Zaandam,
the Netherlands, August 25, 2016 - Ahold Delhaize
today published Ahold's second-quarter and half-year report for the
period ended July 17, 2016, and, as an appendix, Delhaize Group's
summarized second-quarter and half-year report for the period ended
June 30, 2016.
The company, a leader in supermarkets and
e-commerce with 22 market-leading local brands in 11 countries, was
formed from the merger of Ahold and Delhaize Group. The merger was
effective on July 24, 2016, after the end of both companies'
second-quarter reporting periods.
CEO comments
Dick Boer, CEO of Ahold Delhaize, said: "We have
started our new chapter as Ahold Delhaize with good momentum, with
these two strong sets of pre-merger results. Building on our solid
financial foundation, common values and great local brands, we are
driving ahead with full energy to deliver even more for customers
and communities, associates and shareholders. We look forward to
continuing to shape Ahold Delhaize, with a strong commitment to
delivering great food, value and innovations for customers across
our 11 markets, both in stores and online."
Pro-forma adjustments
Starting from the third quarter of 2016, Ahold
Delhaize will report its quarterly financial performance for five
business segments: The Netherlands, Belgium, Central and
Southeastern Europe and two reporting segments in the United
States. To provide a comparable base, pro-forma historical
quarterly segment information will be published on October 6,
2016. In this pro-forma information, we will exclude the financial
impact of divestments, as well as merger transaction costs. We will
include the impact of purchase price allocation, as well as other
effects, including the effects of the alignment of corporate costs
allocation and accounting policies.
As announced by Ahold and Delhaize Group on July
14, 2016, 86 stores will be divested in the United States, as part
of the approval of the U.S. Federal Trade Commission. Proceeds from
these divestments are estimated to be $174 million, resulting
in no significant divestment gain or loss. These 86 stores
represented $1.4 billion of net sales and $88 million of underlying
operating income in 2015. In addition, Ahold Delhaize expects to
divest another 10 stores in the Richmond area.
In Belgium, Ahold Delhaize will divest 13 stores,
as part of the approval by the Belgian Competition Authority, as
announced on March 15, 2016. These 13 stores represented €94
million of net sales and €10 million of underlying operating income
in 2015. In addition, Delhaize Belgium also announced the sale of
pet specialist shop chain Tom&Co on June 27, 2016.
Outlook
We are confident that we will meet our synergy
target of €500 million on an annual run-rate basis by mid-2019. In
2016, synergies are expected to positively impact operating income
by €30 million in the second half of 2016.
We continue to expect €350 million in one-off
costs related to the merger, of which €61 million has been booked
by Ahold and Delhaize year-to-date 2016 and €80 million is expected
for the second half of 2016. This excludes transaction costs, which
we continue to expect to be within €140 million, of which
€62 million has been booked by Ahold and Delhaize in 2015 and
€15 million year-to-date in 2016, with the remainder expected
for the second half of 2016.
Our free cash flow for 2016 is expected to be €1.3
billion, including expected capital expenditure of
€1.8 billion, €0.2 billion of transaction, integration and
Delhaize Belgium's Transformation Plan costs and estimated cash
flows from divestments of €0.1 billion.
We plan to hold a Capital Markets Day on December
7 in London, where we will provide an update on our future strategy
framework for Ahold Delhaize, share more details on integration and
synergies, and give guidance on our capital structure going
forward.
Notes to this report
This report includes separate results for the
second quarter and half year of 2016 for both former Koninklijke
Ahold N.V. ("Ahold") and former Delhaize Group SA/NV ("Delhaize")
on a standalone basis. Koninklijke Ahold Delhaize N.V. ("Ahold
Delhaize") will publish its first combined results as of the third
quarter of 2016.
Ahold and Delhaize Group are reporting on a
standalone basis for the second quarter and half year of 2016
because the July 24, 2016, effective merger date of Ahold and
Delhaize fell after the July 17 end
of Ahold's first half year of 2016 and after the
June 30 end of Delhaize's first half year of 2016. Ahold's interim
report is included on pages 3-24 of this document and Delhaize's
summary report on pages 25-37. The members of the Ahold Delhaize
Management Board who acted as members of the Ahold and Delhaize
boards during these reporting periods are the ones responsible
for the respective standalone half-year reports.