Royal Ahold NV, the Dutch grocery chain that’s merging with Delhaize Group, reported fourth-quarter profit that topped analysts’ estimates as profitability in the US and the Netherlands improved because of cost reductions.
Fourth-quarter underlying operating income rose 39 per cent to 421 million euros ($457 million), the Zaandam, Netherlands-based owner of the Stop & Shop chain said in a statement Thursday. The average estimate of analysts polled by Bloomberg was €382 million. This year’s fourth quarter included one more week than the same quarter a year earlier.
Underlying operating margin widened to 4.3 per cent from 3.7 per cent in the fourth quarter and the company said it expects margin improvement to continue in 2016.
"That clearly shows that the inflection point is reached and that they’re in a positive momentum," said Alan Vandenberghe, analyst for KBC Securities , said by phone.
Ahold forecasts cost savings of €350 million this year, which will help pay for reduced prices and investments in higher-quality produce selection in the U.S. as the company tackles increased competition from chains such as Wal-Mart Stores Inc. After the merger with Belgium’s Delhaize, the company will have more than 4 per cent of the US grocery market. Globally the combination will have 6,500 stores and annual sales exceeding €54 billion.
Ahold shares fell 1.1 per cent to €20.74 Wednesday in Amsterdam.
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