3rd Quarter Highlights
· Earnings per share increase by 31.6% to Euro 0.33
· Net earnings rise 55.5% to Euro 259.6 million
· Operating results increase by 67.5% to Euro 548.1 million
· Sales rise 76.5% to Euro 13.8 billion
· Confirmation of strong earnings growth for full-year 2000

Royal Ahold, the international food provider, achieved third quarter 2000 net earnings of Euro 259.6 million, a 55.5% increase. Sales rose 76.5% to Euro 13.8 billion and operating results increased by 67.5% to Euro 548.1 million. Earnings per common share for the quarter rose 31.6% to Euro 0.33. Excluding currency fluctuations, specifically the higher average exchange rate of the U.S. dollar, earnings per common share grew 18.4%.

'Record sales and results expected for 4th Quarter', says Cees van der Hoeven
In a comment, Ahold President & CEO Cees van der Hoeven said: 'Once again we have delivered strong results this quarter, particularly taking seasonality into account. They are in line with our projection for full-year 2000. Our retail chains and foodservice operations turned in an improved performance, reinforcing our market positions. Our strategy to reach consumers through food retail, foodservice and e-commerce channels is proving highly effective. Our retail customer count is rising, and when they eat out, we play a role as well. At the same time, we are seeing interesting synergy benefits developing within and among our sales channels. We anticipate a record-breaking performance in the fourth quarter. Ahold is right on track to become the leading multi-channel food provider in the world.'

 
3rd Quarter
First Three Quarters
x 1 million Euro
2000
1999
Change in %
2000
1999
Change in %
Sales
13,776.5
7,807.3
76.5
37,180.3
24,980.4
48.8
EBITDA
832.3
534.4
55.7
2,391.0
1,642.0
45.6
As % of sales
6.0
6.8
6.4
6.6
EBIT
548.1
327.3
67.5
1,540.4
994.6
54.9
As % of sales
4.0
4.2
4.1
4.0
Net earnings
259.6
166.9
55.5
746.0
514.9
44.9
Net earnings after preferred divedend
256.9
164.1
56.6
736.7
505.6
45.7
Earnings per share in Euro
0.33
0.25
31.6
1.03
0.78
32.5

Sales and results were positively influenced by the higher average exchange rate of the U.S. dollar (Euro 1.12 vs Euro 0.95). Excluding currency impact, autonomous sales growth amounted to 6.8%, earnings per share grew 18.4% in the third quarter and 19.6% in the first three quarters of 2000.

United States

 
3rd Quarter
First Three Quarters
x 1 million USD
2000
1999
Change in %
2000
1999
Change in %
Sales
7,042.0
4,613.8
52.6
20,175.3
15,406.9
30.9
Operating results
314.3
228.9
37.3
981.0
734.5
33.6

In the United States, sales rose 52.6%. This increase mainly reflects the acquisition of U.S. Foodservice and, to a lesser degree, the acquisition of Golden Gallon and Sugar Creek. Strong identical sales at Stop & Shop, Giant-Landover, Giant-Carlisle and BI-LO also contributed to sales growth. Identical growth in the U.S. this quarter amounted to 2.2%. Internet grocer Peapod was consolidated in this quarter for the first time.

Operating results in the United States rose by 37.3%, largely reflecting the consolidation of U.S. Foodservice. The retail operating companies also contributed significantly to the higher operating results.

During the third quarter, 35 Edwards stores were transferred to the Stop & Shop format. The remaining 28 will follow in the course of the fourth quarter. These stores will permit Stop & Shop to reach new customers in new communities and towns throughout New Jersey and New York. Costs incurred during the conversion process were partially charged to operating results and against a special provision.
At internet grocer Peapod, operating losses amounted to USD 10.0 million as anticipated. These factors and the lower operating margin at U.S. Foodservice, characteristic of the foodservice business, resulted in higher sales growth compared to operating results.

Europe

 
3rd Quarter
First Three Quarters
x 1 million USD
2000
1999
Change in %
2000
1999
Change in %
Sales
4,499.1
2,450.2
83.6
11,597.7
7,732.2
50.5
Operating results
162.1
107.8
50.4
426.6
312.2
36.6

European sales rose 83.6%, mainly reflecting the consolidation of the ICA Group in Scandinavia. Sales increased in all other European trade areas. Poland and the Czech Republic generated considerable sales growth, primarily due to the newly-opened supermarkets and hypermarkets.

Operating results rose 50.4%, largely reflecting the consolidation of the ICA Group. Results in Spain and the Czech Republic were positive as well, contributing to the rise. The costs attached to opening and developing new stores generated operating losses in Poland. In The Netherlands, operating results were again higher than last year. Operating results at the Portuguese joint venture with Jerónimo Martins were slightly lower. The lower average operating margin at ICA, currently being addressed, generated stronger sales growth than operating results.

Latin America

 
3rd Quarter
First Three Quarters
x 1 million USD
2000
1999
Change in %
2000
1999
Change in %
Sales
1,304.5
874.5
49.2
3,642.4
2,516.6
44.7
Operating results
49.7
22.8
118.0
113.7
64.2
77.1

In Latin America, sales grew 49.2%, mainly reflecting the joint venture with La Fragua in Guatemala. The other retail chains, particularly Bompreço in Brazil and Disco in Argentina, also contributed to sales growth.

Operating results rose by 118.0%, largely reflecting the joint venture with La Fragua. Bompreço and Disco also contributed significantly to the rise in operating results.

Asia

 
3rd Quarter
First Three Quarters
x 1 million USD
2000
1999
Change in %
2000
1999
Change in %
Sales
97.3
117.5
(17.2)
297.3
374.4
(20.6)
Operating results
(4.6)
(9.7)
52.6
(16.2)
(34.7)
53.3

In Asia, sales decreased reflecting the discontinuation at the end of 1999 of Ahold activities in China and Singapore. Operating results of the retail chains in Thailand and Malaysia improved, with Thailand almost reaching break-even.

Corporate costs

 
3rd Quarter
First Three Quarters
x 1 million USD
2000
1999
Change in %
2000
1999
Change in %
(10.7)
(10.4)
2.9
(34.7)
(32.9)
5.5

Corporate costs were almost identical to those in the third quarter of last year.

Net financial expense

 
3rd Quarter
First Three Quarters
x 1 million USD
2000
1999
Change in %
2000
1999
Change in %
(164.0)
(86.8)
88.9
(459.7)
(279.0)
64.8

The increase in net financial expense reflects the financing of acquisitions and the consolidation of interest expenses at U.S. Foodservice, the ICA Group and La Fragua.

The rolling annual interest coverage ratio was 3.29 and the rolling annual ratio of net interest bearing debt/EBITDA amounted to 2.31.

Tax rate
The tax rate, expressed as a percentage of pre-tax earnings, amounted to 25.6%.

Group equity
Group equity, expressed as a percentage of the balance sheet total, amounted to 8.0% (at year-end 1999: 18.8%). After conversion of the convertible subordinated notes outstanding, group equity amounts to 15.3%. Capital accounts amounted to 16.0% of the balance sheet total. Stockholders' equity amounted to Euro 1.0 billion. In the first three quarters of 2000, proceeds from the issue of common stock and from exercised option rights, and the positive balance of exchange rate fluctuations were added to stockholders' equity. In addition, net earnings over the first three quarters of 2000, after deduction of the dividend on the preferred shares and the cash dividend on common shares, were added to stockholders' equity. Goodwill paid for acquisitions amounting to Euro 5.1 billion (primarily for U.S. Foodservice and ICA), were fully charged to stockholders' equity.


Confirmation full-year earnings outlook
Ahold confirms its earlier projection that sales and operating results for the full-year 2000 will increase in all regions, reflecting healthy autonomous growth and acquisitions. It is expected that net earnings will be sharply higher than in 1999. Earnings per share, excluding currency impact, are expected to rise by 17-20%.

Additional information

* In the first week of December, Ahold expects to finalize the acquisition of foodservice company PYA/Monarch in the United States. PYA/Monarch, with sales of approximately USD 3.5 billion, operates in the southeastern United States. Completion of the transaction will boost Ahold's annual foodservice sales in the United States to approximately USD 12 billion.

* Ahold launched a public tender offer November 27 to acquire all outstanding shares of Superdiplo, the Spanish supermarket/hypermarket operator with more than 300 stores and sales of approximately Euro 1.5 billion. The offer will remain open until December 27 and is expected to close by the end of December. After completion of the transaction, Ahold will operate approximately 530 stores in Spain with annualized sales of Euro 2 billion, four times its current size.

* Both PYA/Monarch and Superdiplo will be consolidated as of January 1, 2001. Goodwill paid for both acquisitions will be capitalized and amortized over a 20-year period.

* In the United States, Ahold operating companies Tops and Stop & Shop have signed a letter of intent with C&S Wholesale Distributors to acquire 56 stores and 7 sites for the sum of USD 178 million. C&S Wholesale Distributors is acquiring these stores and sites from the Grand Union company, which has filed for bankruptcy protection. Approval for this transaction is required from the federal bankruptcy court and antitrust authorities. Following approval and completion of the transaction, Ahold expects to generate additional sales of USD 800 million. The one-time transition costs of USD 40 million will impact slightly on U.S. results in the first year, but improve substantially afterwards, with strong cost savings that will benefit consumers.
A separate release will be issued shortly regarding this transaction.