Earnings Release • Aug 9, 2023
Earnings Release
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Koninklijke Ahold Delhaize N.V.
Q2 2023 Report
Issued on August 9, 2023
Zaandam, the Netherlands, August 9, 2023 – Ahold Delhaize, one of the world's largest food retail groups and a leader in both supermarkets and e-commerce, reports second quarter results today.
| Ahold Delhaize Group | The United States | Europe | |||||
|---|---|---|---|---|---|---|---|
| Q2 2023 |
% change | % change constant rates |
Q2 2023 |
% change constant rates |
Q2 2023 |
% change constant rates |
|
| € million, except per share data | 13 weeks 2023 vs. 13 weeks 2022 | ||||||
| Net sales | 22,068 | 2.9 % | 4.3 % | 13,618 | 2.7 % | 8,450 | 7.0 % |
| Comparable sales growth excluding gasoline | 4.6 % | 3.6 % | 6.3 % | ||||
| Online sales | 2,158 | 6.4 % | 7.6 % | 1,034 | 6.6 % | 1,124 | 8.6 % |
| Net consumer online sales | 2,891 | 8.3 % | 9.3 % | 1,034 | 6.6 % | 1,856 | 10.8 % |
| Operating income | 724 | (19.1) % | (17.9) % | 574 | (8.4) % | 134 | (51.1) % |
| Operating margin | 3.3 % | (0.9) pp | (0.9) pp | 4.2 % | (0.5) pp | 1.6 % | (1.9) pp |
| Underlying operating income | 904 | 2.8 % | 4.4 % | 623 | 0.5 % | 267 | 0.7 % |
| Underlying operating margin | 4.1 % | — pp | — pp | 4.6 % | (0.1) pp | 3.2 % | (0.2) pp |
| Diluted EPS | 0.48 | (19.9) % | (18.6) % | ||||
| Diluted underlying EPS | 0.62 | 4.7 % | 6.3 % | ||||
| Free cash flow | 864 | 45.1 % | 49.3 % |
| Ahold Delhaize Group | The United States | Europe | |||||
|---|---|---|---|---|---|---|---|
| HY 2023 |
% change | % change constant rates |
HY 2023 |
% change constant rates |
HY 2023 |
% change constant rates |
|
| € million, except per share data | 26 weeks 2023 vs. 26 weeks 2022 | ||||||
| Net sales | 43,692 | 6.0 % | 5.3 % | 27,097 | 4.2 % | 16,595 | 7.1 % |
| Comparable sales growth excluding gasoline | 5.4 % | 4.9 % | 6.2 % | ||||
| Online sales | 4,406 | 7.8 % | 7.3 % | 2,158 | 9.3 % | 2,248 | 5.4 % |
| Net consumer online sales | 5,813 | 8.0 % | 7.6 % | 2,158 | 9.3 % | 3,654 | 6.6 % |
| Operating income | 1,546 | (9.8) % | (10.5) % | 1,206 | 1.2 % | 336 | (36.6) % |
| Operating margin | 3.5 % | (0.6) pp | (0.6) pp | 4.5 % | (0.1) pp | 2.0 % | (1.4) pp |
| Underlying operating income | 1,769 | 3.5 % | 2.7 % | 1,271 | 7.1 % | 497 | (6.2) % |
| Underlying operating margin | 4.0 % | (0.1) pp | (0.1) pp | 4.7 % | 0.1 pp | 3.0 % | (0.4) pp |
| Diluted EPS | 1.06 | (7.4) % | (8.1) % | ||||
| Diluted underlying EPS | 1.23 | 7.5 % | 6.7 % | ||||
| Free cash flow | 886 | 54.1 % | 54.2 % |
"The agility and flexibility that our brands and associates are showing, adjusting quickly to meet customers' needs while, at the same time, diligently staying the course on our various transformation projects, underpinned the company's strong performance this past quarter. All these efforts remain particularly important as the external environment continues to be dynamic. I am proud of the resilience our brands' associates continue to demonstrate in the face of climate impacts, such as the fires in Greece, and the widespread rise in social tensions, which are, unfortunately, leading to more incidents in stores.
"On a positive note, we see more evidence that inflation has passed its peak. For customers, our great local brands have swiftly reflected price decreases, where possible. For our brands' operations, inflation remains at more elevated levels, due to higher energy, commodity, transport and labor costs, all of which are having a particularly notable impact on our European margins. Nevertheless, at a Group level we were able to deliver a consistent performance from the top to the bottom line, with comparable store sales excluding gas up 4.6% and diluted underlying EPS increasing by 4.7% in Q2.
"In the U.S., Q2 comparable sales grew by 4.0%, excluding the impact of weather and calendar shifts. Powered by growth in loyalty sales and increasing online penetration, we were able to more than compensate for the negative headwinds related to a reduction in the SNAP federal assistance program and moderating inflation rates. Food Lion and Hannaford, in particular, continue to see strong market share gains as both brands further elevate their omnichannel capabilities. In aggregate, e-commerce penetration in the U.S. reached 8.1% for the first half of the year. We also continue to take concrete actions to orient our online fulfillment capabilities toward same-day delivery models. In line with this, we will close a facility in Jersey City, New Jersey, effective March 2024, utilizing our existing Stop & Shop store network and partners to service customers in this catchment area going forward.
"In Europe, excluding the impact of strikes in Belgium, comparable sales were up 7.6%. A key highlight of the quarter was a very strong performance in online retail. At bol.com, Gross Merchandise Value (GMV) grew by 10.5% to €1.4 billion. At Albert Heijn, we crossed the 800,000 mark for premium subscribers and continue to see improvements in e-commerce profitability. While underlying operating margin was down 0.2 percentage points at 3.2% in the quarter, excluding the impact of inflated energy costs and the effects on Delhaize Belgium from our operating model transformation, underlying operating margin exceeded prior year levels. When it comes to the initiative at Delhaize, I am confident the management team is on the right track and we expect the first fifteen stores will begin converting in October and November.
"We remain dedicated to making progress on our sustainability ambitions and are proud to share that we have achieved an AAA rating from MSCI. Being categorized into the highest-scoring range indicates that Ahold Delhaize is a leader in the industry in managing its most significant sustainability challenges and opportunities. Another major achievement was bol.com's attainment of B Corp Certification. With 13 million customers and 52,000 local sales partners, we are proud that an e-commerce platform of bol.com's size has achieved this recognition. The brand's commitment to taking customers and sales partners along on its journey aligns perfectly with Ahold Delhaize's goal to make healthy and sustainable choices easy for everyone.
"Our focus on striking the right balance between investing in growth and creating opportunities to drive operational excellence continues to fuel the positive outlook for our company. I am, therefore, pleased that we are in a position to increase our free cash flow guidance for 2023 to a range between €2.0 billion and €2.2 billion and reaffirm the rest of our guidance for the year. With our strong culture, known for its agility, ability to drive transformative change and commitment to sustainability, I am confident we are well prepared to navigate the complexities of the current business environment and position the company to drive brand strength and market share growth in the coming periods."
Group net sales were €22.1 billion, an increase of 4.3% at constant exchange rates, and up 2.9% at actual exchange rates. Group net sales were driven by comparable sales growth excluding gasoline of 4.6%, partially offset by lower gasoline sales. Strikes at Delhaize Belgium, and, to a lesser extent, weather and calendar shifts, had a negative net impact on Q2 Group comparable sales of approximately 0.7 percentage points.
In Q2, Group net consumer online sales increased by 9.3% at constant exchange rates, due to robust growth at bol.com, which has now fully lapped COVID-19-related comparisons. Group online sales in grocery increased 6.2% at constant exchange rates.
In Q2, Group underlying operating margin was 4.1%, consistent with Q2 2022 at constant exchange rates. Favorable insurance results offset margin declines in the U.S. and Europe. Excluding the impacts of inflated energy costs and strikes at Delhaize Belgium, underlying operating margin exceeded the prior year's results.
In Q2, Group IFRS-reported operating income was €724 million, representing an IFRS-reported operating margin of 3.3%, mainly impacted by charges related to the transformation in Belgium and other Accelerate initiatives, including impairment charges for store assets in Belgium (€108 million) and for the Jersey City fulfillment center (€40 million). Additionally, there were €40 million in restructuring and related costs pertaining to these initiatives.
Underlying income from continuing operations was €601 million, an increase of 1.3% in the quarter at actual rates. Ahold Delhaize's IFRS-reported net income in the quarter was €468 million. Diluted EPS was €0.48 and diluted underlying EPS was €0.62, up 4.7% at actual currency rates compared to last year's results.
In the quarter, Ahold Delhaize purchased 11.7 million own shares for €355 million, bringing the total amount to €561 million in the first half of the year. The 2023 interim dividend is €0.49, up 7% versus the prior year, and in line with the Group's interim dividend policy.
U.S. net sales were €13.6 billion, an increase of 2.7% at constant exchange rates and up 0.3% at actual exchange rates. U.S. net sales were driven by comparable sales growth excluding gasoline of 3.6%, partially offset by lower gasoline sales. Excluding the impact of weather and calendar shifts, U.S. comparable sales growth was 4.0%, partially offset by the end of emergency SNAP governmental benefits and the moderation of inflation rates. Food Lion and Hannaford continue to lead brand performance. Food Lion delivered its 43rd consecutive quarter of positive sales growth.
In Q2, online sales in the segment were up 6.6% in constant currency, driven primarily by double-digit growth at Food Lion, which opened over 100 additional click-and-collect locations compared to the prior year.
Underlying operating margin in the U.S. was 4.6%, down 0.1 percentage points at constant exchange rates from the prior year period. In Q2, U.S. IFRS-reported operating margin was 4.2%, mainly impacted by an impairment charge in the amount of €40 million for the Jersey City fulfillment center related to the Accelerate initiative.
European net sales were €8.4 billion, an increase of 7.0% at constant exchange rates and 7.4% at actual exchange rates. Europe's comparable sales increased by 6.3%.
On March 7, Ahold Delhaize's Belgian brand, Delhaize, announced its intention to transform all of its integrated supermarkets in Belgium into independently operated Delhaize stores to strengthen its position in the country's competitive retail market. Ahold Delhaize supports the intention to transform to one aligned operating model, which will allow the brand to better serve customers in the long term. By having all stores operated by local entrepreneurs in the future, Delhaize will have a better opportunity to respond to local conditions. Following the announcement, Delhaize Belgium has been impacted by strikes. Excluding the impact of strikes in Belgium, Europe's comparable sales increased by 7.6%.
In Q2, net consumer online sales increased by 10.8%. Online sales in grocery increased by 5.3%. At bol.com, gross merchandise value ("GMV") was €1.4 billion, an increase of 10.5% compared to the prior year. Bol.com's GMV sales from its nearly 52,000 third-party sellers increased by 13.3% in Q2, and represented 66% of sales.
Underlying operating margin in Europe was 3.2% in Q2, down 0.2 percentage points from the prior year mainly due to the impact of escalating energy costs and strikes at Delhaize Belgium. Excluding these impacts, underlying operating margin in Europe exceeded the prior year. Additionally, the non-cash service charge for the Netherlands employee pension plan decreased €15 million as a result of higher discount rates in the Netherlands. Europe's Q2 IFRS-reported operating margin was 1.6%, mainly impacted by costs incurred in Belgium related to the affiliation of stores, including an impairment charge in the amount of €108 million for store assets and €26 million for restructuring related costs.
Despite a dynamic external environment, Ahold Delhaize is increasing its free cash flow guidance for 2023. We now expect free cash flow in a range from €2.0 billion to €2.2 billion. This change reflects our ongoing solid and consistent operating cash flows, inflows related to the collection of a tax receivable in Belgium and outflows related to the delivery of various projects identified as part of our Accelerate operational efficiency initiative. This initiative was launched in Q4 2022 to evaluate additional savings and efficiency levers to streamline organizational structures and processes, optimize go-to-market propositions, increase joint sourcing and consolidate IT – with a clear priority to unlock resources to accelerate our Save for Our Customers program, support our ambitions to achieve e-commerce profitability, and focus investments on high-return projects.
Ahold Delhaize reiterates the rest of the Group's 2023 outlook, which we announced when we published our Q4 2022 results. Underlying operating margin is expected to be ≥4.0%, in line with the Company's historical profile. Underlying EPS is expected to remain at around 2022 levels at current exchange rates. Net capital expenditures are expected to total around €2.5 billion, with increased investments in digital and online capabilities as well as healthy and sustainable initiatives focused on reducing our climate impact. In addition, Ahold Delhaize remains committed to its dividend policy and share buyback program in 2023, as previously stated.
| Full-year outlook |
Underlying operating margin |
Underlying EPS |
Save for Our Customers |
Net capital expenditures |
Free cash flow1 |
Dividend payout ratio2.3 |
Share buyback3 |
|
|---|---|---|---|---|---|---|---|---|
| Outlook | 2023 | ≥ 4.0% | Around 2022 levels |
≥ €1 billion | ~ €2.5 billion | ~ €2.0 - 2.2 billion |
40-50% payout; YOY growth in dividend per share |
€1 billion |
1. Excludes M&A.
2. Calculated as a percentage of underlying income from continuing operations.
3. Management remains committed to our share buyback and dividend programs, but, given the uncertainty caused by the wider macro-economic consequences of the war in Ukraine, will continue to monitor macro-economic developments. The program is also subject to changes resulting from corporate activities, such as material M&A activity.
| € million, except per share data | Q2 2023 (13 weeks) (13 weeks) |
Q2 2022 |
% change | % change constant rates |
HY 2023 (26 weeks) (26 weeks) |
HY 2022 |
% change | % change constant rates |
|---|---|---|---|---|---|---|---|---|
| Net sales | 22,068 | 21,445 | 2.9 % | 4.3 % | 43,692 | 41,219 | 6.0 % | 5.3 % |
| Of which: online sales | 2,158 | 2,028 | 6.4 % | 7.6 % | 4,406 | 4,087 | 7.8 % | 7.3 % |
| Net consumer online sales1 | 2,891 | 2,669 | 8.3 % | 9.3 % | 5,813 | 5,384 | 8.0 % | 7.6 % |
| Operating income | 724 | 895 | (19.1) % | (17.9) % | 1,546 | 1,714 | (9.8) % | (10.5) % |
| Income from continuing operations | 468 | 603 | (22.5) % | (21.2) % | 1,029 | 1,149 | (10.4) % | (11.1) % |
| Net income | 468 | 603 | (22.5) % | (21.2) % | 1,029 | 1,149 | (10.4) % | (11.1) % |
| Basic income per share from continuing operations (EPS) |
0.48 | 0.60 | (19.8) % | (18.6) % | 1.06 | 1.15 | (7.4) % | (8.1) % |
| Diluted income per share from continuing operations (diluted EPS) |
0.48 | 0.60 | (19.9) % | (18.6) % | 1.06 | 1.14 | (7.4) % | (8.1) % |
| Underlying EBITDA1 | 1,764 | 1,728 | 2.0 % | 3.5 % | 3,499 | 3,364 | 4.0 % | 3.2 % |
| Underlying EBITDA margin1 | 8.0 % | 8.1 % | 8.0 % | 8.2 % | ||||
| Underlying operating income1 | 904 | 880 | 2.8 % | 4.4 % | 1,769 | 1,709 | 3.5 % | 2.7 % |
| Underlying operating margin1 | 4.1 % | 4.1 % | 4.0 % | 4.1 % | ||||
| Underlying income per share from continuing operations – basic (underlying EPS)1 |
0.62 | 0.59 | 4.7 % | 6.3 % | 1.23 | 1.14 | 7.6 % | 6.7 % |
| Underlying income per share from continuing operations – diluted (diluted underlying EPS)1 |
0.62 | 0.59 | 4.7 % | 6.3 % | 1.23 | 1.14 | 7.5 % | 6.7 % |
| Free cash flow1 | 864 | 596 | 45.1 % | 49.3 % | 886 | 575 | 54.1 % | 54.2 % |
1. Net consumer online sales, underlying EBITDA, underlying operating income, basic and diluted underlying income per share from continuing operations and free cash flow are alternative performance measures that are used throughout this report. For a description of alternative performance measures, see Note 3: Alternative performance measures to the interim financial statements.
| Q2 2023 |
Q2 2022 |
% change constant |
HY 2023 |
HY 2022 |
% change constant |
|||
|---|---|---|---|---|---|---|---|---|
| (13 weeks) (13 weeks) | % change | rates | (26 weeks) (26 weeks) | % change | rates | |||
| \$ million | ||||||||
| Net sales | 14,825 | 14,434 | 2.7 % | 29,289 | 28,114 | 4.2 % | ||
| Of which: online sales | 1,127 | 1,057 | 6.6 % | 2,333 | 2,134 | 9.3 % | ||
| € million | ||||||||
| Net sales | 13,618 | 13,577 | 0.3 % | 2.7 % | 27,097 | 25,776 | 5.1 % | 4.2 % |
| Of which: online sales | 1,034 | 994 | 4.1 % | 6.6 % | 2,158 | 1,954 | 10.4 % | 9.3 % |
| Operating income | 574 | 642 | (10.6) % | (8.4) % | 1,206 | 1,182 | 2.0 % | 1.2 % |
| Underlying operating income | 623 | 635 | (1.8) % | 0.5 % | 1,271 | 1,176 | 8.0 % | 7.1 % |
| Underlying operating margin | 4.6 % | 4.7 % | 4.7 % | 4.6 % | ||||
| Comparable sales growth | 2.7 % | 7.4 % | 4.1 % | 5.8 % | ||||
| Comparable sales growth excluding gasoline |
3.6 % | 6.4 % | 4.9 % | 4.9 % |
| Q2 2023 |
Q2 2022 |
% change constant |
HY 2023 |
HY 2022 |
% change constant |
|||
|---|---|---|---|---|---|---|---|---|
| € million | (13 weeks) (13 weeks) | % change | rates | (26 weeks) (26 weeks) | % change | rates | ||
| Net sales | 8,450 | 7,868 | 7.4 % | 7.0 % | 16,595 | 15,443 | 7.5 % | 7.1 % |
| Of which: online sales | 1,124 | 1,034 | 8.6 % | 8.6 % | 2,248 | 2,133 | 5.4 % | 5.4 % |
| Net consumer online sales | 1,856 | 1,675 | 10.8 % | 10.8 % | 3,654 | 3,429 | 6.6 % | 6.6 % |
| Operating income | 134 | 273 | (50.9) % | (51.1) % | 336 | 528 | (36.4) % | (36.6) % |
| Underlying operating income | 267 | 264 | 1.2 % | 0.7 % | 497 | 527 | (5.8) % | (6.2) % |
| Underlying operating margin | 3.2 % | 3.4 % | 3.0 % | 3.4 % | ||||
| Comparable sales growth | 6.3 % | 1.8 % | 6.2 % | (0.7) % | ||||
| Comparable sales growth excluding gasoline |
6.3 % | 1.8 % | 6.2 % | (0.7) % |
| € million | Q2 2023 (13 weeks) (13 weeks) |
Q2 2022 |
% change | % change constant rates |
HY 2023 |
HY 2022 (26 weeks) (26 weeks) |
% change | % change constant rates |
|---|---|---|---|---|---|---|---|---|
| Underlying operating income (expense) |
14 | (19) | NM1 | NM1 | 1 | 6 | (78.2) % | (83.8) % |
| Underlying operating expense excluding insurance results |
(28) | (34) | (18.4) % | (17.7) % | (58) | (70) | (16.4) % | (16.7) % |
1. Not meaningful, as the result is an income in Q2 2023, compared to an expense in Q2 2022.
In Q2, underlying Global Support Office operating income was €14 million, compared to an expense of €19 million in the prior year, mainly due to an increase of €27 million in positive insurance results, driven by the increase in interest rates.
Underlying operating income increased by €24 million to €904 million, and was adjusted for the following items, which impacted reported IFRS operating income:
• Restructuring and related charges and other items of €38 million (Q2 2022: €(21) million – income) Including these items, IFRS operating income decreased by €171 million to €724 million.
Income from continuing operations was €468 million, representing a decrease of €135 million compared to last year. This was driven by a €171 million decrease in operating income, a lower share in income of joint ventures of €12 million impacted by the sale of property at one of the real estate joint ventures in Q2 2022, and higher net financial expenses of €7 million, partially offset by lower income taxes of €55 million.
Free cash flow was €864 million, which represents an increase of €269 million compared to Q2 2022. This was driven by a favorable difference of €341 million in cash flows related to income taxes and a positive development in working capital of €42 million, partially offset by increased net investments of €46 million, a lower operating cash flow of €42 million, a decrease in dividends received from joint ventures of €15 million, and higher net lease repayments of €11 million. The favorable difference in cash flows related to income taxes pertains to the agreement with the Belgian tax authorities and the recovery of the associated outstanding receivable, as disclosed in Note 7: Income taxes.
Net debt remained flat at €14.7 billion compared to Q1 2023. The share buyback of €355 million and the dividend payment of €574 million were offset by the free cash flow of €864 million, the foreign exchange impact on net debt of €49 million and the decrease in lease liabilities of €24 million.
Underlying operating income increased by €59 million to €1,769 million, and was adjusted for the following items, which impacted reported IFRS operating income:
Income from continuing operations was €1,029 million, representing a decrease of €120 million compared to last year. This was driven by a €168 million decrease in operating income and a lower share in income from joint ventures of €15 million, partially offset by lower income taxes of €53 million and lower net financial expenses of €10 million.
Free cash flow was €886 million, which represents an increase of €311 million compared to half year 2022. This was driven by a favorable difference of €265 million in cash flows related to income taxes, a positive development in working capital of €54 million, a higher operating cash flow of €53 million, and lower net interest paid of €28 million, partially offset by higher net lease repayments of €38 million, increased net investments of €36 million, and a decrease in dividends received from joint ventures of €15 million.
For 2023, the interim dividend is €0.49 per common share, compared to the 2022 interim dividend of €0.46 per common share. The 2023 interim dividend will be paid on August 31, 2023. The interim dividend is equal to 40% of the year-to-date underlying income per share from continuing operations (see Note 3: Alternative performance measures for a reconciliation of income from continuing operations to underlying income from continuing operations).
Store portfolio (including franchise and affiliate stores):
| End of Q2 2022 |
Opened / acquired |
Closed / sold |
End of Q2 2023 |
|
|---|---|---|---|---|
| The United States | 2,048 | 6 | (6) | 2,048 |
| Europe1 | 5,543 | 146 | (141) | 5,548 |
| Total | 7,591 | 152 | (147) | 7,596 |
1. The number of stores at the end of Q2 2023 includes 1,123 specialty stores (Etos and Gall & Gall); (end of Q2 2022: 1,127).
| End of Q4 2022 |
Opened / acquired |
Closed / sold |
End of Q2 2023 |
|
|---|---|---|---|---|
| The United States | 2,051 | 1 | (4) | 2,048 |
| Europe1 | 5,608 | 49 | (109) | 5,548 |
| Total | 7,659 | 50 | (113) | 7,596 |
1. The number of stores at the end of Q2 2023 includes 1,123 specialty stores (Etos and Gall & Gall); (end of Q4 2022: 1,125).
Ahold Delhaize's enterprise risk management program provides executive management with a periodic and holistic understanding of Ahold Delhaize's key business risks and the management practices, policies and procedures in place to mitigate these risks. Ahold Delhaize recognizes strategic, operational, financial, compliance/regulatory and ESG/sustainability risk categories. Overall, our principal risks have not changed significantly compared to those disclosed within the Annual Report 2022. The risk exposure relating to our competitive environment and macroeconomic developments increased. Inflation, energy costs and rising interest rates are approaching or have passed their peak. However, the likelihood of a recessionary macroeconomic environment is increasing and could impact the purchasing power of our customers. These factors are still posing considerable challenges to consumer confidence and there is a strong likelihood of negative impacts on key economies in our geographical footprint in 2023. Societal unrest and the polarization of society on social topics, among other things, are increasing the risk of disruption to our brands' operations, associates and customers. There is a noted increase in violent incidents and unruly behavior in stores, and risks related to associate well-being, psychological health and safety are increasing. An integrated comprehensive analysis of the principal risks faced by Ahold Delhaize is included in the Risks and opportunities section of Ahold Delhaize's Annual Report 2022, which was published on March 1, 2023.
The contents of this interim report have not been audited or reviewed by an independent external auditor.
The members of Ahold Delhaize's Management Board hereby declare that, to the best of their knowledge, the half-year financial statements included in this interim report, which have been prepared in accordance with IAS 34 "Interim Financial Reporting," give a true and fair view of Ahold Delhaize's assets, liabilities, financial position and profit or loss and the undertakings included in the consolidation taken as a whole, and the half-year management report included in this interim report includes a fair review of the information required pursuant to section 5:25d, subsections 8 and 9, of the FMSA.
| € million, except per share data Note 2023 2022 2023 2022 Net sales 5/6 22,068 21,445 43,692 41,219 Cost of sales (16,209) (15,723) (32,003) (30,137) Gross profit 5,859 5,722 11,689 11,082 Other income 166 159 335 303 Selling expenses (4,329) (4,191) (8,633) (8,148) General and administrative expenses (972) (795) (1,846) (1,523) Operating income 5 724 895 1,546 1,714 Interest income 42 12 74 21 Interest expense (90) (55) (160) (107) Net interest expense on defined benefit pension plans (4) (4) (8) (8) Interest accretion to lease liability (94) (87) (185) (173) Other financial income (expense) (5) (10) 8 (15) Net financial expenses (152) (145) (272) (282) Income before income taxes 572 750 1,274 1,432 Income taxes 7 (113) (168) (255) (309) Share in income of joint ventures 9 21 11 26 Income from continuing operations 468 603 1,029 1,149 Income (loss) from discontinued operations — — — — Net income 468 603 1,029 1,149 Attributable to: Common shareholders 468 603 1,029 1,149 Non-controlling interests — — — — Net income 468 603 1,029 1,149 Net income per share attributable to common shareholders: Basic 0.48 0.60 1.06 1.15 Diluted 0.48 0.60 1.06 1.14 Income from continuing operations per share attributable to common shareholders: Basic 0.48 0.60 1.06 1.15 Diluted 0.48 0.60 1.06 1.14 Weighted average number of common shares outstanding (in millions): Basic 967 1,000 970 1,003 Diluted 970 1,002 974 1,007 |
Q2 | Q2 | HY | HY | |
|---|---|---|---|---|---|
| Average U.S. dollar exchange rate (euro per U.S. dollar) | 0.9185 | 0.9403 | 0.9252 | 0.9161 |
| € million | Note | Q2 2023 |
Q2 2022 |
HY 2023 |
HY 2022 |
|---|---|---|---|---|---|
| Net income | 468 | 603 | 1,029 | 1,149 | |
| Remeasurements of pension plans: | |||||
| Remeasurements before taxes – income (loss) | (72) | 351 | (98) | 399 | |
| Income taxes | 19 | (91) | 26 | (102) | |
| Other comprehensive income (loss) that will not be reclassified to profit or loss |
(53) | 260 | (73) | 297 | |
| Currency translation differences in foreign interests: | |||||
| Continuing operations | (89) | 696 | (222) | 1,037 | |
| Income taxes | 1 | 1 | (1) | — | |
| Cash flow hedges: | |||||
| Fair value result for the period | — | — | — | — | |
| Transfers to net income | — | — | — | 1 | |
| Income taxes | — | — | — | — | |
| Non-realized gains (losses) on debt and equity instruments: | |||||
| Fair value result for the period | — | — | — | — | |
| Income taxes | — | — | — | — | |
| Other comprehensive income of joint ventures – net of income taxes: |
|||||
| Share of other comprehensive income from continuing operations |
— | — | — | — | |
| Other comprehensive income (loss) reclassifiable to profit or loss |
(88) | 697 | (222) | 1,037 | |
| Total other comprehensive income (loss) | (141) | 957 | (295) | 1,334 | |
| Total comprehensive income | 327 | 1,560 | 734 | 2,483 | |
| Attributable to: | |||||
| Common shareholders | 327 | 1,560 | 734 | 2,483 | |
| Non-controlling interests | — | — | — | — | |
| Total comprehensive income | 327 | 1,560 | 734 | 2,483 | |
| Attributable to: | |||||
| Continuing operations | 327 | 1,560 | 734 | 2,483 | |
| Discontinued operations | — | — | — | — | |
| Total comprehensive income | 327 | 1,560 | 734 | 2,483 |
| € million Note |
July 2, 2023 |
January 1, 2023, restated |
|---|---|---|
| Assets | ||
| Property, plant and equipment | 11,993 | 12,482 |
| Right-of-use asset | 9,666 | 9,607 |
| Investment property | 610 | 661 |
| Intangible assets | 13,057 | 13,174 |
| Investments in joint ventures and associates | 255 | 262 |
| Other non-current financial assets | 785 | 1,193 |
| Deferred tax assets | 225 | 242 |
| Other non-current assets | 118 | 116 |
| Total non-current assets | 36,709 | 37,737 |
| Assets held for sale 8 |
71 | 26 |
| Inventories Receivables |
4,802 2,151 |
4,611 2,340 |
| Other current financial assets | 416 | 424 |
| Income taxes receivable | 51 | 35 |
| Prepaid expenses and other current assets | 351 | 301 |
| Cash and cash equivalents 10 |
3,893 | 3,082 |
| Total current assets | 11,736 | 10,818 |
| Total assets | 48,445 | 48,555 |
| Equity and liabilities | ||
| Equity attributable to common shareholders 9 |
15,035 | 15,405 |
| Loans | 4,967 | 4,527 |
| Other non-current financial liabilities | 11,046 | 11,055 |
| Pensions and other post-employment benefits | 779 | 696 |
| Deferred tax liabilities | 931 | 1,005 |
| Provisions | 719 | 742 |
| Other non-current liabilities | 34 | 44 |
| Total non-current liabilities | 18,477 | 18,068 |
| Accounts payable | 7,877 | 8,162 |
| Other current financial liabilities | 3,316 | 2,718 |
| Income taxes payable | 199 | 230 |
| Provisions | 408 | 377 |
| Other current liabilities | 3,132 | 3,595 |
| Total current liabilities | 14,933 | 15,082 |
| Total equity and liabilities | 48,445 | 48,555 |
See Note 2: Accounting policies for details about the restatement of the 2022 figures due to the implementation of IFRS 17.
| € million | Note | Share capital |
Additional paid-in capital |
Currency translation reserve |
Cash flow hedging reserve |
Other reserves including retained earnings1 |
Equity attributable to common shareholders |
|---|---|---|---|---|---|---|---|
| Balance as of January 2, 2022 | 10 | 10,988 | (75) | (2) | 2,799 | 13,721 | |
| Net income attributable to common shareholders |
— | — | — | — | 1,149 | 1,149 | |
| Other comprehensive income attributable to common shareholders |
— | — | 1,037 | — | 297 | 1,334 | |
| Total comprehensive income attributable to common shareholders |
— | — | 1,037 | — | 1,446 | 2,483 | |
| Dividends | — | — | — | — | (522) | (522) | |
| Share buyback | — | — | — | — | (522) | (522) | |
| Cancellation of treasury shares | — | — | — | — | — | — | |
| Share-based payments | — | — | — | — | 27 | 27 | |
| Balance as of July 3, 2022 | 10 | 10,988 | 962 | (1) | 3,228 | 15,188 | |
| Balance as of January 1, 2023 | 10 | 9,603 | 595 | (1) | 5,198 | 15,405 | |
| Net income attributable to common shareholders |
— | — | — | — | 1,029 | 1,029 | |
| Other comprehensive income attributable to common shareholders |
— | — | (223) | — | (73) | (295) | |
| Total comprehensive income attributable to common shareholders |
— | — | (223) | — | 956 | 734 | |
| Dividends | 9 | — | — | — | — | (574) | (574) |
| Share buyback | 9 | — | — | — | — | (561) | (561) |
| Cancellation of treasury shares | — | (622) | — | — | 623 | — | |
| Share-based payments | — | — | — | — | 31 | 31 | |
| Balance as of July 2, 2023 | 10 | 8,980 | 373 | (1) | 5,673 | 15,035 |
1. Other reserves include, among others, the remeasurements of defined benefit plans.
| Q2 | HY | ||||
|---|---|---|---|---|---|
| Q2 | 2022 | HY | 2022 | ||
| € million | Note | 2023 | restated | 2023 | restated |
| Income from continuing operations | 468 | 603 | 1,029 | 1,149 | |
| Adjustments for: | |||||
| Net financial expenses Income taxes |
152 113 |
145 168 |
272 255 |
282 309 |
|
| Share in income of joint ventures | (9) | (21) | (11) | (26) | |
| Depreciation, amortization and impairments | 1,020 | 863 | 1,904 | 1,675 | |
| (Gains) losses on leases and the sale of assets / disposal groups held for sale |
(19) | (13) | (19) | (19) | |
| Share-based compensation expenses | 14 | 18 | 26 | 29 | |
| Operating cash flows before changes in operating assets and liabilities |
1,739 | 1,764 | 3,456 | 3,399 | |
| Changes in working capital: | |||||
| Changes in inventories | (20) | (218) | (248) | (521) | |
| Changes in receivables and other current assets | (104) | (223) | 137 | (198) | |
| Changes in payables and other current liabilities | 161 | 437 | (508) | 46 | |
| Changes in other non-current assets, other non-current liabilities and provisions |
(80) | (63) | (105) | (101) | |
| Cash generated from operations | 1,696 | 1,696 | 2,732 | 2,625 | |
| Income taxes paid – net | 157 | (184) | 61 | (204) | |
| Operating cash flows from continuing operations | 1,853 | 1,512 | 2,793 | 2,421 | |
| Operating cash flows from discontinued operations | — | — | — | — | |
| Net cash from operating activities | 1,853 | 1,512 | 2,793 | 2,421 | |
| Purchase of non-current assets | (559) | (530) | (1,087) | (1,040) | |
| Divestments of assets / disposal groups held for sale | 16 | 33 | 50 | 39 | |
| Acquisition of businesses, net of cash acquired | 4 | (20) | (15) | (22) | (15) |
| Divestment of businesses, net of cash divested | — | — | — | — | |
| Changes in short-term deposits and similar instruments | — | — | — | — | |
| Dividends received from joint ventures | 17 | 33 | 18 | 33 | |
| Interest received | 40 | 9 | 69 | 15 | |
| Lease payments received on lease receivables | 29 | 27 | 57 | 57 | |
| Other | — | (1) | 3 | (1) | |
| Investing cash flows from continuing operations | (477) | (443) | (912) | (911) | |
| Investing cash flows from discontinued operations | — | — | — | — | |
| Net cash from investing activities | (477) | (443) | (912) | (911) | |
| Proceeds from long-term debt | 499 | — | 499 | — | |
| Interest paid | (81) | (51) | (108) | (83) | |
| Repayments of loans | (196) | (67) | (215) | (90) | |
| Changes in short-term loans | 24 | (205) | 854 | 757 | |
| Repayment of lease liabilities | (452) | (439) | (907) | (868) | |
| Dividends paid on common shares | 9 | (574) | (522) | (574) | (522) |
| Share buyback | 9 | (355) | (255) | (561) | (523) |
| Other cash flows from derivatives | — | — | — | — | |
| Other | (5) | (9) | (3) | (21) | |
| Financing cash flows from continuing operations | (1,140) | (1,547) | (1,014) | (1,350) | |
| Financing cash flows from discontinued operations | — | — | — | — | |
| Net cash from financing activities | (1,140) | (1,547) | (1,014) | (1,350) | |
| Net cash from operating, investing and financing activities | 237 | (478) | 866 | 159 | |
| Cash and cash equivalents at the beginning of the period (excluding restricted cash) |
3,656 | 3,718 | 3,054 | 2,968 | |
| Effect of exchange rates on cash and cash equivalents | (9) | 173 | (36) | 286 | |
| Cash and cash equivalents at the end of the period (excluding restricted cash) |
10 | 3,884 | 3,413 | 3,884 | 3,413 |
| Average U.S. dollar exchange rate (euro per U.S. dollar) | 0.9185 | 0.9403 | 0.9252 | 0.9161 | |
See Note 2: Accounting policies for details about the restatement of the 2022 figures due to the implementation of IFRS 17.
The principal activity of Koninklijke Ahold Delhaize N.V. ("Ahold Delhaize" or the "Company" or "Group" or "Ahold Delhaize Group"), a public limited liability company with its registered seat and head office in Zaandam, the Netherlands, is the operation of retail food stores and e-commerce primarily in the United States and Europe.
The information in these condensed consolidated interim financial statements ("financial statements") is unaudited.
This summarized financial information has been prepared in accordance with IAS 34 "Interim Financial Reporting." The accounting policies applied in these financial statements are consistent with those applied in Ahold Delhaize's 2022 financial statements, except as otherwise indicated below under "New and revised IFRSs effective in 2023."
All amounts disclosed are in millions of euros (€), unless otherwise stated. Due to rounding, numbers presented may not add up precisely to the totals provided.
Ahold Delhaize's financial year consists of 52 weeks in 2023 and 2022 and is based on a 4/4/5-week calendar, with four equal quarters of 13 weeks.
The risk exposure relating to our competitive environment and macroeconomic developments increased. Inflation, energy costs and rising interest rates are approaching or have passed their peak. However, the likelihood of a recessionary macroeconomic environment is increasing and could impact the purchasing power of our customers. These factors are still posing considerable challenges to consumer confidence and there is a strong likelihood of negative impacts on key economies in our geographical footprint in 2023. Societal unrest and the polarization of society on social topics, among other things, are increasing the risk of disruption to our brands' operations, associates and customers. There is a noted increase in violent incidents and unruly behavior in stores, and risks related to associate well-being, psychological health and safety are increasing.
Ahold Delhaize's enterprise risk management program provides executive management with a periodic and holistic understanding of Ahold Delhaize's key business risks and the management practices, policies and procedures in place to mitigate these risks. Ahold Delhaize recognizes strategic, operational, financial, compliance/regulatory and ESG/sustainability risk categories. Overall, our principal risks have not changed significantly compared to those disclosed within the Annual Report 2022. An integrated comprehensive analysis of the principal risks faced by Ahold Delhaize is included in the Risks and opportunities section of Ahold Delhaize's Annual Report 2022, which was published on March 1, 2023.
On May 23, 2023, the International Accounting Standards Board (the IASB or Board) issued International Tax Reform – Pillar Two Model Rules – Amendments to IAS 12 (the Amendments) to clarify the application of IAS 12 Income Taxes to income taxes arising from tax law enacted or substantively enacted to implement the Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) Pillar Two model rules (Pillar Two income taxes).
The Amendments introduce:
The mandatory temporary exception – the use of which is required to be disclosed – applies immediately. The remaining annual disclosure requirements apply for annual reporting periods beginning on or after January 1, 2023, and will be reported in the annual report for the year 2023.
In addition, the following amendments and revisions to existing standards became effective for Ahold Delhaize's consolidated financial statements as of January 2, 2023:
These amendments do not have a significant impact on the Company's consolidated financial statements.
Furthermore, the following standard became effective for Ahold Delhaize's consolidated financial statements as of January 2, 2023:
• IFRS 17, "Insurance Contracts"
IFRS 17 replaces IFRS 4, "Insurance Contracts." The Company adopted IFRS 17 on January 2, 2023, and applied the full retrospective transition approach. Therefore, the comparative figures for the 2022 financial year have been restated, as presented below.
The impact of IFRS 17 on the 2022 balance sheet was as follows:
| January 1, 2023, |
Effect of IFRS 17 |
January 1, 2023, |
|
|---|---|---|---|
| € million | as reported | adoption | restated |
| Assets | |||
| Receivables | 2,391 | (51) | 2,340 |
| Other current financial assets | 373 | 51 | 424 |
| Total current assets | 10,818 | — | 10,818 |
| Total assets | 48,555 | — | 48,555 |
| Equity and liabilities | |||
| Equity attributable to common shareholders | 15,405 | — | 15,405 |
| Accounts payable | 8,191 | (29) | 8,162 |
| Other current financial liabilities | 2,689 | 29 | 2,718 |
| Total current liabilities | 15,082 | — | 15,082 |
| Total liabilities and shareholders' equity | 48,555 | — | 48,555 |
The impact of IFRS 17 on the Reinsurance contract asset and the Reinsurance contract liability as of January 1, 2023, as presented in Note 11: Financial instruments, was as follows:
| € million | January 1, 2023, as reported |
Effect of IFRS 17 adoption |
January 1, 2023, restated |
|---|---|---|---|
| Reinsurance contract asset | 283 | 51 | 333 |
| Reinsurance contract liability | (273) | (29) | (302) |
| January 3, 2022, |
Effect of IFRS 17 |
January 3, 2022, |
|
|---|---|---|---|
| € million | as reported | adoption | restated |
| Assets | |||
| Receivables | 2,058 | (52) | 2,005 |
| Other current financial assets | 356 | 52 | 408 |
| Prepaid expenses and other current assets | 387 | (119) | 268 |
| Total current assets | (119) | 9,465 | |
| Total assets | 45,712 | (119) | 45,593 |
| Equity and liabilities | |||
| Equity attributable to common shareholders | 13,721 | — | 13,721 |
| Accounts payable | 7,563 | (32) | 7,531 |
| Other current financial liabilities | 2,552 | 32 | 2,584 |
| Other current liabilities | 3,483 | (119) | 3,364 |
| Total current liabilities | 14,179 | (119) | 14,060 |
| Total liabilities and shareholders' equity | 45,712 | (119) | 45,593 |
The impact of IFRS 17 on the Q2 2022 cash flow statement was as follows:
| € million | Q2 2022 as reported |
Effect of IFRS 17 adoption |
Q2 2022 restated |
|---|---|---|---|
| Operating cash flows before changes in operating assets and liabilities | — | 1,764 | |
| Changes in working capital: | |||
| Changes in receivables and other current assets | (195) | (28) | (223) |
| Changes in payables and other current liabilities | 408 | 28 | 437 |
| Changes in other non-current assets, other non-current liabilities and provisions | (63) | — | (63) |
| Cash generated from operations | 1,696 | — | 1,696 |
The impact of IFRS 17 on the half year 2022 cash flow statement was as follows:
| € million | HY 2022 as reported |
Effect of IFRS 17 adoption |
HY 2022 restated |
|---|---|---|---|
| Operating cash flows before changes in operating assets and liabilities | 3,399 | — | 3,399 |
| Changes in working capital: | |||
| Changes in receivables and other current assets | (130) | (69) | (198) |
| Changes in payables and other current liabilities | (21) | 68 | 46 |
| Changes in other non-current assets, other non-current liabilities and provisions | (102) | 1 | (101) |
| Cash generated from operations | 2,625 | — | 2,625 |
The impact of IFRS 17 on the Q2 2022 free cash flow, as presented in Note 3: Alternative performance measures, was as follows:
| € million | Q2 2022 as reported |
Effect of IFRS 17 adoption |
Q2 2022 restated |
|---|---|---|---|
| Operating cash flows before changes in working capital and income taxes paid | 1,701 | — | 1,701 |
| Changes in working capital | (5) | — | (5) |
| Free cash flow | 596 | — | 596 |
The impact of IFRS 17 on the half year 2022 free cash flow, as presented in Note 3: Alternative performance measures, was as follows:
| € million | HY 2022 as reported |
Effect of IFRS 17 adoption |
HY 2022 restated |
|---|---|---|---|
| Operating cash flows before changes in working capital and income taxes paid | 3,297 | 1 | 3,298 |
| Changes in working capital | (672) | (1) | (673) |
| Free cash flow | 575 | — | 575 |
These interim financial statements include alternative performance measures (also known as non-GAAP measures). The descriptions of these alternative performance measures are included under Definitions and abbreviations in Ahold Delhaize's Annual Report 2022.
| € million | Q2 2022 restated |
HY 2023 |
HY 2022 restated |
|
|---|---|---|---|---|
| Operating cash flows from continuing operations before changes in working capital and income taxes paid1 |
1,659 | 1,701 | 3,351 | 3,298 |
| Changes in working capital1 | 37 | (5) | (619) | (673) |
| Income taxes paid – net | 157 | (184) | 61 | (204) |
| Purchase of non-current assets | (559) | (530) | (1,087) | (1,040) |
| Divestments of assets / disposal groups held for sale | 16 | 33 | 50 | 39 |
| Dividends received from joint ventures | 17 | 33 | 18 | 33 |
| Interest received | 40 | 9 | 69 | 15 |
| Interest paid | (81) | (51) | (108) | (83) |
| Lease payments received on lease receivables | 29 | 27 | 57 | 57 |
| Repayment of lease liabilities | (452) | (439) | (907) | (868) |
| Free cash flow | 864 | 596 | 886 | 575 |
1. Operating cash flows from continuing operations before changes in working capital and income taxes paid and Changes in working capital have been restated due to the implementation of IFRS 17 (see Note 2: Accounting policies).
| € million | July 2, 2023 |
April 2, 2023 |
January 1, 2023 |
|---|---|---|---|
| Loans | 4,967 | 4,491 | 4,527 |
| Lease liabilities | 10,709 | 10,637 | |
| Non-current portion of long-term debt | 15,200 | 15,164 | |
| Short-term borrowings and current portion of long-term debt | 3,301 | 2,476 | |
| Gross debt | 18,730 | 18,500 | 17,640 |
| Less: cash, cash equivalents, short-term deposits and similar instruments, and short term portion of investments in debt instruments1, 2, 3, 4 |
4,034 | 3,810 | 3,223 |
| Net debt | 14,696 | 14,690 | 14,416 |
1. Short-term deposits and similar instruments include investments with a maturity of between three and 12 months. The balance of these instruments at July 2, 2023, was €15 million (April 2, 2023: €16 million and January 1, 2023: €16 million) and is presented within Other current financial assets in the consolidated balance sheet.
2. Included in the short-term portion of investments in debt instruments is a U.S. Treasury investment fund in the amount of €125 million (April 2, 2023: €128 million and January 1, 2023: €125 million).
3. Book overdrafts, representing the excess of total issued checks over available cash balances within the Group cash concentration structure, are classified in accounts payable and do not form part of net debt. This balance at July 2, 2023, was €379 million (April 2, 2023: €323 million and January 1, 2023: €414 million).
4. Cash and cash equivalents include an amount held under a notional cash pooling arrangement of €1,413 million (April 2, 2023: €1,299 million and January 1, 2023: €712 million). This cash amount is fully offset by an identical amount included under Shortterm borrowings and current portion of long-term debt.
| € million | Q2 2023 |
Q2 2022 |
HY 2023 |
HY 2022 |
|---|---|---|---|---|
| Underlying operating income | 904 | 880 | 1,769 | 1,709 |
| Depreciation and amortization | 859 | 848 | 1,730 | 1,655 |
| Underlying EBITDA | 1,764 | 1,728 | 3,499 | 3,364 |
| € million, except per share data | Q2 2022 |
HY 2023 |
HY 2022 |
|
|---|---|---|---|---|
| Income from continuing operations | 603 | 1,029 | 1,149 | |
| Adjustments to operating income | 180 | (16) | 223 | (5) |
| Tax effect on adjusted and unusual items | (47) | 5 | (58) | 3 |
| Underlying income from continuing operations | 601 | 593 | 1,194 | 1,148 |
| Underlying income from continuing operations for the purpose of diluted earnings per share |
601 | 593 | 1,194 | 1,148 |
| Basic income per share from continuing operations1 | 0.48 | 0.60 | 1.06 | 1.15 |
| Diluted income per share from continuing operations2 | 0.48 | 0.60 | 1.06 | 1.14 |
| Underlying income per share from continuing operations – basic1 | 0.62 | 0.59 | 1.23 | 1.14 |
| Underlying income per share from continuing operations – diluted2 | 0.62 | 0.59 | 1.23 | 1.14 |
1. Basic and underlying earnings per share from continuing operations are calculated by dividing the (underlying) income from continuing operations attributable to equity holders by the average numbers of shares outstanding. The weighted average number of shares used for calculating the basic and underlying earnings per share for Q2 2023 is 967 million (Q2 2022: 1,000 million).
2. The diluted earnings per share from continuing operations and diluted underlying EPS are calculated by dividing the diluted (underlying) income from continuing operations by the diluted weighted average number of shares outstanding. The diluted weighted average number of shares used for calculating the diluted underlying EPS for Q2 2023 is 970 million (Q2 2022: 1,002 million).
Ahold Delhaize completed various store acquisitions for a total purchase consideration of €23 million. The provisional allocation of the fair values of the identifiable assets acquired, liabilities assumed and goodwill arising from acquisitions through Q2 2023 is as follows:
| € million | Store acquisitions |
|---|---|
| Property, plant and equipment | 4 |
| Other intangible assets | 1 |
| Assets held for sale | — |
| Inventories | 1 |
| Net identifiable assets acquired | 7 |
| Goodwill | 16 |
| Total purchase consideration | 23 |
| Purchase consideration in kind | (1) |
| Cash acquired (excluding restricted cash) | — |
| Acquisition of businesses, net of cash acquired | 22 |
A reconciliation of Ahold Delhaize's Goodwill balance is as follows:
| € million | Goodwill |
|---|---|
| As of January 1, 2023 | |
| At cost | 7,990 |
| Accumulated impairment losses | (69) |
| Opening carrying amount | 7,920 |
| Acquisitions through business combinations | 16 |
| Exchange rate differences | (91) |
| Closing carrying amount | 7,845 |
| As of July 2, 2023 | |
| At cost | 7,913 |
| Accumulated impairment losses | (68) |
| Closing carrying amount | 7,845 |
Ahold Delhaize's retail operations are presented in two reportable segments. In addition, "Other retail," consisting of Ahold Delhaize's unconsolidated joint ventures JMR – Gestão de Empresas de Retalho, SGPS, S.A. ("JMR") and P.T. Lion Super Indo ("Super Indo"), as well as Ahold Delhaize's Global Support Office, is presented separately. The accounting policies used for the segments are the same as the accounting policies used for these interim financial statements.
All reportable segments sell a wide range of perishable and non-perishable food and non-food consumer products.
| Reportable segment | Operating segments included in the reportable segment |
|---|---|
| The United States | Stop & Shop, Food Lion, The GIANT Company, Hannaford, Giant Food and FreshDirect |
| Europe | Albert Heijn (including the Netherlands and Belgium) |
| Delhaize ("Delhaize Le Lion" including Belgium and Luxembourg) | |
| bol.com (including the Netherlands and Belgium) | |
| Albert (Czech Republic) | |
| Alfa Beta (Greece) | |
| Mega Image (Romania) | |
| Delhaize Serbia (Republic of Serbia) | |
| Etos (the Netherlands) | |
| Gall & Gall (the Netherlands) | |
| Other | Included in Other |
Interim financial statements
| Other retail | Unconsolidated joint ventures JMR (49%) and Super Indo (51%) |
|---|---|
| Global Support Office | Global Support Office staff (the Netherlands, Belgium, Switzerland and the United States) |
| € million | The United States |
Europe | Global Support Office |
Ahold Delhaize Group |
|---|---|---|---|---|
| Net sales | 13,618 | 8,450 | — | 22,068 |
| Of which: online sales | 1,034 | 1,124 | — | 2,158 |
| Operating income (expense) | 574 | 134 | 16 | 724 |
| Impairment losses and reversals – net | 47 | 114 | — | 161 |
| (Gains) losses on leases and the sale of assets – net | (9) | (9) | — | (19) |
| Restructuring and related charges and other items | 11 | 29 | (2) | 38 |
| Adjustments to operating income1 | 49 | 133 | (2) | 180 |
| Underlying operating income (expense) | 623 | 267 | 14 | 904 |
1. Included in General and administrative expenses in the consolidated income statement.
| € million | The United States |
Europe | Global Support Office |
Ahold Delhaize Group |
|---|---|---|---|---|
| Net sales | 13,577 | 7,868 | — | 21,445 |
| Of which: online sales | 994 | 1,034 | — | 2,028 |
| Operating income (expense) | 642 | 273 | (20) | 895 |
| Impairment losses and reversals – net | 6 | 8 | — | 14 |
| (Gains) losses on leases and the sale of assets – net | (14) | 5 | — | (9) |
| Restructuring and related charges and other items | — | (22) | 1 | (21) |
| Adjustments to operating income1 | (7) | (9) | 1 | (16) |
| Underlying operating income (expense) | 635 | 264 | (19) | 880 |
1. Included in General and administrative expenses in the consolidated income statement.
| € million | The United States |
Europe | Global Support Office |
Ahold Delhaize Group |
|---|---|---|---|---|
| Net sales | 27,097 | 16,595 | — | 43,692 |
| Of which: online sales | 2,158 | 2,248 | — | 4,406 |
| Operating income | 1,206 | 336 | 3 | 1,546 |
| Impairment losses and reversals – net | 49 | 125 | — | 174 |
| (Gains) losses on leases and the sale of assets – net | (9) | (8) | — | (17) |
| Restructuring and related charges and other items | 25 | 44 | (2) | 67 |
| Adjustments to operating income1 | 64 | 161 | (2) | 223 |
| Underlying operating income | 1,271 | 497 | 1 | 1,769 |
1. Included in General and administrative expenses in the consolidated income statement.
| € million | The United States |
Europe | Global Support Office |
Ahold Delhaize Group |
|---|---|---|---|---|
| Net sales | 25,776 | 15,443 | — | 41,219 |
| Of which: online sales | 1,954 | 2,133 | — | 4,087 |
| Operating income (expense) | 1,182 | 528 | 3 | 1,714 |
| Impairment losses and reversals – net | 10 | 9 | — | 20 |
| (Gains) losses on leases and the sale of assets – net | (16) | 1 | — | (15) |
| Restructuring and related charges and other items | — | (11) | 2 | (9) |
| Adjustments to operating income1 | (6) | (1) | 2 | (5) |
| Underlying operating income (expense) | 1,176 | 527 | 6 | 1,709 |
1. Included in General and administrative expenses in the consolidated income statement.
Results in local currency for the United States are as follows:
| Q2 | Q2 | HY | HY | |
|---|---|---|---|---|
| \$ million | 2023 | 2022 | 2023 | 2022 |
| Net sales | 14,825 | 14,434 | 29,289 | 28,114 |
| Of which: online sales | 1,127 | 1,057 | 2,333 | 2,134 |
| Operating income | 625 | 682 | 1,304 | 1,288 |
| Underlying operating income | 678 | 674 | 1,373 | 1,281 |
| Q2 2023 | Q2 2022 | |||||
|---|---|---|---|---|---|---|
| € million | The United States |
Europe | Ahold Delhaize Group |
The United States |
Europe | Ahold Delhaize Group |
| Sales from owned stores | 12,535 | 5,360 | 17,895 | 12,530 | 5,045 | 17,575 |
| Sales to and fees from franchisees and affiliates |
— | 1,939 | 1,939 | — | 1,764 | 1,764 |
| Online sales | 1,034 | 1,124 | 2,158 | 994 | 1,034 | 2,028 |
| Wholesale sales | 49 | 26 | 76 | 53 | 25 | 78 |
| Net sales | 13,618 | 8,450 | 22,068 | 13,577 | 7,868 | 21,445 |
Interim financial statements
| HY 2023 | HY 2022 | |||||
|---|---|---|---|---|---|---|
| € million | The United States |
Europe | Ahold Delhaize Group |
The United States |
Europe | Ahold Delhaize Group |
| Sales from owned stores | 24,839 | 10,541 | 35,380 | 23,724 | 9,879 | 33,603 |
| Sales to and fees from franchisees and affiliates |
— | 3,758 | 3,758 | — | 3,383 | 3,383 |
| Online sales | 2,158 | 2,248 | 4,406 | 1,954 | 2,133 | 4,087 |
| Wholesale sales | 99 | 48 | 147 | 98 | 48 | 146 |
| Net sales | 27,097 | 16,595 | 43,692 | 25,776 | 15,443 | 41,219 |
The decrease in income tax expense and effective tax rate for Q2 and HY 2023 is mainly caused by a change in the geographical mix of earnings.
In March 2023, Ahold Delhaize signed an agreement with the Belgian tax authorities relating to its tax return over 2018. Based on this agreement, Ahold Delhaize fully recovered its associated outstanding receivable. The payment was received in May 2023.
Assets held for sale and related liabilities at July 2, 2023, consist primarily of non-current assets and associated liabilities of retail locations.
On March 7 2023, Ahold Delhaize's Belgian brand, Delhaize, announced its intention to transform all of its integrated supermarkets in Belgium into independently operated Delhaize stores to strengthen its position in the country's competitive retail market. In Q2 2023, the store assets qualified as assets held for sale. These assets will be sold to the local entrepreneurs, who will become independent operators under the affiliate business model. Before they were classified as assets held for sale, Delhaize Belgium recognized a €108 million impairment for the assets based on fair value less costs to sell, resulting in a remaining carrying value of €31 million.
On April 12, 2023, the General Meeting of Shareholders approved the dividend over 2022 of €1.05 per common share. The interim dividend for 2022 of €0.46 per common share was paid on September 1, 2022. The final dividend of €0.59 per common share was paid on April 27, 2023.
On January 2, 2023, the Company commenced the €1 billion share buyback program that was announced on November 9, 2022. The program is expected to be completed before the end of 2023.
In the first half of the year, 18,898,237 of the Company's own shares were repurchased at an average price of €29.74 per share, and the share buyback program resulted in a net transactional discount from the dealers of €1 million.
The number of outstanding common shares as of July 2, 2023, was 961,252,798 (January 1, 2023: 977,352,954).
The following table presents the reconciliation between the cash and cash equivalents as presented in the statement of cash flows and on the balance sheet:
| € million | July 2, 2023 |
January 1, 2023 |
|---|---|---|
| Cash and cash equivalents as presented in the statement of cash flows | 3,884 | 3,054 |
| Restricted cash | 10 | 28 |
| Cash and cash equivalents as presented on the balance sheet | 3,893 | 3,082 |
Cash and cash equivalents include an amount held under a notional cash pooling arrangement of €1,413 million (January 1, 2023: €712 million), which is fully offset by an identical amount included under Other current financial liabilities.
On March 28, 2023, Ahold Delhaize announced that it successfully launched and priced a €500 million Green Bond, with a term of five years, maturing on April 4, 2028. The issuance was priced at 99.851% and carries an annual coupon of 3.5%. The settlement of the bond issue took place on April 4, 2023. The bond proceeds will be used to finance and re-finance Ahold Delhaize's new or existing assets with a positive measurable environmental impact in the following categories:
This inaugural Green Bond reinforces the continued alignment of the Company's funding strategy to its sustainability strategy and overall ESG ambitions.
The following table presents the fair value of financial instruments, based on Ahold Delhaize's categories of financial instruments, including current portions, compared to the carrying amount at which these instruments are included on the balance sheet. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.
The carrying amount of trade and other (non-)current receivables, cash and cash equivalents, accounts payable, short-term deposits and similar instruments, and other current financial assets and liabilities approximate their fair values because of the short-term nature of these instruments and, for receivables, because any expected recoverability loss is reflected in an impairment loss.
| July 2, 2023 | January 1, 2023, restated | ||||
|---|---|---|---|---|---|
| € million | Carrying amount |
Fair value |
Carrying amount |
Fair value |
|
| Financial assets at amortized cost | |||||
| Loans receivable | 32 | 28 | 36 | 34 | |
| Lease receivable | 512 | 477 | 518 | 498 | |
| Financial assets at fair value through profit or loss (FVPL) | |||||
| Reinsurance contract asset1 | 322 | 322 | 333 | 333 | |
| Investments in debt instruments | 136 | 136 | 136 | 136 | |
| Derivative financial instruments | |||||
| Derivatives | 1 | 1 | 2 | 2 | |
| Financial liabilities at amortized cost | |||||
| Notes | (4,826) | (4,556) | (4,373) | (4,075) | |
| Financing obligations | (179) | (91) | (194) | (109) | |
| Other long-term financial liabilities | (224) | (206) | (269) | (268) | |
| Financial liabilities at fair value through profit or loss (FVPL) | |||||
| Reinsurance contract liability1 | (283) | (283) | (302) | (302) | |
| Derivative financial instruments | |||||
| Derivatives | (29) | (29) | (26) | (26) |
1. Reinsurance contract asset and Reinsurance contract liability have been restated due to the implementation of IFRS 17 (see Note 2: Accounting policies).
Of Ahold Delhaize's categories of financial instruments, only derivatives, investments in debt instruments and reinsurance assets (liabilities) are measured and recognized on the balance sheet at fair value. These fair value measurements are categorized within Level 2 of the fair value hierarchy. A description of the valuation techniques and inputs used to develop the measurements is included in Note 30 of Ahold Delhaize's 2022 financial statements, as included in the Annual Report 2022, published on March 1, 2023.
Ahold Delhaize posted deposits as collateral in the net amount of €26 million as of July 2, 2023 (January 1, 2023: €26 million). The counterparties have an obligation to repay the deposits to Ahold Delhaize upon settlement of the contracts.
Ahold Delhaize has entered into arrangements with a number of its subsidiaries and affiliated companies in the course of its business. These arrangements relate to service transactions and financing agreements. Furthermore, Ahold Delhaize considers transactions with key management personnel to be related party transactions. As of the balance sheet date, July 2, 2023, there have been no significant changes in the related party transactions from those described in Ahold Delhaize's Annual Report 2022.
A comprehensive overview of commitments and contingencies as of January 1, 2023, is included in Note 34 of Ahold Delhaize's 2022 financial statements, as included in the Annual Report 2022, published on March 1, 2023. For an update on commitments and contingencies relating to taxes, see Note 7: Income taxes.
On July 5, 2023, Ahold Delhaize announced that shareholders approved the appointment of Jolanda Poots-Bijl as member of the Management Board during the Extraordinary General Meeting of Shareholders in Zaandam. Jolanda will join Ahold Delhaize in mid-August as Executive Vice President Finance and member of the Executive Committee. As per October 1, 2023, she will join the Management Board and assume the role of Chief Financial Officer.
On July 11, 2023, Ahold Delhaize announced that bol.com and Cycloon are strengthening their strategic partnership, with bol.com acquiring all shares in Cycloon. The parties jointly aim to accelerate Cycloon's growth and share the ambition to make delivery greener and more social. Currently, bol.com already holds a majority of shares in Cycloon. The transaction to acquire the remaining shares was completed on July 26, 2023.
Zaandam, the Netherlands, August 8, 2023
Frans Muller (President and Chief Executive Officer) JJ Fleeman (Chief Executive Officer Ahold Delhaize USA) Wouter Kolk (Chief Executive Officer Ahold Delhaize Europe and Indonesia)
Ahold Delhaize's financial year consists of 52 or 53 weeks and ends on the Sunday nearest to December 31. Ahold Delhaize's 2023 financial year consists of 52 weeks and ends on December 31, 2023.
The remaining key publication date for 2023 is: November 8 – Results Q3 2023
This communication contains information that qualifies as inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation. This communication includes forward-looking statements. All statements other than statements of historical facts may be forward-looking statements. Words and expressions such as guidance, remain, propositions, continue(s)/(d), confident, will, on the right track, commitment, focus, outlook, risks, uncertainties, likelihood, strategy, already, consistent or other similar words or expressions are typically used to identify forward-looking statements.
Forward-looking statements are subject to risks, uncertainties and other factors that are difficult to predict and that may cause the actual results of Koninklijke Ahold Delhaize N.V. (the "Company") to differ materially from future results expressed or implied by such forward-looking statements. Such factors include, but are not limited to, risks relating to the Company's inability to successfully implement its strategy, manage the growth of its business or realize the anticipated benefits of acquisitions; risks relating to competition and pressure on profit margins in the food retail industry; the impact of economic conditions, including high levels of inflation, on consumer spending; changes in consumer expectations and preferences; turbulence in the global capital markets; political developments, natural disasters and pandemics; climate change; energy supply issues; raw material scarcity and human rights developments in the supply chain; disruption of operations and other factors negatively affecting the Company's suppliers; the unsuccessful operation of the Company's franchised and affiliated stores; changes in supplier terms and the inability to pass on cost increases to prices; risks related to environmental, social and governance matters (including performance) and sustainable retailing; food safety issues resulting in product liability claims and adverse publicity; environmental liabilities associated with the properties that the Company owns or leases; competitive labor markets, changes in labor conditions and labor disruptions; increases in costs associated with the Company's defined benefit pension plans; ransomware and other cybersecurity issues relating to the failure or breach of security of IT systems; the Company's inability to successfully complete divestitures and the effect of contingent liabilities arising from completed divestitures; antitrust and similar legislation; unexpected outcomes in the Company's legal proceedings; additional expenses or capital expenditures associated with compliance with federal, regional, state and local laws and regulations; unexpected outcomes with respect to tax audits; the impact of the Company's outstanding financial debt; the Company's ability to generate positive cash flows; fluctuation in interest rates; the change in reference interest rate; the impact of downgrades of the Company's credit ratings and the associated increase in the Company's cost of borrowing; exchange rate fluctuations; inherent limitations in the Company's control systems; changes in accounting standards; inability to obtain effective levels of insurance coverage; adverse results arising from the Company's claims against its self-insurance program; the Company's inability to locate appropriate real estate or enter into real estate leases on commercially acceptable terms; and other factors discussed in the Company's public filings and other disclosures.
Forward-looking statements reflect the current views of the Company's management and assumptions based on information currently available to the Company's management. Forward-looking statements speak only as of the date they are made, and the Company does not assume any obligation to update such statements, except as required by law. For more information:
Press office: +31 88 659 5134 Investor relations: +31 88 659 5213 Social media: Instagram: @Ahold-Delhaize / LinkedIn: @Ahold-Delhaize
Ahold Delhaize is one of the world's largest food retail groups and a leader in both supermarkets and e-commerce. Its family of great local brands serves 60 million customers each week, both in stores and online, in the United States, Europe and Indonesia. Together, these brands employ more than 414,000 associates in 7,659 grocery and specialty stores and include the top online retailer in the Benelux and the leading online grocers in the Benelux and the United States. Ahold Delhaize brands are at the forefront of sustainable retailing, sourcing responsibly, supporting local communities and helping customers make healthier choices. The company's focus on four growth drivers – drive omnichannel growth, elevate healthy and sustainable, cultivate best talent and strengthen operational excellence – is helping to fulfil its purpose, achieve its vision and prepare its brands and businesses for tomorrow. Headquartered in Zaandam, the Netherlands, Ahold Delhaize is listed on the Euronext Amsterdam and Brussels stock exchanges (ticker: AD) and its American Depositary Receipts are traded on the over-the-counter market in the U.S. and quoted on the OTCQX International marketplace (ticker: ADRNY). For more information, please visit: www.aholddelhaize.com.
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