Delhaize raises prognosis for the year following strong second quarter

Delhaize raises prognosis for the year following strong second quarter

Belgian retail chain Delhaize has had a strong second quarter, and therefore raises its prognosis for the entire year. Sales of the group came to 5.3 billion euro, near what analysts had expected, but the underlying company profit of 193 million euro was clearly higher than the anticipated 180 million euro.

Belgium: market share grows

In Delhaize's home market Belgium the comparable sales growth (+0.8%) were less than half of the expected 2%. Despite this the market share of the distributor went up by 35 base points “because of our renovated stores and the expansion of our network”.

 

There is even more good news, because Delhaize succeeded in upping its company margin. It is currently 4.1% on the home market. The total company margin (3.6%) and the group profits (104 million euro) were better than expected.

 

US: pressure on prices at Hannaford

In the United States comparable sales went up by 1.1%, as was expected by analysts. For the third quarter in a row the group had a growth in volume at an underlying company margin of 3.8%.

 

There is still however some pressure, especially at the “better” chain of supermarkets Hannaford. That chain, active in the Northeast of America, had to lower prices under pressure of its competitors to keep its customers. Delhaize calls the lower prices “price investments”.

 

At Food Lion 178 more stores were repositioned, bringing the total to almost 80% of the network.

 

Southeast Europe: profitability Delta Maxi below expectations

In Southeast Europe, Delhaize is in full expansion, especially in Romania and Greece, and therefore has decided not to disclose comparable sales numbers. Globally sales increased 5.3% to 787 million and the company margin went from 3.2% to 3.4%.

 

Delhaize also continues its reorganisation in Southeast Europe: “In correlation with our agreement to focus on regions where we can generate the highest growth and return, we have made contracts for the sale of Sweetbay, Harveys and Reid’s, and for our activities in Montenegro.

 

The distribution group does admit that the profitability of Delta Maxi, the chain it bought in the Balkan in 2011, is “below expectations”.

 

Prognosis for the year goes up

Following this strong second quarter Delhaize has an organic growth of 3% for the first six months, an underlying company profits of 9.8% and an underlying company margin of 3.8%.  Based on these numbers departing CEO Pierre-Olivier Beckers announces the group will slightly up its prognosis for the entirety of 2013: Delhaize is now looking for a company profit of 780 million euro.

 

That number still includes the American chains Sweetbay, Harveys and Reid’s, which will soon be sold to Bi-Lo. Without those chains the annual company profit should come to 755 million euro.

 

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