BELGIUM: Delhaize FY underlying profit falls on pricing investment
Price investment boosts US sales
Belgium-based retailer Delhaize has booked a drop in full-year underlying profit as investments in price in the US drove sales gains but ate into margins.
The company said that underlying profit fell to EUR753m (US$1.05bn) in the 12 month period, down 4.2%. Excluding currency exchange, underlying profit was down 2.1%.
Delhaize said that underlying operating margin fell to 3.4% in the fourth-quarter, impacted by "continued price investment in the US". However, the company emphasised that this investment resulted in higher US sales. During the final quarter, Delhaize American saw a 2.8% increase in same-store sales, while Delhaize Belgium booked like-for-like gains of 2.4%.
For the full-year, total sales rose 2.6%, excluding currency exchange, with organic sales growth of 3.1%.
Looking to 2014, Delhaize CEO Frans Muller commented: "In 2014, we will further differentiate our offer and support our core banners by focusing on maintaining or strengthening our local leadership positions. We will pursue operational efficiencies and exercise continued capital discipline in order to fund this."
Muller said that the group would raise its capital expenditure for the year to EUR625m in order to fund the opening of 180 stores.
Delhaize Group 2013 results
Financial Highlights 2013
» Group revenue growth of 2.6% at identical exchange rates; organic revenue growth of 3.1%
» Food Lion phase roll-out completed
» Underlying operating profit of €753 million (-4.2%) or €769 million at identical exchange rates (-2.1%)
» Free cash flow generation of €669 million
» Adoption of a dividend policy to pay out approximately 35% of underlying Group share in net profit from continued operations. Proposed full year gross dividend of €1.56 per share, an 11% increase compared to 2012.
Financial Highlights Fourth Quarter 2013
» Group revenue growth of 3.0% at identical exchange rates; organic revenue growth of 3.2%
» Solid comparable store sales growth at Delhaize America (+2.8%) driven by Food Lion and at Delhaize Belgium (+2.4%)
» Underlying operating margin of 3.4%; impacted by continued price investments in the U.S.
Executive Committee Changes
» Marc Croonen appointed as Chief Human Resources Officer and member of the Executive Committee
» Dirk Van den Berghe appointed as member of the Executive Committee in combination with his role as CEO Delhaize Belgium & Luxembourg
» CEO Comments
Frans Muller, Chief Executive Officer of Delhaize Group, commented: “Since joining as CEO in November 2013, I have gained a thorough understanding of our Group, of the different markets in which we operate and of our banners. Our Group has strong foundations, with leadership positions in nearly all our markets, a solid balance sheet, and passionate associates. Since the beginning of the year, we continue to have positive momentum at Delhaize America while facing challenges in Belgium and Serbia.”
“In 2014, we will further differentiate our offer and support our core banners by focusing on maintaining or strengthening our local leadership positions. We will pursue operational efficiencies and exercise continued capital discipline in order to fund this.”
“For the current year, our capital expenditures will increase to approximately €625 million and we plan to open 180 stores. We intend to maintain or improve sales growth and continue to generate a healthy level of free cash flow.”
Original source: Delhaize
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