Belgian supermarket chain Delhaize released surprisingly good provisional numbers for the first quarter. On its two most important markets, Belgium and the United States, notably better profit margins were achieved. The complete numbers results will be known on 8 May, although the “Capital Markets Day” planned for that day has been postponed.
Organic sales growth of 3.8%
Delhaize's provisional quarterly numbers show that sales have risen by 1.5 percent to 5.5 billion euro. At stable exchange rates that becomes 2.1 percent and organic growth is 3.8 percent.
In the United States comparable sales growth was 1.9%, mainly due to good weather conditions and a growth in volumes at Food Lion and Hannaford. In Belgium comparable sales growth was 2.4 percent, with inflation and better volumes as most important causes. In South-East Europe sales rose by 6.8 percent, at unchanged exchange rates.
Better profit margins
In that same period the underlying company profit was 214 million euro, 13.7% higher than in the past year at unchanged exchange rates, but due to currency fluctuations the real profit growth is slightly lower, at 13%.
The underlying operational profit margin in the US was 4.2 percent, compared to 3.7% the year before, mainly because of higher sales, the closing of badly performing shops and good results at Bottom Dollar Food. Parts of it had to be sacrificed though to finance price reductions.
The underlying operation profit margin in Belgium evolved, mainly due to cuts and better sales, from 4.6% to 5.1%. The weak part in this success story is South-East Europe, where underlying operational profit margins dropped from 2.0 percent to 1.4 percent, with price reductions as the main cause.
Higher operating cash flow
The underlying operating cash flow (ebitda) is 7.1 percent higher than in the previous year at 369 million euro: the free cash flow was 255 million euro, compared to 87 million in the previous year. Delhaize is predicting an underlying company profit for the whole year of 775 million euro at unchanged exchange rates. That was 810 million euro in 2012.
The complete results of the first quarter will be announced on 8 May. Delhaize also said in a press release that the “Capital Markets Day” planned for that day will be pushed to a later date. The extra time will be used to explain the update on the activities and the long-term vision of Delhaize more extensively. It seems changes are coming at the company with the lion...