Belgium remains a worry for Ahold Delhaize

Belgian-Dutch merger company Ahold Delhaize has released decent results for its first quarter of 2017: the Netherlands performed well, but the integrated stores’ performance in Belgium is still worrisome.

Mixed performance

The company’s quarterly turnover grew 3 % to 15.8 billion euro and its EBIT grew 8.1 % to 604 million euro, thanks in part to 56 million euro in synergies in the past quarter alone. Ahold Delhaize hopes to cut 220 million euro in costs this year and 500 million euro by 2019.

The group managed to hold its ground in the United States, despite lower prices and major competition. Walmart and Amazon are waging an oxygen-depriving price war and at the same time, Lidl is opening stores in Ahold Delhaize’s market. Nevertheless, Ahold USA and Delhaize America’s new-found synergies seem to pay off.

In Europe, the Dutch division performed quite well, with a 3.9 % turnover growth (to 3.3 billion euro) and an improved operational margin (from 4.7 to 5 %). Both Albert Heijn and bol.com are performing positively. Its Belgian division however, with a 1.1 % turnover drop to 1.18 billion euro and a 6.7 % EBIT drop to 28 million euro, did not fare as well. Its operational margin is 2.4 %, mainly due to its own store network’s lackluster performance. Its independent entrepreneurs, which contribute more than half of the Belgian turnover, did better.

The group wants to remodel and modernize more than 120 Belgian stores in an attempt to remedy the situation. It will tackle about twenty of its own stores and about a hundred franchise stores.