Strikes in Belgium cost Ahold Delhaize dearly

Despite social unrest at its Belgian branch Delhaize, Ahold Delhaize delivered strong quarterly results. CEO Frans Muller remains confident of a good outcome in the Belgian market as well.

Stable margins

Sales at Ahold Delhaize rose 4.3 % to more than 22 billion euros, while operating profit rose 4.4 % to 904 million euros – slightly above analysts’ expectations. The operating profit margin remained stable at 4.1 %, although net profit did end up lower. The strikes at Delhaize did weigh on results: European sales rose 7 % to 8.45 billion euros, without the unrest in Belgium that would have been 7.6 %. The company wrote off 108 million for store assets and 26 million euros for restructuring costs in Belgium.

Muller is still confident about that Belgian restructuring plan, which entails selling all supermarkets to independent entrepreneurs: “When it comes to the initiative at Delhaize, I am confident the management team is on the right track and we expect the first fifteen stores will begin converting in October and November.”

Muller also stated that inflation is now past its peak. Where possible, the retailer is implementing price cuts that reflect falling inflation. For its own operations, however, inflation remains at higher levels due to higher costs for energy, raw materials, transport and labour – all of which have a significant impact on European margins.