Delhaize Group has reported operating profit and cash generation that beat analysts' estimates, as US revenue got a boost from an extra week of sales and accelerating food inflation.
Operating profit excluding one-time items fell to €764 million last year, the Brussels-based company said in a statement. Analysts projected €705.5 million, according to the median of 20 estimates compiled by Bloomberg. The extra week of sales, which occurs every five or six years, as Delhaize America’s fiscal year ends on the Saturday closest to 31 December, brought in $344 million of sales and added about €25 million to profit.
Same-store sales growth in the US quickened to 3.6 per cent in the fourth quarter from about 3.2 per cent when excluding the positive impact from walkouts at Market Basket in the preceding quarter, with price increases accelerating to 2.6 per cent from 1.8 per cent. Delhaize also said that it generated about €585 million of cash not required for reinvestment less proceeds from disposals last year, surpassing most analyst estimates and equal to about 7.9 per cent of its current market value.
'Delhaize was in a position to pass inflation on to US consumers and volume growth remained sound,' Fabienne Caron, an analyst at KeplerCheuvreux in Frankfurt, wrote in an investor note. 'Better stock management helped' cash generation.
Highest Value
Delhaize climbed as much as 5.4 per cent to €72.64 on Euronext Brussels, the highest value in intraday trading since July 2007. The shares have gained 49 per cent in the past 12 months, the second-best performance in the 15-company Bloomberg Europe Food Retailers Index.
Accelerating inflation in the US, where Delhaize generated 63 per cent of revenue last year, contrasts with deflation in its Belgian home market. Delhaize said same-store sales in Belgium fell 6.9 per cent in the final quarter of 2014 amid strikes affecting both the distribution centres and the company-operated stores.
Chief executive officer Frans Muller said that the grocer plans to “soon” conclude negotiations with Belgian labour unions about his plans to cease operations at about 10 per cent of the company-operated supermarkets and cut as many as 2,500 jobs in the country.
Bloomberg News, edited by ESM
