Koninklijke Ahold Delhaize N.v. · EURONEXT:AD
Koninklijke Ahold Delhaize — Q4 2017 Earnings Presentation
34 slides from Koninklijke Ahold Delhaize's earnings presentation, Feb 28, 2018
Slide 1: Q4/Full Year 2017
Q4/Full Year 2017 February 28, 2018
Slide 2: Highlights
Highlights Dick Boer President and CEO Q4/Full Year Results 2017 2
Slide 3: A successful year with Ahold Delhaize in great shape
A successful year with Ahold Delhaize in great shape • Pro forma Q4 net sales of €15.8 billion, up +2.5% at constant exchange rates • Pro forma Q4 underlying operating margin up +0.1%-point, full year 2017 up +0.2%-point • Integration substantially completed, with synergies driving strong margin del
Slide 4: Financial Results
Financial Results Jeff Carr CFO Q4/Full Year Results 2017 4
Slide 5: Group performance
Group performance € in million Quarter 4 Full year 2017 2016 Change Change 2017 2016 Change Change actual rates constant rates actual rates constant rates Net sales 15,763 16,216 (2.8)% 2.5% 62,694 62,331 0.6% 1.7% Net sales excl gas 2.3% 1.6% Underlying EBITDA 1,081 1,092 (1.0)% 4.7% 4,247 4,063 4.
Slide 6: Group performance
Group performance € in million Full year 2017 2016 Change actual rates Underlying operating income 2,456 2,298 6.9% Restructuring and related charges 178 246 Other 42 78 Operating income 2,236 1,974 13.3% Net financial expenses (297) (601) Income taxes (146) (331) Share in income (loss) of joint ven
Slide 7: Ahold Delhaize delivering performance
Ahold Delhaize delivering performance Net sales increasing Best-in-class underlying operating margin € in million 62,694 expanding further 3.9% 62,331 3.7% 3.5% 60,881 2015 2016 2017 2015 2016 2017 Continued commitment to investing in our Free cash flow yield ¹ increasing and ahead of peers business
Slide 8: Ahold USA - results Q4 2017
Ahold USA - results Q4 2017 Another quarter with positive comparable sales growth, margin expansion and stable market shares Net sales Comparable sales growth 1 € in million • Net sales up 1.1% at constant rates 34 28 • Comparable sales ex gas 0.7% 0.6% -519 -2 0.3% 6,025 up 0.6% 5,506 5,566 Q4'16 Q
Slide 9: Delhaize America – results Q4 2017
Delhaize America – results Q4 2017 Continued momentum: comp sales growth of 1.5% combined with 0.4pts UOM expansion Net sales • Net sales up 1.4% at Comparable sales growth € in million constant rates 54 • Comparable sales up 1.5% -338 -2 • Continued volume growth 3,969 3,631 3,683 at Food Lion 2.2%
Slide 10: The Netherlands – results Q4 2017
The Netherlands – results Q4 2017 Exceptional comp sales growth while profitability remains best-in-class, with market share gains Net sales Comparable sales growth € in million • Net sales up 6.4% 203 19 6.0% 6.0% • Comparable sales up 6.0%, 4.9% up 4.1% ex bol.com 3.6% 3.3% 3,673 • Price inflation
Slide 11: Belgium – results Q4 2017
Belgium – results Q4 2017 New team in place to drive strategic focus areas Net sales Comparable sales growth € in million • Net sales up 0.8% 10 • Comparable sales flat, excl effect of 2 less sales days 1,280 1,290 • Price inflation of 0.9% • Good holiday sales -0.9% -0.6% 0.0% -0.3% 0.0% performanc
Slide 12: CSE – results Q4 2017
CSE – results Q4 2017 Continued growth and strong margin expansion Net sales Comparable sales growth 1 € in million • Net sales up 2.3% at 25 4 33 -2 constant rates • Comparable sales ex gas 3.5% 1,551 up 0.3%. Strong 1,491 1,516 performance in Romania, 1.5% 1.7% Czech Republic and Serbia 0.5% 0.3%
Slide 13: Synergies delivered ahead of plan
Synergies delivered ahead of plan €268 million delivered in 2017 € in million Quarter 4 Full year Timeline 2016 – 2019 2017 2016 2017 2016 € in million 500 420 United States 51 8 159 8 268 Europe 25 7 78 7 GSO* 7 4 31 7 Total 83 19 268 22 22 * Global Support Office 2016 2017 2018 2019 • Net synergie
Slide 14: Majority of net synergies flow to bottom line
Majority of net synergies flow to bottom line € in million -41 -25 4 -21 -17 268 168 Net synergies 2017 Belgium U.S. deflation NL Pensions PPA costs Other Flow through • Net synergies 2017: €268 million • Dilutive impact from Belgian operations explains largest negative effect on base UOP, compared
Slide 15: Tax reform benefits U.S. and Belgium
Tax reform benefits U.S. and Belgium • One-time tax effect in Q4 2017: €407 million, non cash • Impact tax reform on 2018: – Cash tax benefit of around €200 million – Effective tax rate expected to be in the low twenty percent range € in million Full year 2017 (earnings before tax of €1,928 million)
Slide 16: Free cash flow
Free cash flow ¹ Outstanding free cash flow generation in both Q4 and FY 2017 € in million Quarter 4 Full year 2017 2016 2017 2016 Operating cash flow 1,043 975 4,049 3,706 Change in working capital 522 480 131 (95) Income tax paid – net (152) 9 (480) (313) Cash from cont. operations 1,413 1,464 3,7
Slide 17: Capital structure
Capital structure Reduced net debt and strong capital structure € in billion 7.6 7.3 3.2 2.5 Cash * 0.7 Gross debt 1.0 Net debt -0.5 3.2 (4.3) 2.5 (4.7) -1.9 Net debt YE FCF SBB 2016 Dividend FX & other Net debt YE YE 2016 YE 2017 2016 generation 2017 • 2017 full year leverage ratio of S&P Lease adj
Slide 18: Reporting changes 2018
Reporting changes 2018 • One U.S. reporting segment: Ahold USA and Delhaize America segments to be combined, reflecting governance structure • Online net sales and online net consumer sales (if applicable) to be provided per reporting segment • Reporting of pro forma results discontinued, slight sal
Slide 19: Outlook 2018
Outlook 2018 Reflecting on successful 2017, confident about Outlook 2018 • Confirming our target for 2018 of realizing €420 million net synergies, including €268 million realized up until 2017. Confident to reach €750 million of gross synergies for 2019, of which €250 million will be reinvested, in
Slide 20: Business Highlights
Business Highlights Dick Boer President and CEO Q4/Full Year Results 2017 20
Slide 21: 2017: Ahold Delhaize in great shape
2017: Ahold Delhaize in great shape Better together to drive change, delight our customers and succeed in the new reality • First full year after the merger of two strong food retail companies • Integration well on track, substantially completed – Implementation of Retail Business Services (RBS) in
Slide 22: Integration U.S. substantially completed
Integration U.S. substantially completed … • RBS now fully operational, providing back office functions for all U.S. brands and expertise on Own Brands, Digital and Supply Chain • Thousands of people transferred into new roles, substantial HQ headcount reduction • All brands operating in brand-centr
Slide 23: Delhaize Belgium: New positioning and the right team
Delhaize Belgium New positioning and the right team to make it happen • Xavier Piesvaux appointed Brand President Delhaize Belgium in September 2017 • Clear priority to stabilize market share and grow top line and profitability in the course of 2018-2020 • Changes to Delhaize Belgium Executive Commi
Slide 24: Innovative technology
Innovative technology Frictionless payment solutions make shopping more convenient Stop & Shop frictionless payments • Scan it and Go payment solution • Automatic bank withdrawals when passing through checkout zone • Pilot starts early 2018 “Tap to Go” at Albert Heijn to Go • Tap it and Go payment s
Slide 25: Our leading eCommerce business grew 21.8% in 2017
Our leading eCommerce business grew 21.8% in 2017 Close to €3 billion online sales¹, of which €1.2 billion in food • Improved operational performance and customer satisfaction at Peapod • Peapod expanding in-store marketing campaigns to promote online • Launch of ‘Ask Peapod’ on Alexa • Hannaford To
Slide 26: Continued investments in digital solutions
Continued investments in digital solutions Digital transformation and innovation to better serve our customers • Percentage of sales touched by loyalty cards: around 80% in 2017, expected over 90% in 2018 • Close to 2.5 billion personalized offers sent out in 2017, to significantly increase in 2018
Slide 27: Fresher & healthier eating
Fresher & healthier eating Help customers make healthier choices • Fresh sales at Ahold Delhaize close to 50% of total sales in 2017 • Hannaford Kitchen locations provide freshly made, grab-and-go meal options from stir fry and burritos to signature sandwiches • Giant Landover launched a Diabetes Pr
Slide 28: Building great own-brands
Building great own-brands Differentiating our businesses for today’s value-focused customers • Healthy own brand sales increased to 46% in 2017, target 2020 raised to 50% • Own brands U.S. centralized in RBS for best in class commercial capabilities and leverage of U.S. volumes • In the U.S., Nature
Slide 29: Committed to Sustainable Retailing
Committed to Sustainable Retailing Our brands are at the forefront of sustainable retailing Beaten our 45% target: 46% of own Increased food waste recycling by 8% brand sales from healthy products Ranked amongst global Associate engagement of 78% sustainability leaders in our sector 29
Slide 30: Stichting Continuiteit Ahold Delhaize
Stichting Continuiteit Ahold Delhaize • Option agreement expires December 2018 • Initial discussions with SCAD board started • Extension at discretion of Management Board/Supervisory Board • On the AGM agenda (April 11) for information purposes • Decision taken before December 2018 Q4/Full Year Resu
Slide 31: Wrap-up
Wrap-up A successful year with Ahold Delhaize in great shape • Successful integration: First full year with another set of strong results • Stable or increasing market shares in our major geographies • Margins expanded thanks to continued synergy delivery, ahead of plan • Close to €3 billion in net
Slide 32: Cautionary notice
Cautionary notice This communication includes forward-looking statements. All statements other than statements of historical facts may be forward-looking statements. Words such as proposed, looking forward, continued commitment, increasing, expected, on track, targeted, outlook, to be, confident to
Slide 33: Thank you
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Slide 34: Important dates
Important dates 2018/2019 • Annual General Meeting April 11, 2018 • Ahold Delhaize Q1 2018 results May 9, 2018 • Ahold Delhaize Q2 2018 results August 8, 2018 • Ahold Delhaize Q3 2018 results November 7, 2018 • Ahold Delhaize Q4/FY 2018 results February 27, 2019 Q4/Full Year Results 2017 34
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