Ahold Delhaize eyes growth in 2025 with digital expansion and cost efficiencies
Investing.com -- Ahold Delhaize (AS: AD ) on Wednesday said it is cautiously optimistic about 2025 despite market volatility anticipating continued progress in key financial and operational areas.
This is driven by their Growing Together strategy with ongoing investments in omnichannel platforms competitive pricing and store growth supporting their focus on customer loyalty and market leadership.
Net sales in the fourth quarter reached €23.3 billion, marking a modest increase of 0.6% at constant exchange rates.
This growth was tempered by several factors, including the divestment of FreshDirect, the closure of underperforming Stop & Shop stores, and the cessation of tobacco sales in the Netherlands.
Excluding these elements, net sales would have been 2.1 percentage points higher. For the full year, total net sales stood at €89.4 billion, reflecting a 0.9% increase at constant rates.
Comparable sales, excluding gasoline, rose by 1.4% in the fourth quarter, with a slight advantage in the U.S. market at 1.4% compared to 1.2% in Europe.
The U.S. segment showed signs of recovery in volume, particularly during the holiday season. Food Lion maintained its growth streak, marking its 49th consecutive quarter of comparable store sales growth.
Online sales continued to be a bright spot, increasing by 5.8% at constant exchange rates, with double-digit growth in online grocery excluding FreshDirect.
Despite these gains, profitability showed some pressure. The underlying operating margin stood at 4.1% in the fourth quarter, a decrease of 0.2 percentage points, mainly due to price investments in the U.S. and lower one-time gains.
Diluted underlying earnings per share declined by 6.6% to €0.69, while IFRS operating income fell by 10% to €607 million.
Full-year results were in line with expectations, with an underlying operating margin of 4.0% and diluted underlying EPS at €2.54.
Ahold Delhaize plans to boost earnings by opening more stores, remodeling existing ones, and integrating new technology.
The 2025 Profi acquisition should add about €3 billion in annual net sales. However, Stop & Shop closures and further tobacco sales restrictions in Belgium and the Netherlands will negatively impact comparable sales.
The company's free cash flow remained strong, reaching €2.5 billion in 2024, exceeding its original target. For 2025, free cash flow is projected at a minimum of €2.2 billion, with gross capital expenditures of around €2.7 billion.
“Without a doubt, 2024 has been a dynamic year with a lot to deal with: inflation, volatility in commodities and supply chain, social and political tensions and fast-paced changes due to new technologies that impact how we work and how we live,” said Frans Muller, chief executive at Ahold Delhaize in a statement.
By leveraging its Save for Our Customers initiative, the company is reinforcing its price competitiveness. The efficiency-driven approach is expected to continue until 2025, with savings of at least €1.25 billion.
Ahold Delhaize has also proposed a 6.4% increase in its dividend to €1.17 per share. Additionally, the company has maintained its annual share buyback program at €1 billion.