Ahold Delhaize Beats Earnings Expectations on Q2 2016 Report
ZAANDAM, THE NETHERLANDS - With the Ahold Delhaize merger finally solidified, the newly combined company has hit the ground running. In the freshly released Q2 2016 financial report, Ahold and Delhaize, which will begin reporting joint financial statements in Q3, both reported better than expected earnings results, giving a small boost to stop pricing.
"We have started our new chapter as Ahold Delhaize with good momentum, with these two strong sets of pre-merger results,” explained Dick Boer, CEO of Ahold Delhaize. “Building on our solid financial foundation, common values, and great local brands, we are driving ahead with full energy to deliver even more for customers and communities, associates, and shareholders. We look forward to continuing to shape Ahold Delhaize, with a strong commitment to delivering great food, value, and innovations for customers across our 11 markets, both in stores and online.”
For the quarter, Ahold reported an 8 percent increase in operating profit in the second quarter, rising to around $400.35 million (€355 million). Reuters analysts had projected Ahold’s income at $380.06 (€337 million). Operating profits at Delhaize also rose, jumping 12.1 percent to reach around $278.55 (€247 million) on a constant currency basis.
These growing profit rates were due in part to a better than expected performance in the U.S., which has been dealing with the ramifications of deflation for several quarters. According to the Financial Times, the U.S. accounts for two-thirds of the company’s total sales, and saw even further rising volumes in Q2. Sales for Ahold’s U.S. business rose 1.2 percent.
Globally, sales at Ahold increased 3.6 percent, while sales at Delhaize rose 4.3 percent. Share prices for AD, the combined company, were up less than one percent to reach $24.50 (€21.72), according to the company’s website.
As we previously reported, 86 U.S. locations will be divested as part of the approval of the U.S. Federal Trade Commission. Proceeds from these divestments are estimated to be $174 million, resulting in no significant divestment gain or loss. According to a press release, these 86 stores represented $1.4 billion of net sales and $88 million of underlying operating income in 2015.
