Sales Increase by 40.6%, Operating Cash Flow by 51.2%, Cash EPS by 10.9%
BRUSSELS, Belgium, April 27, 2001 - Delhaize Group (Euronext Brussels: DELB, NYSE: DEG), the Belgian international food retailer, reported today sales of EUR 5.0 billion for the thirteen week period ending March 31, 2001, an increase of 40.6% over the first quarter of the prior year. The two largest companies of the Group, Delhaize America and Delhaize Belgium, had strong comparable store sales of 3.9% and 7.1%, respectively.
In the first quarter of 2000, Delhaize America's results were for a twelve week quarter. In 2001, Delhaize America has adjusted its calendar for four thirteen week quarters to align with Delhaize Group. In the first quarter of 2001, the increase of Delhaize Group's sales on a comparable basis amounted to 32.6%.
Delhaize Group's cash flow from operations (EBITDA) increased by 51.2% to EUR 366.1 million in the first quarter of 2001. Compared to 2000 figures, adjusted for Delhaize America's results on a thirteen-week basis, the increase amounted to 44.2%. In the first quarter of 2001, Delhaize Group posted an operating cash flow margin of 7.3% of sales compared to 6.8% in the first quarter of 2000. In the first quarter of 2001, EBITDA of Delhaize America increased 31.5% on a comparable thirteen-week basis, while Delhaize Belgium's EBITDA increased 49.7%.
In the first quarter of 2001, Delhaize Group earned EUR 46.4 million, before goodwill amortization and exceptional items, compared to EUR 41.8 million in the first quarter of 2000, an increase of 10.9%. Per outstanding share, cash earnings increased by 10.9% to EUR 0.89. Compared to 2000 figures adjusted for Delhaize America results on a thirteen-week basis, the increase amounted to 7.6%.
In the first quarter of 2001, net earnings after goodwill amortization and exceptional items of Delhaize Group was EUR 26.7 million, or EUR 0.51 per share compared to a total of EUR 40.1 million or EUR 0.77 per share in the first quarter of 2000, a decrease of 33.4%. Compared to 2000 figures adjusted for Delhaize America results on a thirteen-week basis, the decrease amounted to 35.0%. The decrease is the result of financial expenses, amortization of goodwill, and one-time merger costs due to the Hannaford acquisition.
During the first quarter of 2001, Delhaize Group extended its sales network with 92 stores to a total of 2,402 outlets. A large part of the increase was due to the acquisition of Trofo in January 2001 by the Greek Delhaize Group subsidiary Alfa-Beta, which resulted in an increase of its sales network in the first quarter of 2001 by 53 stores to a total of 106 stores.
"We are very satisfied with the Group results in the first quarter", said Pierre-Olivier Beckers, President and Chief Executive Officer of Delhaize Group. "Delhaize America and Delhaize Belgium had strong results, on both sales and cash earnings. Delhaize America benefited from the synergies gained through the acquisition of Hannaford. Food Lion, the major banner of Delhaize America, continued to increase its margins. Delhaize Belgium is well on track to reach the targeted operating cash flow margin of 5.5% at the end of 2001."
On April 25, 2001, the shareholders of Delhaize America approved a share exchange with Delhaize Group, resulting in full control of Delhaize America by Delhaize Group. Before the share exchange Delhaize Group owned 37% of Delhaize America's Class A common stock and 56% of Delhaize America's Class B common stock. On April 26, 2001, Delhaize Group began trading on the New York Stock Exchange as the company launched its American Depositary Receipt (ADR) program under the symbol "DEG".
Pierre-Olivier Beckers said: "The simplified capital structure, the increased liquidity of the stock, the higher market capitalization, and the strong results that we show today, will increase the attractiveness of Delhaize Group in the financial markets. The share exchange will also allow Delhaize Group to optimally align its financial and human resources with its global priorities."
In 2001, Delhaize Group expects an increase of its sales network by 200 stores (+ 8.7%) to 2,510 stores. Total sales are expected to exceed EUR 20 billion, while cash flow from operations is expected to rise by 20 to 25% (on the assumption of a 2001 average exchange rate of 1 EUR = 0.96 USD).
Operating Companies
United States
In the thirteen-week period ending March 31, 2001, sales of Delhaize America stood at USD 3.6 billion (EUR 3.9 billion), an increase of 33.8% over the comparable thirteen-week period of the prior year. Comparable store sales for the thirteen-week period increased 3.9%.
In the first quarter of 2001, cash earnings were USD 64.1 million (EUR 69.4 million), a decrease of 10.8% compared to USD 71.9 million (EUR 72.8 million) in the comparable thirteen-week period in 2000. Cash flow from operations increased by 31.5% over the comparable thirteen-week period of the prior year to USD 282.0 million (EUR 305.3 million) or 7.8% of sales.
Before merger costs related to the acquisition of Hannaford Bros., first quarter earnings amounted to USD 42.4 million (EUR 45.9 million) compared to USD 67.7 million (EUR 68.6 million) in the comparable thirteen-week period in 2000. After merger costs, Delhaize America posted USD 27.9 million (EUR 30.2 million) earnings (USD 67.5 million or EUR 68.4 million in 2000).
First quarter's strong results reflect good sales momentum at all three banners, continuing gross margin improvement over the last several quarters and good cost control. All banners increased their market share. The benefits of the merger with Hannaford Bros. continue to be realized as planned. Delhaize America achieved approximately USD 10 million in benefits from best practices and synergy development in the first quarter of 2001 for a total of USD 20 million achieved since the July 31, 2000 merger date.
At the end of the first quarter 2001, Delhaize America was operating 1,425 supermarkets. Nine new stores, including two relocated stores were added, two stores were closed while 26 stores were renovated during the quarter.
In 2001, total sales of Delhaize America are expected to grow approximately 17-18%, with comparable store sales growth to be 1.5-2%. Cash flow from operations is expected to increase between 25 and 30%.
In April 2001, Delhaize America successfully refinanced the USD 2.5 billion term loan facility used to fund the acquisition of Hannaford Bros., by issuing USD 600 million notes due 2006, USD 1.1 billion notes due 2011 and USD 900 million debentures due 2031.
On April 27, 2001, Delhaize Group will file a Form 6-K disclosing the separate financial statements for Delhaize America for the quarter ended March 31, 2001. The results are shown in comparison to the twelve-week quarter ended March 25, 2000 with accompanying disclosure of the financial results for the thirteen-week period ended April 1, 2000.
Delhaize America has changed its quarterly financial reporting calendar in 2001 to provide for four equal thirteen-week quarters in its fiscal year, to be in line with the fiscal calendar of Delhaize Group. First quarter 2001 sales and earnings of Delhaize America include results from Hannaford Bros. that was acquired on July 31, 2000.
Over the first quarter of 2001, Super Discount Markets achieved sales of USD 72.6 million (EUR 78.6 million) and cash flow from operations of USD 0.5 million (EUR 0.6 million). As of the end of the first quarter of 2001, Super Discount Markets was operating 21 Cub Foods supermarkets and nine Save-A-Lot discount stores.
Europe
In the first quarter of 2001, Delhaize Belgium achieved sales of EUR 771.1 million, an increase of 10.2% resulting from successful sales initiatives in existing stores and the growth of the sales network. Comparable store sales increased by 7.1%. Market share continued to increase.
Cash flow from operations was up by 49.7% to EUR 39.8 million, resulting in an increase of the operating cash flow margin from 3.8% (first quarter of 2000) to 5.2% in the first quarter of 2001.
The sales network was extended with 27 AD Delhaize, Proxy, Bio Square and Shop 'n Go stores, one Di store and four Tom & Co stores. In the first quarter of 2001, Delhaize Belgium successfully launched the new store format Bio Square, the first 100% exclusive organic food and non-food products store of Delhaize Belgium.
During the first quarter of 2001, sales of Alfa-Beta (Greece) were up by 10.0% to EUR 119.6 million. Cash flow from operations increased by 17.2% to EUR 5.3 million, or 4.4% of sales. In the first quarter of 2001, Alfa-Beta completed the acquisition of Trofo, the sixth largest Greek food retailer, becoming the second largest food retailer in Greece. In the first quarter of 2001, Alfa-Beta added 40 supermarkets and 13 cash & carry-stores to its sales network, including the Trofo stores, thereby reaching a total of 106 stores at the end of March 2001. In 2001, Alfa-Beta will integrate the Trofo head and back offices, and convert approximately ten Trofo stores to the Alfa-Beta banner. For the first quarter of 2001, the results of Trofo are not consolidated.
Sales of Delvita (Czech Republic and Slovakia) totalled CZK 2.7 billion (EUR 77.8 million), a decrease of 10.8% due to the significant number of competitive openings. Cash flow from operations amounted to CZK 164.6 million (EUR 4.7 million), an increase by 5.8% as a result of the focus on cost reductions. The operating cash flow margin increased to 6.1% of sales. At the end of March 2001, Delvita was operating 113 stores, of which 98 are in the Czech Republic and 15 in Slovakia.
In the first quarter of 2001, Mega Image (Romania) posted sales of ROL 210.5 billion (EUR 8.5 million) and cash flow from operations of ROL 14.0 billion (EUR 0.6 million). At the end of the first quarter of 2001, Mega Image operated ten stores.
Asia
Sales of the operating companies of Delhaize Group in Asia rose during the first quarter of 2001 by 20.3% to EUR 63.2 million. Operating cash flow amounted to EUR 0.7 million, compared to EUR 1.3 million for the first quarter of 2000. In the first quarter of 2001, the sales network increased by three stores to a total of 71 stores, including 19 in Thailand, 22 in Indonesia and 30 in Singapore.
Delhaize Group
Delhaize Group is a food retailer headquartered in Belgium and listed on Euronext Brussels and on the New York Stock Exchange. At the end of the first quarter of 2001, Delhaize Group's sales network consisted of 2,402 stores in ten countries on three continents. In 2000, Delhaize Group achieved sales of EUR 18.2 billion (USD 16.8 billion) and net earnings of EUR 160.7 million (USD 148.1 million). Delhaize Group employs approximately 152,000 persons.
This press release is available in English, French and Dutch. For more information, visit the Delhaize Group web site at www.delhaizegroup.com. Questions can be e-mailed to investor@delhaizegroup.com.
This press release is not an offer or the solicitation of an offer to acquire any securities of Delhaize Group and no such offer or solicitation will be made except in compliance with applicable securities law
This press release includes forward-looking statements (statements that are not historical facts and relate to future activities and performance) that involve risks and uncertainties, including those described in Delhaize Group's filings with the Securities and Exchange Commission. These forward-looking statements include statements about strategic options, future strategies and the anticipated benefits of these strategies, and they are subject to risks and uncertainties. Actual results may differ materially from those stated in any forward-looking statements based on a number of factors, including the early stage of Delhaize Group's consideration of these strategic options and strategies, the possibility that Delhaize Group may decide not to implement these strategies, the ability of Delhaize Group to successfully implement these strategies if and when Delhaize Group decides to implement them or any of them, and the possibility that the anticipated benefits of these strategies are not achieved. The recent share exchange and the listing of the Delhaize Group ADRs on the New York Stock Exchange may not yield the expected benefits. Delhaize Group assumes no obligation to update the information contained in this press release.
Delhaize Group will conduct an investor's conference call at 3:00 p.m. CET Brussels (9:00 a.m. EDT) on April 27, 2001. The conference call will be broadcast live over the internet at http://www.delhaizeamerica.com and http://www.delhaizegroup.com from 3:00 p.m. CET Brussels (9:00 a.m. EDT). An audio replay of this web cast will be available on the same websites starting at 8:00 p.m. CET Brussels (2:00 p.m. EDT) the same day.
Click here for the First Quarter 2001 Figures (Unaudited)
Contacts
Guy Elewaut: GSM +32 (0)477 50 07 96 + 32 (0)2 412 29 48 (from May 3, 2001)
Geoffroy d'Oultremont: GSM +32 (0)478 88 32 96 + 32 (0)2 412 83 21 (from May 3, 2001)
Tawn Earnest: +1 (704) 633-8250, ext. 2185
Amy Shue: +1 (704) 633-8250, ext. 2529