Zaandam / NL. (ad) Dutch Ahold Delhaize Group, one of the world’s largest food retail groups and a leader in both supermarkets and eCommerce, provides an update on Q1 results and the 2020 guidance outlook.
Update on Q1-2020 results
Regarding preliminary Q1 results, which will be reported in full on May 07th, Frans Muller, President and CEO of Ahold Delhaize, said: «We are extremely proud of the talented and hardworking associates across our brands around the globe, who have worked tirelessly to serve their local communities in this time of need during the Covid-19 crisis. Every one of our local brands remains committed to protecting the health and safety of associates and customers.
«Due to Covid-19, demand across our multichannel network in the Eastern U.S. and Europe increased significantly in Q1. As a result, we expect Group net sales growth of approximately 15 percent in Q1, or 13 percent in constant currency. Comparable sales growth excluding gasoline is expected to be approximately 14 percent in the U.S., and 10 percent in Europe in Q1. In the U.S., we saw customers begin stockpiling in March, and experienced approximately 34 percent comparable sales growth excluding gasoline in the month. In Europe, we saw slightly earlier customer stockpiling, beginning in late February, which accelerated into March. Europe comparable sales excluding gasoline were up approximately16 percent in March.
«We expect underlying operating margin in Q1 to be above the prior year. This is partly due to a timing effect. The Q1 margin has benefitted from the higher sales trends experienced at an earlier stage compared to the timing of the significant investments made enhancing associate pay and benefits and implementing additional safety and protective measures, which have become material towards the end of Q1.»
Reiterating 2020 profit outlook
Regarding the 2020 outlook, Frans Muller said: «Covid-19 has created uncertainty for our 2020 outlook, and it is too early to know how this will ultimately impact our great local brands and the communities that they serve. Although we continued to experience higher than normal sales growth through the end of March, there is increased uncertainty in sales over the course of the year, especially as it applies to changes in consumer shopping patterns and behavior.
«Uncertain times call for a commitment to our purpose and especially our values, one of which is care. We are committing to this in abundance as we focus on operating our brands and supply chains smoothly, with associate and customer health and safety as our first and foremost priority. Investing in safeguarding associate and customer wellbeing will ensure our brands will continue to be able to serve the communities that rely on us in this time of great need.
«The timing of these investments in associate and customer safety and protection have become material towards the end of Q1. This means we are not likely to sustain the underlying operating margin level experienced in Q1. Nevertheless, we maintain our full year outlook, that the group underlying operating margin will be broadly in line with 2019. We continue to expect underlying earnings per share growth in the mid-single-digit range for the year.
«We expect free cash flow to exceed our previous guidance of EUR 1.5 billion, due to our expectation that some capital programs will likely be delayed due to Covid-19. The free cash flow guidance expressly excludes M+A activity.
«Our cash and liquidity positions remain strong. We propose a cash dividend of EUR 0.76 per common share for the financial year 2019, up 8.6 percent from last year. Our policy continues to be to target a dividend payout of 40-50 percent of underlying income from continuing operations in 2020. We have acquired EUR 348.7 million of our own shares this year as of April 03, and intend to continue repurchases under the EUR 1 billion share buyback program. However, given the uncertainty caused by Covid-19, we will continue to assess these policies throughout the year.
«We look forward to reporting our Q1 earnings in full on May 07, 2020.»