Royal Ahold (NYSE: AHO), the international food retail and foodservice company, today announced it will significantly boost organic growth in 2001 by opening approximately 1,250 new or remodeled stores around its global network. The total store count at 2001 year-end is expected to reach approximately 9,000. Total sales, excluding currency impact and any eventual acquisitions, are expected to amount to approximately Euro 65 billion in 2001. This was evident from the Royal Ahold Annual Report over the year 2000, which was published today, and will be discussed at the Annual General Meeting of Stockholders in The Hague on May 15, 2001.
In its message to stockholders, the Ahold Corporate Executive Board anticipates that sales and operating results will improve in all trade areas in 2001, reflecting healthy organic growth alongside the contribution of recent acquisitions. Ahold expects net earnings to be strongly higher and that earnings per share, excluding currency fluctuations, extraordinary items and goodwill amortization, will be 15% higher than in 2000.
Ahold President Cees van der Hoeven: ‘Powerful organic growth’
‘Our strength lies in our ability to achieve significant organic growth while acquiring and successfully integrating world-class companies into our group’, says Ahold President-CEO Cees van der Hoeven in the Annual Report. Last year Ahold achieved organic sales growth of 6.6% and organic operating results of 13.6%, both substantially above the industry average. ‘We have developed a global network of best-of-breed regional market leaders in food retail and foodservice. Our growth potential as a company has increased considerably, reflecting the linkage of our food retail and foodservice activities. By adding foodservice to our business portfolio, we are able to serve our customers at every meal occasion. Sustaining and nurturing this multi-channel strategy and focusing strongly on organic growth will again lead to a surge in our worldwide sales. We intend to double the size of our company in the 1999 – 2002 period, although this now looks almost doable by the end of this year.’
Food specialist of the world
The 2000 Annual Report is stamped ‘Food specialist of the world’, reflecting Ahold’s position as the leading international food retail and foodservice company. Ahold serves approximately 35 million customers every week through its extensive store network in 25 countries. In addition the company supplies 200,000 institutional clients who serve the customer. International know-how and broad experience with customer requirements, procurement, production, distribution and transportation are the cornerstones of the strategy. This knowledge is consistently employed to serve existing and new customers at more and more locations by offering them a wide choice of safe and high quality food items. With the customer confidence in Ahold and its operating units, new types of services for its customers are being developed.
In the Annual Report, Ahold confirms its commitment to social responsibility. ‘This awareness is a fundamental element of our corporate policy and drives our desire to play our part as a citizen of the world, ensuring safe and high-quality food is on the shelves of our stores and delivered to our foodservice accounts. This responsibility is also evident in the measures we take to reduce environmental impact, choices we offer in products we sell, and the resources we make available to the local communities where we operate.’ Ahold’s environmental policy is also illustrated through its policies to minimize energy use, pesticide levels and packaging materials. In many of its trade areas, Ahold companies contribute to urban revitalization by opening stores in economically disadvantaged inner cities. In the agricultural sector Ahold cooperates with farmers and suppliers in sustainable projects to meet rapidly developing customer demands for specialty and value added products.
Outlook per region
Ahold expects that its stores in the United States will generate organic sales growth of 6% in 2001. Sales are expected to rise to approximately USD 34 billion. Approximately 80 new stores and more than 100 remodels are scheduled. At year-end, the U.S. store count is expected to exceed 1,400. The current Ahold foodservice operation expects internal growth of approximately 12%.
A total of approximately USD 1.5 billion is expected to be invested in the existing business. Operating margin is expected to rise again, reflecting strict cost control and increasing synergies between the company’s food retail and foodservice activities.
In Europe, operating results are expected to improve further. By year-end, the number of stores that Ahold operates or services in Europe will rise by about 160 new stores to approximately 6,800 (year-end 2000: 6,623). Hundreds of stores will be remodeled. Investment in Ahold’s current European operations is expected to total Euro 2.2 billion, including Superdiplo. It is anticipated that increasing private consumption and strong organic growth will result in sales of approximately Euro 22 billion.
In Latin America, the store count will rise to over 600 (year-end 2000: 567). Approximately 50 new stores will open and Euro 350 million is expected to be invested in the current business. Ahold estimates average organic sales growth in its Latin American trade areas at approximately 10%. Total 2001 sales on this continent are anticipated at approximately Euro 5.5 billion.
In Ahold’s Asia trade areas of Thailand, Malaysia and Indonesia, organic sales growth is anticipated to be approximately 8%. The number of Ahold stores in the region will grow to approximately 100 (year-end 2000: 80). Private consumption will grow further in these countries. Ahold expects Asia to make a positive store contribution in 2001 as regional sales are anticipated to be Euro 430 million.
Royal Ahold operates approximately 8,500 supermarkets, hypermarkets and other store formats in the United States, Europe, Latin America and Asia with consolidated 2000 sales of close to USD 50 billion (Euro 52.2 billion). The company also has a significant presence in the foodservice sector and is swiftly developing its position in internet-based home delivery. Ahold employs almost 420,000 associates and serves the food needs of over 35 million customers and more than 200,000 foodservice accounts in 25 countries every week. Ahold’s website can be found at www.ahold.com.
Certain statements in this press release, including expectations as to the company’s future performance, are forward-looking statements’ within the meaning of U.S. federal securities laws and are intended to be covered by the safe harbors created thereby. These forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from these statements. Such factors include, but are not limited to, the effect of general economic conditions and changes in interest rates in the countries in which the company operates, increased competition in the markets in which the company operates, changes in marketing methods utilized by competitors and difficulties encountered in the integration of new acquisitions. Fluctuation in exchange rates between the Euro and the other currencies in which the company’s assets, liabilities and results are denominated, in particular the U.S. dollar, can also influence the forward-looking statements as can other factors discussed in the company’s public filings. Readers are cautioned not to place undue reliance on such forward-looking statements. For a more detailed discussion of such risks and other factors, see Royal Ahold’s Annual Report on form 20-F for its most recent fiscal year.