Se Second Qu Quarter 20 2016 Re Results ts August 25, 2016
Second Quarter 2016 Results Se 2 Today’s second quarter results presentation - content • In Introduction – Di Dick Boer • Ah Ahold Q2 Q2 2016 results – Di Dick Boer, Jeff Carr • De Delhaize Group Q2 Q2 2016 results – Fr Frans Mu Muller • Ahold De Ah Delhaize’s integration, outlook an and d upc pcoming events – Di Dick Boer, Fr Frans Mu Muller, Jeff Ca Carr
Strong Q2 results for both Ahold and Delhaize Group provide good 3 momentum for Ahold Delhaize • Ahold Delhaize merger effective on July 24, 2016 • Two separate sets of results as Q2 for both companies ended prior to merger completion • Ahold underlying operating income of € 355 million, up 8.0% at constant exchange rates • Delhaize Group underlying operating profit of € 247 million, up 12.1% at constant exchange rates
Second Quarter 2016 Results Se 4 Ahold Se Second qu quar arter 2016 results Dick Boer, Jeff Carr
Se Second Quarter 2016 Results 5 Ahold second quarter 2016 highlights • 3.0% increase in Q2 Group sales to € 9.0 billion (up 4.4% excluding gas at constant exchange rates) • Improving volume sales trend in the United States • Continued strong online consumer sales in the Netherlands, up more than 30% • Strong margins in the Netherlands driven by Simplicity savings • Underlying operating margin of 4.0% (Q2 2015: 3.8%) • 7.3% increase in Group underlying operating income (up 8.0% at constant exchange rates) • Free cash flow of € 253 million, half-year 2016 € 540 million
Se Second Quarter 2016 Results 6 Group performance - Ahold ( € in Millions) Quarter 2 2016 2015 Change Change* • Continued good operational and Net sales Ne 8,951 8,688 3.0% 3.6% financial performance Net sales excl gas 4.4% • Underlying operating margin improved, primarily resulting from Un Underlying operating income 355 331 7.3% 8.0% The Netherlands • One-off charges in operating Underlying operating margin Un 4.0% 3.8% income largely merger-related Op Operating income 319 301 6.0% 6.6% In Income from continuing 208 195 6.7% 7.5% operation op ons Net income Ne 209 195 7.2% 7.7% * At constant exchange rates
Se Second Quarter 2016 Results 7 Performance by segment - Ahold ( € in Millions) Quarter 2 Ahold USA The Netherlands Czech Republic • Strong net sales excluding gas 2016 2016 2016 Change* Change Change* resulting mainly from positive Ne Net sales 5,526 3.4% 3,022 4.6% 403 (0.3%) volume development in the U.S. and continued strong online growth in the Netherlands Net sales excl gas 4.6% 4.6% 0.1% • Underlying operating margin Underlying operating Un improved as Q2 Simplicity savings 215 2.1% 157 20.8% 7 69.0% income in exceeded reinvestments in customer proposition in the Netherlands Underlying operating Un 3.9% 0.0 5.2% 0.7 1.7% 0.7 margin ma • Good identical sales performance, despite deflationary environment in the U.S. Growth 2015 vs. 2014 Identical sales Id 1.2% (0.4) 3.2% (0.2) 1.3% (0.8) positively impacted by the timing growth excl ga gr gas of Easter * At constant exchange rates
Se Second Quarter 2016 Results 8 Operating cash flow generation - Ahold ( € in Millions) Quarter 2 2016 2015 Change • Strong operating cash flow Operating cash flow* 575 534 41 delivered • Higher income taxes paid Change in working capital 41 59 (18) compared to last year which included several one-off tax benefits (114) (33) (81) Income tax paid • Higher investments in non- current assets following Net investment (180) (123) (57) additional logistical investments in the Netherlands as (69) (70) 1 Interest and dividend joint ventures announced previously • YTD free cash flow of € 540 million, down € 13 million versus Fr Free cas ash flow 253 25 367 36 (114) (1 H1 2015 * From continuing operations before changes in working capital and income tax paid
Second Quarter 2016 Results Se 9 Ahold business highlights USA US The Netherlands Th bo bol.com • • • New Produce department rolled out Leading in choice and quality: new Consumer sales in Belgium up 59% to 688 stores, new Bakery to 640 assortment of over 600 products and Plaza sales up 83% stores, showing volume uplift; rollout launched , and quality of over 500 • New assortment of premium of both to be completed in Q3 products improved in H1’16 beauty care brand Rituals • Price reductions on 1000+ items, launched additional media campaigns and strong weekly ads drove solid unit growth • Successful initiatives on Produce Cz Czech Republic to support a healthier lifestyle • Next wave of Favorite initiatives • Introduction of weekly personalized launched promo offerings • Loyalty campaign launched with • Successful virtual reality campaign Curver meal boxes • Nature’s Promise organic and free- with dinosaurs for kids • Nominated finalist in the from brand continued to show • Belgian products offered to European Quality Awards strong growth , up 18% celebrate the merger
Se Second Quarter 2016 Results 10 10 Delhaize Group Se Second qu quar arter 2016 results Frans Muller
Se Second Quarter 2016 Results 11 11 Delhaize Group second quarter 2016 highlights Gr Group • Revenues +4.3% at identical exchange rates • Underlying operating profit +12.1% at identical exchange rates • Operating free cash flow of € 258 million U. U.S. • Continued solid CSS (2.9%) and real growth (3.9%) at both Food Lion and Hannaford • Persisting retail deflation • Resilient underlying operating margin Be Belgium • Market share continued to recover following the Transformation Plan related disruption • CSS (2.1%) driven by performance of affiliated stores and inflation • Company-operated stores lagging expectations • Underlying operating margin supported by Transformation Plan savings SE SEE • Continued strong CSS at 8.7%, driven by Romania and Greece • Market share improvements in all 3 countries • Underlying operating margin supported by sales leverage in Romania • Intense promotional environment in Greece
Se Second Quarter 2016 Results 12 12 Financial results Q2 2016 – Delhaize Group ( € in Millions) Quarter 2 % Growth 2016 2015 Actual rates Identical rates Re Revenues 6,286 6,114 2.8% 4.3% 24.4% 24.4% 5 bps 7 bps Gr Gross Margin 21.0% 21.2% (16 bps) (14 bps) SG SG&A as % of revenues Underlying EB Un EBITDA 414 393 5.2% 6.8% Un Underlying Operating Profit 247 223 10.4% 12.1% Un Underlying Operating Margin 3.9% 3.7% 27 bps 27 bps Op Operating Pr Profit 217 187 15.8% 17.8% Op Operating Free Cash Flow 258 322 (20.0%) (19.6%)
Se Second Quarter 2016 Results 13 13 Delhaize America Organic revenue and +0.3% -0.3% -1.0% 2016 Q2 +3.9% CSS +2.9% CS +2.9% 20 Real growth Retail inflation CSS Calendar Impact Expansion Organic Revenue Or Growth Underlying operating Q2 Q2 margin impacted by: Q2 2015 3.9% • (+) Continued sales momentum at both margin banners Q2 Q2 • (+) Lower cost of products in some categories ma • (+) Lower shrink at Food Lion 4.1% Q2 2016 • (-) Increased labor and healthcare expenses • (-) Hannaford price investments (started in Q4 15) Un
Se Second Quarter 2016 Results 14 14 Delhaize Belgium Organic revenue and +0.2% +0.3% Q2 2016 Q2 +2.6% CSS CS +2.1% CSS Calendar Impact Expansion Organic Revenue Or Growth Underlying operating 3.2% Q2 2015 margin Q2 Q2 Q2 margin impacted by: Q2 ma Q2 2016 3.3% • (+) Transformation Plan savings • (-) Higher shrink in supermarkets • (-) Price investments Un
Se Second Quarter 2016 Results 15 15 Delhaize Southeastern Europe Organic revenue and +5.0% +0.5% +14.2% Q2 2016 Q2 CSS CS +8.7% CSS Calendar Impact Expansion Organic Revenue Or Growth Underlying operating Q2 2015 4.5% Q2 Q2 margin impacted by: margin Q2 Q2 • (+) Strong revenues in Romania ma and Greece Q2 2016 5.0% • (+) Good cost control • (-) Intense promotional activity in Un Greece
Se Second Quarter 2016 Results 16 16 Free cash flow - Delhaize Group ( € in Millions) Operating Free Cash Flow Q2 2015 322 Q2 Q2 Ca Q2 2016 258 Op 771 Flow Generation 267 109 2016 H1 329 20 Free Cash Fl 35 31 42 31 -42 EBITDA Changes Net Cash Other Operating Transfor- Merger- Free Cash in core payment capex Free Cash mation Plan related Fr Flow working of interest Flow costs capital and taxes
Second Quarter 2016 Results Se 17 17 Ahold Delhaize In Integration, outlook & & up upcoming ev even ents Dick Boer, Frans Muller, Jeff Carr
Second Quarter 2016 Results Se 18 18 Integration off to a good start • Smooth Day 1 transition, showing the value of solid integration preparation • Successful integration of two Head Offices into single Zaandam-based HQ • Kick-off has started of cultural integration agenda • Global Integration Management Office drives integration process • New visual identity was introduced and rolled out across all corporate offices
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