ZAANDAM, The Netherlands — Ahold Delhaize reported solid results for its fourth quarter and 2023 fiscal year, with full-year sales and earnings per share in line with expectations.
Fourth quarter net sales were €23.0 billion ($24.65 billion), up 1.9% at constant exchange rates and down 1.4% at actual exchange rates. Comparable sales, excluding gas, increased by 1.8% for the group, with a decline of 1.0% in the U.S. and an increase of 6.5% in Europe. Net consumer online sales increased by 2.6% in the fourth quarter at constant exchange rates. Double-digit growth at Food Lion and Hannaford and accelerating growth at Albert Heijn were partially offset by a decline at FreshDirect.
“I am pleased to report a solid end to the year for Ahold Delhaize,” president and CEO Frans Muller said in a statement. “The local brands in our strong international portfolio have been steadfast in creating value for customers by enhancing their highly personalized loyalty programs, increasing access to omnichannel offerings, and expanding their innovative own-brand assortments. In an increasingly complex world, our brands are able to deliver consistency to customers, associates and suppliers, quarter after quarter.”
Muller said that the company exceeded its cost management goals for the year and noted that fourth-quarter results for its U.S. operations were in line with projections.
Frans Muller
“In the U.S., net sales decreased by 1.5% at constant rates and comparable sales declined by 1.0%, in line with our expectations, as inflation moderated further and Supplemental Nutrition Assistance Program (SNAP) headwinds remained,” Muller said. “With the backdrop of a declining U.S. grocery market, Food Lion achieved a remarkable milestone with 45 consecutive quarters of positive comparable sales growth. Excluding one-offs, the U.S. underlying operating margin was consistent with the prior year, highlighting our strong focus on managing costs to match top-line deflation trends. In addition, the divestment of FreshDirect was finalized in the quarter, which contributed a modest uplift to margin. For the coming quarters, this margin upside will help fund investments into our U.S. brands’ store portfolio and customer value propositions.
“In Europe, net sales were up 7.5% at constant rates and comparable store sales were up 6.5% in Q4. This is a strong result, and comes along with the first positive volume trends in over two years. Key to this milestone has been our brands’ relentless focus on rolling out local everyday low-price programs. Our brands have expanded their offering in the region to 7,000 own-brand products, meeting customers’ needs for high-quality, affordable items. Online grocery sales were up 9.3% with accelerating growth at Albert Heijn. Underlying operating margin was 3.7%, a sequential quarter-over-quarter improvement since we announced Delhaize Belgium’s Future Plan and strong cost-control measures to compensate for high inflation in the cost base, particularly impacting labor. At Delhaize, 107 stores have now signed agreements with independent buyers. And we are starting to see encouraging results, with accelerating comparable store sales and stabilizing market share at converted stores.
“Our 2023 diluted underlying EPS of €2.54 decreased by 0.4% at actual rates compared to 2022, in line with the Company’s original guidance of around prior year levels. Free cash flow in 2023 was €2.4 billion, reflecting ongoing solid and consistent operating cash flows, inflows related to the collection of a tax receivable in Belgium and outflows related to the delivery of various projects identified as part of the Accelerate operational efficiency initiative.
Looking ahead, Ahold Delhaize sees more of the same.
“For 2024, we expect a predominantly consistent performance year-over-year,” Muller said, “albeit with some different phasing across the quarters – as, for example, we lap the impacts of inflation rates, SNAP and the various positive and negative impacts of the prior year’s transformational initiatives in Europe and the U.S. Our Group underlying margin is expected to be at least 4%. Earnings per share are expected to be around 2023 levels and free cash flow at around €2.3 billion. And, as always, you can expect us to be laser focused on cost control and cash flow delivery.”
The company said that a more detailed Outlook will be included in its annual report, which will be published on February 28.
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