Ahold Delhaize sees improvement in Belgium

The major supermarket Ahold Delhaize performed better than expected last quarter. One of the windfalls is the ‘recovery of performance’ at subsidiary Delhaize in Belgium.

The listed Ahold Delhaize

, one of the larger supermarket groups in the world and best known to us for Delhaize, Albert Heijn and Bol, saw its share price rise on Wednesday morning. This has to do with the better than expected first quarter results. Turnover amounted to 21.7 billion euros, 0.4 percent more than a year earlier. The analysts had expected 21.5 billion euros.

The profit was also better than expected. The underlying operating profit margin was 4 percent, while analysts had targeted 3.8 percent.

The market was mainly looking forward to the profit figures. Supermarkets saw their results boosted by food price increases over the past two years, but now they are struggling with higher wages and hesitant consumers, who are spending less and buying more private labels, as inflation cools.

Ahold Delhaize only saw an improvement in profit last quarter in Europe, where the underlying operating margin rose by 0.3 percentage points to 3.2 percent. In the US, 0.2 percentage points fell to 4.6 percent. This was partly due to the scaling back of a support program for families with lower incomes. Households in the US who saw their budgets under pressure also spent more on private labels than on more expensive A-brands. As a result, turnover in the US fell, while in Europe it rose.

For Europe, in connection with the slightly higher profit margin, the group talks about the effect of a ‘recovery of performance’ in Belgium, where Delhaize suffered from strikes a year ago after the announcement of the privatization of its 128 own stores, and of lower energy costs. These favorable elements were partly offset by higher wages and an increased Dutch pension contribution.

Regarding the privatization operation at Delhaize, CEO Frans Muller said in the press release on Wednesday that ‘excellent progress’ has been made and that important milestones have been achieved. ‘So far, 76 stores have been transferred to their new owners. We expect all conversions to be completed by the end of the year.”

“We see promising results in the stores that have already made the switch, with more customer visits and fuller shopping baskets,” says Muller. ‘That will play an important role in the European margin recovery in the coming years.’ The company reiterated its full-year forecast on Wednesday.