BELGIUM: Delhaize H1 profit slides
- Net profit slides 65.9%
- Operating profit down 13.3%
- Sales climb 10.1%
Delhaize's profit in the six months to the end of June slumped 65.9%
Belgian retailer Delhaize has posted a drop in first-half profits and said it now expects to achieve the bottom-end of its full-year earnings guidance range.
Profit in the six months to the end of June slumped 65.9% to EUR83m (US$103.5m), Delhaize reported today (22 August). The retailer blamed a "portfolio optimisation charge" of EUR133m in the US.
Underlying operating profit slid 13.3% to EUR373m, while underlying operating margin dropped to 3.3% of revenues. Delhaize said the decline was a result of "substantial" price investments at Food Lion as part of a brand repositioning at the US chain. It also expanding another US retailer, Bottom Dollar Food.
Sales, however, climbed 10.1% to reach EUR11.17bn in the period, and 5% at identical exchange rates.
"We confirm that we will reach our full-year underlying operating profit guidance," said CEO Pierre-Olivier Beckers. "However, we expect to achieve the bottom end of the range as we remain committed to improving our customers' experience in terms of both price and service."
The retailer is expecting a decrease in underlying operating profit of between 15% and 20%.
Click here for just-food's coverage of the retailer's results conference call.
Delhaize Group second quarter 2012 results
FULL PRESS RELEASE IN PDF FORMAT.PDF (147.23 KB)
Financial Summary Second Quarter 2012 (at identical exchange rates)
» Revenue growth of 4.2% (1.3% organic growth)
» Comparable store sales decreased by 0.6% in the U.S. and increased by 1.1% in Belgium
» Underlying operating margin of 3.2%, impacted by price investments and Food Lion repositioning
Financial Summary First Half 2012 (at identical exchange rates)
» Revenue growth of 5.0% (1.8% organic growth)
» Underlying operating margin of 3.3%
» Confirm full year underlying operating profit guidance, albeit at the bottom-end of the range, as Delhaize Group remains committed to improving customers' experience in terms of price and service
» Encouraging momentum from growth initiatives. Food Lion repositioning continues to deliver strong revenue growth with sustained momentum in Phase One (comparable store sales growth of 3.2%) and positive trends in Phase 2
» Current gross annual cost savings plan will exceed the € 500 million target and reach € 550 million by the end of 2012. Subsequent efficiency plan being prepared as we are determined to fund our growth initiatives
» Reiterate free cash flow target of € 500 million in 2012
» CEO Comments
Pierre-Olivier Beckers, President and Chief Executive Officer of Delhaize Group, commented: "We are pleased to report that during the second quarter a number of our initiatives produced good results and we are confident that they will support our revenue growth in the second part of the year. Specifically, the investments at Food Lion continued to pay off as the Phase One stores sustained strong revenue growth in their second year after launch. Phase 2 stores have enjoyed similar positive momentum in the initial months following their launch in March 2012. With the launch of Phase 3 in July 2012, we have now repositioned more than 700 Food Lion stores, or 65% of the network. Our experience with Food Lion´s repositioning gives us confidence that steps being taken elsewhere in the Group will also start to bear fruit. Turning to Belgium, we are encouraged by the positive comparable store sales growth recorded during the second quarter and believe we will see further positive impact resulting from additional price investments, new store openings and remodelings. While Greece continues to dominate the headlines, Alfa Beta managed to gain market share and to grow its profitability,"
"Despite these positive trends and as expected, our growth initiatives continued to impact our underlying operating profit. We confirm that we will reach our full year underlying operating profit guidance. However, we expect to achieve the bottom-end of the range as we remain committed to improving our customers experience in terms of both price and service. Given the decline in our operating profit and the challenging environment, we recognize the need to redouble our efforts and sharpen our focus. As previously described, we expect to exceed our current cost savings program and deliver € 550 million by year-end, and we are working on a multi-year plan focused on achieving greater efficiency."
Original source: Delhaize Group
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