Ahold profit and sales climb, operating income falls
August 30, 2007
by Eric Schroeder
AMSTERDAM, THE NETHERLANDS — Net income at Ahold in the second quarter ended June 30 soared to €2,228 million ($3,034 million) from €219 million in the same period a year ago behind gains from the sale of certain assets, including the company’s U.S.-based food distribution business. Operating income, meanwhile, fell 4% to €291 million ($396 million). Net sales for the most recent quarter were €6,603 million ($8,993 million), up 2% from the same period last year.
For the first half of fiscal 2007, operating income was €626 million, down 4% from €650 million. Sales for the first half totaled €15,224 million, up from €14,978 million.
Ahold operates the Stop & Shop and Giant chains in the United States and several large European chains, including its flagship supermarket Albert Heijn.
"The results show that we are continuing to make progress with our strategy for profitable growth," said John Rishton, chief financial officer and acting president and chief executive officer. "Of particular importance is that the roll-out of the Value Improvement Program at Stop & Shop and Giant-Landover remains on track, with customer perception of price reductions continuing to improve."
Operating income at Ahold’s U.S. retail outlets in the second quarter was €161 million, down 25% from €214 million in the same period a year ago. Operating income included restructuring charges of €19 million, mainly resulting from the closing of 10 stores in the southern New Jersey market area. Results also included expenses of €6 million relation to an adjustment of payroll tax accruals related to prior years.
Sales in U.S. retail fell 2% to €3,662 million.
In addition to releasing its financials, Ahold announced a €1 billion ($1.36 billion) share buyback program and said it has decided to delist from the New York Stock Exchange.
"The decision is consistent with the company’s strategy of improving its cost effectiveness by reducing complexity without detracting from the integrity of its governance and control processes," the company said. Ahold said it will continue to trade on the over-the-counter market in the United States.