Ahold Delhaize amazes by doubling profits

People queuing at an Albert Heijn store, one of retailer Ahold Delhaize's main supermarket chains
Photo: Ralph Rozema / Shutterstock.com

The coronavirus crisis has given wings to Ahold Delhaize: the supermarket group achieved a 16 % rise in turnover this quarter, while doubling its profits. The current pandemic caused a 78 % increase in online sales, causing the group to revise its full-year forecasts upwards.

 

Stockpiling effect persists

During the last quarter (April to June), the coronavirus was very beneficial for Ahold Delhaize. Excluding exchange rate fluctuations, sales increased from 15.9 to 19.1 billion euros, a billion more than analysts had expected. The growth (20 %) was strongest in the United States, mainly because confinement started later and the effect of massive consumer stockpiling was greater there. In Europe, comparable sales increased by 10 %.

 

Ahold Delhaize was also able to benefit from the upward trend in e-commerce: online sales grew by 78 %. Dutch web platform bol.com grew by 65.4 %, pushed forward by its external business partners. The number of suppliers on the platform increased from 7,000 at the beginning of this year to 34,000 at the end of the quarter, while their sales have more than doubled (+ 107 %).

 

Profit growth despite Covid costs

Quarterly profit doubled as well, from 334 million euros net profit last year to 693 million euros today. Operating profit grew by 69 % to 1 billion euros, which is again significantly higher than the 640 million euros analysts had expected. For the year as a whole, Ahold Delhaize is now forecasting a profit hike of almost 20 %, up from previous forecasts.

 

However, the coronavirus crisis also led to more expenses: Ahold Delhaize estimates the additional costs at 330 million euros for the first half of the year as a whole, of which 260 million euros were booked in the second quarter. Among other things, 45,000 new employees were hired. 

 

Not in the race for Hema

Moreover, CEO Frans Muller has announced that he will not enter the race for the takeover of Hema. The supermarket group claims not to have made an offer for the chain, despite previous rumours that the company was very interested.

 

A number of retail experts, including RetailDetail founder Jorg Snoeck, still believe that this would be a perfect combination. They point to the groups' being very complementary, enabling each other faster growth in Belgium and - for Ahold Delhaize's point of view - stopping the profitable relation between Hema and rival Jumbo.