Axfood — Earnings Release 2010

Jul 15, 2010

Interim Report Axfood AB (publ)

SECOND QUARTER SUMMARY

• Axfood's consolidated sales for the period April–June totalled SEK 8,583 m (8,216), an increase of 4.5%.
• Retail sales for Group-owned stores rose 0.7% during the period. Like-for-like sales fell by 1.9%.
• Operating profit for the period was SEK 279 m (269).
• Profit after financial items for the period was SEK 270 m (258).
• Profit after tax for the period was SEK 199 m (190), and earnings per share were SEK 3.79 (3.63).
• Axfood Närlivs signed an agreement to acquire Reitan Servicehandel's cold storage distribution centre in Stockholm. Axfood will take over operations on 1 October 2010.
• Axfood's goal for 2010 is to achieve an operating profit at least at the same level as in 2009.

IMPORTANT EVENTS AFTER THE REPORTING PERIOD

• A new, two-year cooperation agreement was signed between Axfood Närlivs and Preem.

Key ratios
SEK m	Q2 2010	Q2 2009	Change, %	Six months 2010	Six months 2009	Change, %	Full year 2009
Net sales	8,583	8,216	4.5	16,793	15,898	5.6	32,378
Operating profit	279	269	3.7	524	503	4.2	1,128
Operating margin, %	3.3	3.3	0.0	3.1	3.2	-0.1	3.5
Profit after financial items	270	258	4.7	505	479	5.4	1,082
Profit after tax	199	190	4.7	373	353	5.7	793
Earnings per share, SEK1	3.79	3.63	4.4	7.10	6.73	5.5	15.13
Cash flow per share, SEK	-0.2	0.8	-	-0.9	-2.1	57.1	0.1
Equity ratio, %	-	-	-	32.9	30.7	2.2	36.7
Return on capital employed, %	-	-	-	32.7	30.5	2.2	31.8
Return on shareholders' equity, %	-	-	-	34.8	36.7	-1.9	32.4
Net asset value per share, SEK	-	-	-	47.34	41.78	13.3	50.22

1) Before and after dilution.

For further information, please contact:

Anders Strålman, President and CEO, mobile +46-70-293 16 93.

Karin Hygrell-Jonsson, CFO, mobile +46-70-662 69 70.

Anne Rhenman-Eklund, Head of Investor Relations, +46-8-553 998 13, mobile +46-70-280 64 59.

CEO'S COMMENTS

Axfood continues to show stable earnings performance in a highly competitive market. On top of this, industry statistics show a generally weak volume and price trend for the food retail market. Indications are strong that consumers are giving priority to capital goods and restaurant visits. For many, considerably higher electricity bills from the past winter have also affected their personal finances.

During the second quarter we had continued high activity in all operations, establishing or converting additional stores and carrying out numerous campaign activities.

Willys continues to show good earnings performance with a favourable operating margin, at the same time that its market share has grown through more new stores. Willys also continues to defend its position as "Sweden's cheapest bag of groceries". This was recently confirmed in an independent price study that has been carried out and published. However, from the start of the quarter, like-for-like sales have been affected by a generally weak trend in the industry, competitor establishment and own new establishment. During the remainder of 2010, additional stores will be opened through new establishment or conversion from Hemköp units.

Hemköp posted yet another quarter in the black, positive like-for-like sales performance and increasingly stable operations. This is a result of the structural changes that were initiated in 2009. It can also be credited to the campaigns that we carried out during the spring, in line with Hemköp's new price strategy and improved customer offer.

At PrisXtra, sales and profitability remain unsatisfactory. It is nevertheless our judgement that it will be possible to achieve a positive operating result for the full year.

Axfood Närlivs has signed three new agreements – one covering the acquisition of Reitan Servicehandel's cold storage distribution centre in Kungens kurva, a new five-year supply agreement with Reitan Servicehandel, and a new two-year agreement with the Preem service station chain.

As previously, Dagab is maintaining a very high level of quality in its delivery reliability and in June posted its best delivery reliability performance ever, at 97.8%. The resumed collaboration with the Vi stores is also proceeding very satisfactorily.

Much points to continued optimism among households, despite the risk for higher interest rates. At the same time, we believe the market conditions will remain unchanged, with high price competition and price conscious customers.

In line with our strategy, we are continuing to ensure profitable growth through greater efficiency and good cost control. During the rest of 2010 we will maintain a high pace of establishment and change, further develop our concepts, optimize store operations, refine our price and product range strategy, and stimulate our sales performance.

Axfood's goal for 2010 is to achieve an operating profit at least at the same level as in 2009.

Anders Strålman President and CEO

SALES, AXFOOD GROUP

Second quarter

Consolidated wholesale and retail sales for the Axfood Group totalled SEK 8,583 m (8,216) for the period, an increase of 4.5%. Store sales for the Axfood Group (wholly owned stores and Hemköp franchises) totalled SEK 7,021 m (7,013), an increase of 0.1%. Sales for Axfood-owned retail operations rose 0.7% during the period, with a 1.9% drop in like-for-like sales.

Six months

Consolidated wholesale and retail sales for the Axfood Group totalled SEK 16,793 m (15,898) for the period, an increase of 5.6%. Store sales for the Axfood Group (wholly owned stores and Hemköp franchises) totalled SEK 13,863 m (13,651), an increase of 1.6%. Sales for Axfood-owned retail operations rose 2.0% during the period, with a 0.2% increase in like-for-like sales.

Net sales per operating segment
SEK m	Q2 2010	Q2 2009	Sex months 2010	Six months 2009	2009
Hemköp	1,224	1,344	2,503	2,701	5,335
Willys	4,665	4,492	9,131	8,678	17,589
PrisXtra1	161	175	332	357	685
Axfood Närlivs1	1,491	1,468	2,784	2,722	5,611
Dagab	6,422	6,159	12,601	11,828	24,052
Other2	1,026	887	2,019	1,615	3,364
Internal sales
Dagab	-5,424	-5,454	-10,645	-10,452	-21,049
Axfood Närlivs	-6	-5	-12	-10	-19
Other	-976	-850	-1,920	-1,541	-3,190
Total	8,583	8,216	16,793	15,898	32,378

1) On 1 January 2010, NetXtra was transferred from PrisXtra to Axfood Närlivs. The comparison figures have been adjusted by SEK 10 m for the second quarter, by SEK 22 m for the half year, and by SEK 40 m for the full year 2009.

2) Includes joint-Group support functions, such as purchasing coordination, IT and corporate offices. The item "other" also includes charges for, among other things, amortization of surplus value pertaining to the acquisition of PrisXtra. The increase in sales is attributable to higher internal volumes for Fruits and Vegetables and for Centrally Packaged Meat.

	Retail sales, own and franchise stores
SEK m	Q2 2010	1) %	Like-for-like sales, %1)	Six months 2010	% 1)	Like-for-like sales, %1)
Hemköp	1,212	-8.8	1.6	2,477	-7.2	1.3
Hemköp franchises	983	-3.3	0.0	1,923	-1.2	0.8
Hemköp total	2,195	-6.4	0.9	4,400	-4.7	1.1
Willys total	4,665	3.9	-2.5	9,131	5.2	0.2
PrisXtra total	161	-8.0	-8.0	332	-7.0	-7.0
Total	7,021	0.1	-1.6	13,863	1.6	0.3

1) Percentage change compared with the corresponding period a year ago.

Change in store structure, six months 2010

		New establish			Conversions
	Dec. 2009	ment	Acquisitions	Sales/ closures	to/from	June 2010
Hemköp	72			-2	-5	65
Willys1)	147	4	3		5	159
PrisXtra	6					6
Total, Group-owned	225	4	3	-2	-	230
Hemköp franchises	86			-3		83
1) Of which, Willys hemma	34	1	3		3	41

EARNINGS, AXFOOD GROUP

Second quarter

Operating profit for the period was SEK 279 m (269). The operating margin for the period was 3.3% (3.3%). Net financial items totalled SEK -9 m (-11), and profit after financial items was SEK 270 m (258). The margin after financial items was 3.1% (3.1%). Profit after tax was SEK 199 m (190).

Axfood has no significant transactions with related parties, other than transactions with subsidiaries.

Six months

Operating profit for the period was SEK 524 m (503). The operating margin for the period was 3.1% (3.2%). Net financial items totalled SEK -19 m (-24), and profit after financial items was SEK 505 m (479). Profit after tax was SEK 373 m (353).

Operating profit for the period, broken down by operating segment
SEK m	Q2 2010	Q2 2009	Six months 2010	Six months 2009	2009
Hemköp	10	-10	16	3	28
Willys	195	177	362	344	731
PrisXtra	-3	3	0	3	6
Axfood Närlivs	34	38	48	54	132
Dagab	34	36	64	60	147
Other1	9	25	34	39	84
Operating profit for the period, total2	279	269	524	503	1,128

1) Includes joint-Group support functions, such as purchasing coordination, IT and corporate offices. The item "other" also includes charges for, among other things, amortization of surplus value pertaining to the acquisition of PrisXtra.

2) Net financial items are not distributed per operating segment.

CAPITAL EXPENDITURES

Total capital expenditures during the period January–June amounted to SEK 454 m (319), of which SEK 4 m (3) pertained to acquisitions of businesses. In addition, SEK 219 m (138) pertained to investments in non-current assets in retail operations, SEK 63 m (58) to investments in non-current assets in wholesale operations, and SEK 89 m (93) to IT development.

FINANCIAL POSITION

Cash flow from operating activities for the first half of the year before paid tax was SEK 892 m (859). Paid tax amounted to SEK -184 m (-164). Cash and cash equivalents held by the Group amounted to SEK 268 m, compared with SEK 316 m in December 2009. Interest-bearing assets amounted to SEK 268 m at the end of the period, compared with SEK 316 m in December 2009. Interest-bearing liabilities and provisions totalled SEK 1,060 m at the end of the period, compared with SEK 848 m in December 2009. Interestbearing net debt was SEK 792 m at the end of the period, compared with SEK 532 m in December 2009. Payout of the shareholder dividend affected cash flow by SEK -525 m (-420), and net capital expenditures affected cash flow by SEK -440 m (-292).

The equity ratio was 32.9%, compared with 36.7% as per December 2009.

STORE OPERATIONS

Willys

Second quarter

Willys continues to show favourable earnings performance and defend its position as "Sweden's cheapest bag of groceries". This has also been confirmed in an independent study of prices that was recently carried out and published. Sales during the second quarter totalled SEK 4,665 m (4,492), an increase of 3.9% compared with the same period a year ago. Like-for-like sales decreased by 2.5% during the period. Operating profit for the second quarter was SEK 195 m (177), an increase of 10.2%. The operating margin was 4.2% (3.9%).

The private label share as of June was 23.8% (24.4%) for Willys and 28.2% (28.5%) for Willys hemma.

To further strengthen its market presence, Willys maintained a high pace of establishment during the second quarter, when two stores were converted from Hemköp to Willys, and two from Hemköp to Willys hemma. In addition, two stores were acquired. An additional six stores were adapted during the second quarter to the new generation of Willys. The renewal project currently covers 40 stores.

Six months

Willys' sales for the period January–June totalled SEK 9,131 m (8,678), an increase of 5.2% compared with a year ago. Like-for-like sales increased during the same period by 0.2%. Operating profit for the first half of the year was SEK 362 m (344), and the operating margin was 4.0% (4.0%).

During the first half of the year, three Willys stores and one Willys hemma store were established, three Willys hemma stores were acquired, and five stores were converted from Hemköp, of which two to Willys and three to Willys hemma. The Willys chain thereby consists of 159 wholly owned stores, of which 41 are Willys hemma.

Key ratios
SEK m	Q2 2010	Q2 2009	Six months 2010	Six months 2009	2009
Net sales	4,665	4,492	9,131	8,678	17,589
Change in like-for-like sales, %	-2.5	4.0	0.2	2.2	1.7
Operating profit	195	177	362	344	731
Operating margin, %	4.2	3.9	4.0	4.0	4.2
Number of Group-owned stores Average number of employees during the period	- -	- -	159 3,161	142 3,104	147 3,110
Private label share (Willys/Willys hemma)	-	-	23.8/28.2	24.4/28.5	23.6/28.3

Hemköp

Second quarter

During the second quarter, Hemköp continued its structural programme but also followed up the pricecutting campaign from the preceding quarter with a seasonal campaign. The outcome was positive in terms of sales as well as in the increased number of customers. Like-for-like sales for Group-owned stores increased by 1.6% during the period.

Sales for Hemköp's stores – both Group-owned and franchises – decreased by 6.4% during the second quarter. Sales for Group-owned Hemköp stores totalled SEK 1,212 m (1,329) during the second quarter, a decrease of 8.8%. Compared with the same period a year ago, total sales were negatively affected by changes in store structure. Sales for franchise stores totalled SEK 983 m (1,017), a decrease of 3.3%, with an unchanged movement in like-for-like sales.

Operating profit for the second quarter was SEK 10 m (-10). The operating margin for the period was 0.8% (-0.7). Profit for the comparison period was affected by SEK 18 m in costs for store closures.

Hemköp's loyalty card continues to grow, and by the end of the period 325,000 cards were in issue. The loyalty card is a key part of a long-term effort to boost customer loyalty and thus sales and market shares.

Hemköp's private label share (incl. franchise stores) was 14.7% (14.6%) as of June.

During the second quarter, four stores were converted to Willys and Willy hemma, and four stores were closed – two Group-owned and two proprietor-run.

Six months

Like-for-like sales for Group-owned stores rose 1.3% during the period.

Sales for Hemköp stores – both Group-owned and franchises – decreased by 4.7% during the period January–June. Sales for Group-owned Hemköp stores totalled SEK 2,477 m (2,670) during the period, a decrease of 7.2%.

Sales for franchise stores totalled SEK 1,923 m (1,946), a decrease of 1.2%, with a 0.8% rise in like-forlike sales.

Operating profit for the period January–June was SEK 16 m (3). The operating margin for the period was 0.6% (0.1%). Profit for the comparison period was affected by SEK 23 m in costs for store closures.

During the first half of the year, five stores were converted to Willys and Willy hemma, and five stores were closed – two Group-owned and three proprietor-run. Hemköp had 148 stores at the end of the period, of which 65 were Group-owned.

PrisXtra

Second quarter

PrisXtra's sales totalled SEK 161 m (175) during the second quarter, a decrease of 8.0%. Like-for-like sales decreased by 8.0% during the period. Operating profit for the second quarter was SEK -3 m (3), and the operating margin was -1.9% (1.7%).

As previously, the two largest stores continue to be hurt by traffic re-routing and roadwork associated with construction of the Norra länken motorway in Stockholm.

Six months

PrisXtra's sales totalled SEK 332 m (357) during the period, a decrease of 7.0%. Like-for-like sales decreased by 7.0% during the period. Operating profit for the period January–June was SEK 0 m (3), and the operating margin for the period was 0.0% (0.8%).

	Sales, SEK m, and operating margin, %		Key ratios
500		5 4	SEK m	Q2 2010	Q2 2009	Six months 2010	Six months 2009	2009
400		3	Net sales	161	175	332	357	685
300	1.8 1.7	2	Change in like-for-like sales, %	-8.0	-8.1	-7.0	-10.2	-9.4
200	1.2 175 173 171	1	Operating profit	-3	3	0	3	6
	0.6 161 155	0	Operating margin, %	-1.9	1.7	0	0.8	0.9
100		-1	Number of Group-owned stores Average number of employees	-	-	6	6	6
0	-1.9	-2	during the year	-	-	172	202	192
	Q2 09 Q3 09 Q4 09 Q1 10 Q2 10

AXFOOD WHOLESALING

Dagab

Second quarter

Sales during the second quarter totalled SEK 6,422 m (6,159). Operating profit for the second quarter was SEK 34 m (36), and the operating margin was 0.5% (0.6%). Implementation of Autoorder is continuing according to plan, and the resumed collaboration with the Vi stores is proceeding very satisfactorily. In June, Dagab posted the best delivery reliability performance ever, at 97.8%.

Six months

Dagab's sales for the period January–June totalled SEK 12,601 m (11,828). Operating profit for the period was SEK 64 m (60), and the operating margin for the period was 0.5% (0.5%).

Key ratios
SEK m	Q2 2010	Q2 2009	Six months 2010	Six months 2009	2009
Net sales	6,422	6,159	12,601	11,828	24,052
Distributed sales	4,310	4,123	8,484	7,904	16,229
Operating profit	34	36	64	60	147
Operating margin, %	0.5	0.6	0.5	0.5	0.6
Average number of employees during the period	-	-	927	907	902
Delivery reliability, %	97.4	97.0	97.3	96.6	96.8

Axfood Närlivs

Second quarter

Sales during the second quarter totalled SEK 1,491 m (1,468). Operating profit for the second quarter was SEK 34 m (38), and the operating margin was 2.3% (2.6%). This represents good performance considering the relatively cold weather during the start of the quarter and the continued fierce competition. As earlier in the year, the favourable sales performance for the cash and carry operation continues.

During the period, Axfood Närlivs signed an agreement to acquire Reitan Servicehandel's cold storage distribution centre in Kungens kurva, outside Stockholm. The acquisition creates favourable conditions to further strengthen and develop the company's position as a fast food wholesaler. In connection with the acquisition, a new, five-year supply agreement was also signed with Reitan Servicehandel Sverige AB.

Axfood Närlivs also signed a new, two-year agreement with Preem, covering the supply of newsstand items, retail food products and fast food solutions. The agreement takes effect on 1 January 2011.

Six months

Axfood Närlivs' sales for the period January–June totalled SEK 2,784 m (2,722). Operating profit for the period was SEK 48 m (54), and the operating margin for the period was 1.7% (2.0%).

Key ratios
SEK m	Q2 2010	Q2 2009	Six months 2010	Six months 2009	2009
Net sales	1,491	1,468	2,784	2,722	5,611
Distributed sales	1,286	1,239	2,406	2,290	4,777
Operating profit	34	38	48	54	132
Operating margin, %	2.3	2.6	1.7	2.0	2.4
Axfood Snabbgross, no. stores Average number of employees	-	-	19	19	19
during the year	-	-	642	607	625
Delivery reliability, %	97.7	97.1	97.7	97.3	97.4

SIGNIFICANT RISKS AND UNCERTAINTIES

In the course of its business the Axfood Group is exposed to operational, strategic and financial risks. Operational and strategic risks include business and liability risks, among others, while financial risks include liquidity risk, interest rate risk and currency risk.

Axfood works continuously with risk identification and assessment. One of the most significant business risks that Axfood has identified in its safety analysis work is a total loss, such as from a fire at one of the central warehouses in Jordbro or Backa. Major emphasis is put on preventive work, and the organization for this is well-developed, as is the Company's planning to maintain operating continuity in the event of unforeseen events.

For a thorough account of the risks that affect the Group, please refer to the 2009 Annual Report.

ENVIRONMENTAL IMPACT

One of Axfood's strategic objectives is to actively conduct work for sustainable development. In the day-today activities, sustainability aspects are integrated in purchasing as well as in logistics, transport, store operations and waste handling. In 2009 Axfood adopted a new sustainability programme covering environmental matters, social responsibility and animal welfare. Some of the areas covered include energy savings, waste handling and shrinkage. In 2010, priority is being given to implementation of the new sustainability programme. An overall target has been set to reduce the climate impact of the Group's operations by 75% by 2020. Another goal is to reduce energy use by 30% in the years immediately ahead. During the period, Axfood changed over its electricity purchases to renewable sources. A more detailed account of Axfood's work with environmental matters can be found in Axfood's 2009 Annual Report.

PARENT COMPANY

Other operating revenue for the Parent Company during the period January–June amounted to SEK 86 m (83). After selling expenses, administrative expenses and other operating expenses, totalling SEK 115 m (97), and SEK -4 m (-12) in net financial items, the result after financial items was SEK -33 m (-26). Capital expenditures during the period totalled SEK 2 m (1).

The Parent Company's interest-bearing net debt was SEK 769 m at the end of the period, compared with SEK 1,187 m in December 2009. The Parent Company has no significant transactions with related parties, other than transactions with subsidiaries.

ACCOUNTING PRINCIPLES

Group

This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting. The same accounting policies and methods of calculation have been used as in the most recent annual report, except for with respect to the points described below.

In order to prepare the financial statements in accordance with IFRS, the Board and Company management make estimations and assumptions that affect the Company's result and position as well as other disclosures in general. These estimations and assumptions are based on historical experience and are reviewed on a regular basis.

Effective 1 January 2010 the revised IFRS 3 Business Combinations took effect, along with the amended IAS 27 Consolidated and Separate Financial Statements. The revised and amended standards will only have prospective effects. In addition to IFRS 3 and IAS 27 are changes in IFRS 2 Share-based Payment, IAS 32 Financial Instruments: Presentation – with respect to presentation of new issues – and IAS 39 Financial Instruments: Recognition and Measurement, with respect to items that qualify for hedge accounting. In addition to these changes are IFRIC 12 Service Concession Agreements, IFRIC 15 Agreements on the Construction of Real Estate, IFRIC 16 Hedges of a Net Investment in a Foreign Entity, IFRIC

17 Distribution of Non-cash Assets to Owners, and IFRIC 18 Transfers of Assets from Customers. The changes and IFRIC interpretations referred to here do not have any effect on the Axfood Group's statements of comprehensive income, financial position, cash flows and changes in equity.

Parent Company

The same accounting policies and calculation methods as in the most recent annual report have been used. The Parent Company reports in conformity with the Swedish Annual Accounts Act and recommendation RFR 2.3 – Reporting for Legal Entities, issued by the Swedish Financial Reporting Board (RFR). Application of RFR 2.3 entails that in interim reporting for legal entities, the Parent Company applies all IFRSs and interpretations endorsed by the EU as far as practicable within the framework of the Swedish Annual Accounts Act, the Pension Obligations Vesting Act, and taking into account the connection between accounting and taxation.

As is the case for the Axfood Group, the new and amended standards that took effect on 1 January 2010 have no effect on the Parent Company's income statement, balance sheet, cash flow statement or shareholders' equity.

FORECAST

Axfood's goal for 2010 is to achieve an operating profit at least at the same level as in 2009¹ .

NEXT REPORTING DATE

The interim report for the period January–September 2010 will be presented on 26 October 2010.

PRESS RELEASES ISSUED DURING THE SECOND QUARTER

13 April 2010	Hemköp launches new seasonal concept
19 April 2010	Hemköp serves notice for 14 positions at head offices
20 April 2010	Interim Report Axfood AB (publ), for the period 1 January–31 March 2010
20 April 2010	Axfood presents sustainability programme with climate targets
11 May 2010	Axfood main partner of Save the Children Sweden
30 June 2010	Axfood Närlivs AB acquires Reitan Servicehandel Sverige AB's cold storage
	distribution centre in Kungens kurva

¹ Unchanged compared with preceding report.

This quarterly report gives a fair overview of the Parent Company's and Group's operations, financial position and results of operations, and describes significant risks and uncertainties that the Parent Company and companies included in the Group face.

Stockholm, 15 July 2010

Fredrik Persson Chairman Marcus Storch Vice Chairman Antonia Ax:son Johnson Peggy Bruzelius Maria Curman Odd Reitan Annika Åhnberg Sven-Erik Brandt* Ulla-May Iwahr Rydén* Lars Östberg* Anders Strålman

President and CEO

* Employee representative

This interim report has not been reviewed by the Company's auditors.

FINANCIAL STATEMENTS, GROUP

Condensed statement of comprehensive income, Group

SEK m	Q2 2010	Q2 2009	Six months 2010	Six months 2009	2009
Net sales	8,583	8,216	16,793	15,898	32,378
Cost of goods sold	-7,412	-7,076	-14,516	-13,723	-27,912
Gross profit	1,171	1,140	2,277	2,175	4,466
Selling/administrative expenses, etc.	-892	-871	-1,753	-1,672	-3,338
Operating profit	279	269	524	503	1,128
Net financial items	-9	-11	-19	-24	-46
Profit after financial items	270	258	505	479	1,082
Tax	-71	-68	-132	-126	-289
Profit for the period	199	190	373	353	793
Other comprehensive income
Change in fair value of forward exchange con tracts	0	2	1	0	0
Change in fair value of available-for-sale financial assets	-	-	-	-	4
Tax attributable to components in other compre	0	-1	0	0	-1
hensive income Other comprehensive income for the period	0	1	1	0	3
Total comprehensive income for the period	199	191	374	353	796
Operating profit includes deprecia tion/amortization of	143	137	274	267	535
Earnings per share, SEK	3.79	3.63	7.10	6.73	15.13

Condensed statement of financial position, Group
SEK m	Six months 2010	Six months 2009	2009
Assets
Goodwill	1,543	1,538	1,539
Interest-bearing receivables	-	4	-
Other financial assets	32	28	30
Other non-current assets	2,280	2,084	2,118
Total non-current assets	3,855	3,654	3,687
Inventories	1,835	1,705	1,790
Accounts receivable – trade	680	564	539
Interest-bearing receivables	-	13	-
Other current assets	918	990	841
Cash and bank balances	268	203	316
Total current assets	3,701	3,475	3,486
Total assets	7,556	7,129	7,173
Shareholders' equity and liabilities
Equity attributable to equity holders of the parent	2,484	2,192	2,635
Total shareholders' equity	2,484	2,192	2,635
Non-current interest-bearing liabilities	395	540	546
Noninterest-bearing non-current liabilities	207	203	204
Total non-current liabilities	602	743	750
Current interest-bearing liabilities	665	766	302
Accounts payable – trade	2,150	1,826	1,835
Other current noninterest-bearing liabilities	1,655	1,602	1,651
Total current liabilities	4,470	4,194	3,788
Total shareholders' equity and liabilities	7,556	7,129	7,173
Contingent liabilities	20	24	19
Pledged assets	17	1	14

Condensed statement of cash flows, Group
	Six months	Six months
SEK m	2010	2009	2009
Operating activities
Cash flow from operating activities before changes in working capital, before paid tax	783	751	1,652
Paid tax	-184	-164	-242
Changes in working capital	109	108	148
Cash flow from operating activities	708	695	1,558
Investing activities
Company acquisitions, net	-6	-4	-6
Acquisitions of non-current assets, net	-434	-292	-587
Change in financial non-current assets, net	-1	-	13
Cash flow from investing activities	-441	-296	-580
Financing activities
Change in interest-bearing liabilities	210	-88	-554
Dividend paid out	-525	-420	-420
Cash flow from financing activities	-315	-508	-974
Cash flow for the period	-48	-109	4

Condensed statement of changes in equity, Group
SEK m	Six months 2010	Six months 2009	2009
Amount at start of year	2,635	2,259	2,259
Total comprehensive income for the period	374	353	796
Dividend to shareholders	-525	-420	-420
Amount at end of period	2,484	2,192	2,635

Key ratios and other data, Group

	Six months 2010	Six months 2009	2009
Operating margin, %	3.1	3.2	3.5
Margin after financial items, %	3.0	3.0	3.3
Equity ratio, %	32.9	30.7	36.7
Debt-equity ratio, net, multiple	0.3	0.5	0.2
Debt-equity ratio, multiple	0.4	0.6	0.3
Interest coverage, multiple	26.3	18.7	22.2
Capital employed, SEK m	3,544	3,498	3,483
Return on capital employed, %	32.7	30.5	31.8
Return on shareholders' equity, %	34.8	36.7	32.4
Capital expenditures, SEK m	454	319	633
Earnings per share, SEK1	7.10	6.73	15.13
Dividend per share, SEK	-	-	10.00
Net asset value per share, SEK1	47.34	41.78	50.22
Cash flow per share, SEK1	0.9	-2.1	0.1
Number of shares outstanding1	52,467,678	52,467,678	52,467,678
Average number of employees during the year	6,802	6,837	6,816

1) The number of shares is the same before and after dilution. The average number of shares is the same as the number of shares outstanding. Axfood has no holdings of treasury shares.

Quarterly overview
	Q3 08	Q4 08	Q1 09	Q2 09	Q3 09	Q4 09	Q1 10	Q2 10
Sales	7,934	8,144	7,682	8,216	8,049	8,431	8,210	8,583
Operating profit	284	277	234	269	335	290	245	279
Operating margin, %	3.6	3.4	3.0	3.3	4.2	3.4	3.0	3.3
Earnings per share, SEK1	3.66	3.79	3.10	3.63	4.57	3.83	3.31	3.79
Capital expenditures	123	219	135	184	120	194	204	250

1) The number of shares is the same before and after dilution. The average number of shares is the same as the number of shares outstanding. Axfood has no holdings of treasury shares.

FINANCIAL STATEMENTS, PARENT COMPANY

Condensed income statement, Parent Company
SEK m	Q2 2010	Q2 2009	Six months 2010	Six months 2009	2009
Net sales	-	-	-	-	-
Selling/administrative expenses, etc.	-19	-9	-29	-14	-26
Operating profit	-19	-9	-29	-14	-26
Net financial items	0	-4	-4	-12	-20
Profit after financial items	-19	-13	-33	-26	-46
Untaxed reserves	-	-	-	-	1
Profit before tax	-19	-13	-33	-26	-45
Tax	5	4	9	7	11
Net profit for the period Operating profit includes deprecia	-14	-9	-24	-19	-34
tion/amortization of	2	2	4	4	8

Profit for the period corresponds to comprehensive income for the period.

Condensed balance sheet, Parent Company
SEK m	Six months 2010	Six months 2009	2009
Assets
Property, plant and equipment	6	12	9
Participations in Group companies	3 468	3 468	3 468
Other financial non-current assets	4	4	3
Deferred tax assets	10	10	10
Total non-current assets	3 488	3 494	3 490
Receivables from Group companies1	721	878	1 804
Interest-bearing receivables	-	13	-
Other current assets	135	146	13
Cash and bank balances	-	-	-
Total current assets	856	1 037	1 817
Total assets	4 344	4 531	5 307
Shareholders' equity and liabilities
Restricted shareholders' equity	262	262	262
Unrestricted shareholders' equity	2 535	2 265	3 084
Total shareholders' equity	2 797	2 527	3 346
Untaxed reserves	5	5	5
Non-current interest-bearing liabilities	31	181	180
Noninterest-bearing non-current liabilities	8	7	7
Total non-current liabilities	39	188	187
Current interest-bearing liabilities	629	733	264
Liabilities to Group compaines2	834	1 046	1 417
Accounts payable – trade	15	11	8
Other current noninterest-bearing liabilities	25	21	80
Total current liabilities	1 503	1 811	1 769
Total shareholders' equity and liabilities	4 344	4 531	5 307
Contingent liabilities	360	369	360
Pledged assets	-	-	-
1) of which, interest-bearing receivables	720	876	659
2) of which, interest-bearing liabilities	829	962	1 402

FINANCIAL DEFINITIONS

Average number of employees during the year: Total number of hours worked divided by the number of hours worked per year (1,920 hours).

Capital employed: Total assets less noninterestbearing liabilities and noninterest- bearing provisions. Average capital employed is calculated as capital employed at the start of the period plus capital employed at the end of the period, divided by two.

Cash flow per share: Cash flow for the year divided by a weighted average number of shares outstanding. For cash flow per share after the dilutive effect see "Earnings per share after dilution" below.

Debt-equity ratio: Interest-bearing liabilities divided by shareholders' equity including minority interests.

Dividend yield: Dividend per share divided by the year-end share price.

Earnings per share: Majority owner's share of net profit for the year divided by a weighted average number of shares outstanding.

Earnings per share after dilution: Majority owner's share of net profit for the period after tax, adjusted for interest expenses after taxes pertaining to outstanding convertibles, divided by a weighted average number of common shares adjusted for the dilutive effect of convertibles. The dilutive effect of convertibles consists of the number of shares that would be issued upon full conversion.

Equity ratio: Shareholders' equity including minority interests, as a percentage of total assets.

Interest cover ratio: Profit after financial items plus financial expenses, divided by financial expenses.

Margin after financial items: Profit after financial items as a percentage of net sales for the period.

Net asset value per share: Majority owner's share of shareholders' equity divided by the number of shares outstanding. For net asset value per share after the dilutive effect, see "Earnings per share after dilution" above".

Net debt: Cash and cash equivalents plus interestbearing receivables less interest-bearing liabilities and provisions.

Net debt-equity ratio: Interest-bearing liabilities and provisions less cash and cash equivalents and interest-bearing receivables, divided by shareholders' equity including minority interests.

Operating margin: Operating profit as a percentage of net sales for the period.

P/E multiple after dilution: Share price in relation to earnings per share after dilution.

P/E multiple before dilution: Share price in relation to earnings per share.

Return on capital employed: Profit after financial items, plus financial expenses, as a percentage of average capital employed.

Return on shareholders' equity: Majority owner's share of net profit for the period as per the income statement as a percentage of the majority owner's share of average shareholders' equity. Average shareholders' equity is calculated as shareholders' equity at the start of the period plus shareholders' equity at the end of the period, divided by two.

Axfood AB, SE-171 78 Solna Visitors' address: Hemvärnsgatan 9 Tel +46-8-553 990 00 Fax +46-8-730 03 59 info@axfood.se, www.axfood.se

Axfood AB conducts food retail and wholesale business in Sweden. Retail business is conducted through the wholly owned store chains Willys, Hemköp and PrisXtra, comprising 230 stores in all. In addition, Axfood collaborates with 840 proprietor-run stores. Axfood has an approximate 20% share of the food retail market in Sweden. Axfood is listed on Nasdaq OMX Stockholm AB's Large Cap list.