Net Sales: EUR23.3 billion in Q4, EUR89.4 billion for the full year 2024. Online Sales Growth: 5.8% in Q4, 3.5% for the full year. Underlying Operating Margin: 4.1% for Q4, 4.0% for the full year. Diluted Underlying EPS: EUR0.69 for Q4, EUR2.54 for the full year. Operating Income: EUR607 million for Q4, EUR2.8 billion for the full year. Free Cash Flow: EUR1.3 billion in Q4, over EUR2.5 billion for the full year. Dividend Per Share: Proposed increase of 6.4% to EUR1.17 for 2024. Share Buyback Program: EUR1 billion initiated for 2025. US Comparable Sales: 1.2% increase excluding gas in Q4. European Net Sales: EUR9.4 billion in Q4, up 2.4%. Albert Heijn Market Share: Expanded to 37.7%. CO2 Emissions Reduction: 36% compared to 2018 baseline.

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Release Date: February 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Koninklijke Ahold Delhaize NV (ADRNY) achieved or exceeded all key goals for 2024, demonstrating strong underlying performance. The company reported a 5.8% increase in online sales for Q4 and 3.5% for the full year, with double-digit growth at brands like Albert Heijn and Food Giant. Albert Heijn expanded its market share to 37.7%, marking its sixth consecutive year of strong growth. The company generated over EUR1.35 billion in cost savings in 2024 through its 'Save for Our Customers' program. Koninklijke Ahold Delhaize NV (ADRNY) announced a proposal to increase the dividend per share by 6.4% for 2024, reflecting strong shareholder returns.

Negative Points

Underlying operating margin for Q4 decreased by 20 basis points to 4.1%, impacted by low and non-recurring items in the US. The end of tobacco sales in the Netherlands and the closure of underperforming Stop & Shop locations negatively impacted net sales growth. The divestment of FreshDirect had a negative impact on online sales growth by 5.1 percentage points for Q4 and 6.9 percentage points for the full year. The company faced challenges with inflationary costs, impacting affordability for customers. The integration of Profi is expected to have a dilutive impact on European margins in the first year.

Q & A Highlights

Q: Can you provide insights on the expected EBIT margin for Europe in 2025, especially with the inclusion of Profi? A: Jolanda Poots-Bijl, CFO, stated that while they don't provide regional guidance, they expect both regions to trend around a 4% margin. Profi is expected to align with European margins over time, with synergies starting to pay off in 2026.

Story Continues

Q: What are the initial effects of the price investments at Stop & Shop, and will these continue in 2025? A: Frans Muller, CEO, noted that the price investments have led to positive volume growth in the US, particularly at Stop & Shop. The company plans to continue these investments throughout 2025, with a total of $1 billion earmarked for price investments across US brands.

Q: Could you elaborate on the long-term plan for Profi, including expected synergies and margin targets? A: Jolanda Poots-Bijl, CFO, explained that Profi is currently profitable and is expected to trend in line with European margins over time. Synergies will begin to materialize in 2026, following the completion of the acquisition process.

Q: How do you see the US margin evolving in 2025, considering price investments and other factors? A: Jolanda Poots-Bijl, CFO, mentioned that while they don't provide regional margin guidance, the US margin is expected to remain stable for the full year, balancing investments with growth opportunities.

Q: Can you discuss the impact of the Belgian future plan on European margins? A: Jolanda Poots-Bijl, CFO, highlighted that the Belgian future plan has been successful, with affiliated stores outperforming expectations and recovering market share faster than anticipated, contributing positively to European margins.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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