Supermarket group Koninklijke Ahold (AHONY.PK) Thursday reported a decline in profit for the fourth quarter, despite a 3.4% growth in sales. The company attributed the decline to lower margins due to deflation, trading down by customers and increased promotional activity. Further, the company announced a EUR 500 million share buyback program and proposed a 28% increase in annual dividend.
For the fourth quarter, net income attributable to common shareholders dropped 8.2% to EUR 267 million or EUR 0.22 per share from EUR 291 million or EUR 0.24 per share last year.
Income from continuing operations declined 6.5% to EUR 273 million or EUR 0.23 per share from EUR 292 million or EUR 0.24 per share, reflecting lower operating income and higher net financial expense, partly offset by lower income taxes.
Quarterly net sales rose 3.4% to EUR 6.80 billion from EUR 6.58 billion last year. At constant exchange rates, net sales increased by 11.0% in the quarter, positively impacted by an additional week, while adjusted net sales increased by 2.1%.
Segment wise, net sales from Stop & Shop and Giant-Landover dipped 1.9% to EUR 3.01 billion from EUR 3.07 billion last year, while Giant-Carlisle net sales increased 2.1% to EUR 869 million from EUR 851 million last year, contributing to a 1.0% total sales decline at Ahold USA.
Comparable sales at Stop & Shop grew 1.3% from last year and at Giant-Landover improved 2.9% from the prior year. Giant-Carlisle comparable sales rose 4.0% from last year.
Albert Heijn revenues advanced 12.3% to EUR 2.49 billion from EUR 2.22 billion a year earlier. Meanwhile, sales from Albert and Hypernova declined 1.8% to EUR 431 million from EUR 439 million last year. Total Ahold Europe sales increased 9.9% to EUR 2.92 billion from EUR 2.66 billion.
Total retail operating margin was 5.2% compared to 6.0% last year.
For the full year, net income attributable to common shareholders declined to EUR 894 million or EUR 0.74 per share from EUR 1.08 billion or EUR 0.90 per share last year, impacted significantly by discontinued operations. Full year results included, among other items a gain of EUR 7 million compared to EUR 46 million last year.
Discontinued operations in 2009 included a net provision of EUR 62 million, representing Ahold's estimate of obligations under the lease guarantees of its former subsidiaries BI-LO and Bruno's, whereas in 2008 it included a EUR 161 million gain related to the divestment of Schuitema.
Net sales for fiscal 2009 increased 8.9% to EUR 27.93 billion from EUR 25.65 billion in the previous year. At constant exchange rates, net sales increased by 6.0% and adjusted net sales was up by 3.9% from last year.
John Rishton, chief executive officer said, "Reflecting the confidence in our strategy, our ability to generate cash and our strong balance sheet we announced a €500 million share buyback program to be completed over the next 12 months and propose a 28% increase in our dividend to €0.23 per common share."
The company also reiterated its mid-term targets of net sales growth of 5%, mainly from identical sales growth and aretail operating margin of 5%, while maintaining an investment grade credit rating. At current exchange rates, Ahold expects its capital expenditure to be around EUR 1.1 billion.
In Wednesday's regular trading session, AHONY.PK closed at $12.51 per share.
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