at constant exchange rates. Free cash flow exceeded last year's record at €1.1 billion. As a result, the Board has proposed a 7% increase in our dividend to €0.47, reflecting a payout of 51%, slightly above the top end of our dividend policy range.”

"In 2013, we continued to implement our Reshaping Retail strategy, leveraging changing consumer needs and pursuing growth opportunities in both existing and new markets. We also continued to rapidly expand our online businesses, achieving strong double-digit sales growth.”

"After the successful divestment of our stake in ICA, our shareholders approved a €1 billion capital repayment and reverse stock split in an Extraordinary General Meeting on January 21, 2014. We expect to complete the transaction by the end of the first quarter. This is in addition to our €2 billion share buyback program that is to be completed by December 2014.”

"We remain committed to our financial guidelines for leverage, liquidity and credit rating. Going forward we aim to maintain a balance between investing in profitable growth, returning cash to our shareholders and reducing debt, and we will continue to move toward a more efficient capital structure.”

"While we expect economic conditions to gradually improve, we remain cautious in our outlook for the food retail sector in 2014. Our ongoing focus on expanding our online businesses is expected to continue to result in strong sales growth. We will continue to look for ways to simplify our business in order to reduce costs so that we can invest in our value proposition and offer customers a better shopping experience every day."