Ahold CEO Dick Boer said today (3 March) that the Dutch retailer is looking to expand through acquisitions and expects “more opportunities to arise” this year.
The operator of Albert Heijn stores in the Netherlands and Stop & Shop outlets in the US has faced questions from analysts keen to know what it plans to do with its cash.
Go deeper with GlobalData
Today, alongside its 2010 financial results, Ahold said it would raise its dividend by 26% and launch a EUR1bn (US$1.39bn) share buyback programme.
However, speaking to analysts, Boer said Ahold would also look at expanding the business in “existing and new markets”, including through acquisitions.
Boer and CFO Kimberley Ross were coy about Ahold’s possible acquisition targets – Ross told analysts that the retailer “would not speculate on what we are going to do on acquisitions” – but Ahold’s chief executive said the company would make sure any deal came “at the right price”. Boer also emphasised that a target would have to be a business that could be integrated into Ahold’s current structure.
The Ahold CEO said the retailer had spent the last four years on repositioning its banners in the US and Europe and claimed the company now had a “platform” on both sides of the Atlantic to expand through M&A.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData“We are ready with our foundation, our consolidated platform, to start working on integration and acquisitions in a better way than a couple of years ago. Today, we are much better positioned,” Boer said.
Ahold has made two acquisitions in the US in the last 15 months – the December 2009 purchase of Ukrop’s and the February 2010 acquisition of five Shaw’s stores.
When asked directly about Ahold’s further acquisition ambitions in the US, Boer said: “They have to be at the right price, to fit in our strategy and also the current structure we now have makes us able to integrate better. Everybody would like to know a time frame but we believe that the opportunities will arise sooner than in the last couple of years.”
Announcing its full-year and fourth-quarter results, Boer cited “intense promotional activity” in the US and said operating margins were “negatively impacted by cost inflation that was not fully passed on to consumers”.
Boer, however, said Ahold had increased its volumes and improved market share in the US – and in the Netherlands and the Czech Republic. Nevertheless, he did argue that 2011 would be “challenging” for the food retail industry.
Analysts questioned Boer on the impact dealing with food inflation and facing fragile consumer confidence would have on Ahold’s margins this year. Boer described the twin pressures as a “balancing act” but indicated that all retailers were having to “adjust”. He said he believed Ahold could pass on higher costs.
“We will continue to see inflation in the market. We also see that we will be able to more and more pass [costs] through,” Boer said.
Shares in Ahold closed down 2.7% at EUR9.44.
