Delhaize Group has reported a strong first quarter, boosted by increased revenues from its private label range.
The supermarket group said it had posted revenue growth of 3.0% at identical exchange rates. At actual exchange rates, revenues increased by 13.2% to EUR5.1bn (US$6.78bn) due to the strengthening of the US dollar.
Operating profit increased by 20.2% at actual exchange rates to EUR247m (+7.3% at identical exchange rates). Operating margin increased to 4.9% of revenues mainly as a result of a higher gross margin partially offset by higher selling, general and administrative expenses as a percentage of revenues, lower other operating income and higher other operating expenses.
Net profit from continuing operations increased by 20.5% (+8.2% at identical exchange rates) and amounted to EUR127m, or EUR1.26 basic per share (EUR 1.03 in 2008).
Pierre-Olivier Beckers, president and CEO said: “We are extremely pleased with the solid performance of all our operating companies in the current difficult environment. We generated positive comparable store sales growth and supported our margins on both sides of the Atlantic through targeted price management, the continued growth of private brand revenues and improved inventory management. In particular, our ability to grow market share in Belgium in this difficult environment is a clear sign that our price repositioning is bearing fruit.
“We are on target with our plans to improve our cost structure by EUR100m and to generate EUR50m in working capital improvements this year. This will significantly enhance our flexibility to reinvest in our business and support our profitability. While we remain cautious for the rest of the year as a result of the global economic uncertainty, our solid first quarter performance and our plans for the rest of the year, lead us to confirm our 2009 guidance.”
In the quarter, revenues from its operations in the US grew by 2.0% to US$4.7bn (EUR3.6bn).
Revenues of Delhaize Belgium increased by 2.1% to EUR1.1bn. Operating profit growth of 10.0% was achieved.
Greece, meanwhile, saw a quarter of double-digit revenue growth with an increase of 10.8%, driven by comparable store sales growth, the acquisition of Plus Hellas and new store openings. Alfa-Beta’s market share and the number of customer transactions increased resulting in positve volume growth in an environment with very low inflation, the company said.
Revenues in the Rest of the World segment of Delhaize Group increased by 20.1% in the first quarter of 2009 (+36.4% at identical exchange rates) to EUR53m. The Rest of the World segment recorded an operating loss of EUR0.4m in the first quarter of 2009 as a result of higher staff costs and operational foreign exchange losses in Romania and the operating results of the converted La Fourmi stores.
The company confirmed its full year forecasts of operating profit growth of between 0% and 3% at identical exchanges rates. Excluding the effect of the 53rd week in the 2008 results, operating profit growth for 2009 is expected to be between 3.5% and 6.5% at identical exchange rates.