Ahold sees first quarter profit slip
Net income declined to 282 million Euro ($352 million) from 291 million Euro a year earlier, the Amsterdam-based company said today. Analysts expected profit of 304 million Euro. Sales rose 5 percent to 9.72 billion euros.
"We expect 2012 to be another challenging year for the food-retail industry, with intense competitive activity and consumer spending under pressure due to economic uncertainty, particularly in Europe," Chief Executive Officer Dick Boer said today.
he said ability to raise profits fell in the US as the company invested in price cuts in order to gain market share. Ahold is also expanding geographically, for example into Belgium, in order to life revenue.
In the U.S., where Ahold makes the bulk of its sales, underlying operating income as a percentage of revenue dropped to 4.1 percent from 4.6 percent. Revenue increased 2.8 percent to $7.8 billion.
"We have to play a very aggressive game on promotion in the U.S.,” Boer said, adding that Ahold has increased its market share. With U.S. unemployment still at high levels, Boer said he is cautious for the rest of the year.
In the Netherlands, sales increased 1.2 percent to 3.3 billion Euro. Sales growth was affected by a shift in holidays, mainly as a result of the timing of Easter, the retailer said. In the second quarter, identical sales growth for the company will improve from the first, Boer said.
Ahold, which owns Albert Heijn stores in the Netherlands and Belgium, has said it plans to cut costs by an additional 350 million Euro over three years and increase the proportion of earnings paid as dividends.
Source: businessweek.com
