New Delhaize CEO Frans Muller had a good start: a very strong holiday season in Belgium and renewed momentum in the US with Food Lion have created a turnover growth twice that of what analysts had expected.
Renewed momentum in America
“Our fourth quarter 2013 sales were strong both in the U.S. and in Belgium”, CEO Frans Muller said: “In the U.S., where volume growth continued to be positive, we were especially pleased with Food Lion’s momentum. The phased repositioning, started almost 3 years ago, is meeting our expectations and we look forward to further develop Food Lion’s customer proposition this year.”
Analysts and investors were mostly interested in the American results: Dutch Ahold, which like Delhaize brings in most of its revenue from the United States, had mentioned “a shrinking American market due to the government investing less in food stamps".
Delhaize saw nothing of that: “Comparable store sales grew by 2.8 % despite retail deflation resulting from our price investments at Food Lion Phase 4 and Phase 5 stores and at Hannaford. Revenues were particularly strong at Food Lion.” That +2.8 % doubled analysts’ expectations, even though the numbers do not include Harvey’s and Reid’s (both were sold beforehand).
Strong Belgian holiday season
Like-for-like Belgian turnover grew 2.4 % in the fourth quarter, despite “a continuously competitive market”, says the Dutch successor to Pierre-Olivier Beckers: a clear reference to Dutch newcomer Albert Heijn and to discounters Aldi and Lidl. The holiday season sales were very strong, according to the CEO: the group emphasizes Delhaize Belgium’s market share remained level compared to 2012: 25.5 %.
Other European markets returned mixed results: “Revenues in Southeastern Europe increased by 4.5 % (both at actual and identical exchange rates. We experienced positive comparable store sales growth in Greece and growth by expansion in Romania. This was partially offset by negative volume growth in Serbia (-0.6 %).”
Yearly turnover of 21.1 billion euro
Revenues for 2013 were 21.1 billion euro (+ 0.6 %), even though turnover growth was stalled by a weakened dollar: it would have been a 2.6 % increase at identical exchange rates, while organic revenue growth was 3.1 %. Geographically speaking turnover mostly came out of the United States (12.9 billion), with Belgium number 2 (with 5.1 billion) and Southeastern Europe number 3 (3.1 billion).
Based on preliminary unaudited figures, Delhaize expects “underlying operating profit to be approximately 770 million euro at identical exchange rates”, which is well above its previous estimates of “at least 755 million euro”. These numbers please investors, as its shares immediately shot up 8 %.
(Translated by Gary Peeters)