Koninklijke Ahold Delhaize (AD) Q2 2024 earnings summary

Executive summary

• Strong Q2 2024 performance with net sales up 0.7% to €22.3 billion, margin improvement, and continued momentum in both U.S. and European markets; Europe outperformed the U.S. in sales growth.

• Launched and advanced the 'Growing Together' strategy, focusing on customer value, market densification, innovation, and cost efficiency, supported by structural changes and cost savings.

• Investments in omnichannel capabilities, private label, price competitiveness, and digital initiatives are driving growth.

• Reiterated full-year 2024 outlook, with confidence in delivering strategic and financial goals despite ongoing household budget pressures.

• Benefited from Belgium Future Plan and cost savings, supporting new strategy execution.

Financial highlights

• Net sales grew 0.7% at constant rates to €22.3 billion; underlying operating margin was 4.2%, up 10 basis points year-over-year.

• Q2 underlying operating income was €933 million (+2.6% YoY); IFRS operating income was €790 million (+9.1% YoY); diluted underlying EPS rose 4.5% to €0.65.

• Group online sales increased 3.4% at constant rates, with double-digit growth at most brands, offset by FreshDirect divestment.

• Free cash flow for Q2 was €378 million, down year-over-year due to prior year tax refund and working capital timing; H1 free cash flow at €754 million.

• Interim dividend set at €0.50 per share, up from €0.49 in 2023; share buyback program ongoing with €501 million spent in H1.

Outlook and guidance

• 2024 guidance reiterated: underlying operating margin ≥4.0%, underlying EPS around 2023 levels, free cash flow ~€2.3 billion, net capex ~€2.2 billion.

• Guidance incorporates FreshDirect divestment, tobacco sales cessation at Albert Heijn, and Stop & Shop store closures.

• Strong H1 performance allows for accelerated investments in the Growing Together strategy.

• Vendor support and positive volume trends expected to continue, especially in the U.S.

• Profi acquisition in Romania expected to close in Q4 2024, excluded from current outlook.