Belgium-based supermarket operator Delhaize Group has posted net profit from continuing operations of EUR98.0m for the first quarter, or EUR1.03 per basic share, up 18.8% from last year.
The company said that the Group share of net profit rose by 19.7% to EUR97.3m. Gross margin increased to 25.6% of net sales and other revenues, against 25.3% in the first quarter of 2005, primarily due to better inventory results at Food Lion and an improved sales mix in several other subsidiaries, the company said.
First-quarter sales rose by 11.3% to EUR 4.8bn, while organic sales growth reached 3.3%.
“We are pleased with these first-quarter results,” said Delhaize Group president and CEO Pierre-Olivier Beckers. “Our sales momentum continued to be strong, particularly at Food Lion, our largest company. In Belgium, first- quarter sales were encouraging, as we showed accelerating growth.”
Revenue growth was driven by a 2.9% increase in US sales to US$4.1bn, spearheaded by the continued strong performance of Food Lion. Comparable store sales in the US grew by 1.7%. US operating margin amounted to 5.4% of net sales, while US operating profit increased by 7.1% to US$223.5m.
In Belgium, Delhaize’s acquisition of Cash Fresh resulted in a 9.1% sales rise to EUR1.0bn. The Cash Fresh stores are being converted to the Delhaize format. Comparable store sales growth in Belgium was 0.2%.
Operating margin at Delhaize Belgium fell to 4.5% of net sales and other revenues, owing to price decreases and higher labour, energy and depreciation expenses. Operating profit was 9.7% lower at EUR46.2m.
Like-for-like growth and new store openings resulted in 9.6% sales growth in the company’s Greek operation to EUR235.8m. Operating margin in Greece rose to 1.4% of sales, while operating profit increased to EUR3.3m, partly as a result of a non-recurrent charge of EUR2.0m in 2005.
Net sales and other revenues from emerging markets (Czech Republic, Romania and Indonesia) rose by 7.2% to EUR104.0m, on the back of continued sales growth in Romania and Indonesia. The operating profit from emerging markets reached EUR1.8m.
The company said it expected its total store network to increase by approximately 96 stores in 2006 to 2,732. Delhaize has forecast group revenue growth of 4% to 5% for 2006, with net profit expected to increase by between 8% and 12%.
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