Synergy savings offset price deflation during Q1 at Ahold Delhaize U.S. division
ZAANDAM, the Netherlands — Ahold Delhaize, parent company to several U.S. supermarket chains, including Stop & Shop, Giant, Food Lion and Hannaford, revealed in its 2017 first quarter in the United States, sales were impacted by continuing price deflation, adverse weather and the timing of Easter, but were offset by the delivery of strong synergy savings in the quarter.
Referring to synergy savings, the company stated in its report: “In the United States, discussions with suppliers of nonbranded products are ongoing and progressing according to plan.” In 2017, U.S. net synergy savings have reached €35 million ($38 million).
“Although deflationary pressure was in line with previous quarters, it improved towards the end of the first quarter and we expect sales performance to improve in the second quarter and to operate in a slightly inflationary environment in the second half of the year,” said Ahold Delhaize CEO Dick Boer.
In its Ahold USA division, the company achieved net sales of €5.96 billion ($6.48 billion) compared to €5.837 billion ($6.34 billion) in the year-ago period.
Companywide, Ahold’s net sales for Q1 increased by 65% to €15.9 billion ($17.28 billion) and net income increased by 72.8% to €356 million ($387 million). The company currently sports free cash flow of €197 million ($214.2 million).
"We are pleased to report a resilient first quarter performance with an increase in margins for the Group despite the ongoing deflationary environment in the United States,” said Boer. “We continue to make significant progress on the implementation of our Better Together strategy, investing in our customer proposition, while improving margins.”
The CEO added he is pleased with the progress of the Ahold-Delhaize merger. "Ten months after the merger of Ahold and Delhaize, we are fully on track with the integration and we are delivering on our synergy targets. We are driving forward our integration programs and continue to focus on sharing best practices across and within regions, as we aim to further strengthen our great local brands to ensure they remain customer-focused, close to their communities and positioned to win in their markets,” he said.