Delhaize struggles in Belgium and Serbia | RetailDetail

Delhaize struggles in Belgium and Serbia

Delhaize struggles in Belgium and Serbia

Delhaize's Belgian performance was better than expected, but Serbian activities worry the distributor. America helped with its turnover growth, but it has impacted profit margins.

5.27 billion euro turnover, 45 million euro net loss

Delhaize managed to grow its turnover 3.7 % in the second quarter, reaching 5.27 billion euro. Excluding one-time elements, company profit reached 178 million euro, nearly 8 % less than a year ago. It is still better than the 15 % drop analysts had expected beforehand.

 

The group had to accept a 150 million euro devaluation on its Serbian activities. "In Southeastern Europe, we gained further market share in Greece, Romania and Serbia", Dutch CEO Frans Muller said in a press release. "In Serbia, our results continued to be impacted by macro-economic instability, negative GDP growth and retail deflation. While we are developing a new commercial strategy to strengthen our performance, the current economic outlook is not expected to improve in the near term. This has caused us to book a further impairment."

 

That has also led to a lower company profit, reaching 29 million euro. In the end, the group had to deal with a 45 million euro net loss, while the same period last year resulted in a 105 million euro profit.

 

Belgian marketplace "under even more pressure"

Belgian like-for-like turnover dropped 1.2 %, but analysts had expected a 2.5 % drop. That is pretty much the only positive news to be gathered in Belgium, because the company's margin dropped from 4.5 to 3.2 % with market share "under even more pressure in the second quarter". Delhaize is still facing fierce competition from discounters Aldi and Lidl and from the emergence of Albert Heijn, while social debate has not helped either.

 

Better news comes out the United States, still the most important market for the Belgian distributor. Its like-for-like turnover growth was 3.3 %, but that was at the expense of its margin, now at 3.6 %.

 

Nevertheless, Delhaize confirmed its full-year forecast: "For the second half of the year, we are on schedule with our “Easy, Fresh & Affordable” initiative at Food Lion while we also have the firm intention to negotiate the implementation of our announced Transformation Plan at Delhaize Belgium. For the full year, we expect to generate a healthy level of free cash flow", Frans Muller said.

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