Ahold Delhaize has posted a 1.7% increase in full-year net sales, to €62.69 billion, with Dick Boer, the company's chief executive, praising both the group's "underlying operating margin expansion" and "stable or increasing market share" in the group's major markets.
Here's how some of Europe's leading analysts viewed the retailer's performance:
John David Roeg, NIBC Bank
"The underlying EBIT margin in the Netherlands fell 0.2%, to 4.7%, which is well below consensus' 5.0% expectation. Excluding BOL.com margins would have been flat as a result of synergy savings being offset by higher pension charges.
"The Belgian underlying EBIT margin fell 1.3%, to 1.0% – well below consensus' 2.4% expectation. Margins stood under pressure from higher promotional spending, higher stock losses in company-run stores, higher logistic costs, and higher personnel expenses.
"Europe clearly disappointed, and with an ongoing tough environment in basically all markets, it is only thanks to synergies that results remain solid. We will update our forecast, but see few triggers, other than a much lower tax rate going forward."
Fernand de Boer, Degroof Petercam
"Ahold Delhaize already published sales figures, so full focus on margins and cash generations – in this respect, a little mix. Excluding the insurance gain, underlying EBIT [is] a touch light, but margins in the US [are] better than expected, while [the] Netherlands and Belgium disappointed.
"However, so far, the fear that US margins would collapse are overdone, with synergies clearly coming through. In addition, cash flow remains very strong, where, also, 2018 guidance is better than expected, even taking into account the tax benefit.
"Based on today’s results, we expect to marginally lower our estimates for underlying operating income, but, given the guidance on tax rate, a marginal increase in our EPS estimates."
Bruno Monteyne, Bernstein Research
"Synergies are falling to the bottom line, especially in the USA, where most of the bears are focused. If there is underlying margin compression, it comes from: a) BOL.com – a deliberate decision to invest; b) weak Belgian operating performance – genuinely an issue, but only making up approximately 10% of the business, so unlikely to be sufficient to detract from its overall strong performance; and c) increased pension costs due to lower yields, which have started turning.
"Cash generation ahead of the most bull expectations, despite the company investing at a similar rate – as a percentage of sales – in capex as its US and European peers, and despite investments in e-commerce and new technologies that put Ahold Delhaize ahead of all its peers."
Barclays European Food Retail Equity Research
"The operating results, cash generation and dividend were broadly as expected. Given AD was not seen as a major beneficiary of US tax reform, the guidance for a lower tax rate and an ongoing [approximate] €200 million of annual cash-flow benefit is also clearly good news. However, we still believe that AD will likely benefit less than most of its US peers, and we expect some of the benefit at the tax line to be reinvested at the operating level."
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
