NETHERLANDS: Price investment weighs on Ahold's margins

By Katy Askew | 15 November 2012

Q3 sales up 11%
Operating profit down 3.7% on lower margins
Net profit falls 46% on tax charge

Ahold margins under pressure

Dutch retailer Ahold has booked a decline in operating profit as investments in pricing hit margins.

The company booked an 11% increase in sales, which rose to EUR1.6bn (US$9.67bn) as its strategy to lower prices resulted in higher volumes. However, operating profit fell 3.7% in the third-quarter to EUR289m, as margins dropped to 4.1% from 4.4% due to the group's higher investment levels.

Net profit was hit by a EUR90m tax charge at its Scandanavian joint venture ICA, declining 46% to EUR139m, the group added.

The group also announced that Ahold board memebr James McCann will become COO or Ahold USA. In a seperate announcement, the company said that McCann would take over the duties of retiring COO Carl Schlicker in February.

Show the press release

Ahold Interim Report Q3 2012

Gaining market share in a challenging environment

Highlights - third quarter 2012

Sales of €7.6 billion (up 3.7% at constant exchange rates) Operating income €289 million (down 3.7%) Net income €139 million (down 45.9%), including a €90 million ICA tax charge Underlying operating margin 4.1% Conversion of first 14 Jumbo stores completed

Amsterdam, the Netherlands - Ahold today published its interim report for the third quarter of 2012.

CEO Dick Boer said: "We continued to invest in competitiveness and gained market share in our major markets. Market conditions remained challenging, with consumers cautious in their spending and with ongoing high levels of promotional activity in both the United States and Europe.

"Sales growth in the United States was modest, reflecting declining retail price inflation and a strong sales quarter last year. Through stringent cost control we were able to deliver a solid margin performance. In the Netherlands we were pleased with a strong sales performance, as our value investments gained traction. Margins in the Netherlands were impacted by these investments, which were not fully offset by cost savings and by the inclusion of bol.com for the full quarter.

"We remain cautious in our outlook and expect market conditions to continue to be difficult. We will closely monitor the potential impact of rising food commodity costs, particularly in the United States. We are confident that we are well on track to execute our strategy and we will continue to invest in growth."

https://www.ahold.com/#!https://www.ahold.com/Media/Q3-2012-Results.htm

Original source: Ahold

Sectors: Financials, Retail

Companies: Ahold

View next/previous articles

15 Nov 2012 -

UPDATE: US: "Small minority" could force liquidation - Hostess

15 Nov 2012 -

INTERVIEW: FDEA director Sullivan emphasises UK focus on China growth

Currently reading -

NETHERLANDS: Price investment weighs on Ahold's margins

15 Nov 2012 -

CHINA: Fonterra coy on Beijing "interest" in share fund

15 Nov 2012 -

FRANCE: Brioche Pasquier to close two plants

There are currently no comments on this article

Be the first to comment on this article

Related research

Koninklijke Ahold N.V. (AH) - Financial and Strategic SWOT Analysis Review

Koninklijke Ahold N.V. (Ahold) is a food retailing company. It is an international company of quality supermarkets based in the US and Europe. It is also engaged in operating specialty stores, drug stores, and wine & liquor shops under the brand name...

Ahold in the Netherlands: Local Profile

This is a detailed report covering Ahold’s store formats, private labels, history, key employees, and key financial and operational metrics in the Netherlands....

Ahold in the United States: Local Profile

ICD Research's ‘Ahold in the United States: Local Profile’ is a comprehensive report covering the company’s local operations. It also includes key financial and operational performance details of the company. In addition, the report presents the stra...