Koninklijke Ahold Delhaize N.V. ((ADRNY)) has held its Q4 earnings call. Read on for the main highlights of the call.
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In the latest earnings call, Koninklijke Ahold Delhaize N.V. presented a cautiously optimistic outlook for the future, marked by strong performance in Europe and robust online sales growth. Despite some challenges in U.S. margins and impacts from store closures, the company expressed confidence in its growth strategies moving forward.
Strong Performance in Europe
Ahold Delhaize reported significant improvements in European margins, largely due to the successful implementation of the Belgium Future Plan and a strong fourth-quarter performance by Albert Heijn. Notably, Belgium’s market share recovery surpassed expectations, underscoring the company’s strong foothold in the region.
Growing Online Sales
The company witnessed a 10.9% increase in online sales across both the U.S. and Europe, with Albert Heijn and Food Lion achieving double-digit growth rates. This highlights the company’s successful digital engagement strategies and the growing consumer preference for online shopping.
Successful Cost Management
Ahold Delhaize’s ‘Save for Our Customers’ program exceeded its plans by generating over EUR 1.35 billion in cost savings for 2024. This achievement reflects the company’s effective cost management strategies, which are crucial for maintaining profitability.
Positive Volume Growth in the U.S.
The U.S. market showed positive volume growth in the fourth quarter, indicating the success of the company’s price investments and customer engagement strategies. This growth is a positive indicator of the company’s ability to attract and retain customers in a competitive market.
Dividend Increase
In a move reflecting its strong financial performance, Ahold Delhaize proposed a 6.4% increase in its dividend per share for 2024, raising it to EUR 1.17 per share. This decision underscores the company’s commitment to delivering shareholder value.
U.S. Margin Pressure
The company faced pressures in U.S. margins due to price investments, an unfavorable sales mix, and wage inflation. These factors led to a decrease in the underlying operating margin by 20 basis points, highlighting the challenges in maintaining profitability in the U.S. market.
Impact of Store Closures
The closure of underperforming Stop & Shop locations and the divestment of Fresh Direct negatively impacted U.S. net sales growth by 1.7 percentage points for the year. These strategic decisions were made to streamline operations and focus on more profitable areas.
Pension Settlement Costs
Ahold Delhaize faced a EUR 205 million cash impact due to a Dutch pension plan amendment, which affected the company’s overall cash flow. This one-time cost underscores the complexity of managing large-scale operations across different regions.
Forward-Looking Guidance
Looking ahead, Ahold Delhaize shared its goals for 2025, expecting an underlying margin of around 4% and aiming for mid- to high-single-digit growth in diluted underlying earnings per share. These targets will be driven by strategic investments and market expansion, alongside a €1 billion share buyback program.
In summary, Ahold Delhaize’s earnings call highlighted a balanced performance with strong gains in Europe and online sales, tempered by challenges in the U.S. market. The company’s forward-looking guidance suggests confidence in its strategies to overcome these hurdles and achieve growth in the coming years.
