Ahold Delhaize delivers increased cost savings, supporting strong
Q4 financial results; 2023 outlook reinforces commitment to Leading
Together ambitions
- With double-digit food inflation levels in Q4, our brands
intensified efforts to deliver customers great value and access to
affordable and healthy food options. A key component of our efforts
has been our Save for Our Customers cost savings program, which
yielded 15% more savings than originally expected in 2022.
- Group net sales were €23.4 billion, up 8.1% in Q4 and 6.9% in
2022 at constant exchange rates and up 15.9% in Q4 and 15.1% in
2022 at actual exchange rates.
- Q4 comparable sales excluding gas increased by 9.3% in the U.S.
and 5.7% in Europe. This sales growth was underpinned by the
introduction of more entry-priced products, expanded high-quality
own-brand assortments and further rollout of personalized value
through our digital omnichannel loyalty programs.
- Net consumer online sales increased by 5.0% in Q4 and 4.9% in
2022 at constant exchange rates. Excluding bol.com, grocery online
sales increased 14.4% in Q4 and 11.8% in 2022 at constant
rates.
- Q4 underlying operating margin was 4.4%, an increase of 0.2
percentage points at constant and actual exchange rates. Underlying
operating margin for 2022 was 4.3%, a decrease of 0.1 percentage
points. Positive benefits in our Global Support Office partly
offset margin declines in Europe. The latter was mainly due to
intense cost inflation, particularly in energy, as well as
investments in our European customer value proposition to support
customers in the challenging macro environment.
- IFRS-reported operating income was €1,167 million in Q4
and €3,768 million in 2022. IFRS-reported diluted EPS was
€0.82 in Q4 and €2.54 in 2022.
- Q4 diluted underlying EPS was €0.72, an increase of 22.6% over
the prior year at actual rates. Our 2022 diluted underlying EPS was
€2.55, up 16.5% at actual rates compared to the prior year.
- 2022 free cash flow was €2.2 billion compared to the most
recent guidance of approximately €2 billion.
- We propose a cash dividend of €1.05 for fiscal year 2022, which
is a 10.5% increase compared to 2021.
- Ahold Delhaize introduces “Accelerate” initiative to bolster
Save For Our Customer cost savings program and provide additional
stimulus to key Leading Together strategic priorities.
- 2023 outlook: underlying operating margin of ≥4.0%; underlying
EPS to be around 2022 levels; free cash flow of approximately €2.0
billion; net capital expenditures of approximately €2.5
billion.
Zaandam, the Netherlands, February 15, 2023 – Ahold Delhaize,
one of the world’s largest food retail groups and a leader in both
supermarkets and e-commerce, reports fourth quarter results
today.
The summary report for the fourth quarter 2022 can be viewed and
downloaded at www.aholddelhaize.com.
Summary of key financial data
|
Ahold Delhaize Group |
The United States |
Europe |
€ million, except per share data |
Q4 2022 |
% change |
% changeconstantrates |
Q4 2022 |
% changeconstantrates |
Q4 2022 |
% changeconstantrates |
13 weeks 2022 vs. 13 weeks 2021 |
Net sales |
23,359 |
15.9 % |
8.1 % |
14,782 |
9.2 % |
8,576 |
6.2 % |
Comparable sales growth excluding
gasoline |
7.9 % |
|
|
9.3 % |
|
5.7 % |
|
Online sales |
2,446 |
12.4 % |
7.4 % |
1,132 |
17.3 % |
1,314 |
— % |
Net
consumer online sales |
3,237 |
8.6 % |
5.0 % |
1,132 |
17.3 % |
2,105 |
(0.6) % |
Operating income |
1,167 |
30.5 % |
20.6 % |
857 |
16.0 % |
326 |
29.5 % |
Operating margin |
5.0 % |
0.6 pp |
0.5 pp |
5.8 % |
0.3 pp |
3.8 % |
0.7 pp |
Underlying operating income |
1,026 |
22.4 % |
13.8 % |
701 |
18.9 % |
340 |
1.4 % |
Underlying operating margin |
4.4 % |
0.2 pp |
0.2 pp |
4.7 % |
0.4 pp |
4.0 % |
(0.2) pp |
Diluted EPS |
0.82 |
32.4 % |
22.5 % |
|
|
|
|
Diluted underlying EPS |
0.72 |
22.6 % |
14.2 % |
|
|
|
|
Free cash
flow |
1,481 |
290.4 % |
277.3 % |
|
|
|
|
|
Ahold Delhaize Group |
The United States |
Europe |
€ million, except per share data |
2022 |
% change |
% changeconstantrates |
2022 |
% changeconstantrates |
2022 |
% changeconstantrates |
52 weeks 2022 vs. 52 weeks 2021 |
Net sales |
86,984 |
15.1 % |
6.9 % |
55,218 |
7.9 % |
31,767 |
5.0 % |
Comparable sales growth excluding
gasoline |
5.4 % |
|
|
6.8 % |
|
2.9 % |
|
Online sales |
8,618 |
11.9 % |
6.4 % |
4,157 |
14.5 % |
4,461 |
(0.3) % |
Net
consumer online sales |
11,323 |
8.9 % |
4.9 % |
4,157 |
14.5 % |
7,166 |
(0.1) % |
Operating income |
3,768 |
13.5 % |
4.9 % |
2,605 |
3.9 % |
1,173 |
(3.3) % |
Operating margin |
4.3 % |
(0.1) pp |
(0.1) pp |
4.7 % |
(0.2) pp |
3.7 % |
(0.3) pp |
Underlying operating income |
3,728 |
11.9 % |
3.5 % |
2,603 |
7.2 % |
1,131 |
(13.7) % |
Underlying operating margin |
4.3 % |
(0.1) pp |
(0.1) pp |
4.7 % |
— pp |
3.6 % |
(0.8) pp |
Diluted EPS |
2.54 |
17.2 % |
8.4 % |
|
|
|
|
Diluted underlying EPS |
2.55 |
16.5 % |
7.9 % |
|
|
|
|
Free cash
flow |
2,188 |
35.2 % |
22.5 % |
|
|
|
|
Comments from Frans Muller, President and CEO of Ahold
Delhaize
“I am pleased to report a solid end to the year for Ahold
Delhaize. Our strong international portfolio of local brands has
continued to provide distinct competitive and societal advantages,
particularly from our scale and solid financial position. In this
challenging year, we have seen double-digit inflation levels not
witnessed in 40 years, an energy crisis created by war and the
ongoing effects of the global pandemic on people's lives. Our role
during this time has been clear: keeping shelf prices as low as
possible to support our customers and make healthy food options
accessible to all.
“During 2022, our family of great local brands also contributed
€218 million of charitable cash, products and food donations to
local and regional food banks and non-profit organizations. The
Food Lion Feeds program achieved an important milestone with its
one billionth meal donated, and is well on the way to reaching its
goal of 1.5 billion meals donated by 2025. Delhaize Belgium donated
emergency generators to the Ukrainian Red Cross, ensuring 95,000
Ukrainians continue to have access to clean water and heating.
Hannaford launched its "Eat Well, Be Well – A Path to Better
Health" initiative, which will provide $1.5 million in funding to
non-profit organizations for hosting programs that increase access
to healthy, fresh food tailored to the specific needs of an
individual's health conditions, and provide nutrition
education.
"In Q4, we again rallied our organization around our core
strengths – operational excellence, tight cost control and
disciplined capital allocation. This was critical to provide fuel
for reinvesting in our customer value proposition to offset the
impact of inflation wherever possible. To that end, we
significantly exceeded our original Save for Our Customers goals in
2022, generating €979 million in cost savings, which is over €100
million more than we had originally planned. I am proud of our
associates across Ahold Delhaize and our local brands who left no
stone unturned. As many of the sames challenges persist and may
even intensify in 2023, this formula will continue to play an
important role as we look for further opportunities to improve our
brands' operations.
"As our brands adapted their assortments and omnichannel
customer journeys to rising consumer price sensitivity, the
positive impact from our focus on providing great value without
compromising on quality was clearly reflected in our Q4 sales
figures. Comparable store sales ex gas grew 7.9% in Q4. Net
consumer online sales increased by 5.0%, and our online grocery
sales were up 14.4%. Leveraging these strong sales, we delivered an
underlying operating margin of 4.4% and diluted underlying EPS
growth of 22.6% in Q4. Our earnings were positively influenced by a
strong operating performance in the U.S., as well as foreign
exchange and interest rate changes, which offset higher margin
pressures in Europe.
"In the U.S., comparable sales accelerated at all the brands
versus Q3, resulting in a growth rate of 9.3%.This was driven by
strong holiday season activations. For example, the U.S. brands'
sales from loyalty programs and online orders reached all-time
highs. This has been a trend we have seen building throughout the
year, as our consistent investment in growing these capabilities
continues to pay off. Our brands' customer relationship management
campaigns are a good example, now reaching around 30 million
households and delivering over 10 billion personalized offers
annually. We are also increasingly encouraged by the progress we
see at Stop & Shop, where the brand's remodeled New York City
stores are delivering double-digit sales growth and exceeding
expectations. We plan to remodel a further eight stores in NYC in
Q1 2023, and roll out key learnings to 40 other stores in the fleet
throughout the year.
"In Europe, comparable store sales were up 5.7% in Q4. Excluding
bol.com, which continued to trade against the backdrop of a
challenging e-commerce market in the Benelux, comparable store
sales increased 6.9%. In the Central and Southeastern Europe (CSE)
region, we have now harmonized over 700 own brand products, and
continue to benefit from increased collaboration, harmonization of
processes and best-practice sharing. In the Netherlands, Albert
Heijn introduced dynamic digital discounting in all its stores,
enabling customers to purchase products nearing the end of their
shelf life with discounts ranging from 25% to 70%. In addition,
Albert Heijn entered into a partnership with Jan Linders
Supermarkets, with the vast majority of stores to be converted into
Albert Heijn franchisees on receiving the requisite approvals. The
agreement allows Albert Heijn to expand its regional coverage in
the south of the Netherlands. Underlying operating margins in
Europe decreased to 4.0% in Q4, as sharp increases in energy costs,
in particular, impacted our profitability by 0.5 percentage points.
While I am particularly proud of the mitigating actions and cost
savings delivered by the region in Q4 and throughout the year,
striking the right balance between savings and investments in 2023
will be even more important.
"At bol.com, for the full year, Gross Merchandise Value (GMV)
excluding VAT was €5.5 billion, down 1.9%, against a market which
declined around 6%. As you will remember, during the year, we made
some significant adjustments to bol.com’s medium term plans to
adapt to the current environment. As a result, despite higher
investments in the business, cost increases and sales deleverage,
bol.com remained profitable and delivered €125 million in
underlying EBITDA.
“At Ahold Delhaize, we believe that it is important that we
continue to make investments in our Healthy and Sustainable
strategy. In our own operations, in 2022 we achieved reductions in
CO2 emissions of 32% compared to our 2018 baseline (30% in 2021)
and tonnes of food waste per food sales of 33% against our 2016
baseline (20% in 2021). Our brands also continued to increase the
percentage of own brand healthy food sales to 54.4% in 2022, up one
percentage point compared to 2021. In November, we announced
updated interim CO2 emissions-reduction targets for the entire
value chain (scope 3) to at least 37% by 2030.
"We also reconfirmed our commitment to become net zero in our
own operations by 2040 and across the entire value chain by 2050.
The updated targets were the result of extensive review and are in
line with the UN's goal of keeping global warming below 1.5°C. For
Ahold Delhaize, the main drivers of emissions reduction in scope 3
fall under three categories: suppliers and farmers; low-carbon
products; and customer engagement. Encouraging and supporting our
suppliers to set their own emissions-reduction targets in line with
the latest scientific evidence, and signing up to the Science Based
Targets initiative is a key element of our decarbonization efforts.
Ahold Delhaize aims to play a leading role in this. We are
proactively engaging with our supplier base and are leveraging our
position in the world of food retail to create a positive movement
towards the reduction of greenhouse gas emissions.
"Despite increasing macro-economic and geopolitical challenges,
we expect to deliver consistent results in 2023, with a strong
focus on cash-flow generation. I am particularly excited about our
plans around monetization, mechanization and our digital ecosystem,
which I am convinced will drive long-term competitive advantage and
benefits for our customers. In the short term, with inflation
remaining high, we will also continue to lean in and explore new
opportunities to lower our costs. To that end, we are introducing a
new Group-wide initiative called "Accelerate".
"This initiative builds on our existing Leading Together efforts
to create more agile organizations, to capture more scale and
empower our people to take action to drive efficiency. In
particular, we will continue to evaluate additional savings and
efficiency levers to streamline organizational structures and
processes, optimize go-to-market propositions, increase joint
sourcing and consolidate IT - with a clear priority to unlock
resources to accelerate our Save for Our Customers program and
focus investments on high return projects. I am confident this
proactive approach will make our organization stronger and ensure
we can continue to deliver on our track record of driving
consistent long-term value creation for all stakeholders.
Q4 Financial highlights
Group highlights
Group net sales were €23.4 billion, an increase of 8.1% at
constant exchange rates, and up 15.9% at actual exchange rates.
Group net sales were driven by comparable sales growth excluding
gasoline of 7.9%, and, to a lesser extent, by foreign currency
translation benefits and higher gasoline sales. Q4 Group comparable
sales benefited by approximately 0.4 percentage points from the net
impact of calendar shifts and weather.
In Q4, Group net consumer online sales increased by 5.0% at
constant exchange rates, led by robust performance in the U.S.,
which increased 17.3% compared to the prior year. Net consumer
online sales decreased 0.6% in Europe as the prior year benefited
from a COVID-19 lockdown in the Netherlands. Online sales in
grocery increased 14.4% at constant exchange rates.
In Q4, Group underlying operating margin was 4.4%, an increase
of 0.2 percentage points at constant exchange rates, as strong cost
savings were partially offset by higher labor, distribution and
energy costs. In Q4, Group IFRS-reported operating income was
€1,167 million, representing an IFRS-reported operating margin
of 5.0%, mainly impacted by the gains on sale of investment
properties in the U.S. in the amount of €158 million.
Underlying income from continuing operations was
€707 million, an increase of 18.2% in the quarter at actual
rates. Ahold Delhaize's IFRS-reported net income in the quarter was
€809 million. Diluted EPS was €0.82 and diluted underlying EPS was
€0.72, up 22.6% at actual currency rates compared to last year's
results and up 14.2% at constant currency rates. In the quarter,
10.5 million own shares were purchased for €286 million,
bringing the total year-to-date amount to €1 billion.
2022 diluted underlying EPS of €2.55 increased 16.5% at actual
rates compared to 2021, exceeding the Company's original guidance
of low- to mid-single-digit decline versus 2021. The
higher-than-expected earnings were driven by strong comparable
sales growth excluding gasoline as well as favorable foreign
currency and interest rates. This drove strong cash generation with
free cash flow of €2,188 million, up €570 million
compared to the prior year. The difference is primarily related to
decisions in 2021 to pay a $190 million (~€170 million) pension
liability in the U.S. following 2020 U.S. MEP withdrawals, ahead of
schedule, and fund the Company's decision to pay approximately €380
million related to a disputed tax claim in Belgium.
U.S. highlights
U.S. net sales were €14.8 billion, an increase of 9.2% at
constant exchange rates and up 22.2% at actual exchange rates. U.S.
comparable sales excluding gasoline increased by 9.3%, benefiting
by approximately 0.5 percentage points from the net impact of
weather and calendar shifts. Food Lion and Hannaford led brand
performance with double-digit comparable sales growth at both
brands during the quarter.
In Q4, online sales in the segment were up 17.3% in constant
currency. This builds on top of 30.5% constant currency growth in
the same quarter last year.
Underlying operating margin in the U.S. was 4.7%, up 0.4
percentage points at constant exchange rates from the prior year
period. In Q4, U.S. IFRS-reported operating margin was 5.8%, mainly
impacted by the gains on sale of investment properties in the
amount of €158 million.
Europe highlights
European net sales were €8.6 billion, an increase of 6.2%
at constant exchange rates and 6.6% at actual exchange rates.
Europe's comparable sales excluding gasoline increased by 5.7%. Q4
Europe comparable sales were positively impacted by approximately
0.1 percentage points from calendar shifts.
In Q4, net consumer online sales in the segment decreased by
0.6%, following 7.4% growth in the same period last year. Grocery
online sales increased by 8.0%. Despite challenging non-food
e-commerce market conditions in the Benelux and the cycling of
lockdown restrictions, bol.com was able to limit net consumer
online sales decline to 2.9% after growing 7.8% in the same quarter
last year. Bol.com's net consumer online sales from its more than
51,000 third-party sellers declined 1.6% in Q4 and represented 57%
of sales.
Underlying operating margin in Europe was 4.0% in Q4, down 0.2
percentage points from the prior year due to escalating energy and
volume deleveraging offset by disciplined cost-management measures.
Europe's Q4 IFRS-reported operating margin was 3.8%.
Outlook 2023
The macro environment has become increasingly difficult for
consumers, who contended with inflation levels during 2022 not seen
in four decades. Inflation levels are expected to remain elevated
particularly through the first half of 2023. Our brands are working
hard to reduce costs and create additional efficiencies in order to
keep prices as low as possible for our customers. In this context,
the Company's brands continue to offer consumers a strong shopping
proposition and are well-positioned to maintain profitability in
the current inflationary environment. Ahold Delhaize's Group
underlying operating margin is expected to be ≥4.0%, in line with
the Company's historical profile. Margins will be supported by Save
for Our Customers programs of ≥€1 billion in savings in 2023.
This should help to offset cost pressures related to inflation and
supply chain issues, along with the negative impact to margins from
increased online sales penetration.
Underlying EPS is expected to be around 2022 levels at current
exchange rates. Our earnings guidance implies further growth and a
strong underlying operating performance, which will offset the
non-recurrence of one-off gains in 2022 related to interest
rates.
Free cash flow is expected to be approximately €2.0 billion. Net
capital expenditures are expected to total around €2.5 billion,
with increased investments in our digital and online capabilities
as well as our healthy and sustainable initiatives. In addition,
Ahold Delhaize remains committed to its dividend policy and share
buyback program in 2023, as previously stated. We are proposing a
full-year dividend for 2022 of €1.05 per share, and have previously
announced a €1 billion share purchase program for 2023.
A detailed Outlook will be provided in the Annual Report 2022,
which will be published on March 1, 2023.
|
Full-year outlook |
|
Underlying operating margin |
Underlying EPS |
Save for Our Customers |
|
Net capital expenditures |
Free cash flow1 |
|
Dividend payout ratio2.3 |
Share buyback3 |
Outlook |
2023 |
|
≥ 4.0% |
Around 2022 levels |
≥ €1 billion |
|
~ €2.5 billion |
~ €2.0 billion |
|
40-50% payout;YOY growth in dividend per
share |
€1 billion |
- Excludes M&A.
- Calculated as a percentage of underlying income from continuing
operations.
- Management remains committed to our share buyback and dividend
programs, but, given the uncertainty caused by the wider
macro-economic consequences of the war in Ukraine, will continue to
monitor macro-economic developments. The program is also subject to
changes resulting from corporate activities, such as material
M&A activity.
- Ahold Delhaize Q4 2022 Press Release
- Ahold Delhaize Q4 2022 Interim Report
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