Ahold Delhaize delivers solid Q3 performance, reiterates 2024 outlook and announces €1 billion share buyback for 2025

• In Q3, Ahold Delhaize and its brands continued to put the needs of customers first. Gearing up for the holiday season, the brands further expanded their own-brand assortments, implemented price investments and remodeled stores. As part of their connection to local communities, the brands provided broad support after hurricanes and floods in the southeastern U.S. and the Czech Republic.
• Ahold Delhaize continues to benefit from structural changes in its brands, such as through the Belgium Future Plan, and ongoing cost savings initiatives. The results of these initiatives are providing a strong foundation to invest in and accelerate growth as it steps into its new Growing Together strategy.
• Q3 Group net sales were €22.0 billion, up 1.0% at constant exchange rates and up 0.2% at actual exchange rates. Q3 comparable sales excluding gasoline increased by 1.4% for the Group, up 1.2% in the U.S. and 1.6% in Europe. Comparable sales excluding gasoline were positively impacted by 0.5 percentage points in the U.S. due to weather and calendar shifts, and negatively impacted by 3.3 percentage points in Europe due to the cessation of tobacco sales.
• Our investments in expanding our omnichannel infrastructure and enhancing our digital loyalty programs are yielding strong results. Group online sales increased by 5.1% in Q3 at constant exchange rates and by 4.6% at actual exchange rates. This was driven by double-digit growth in online grocery excluding FreshDirect. The divestment of FreshDirect had a negative impact of 7.3 percentage points. 
• Q3 underlying operating margin was 3.9%, an increase of 0.1 percentage points due to continued strong performance in Europe and stable underlying income in the U.S., partially offset by a decrease in insurance results at the Global Support Office. 
• Q3 IFRS operating income was €583 million and IFRS diluted EPS was €0.40. IFRS results were €272 million lower than underlying results, mainly due to costs related to the closure of 32 Stop & Shop stores and to the Belgium Future Plan.
• Q3 diluted underlying EPS was €0.62, an increase of 7.0% compared to the prior year at actual rates. 
• The Company reiterates its 2024 full-year outlook, including underlying operating margin of ≥4.0%; underlying EPS at around 2023 levels; free cash flow of around €2.3 billion; and net capital expenditures of around €2.2 billion.
• Ahold Delhaize announces a €1 billion share buyback program to start at the beginning of 2025. 

Zaandam, the Netherlands, November 6, 2024 – Ahold Delhaize, one of the world’s largest food retail groups and a leader in both supermarkets and e-commerce, reports third quarter results today.

Summary of key financial data

_{^{1. Comparable sales growth excluding gasoline, net consumer online sales, underlying operating income and related margin, diluted underlying EPS, free cash flow, and the percentage changes at constant rates are alternative performance measures that are used throughout this report. For a description of alternative performance measures and a reconciliation between percentage changes and percentage changes at constant rates, see Note 13 in full Interim Report.}} 

_{^{2. Comparative amounts have been restated to conform to the current year's presentation (see Note 2 in full Interim Report).}}

Comments from Frans Muller, President and CEO of Ahold Delhaize

"I am pleased to report a solid performance in the third quarter, placing us well on track to achieve our strategic objectives and underlying financial goals for the year. As our brands operate in dynamic market environments, we are keeping a clear focus on elevating the customer value proposition, maintaining a sharp eye on cost levels and taking the right measures to step into our new Growing Together strategy, which is designed to drive consistent growth and long-term value creation. 

"I would like to thank associates at all of our brands for their dedication and commitment to serving their local customers and communities, particularly in times of need, such as after the devastating floods in the Czech Republic and Hurricanes Debby and Helene in the U.S. I am proud of our brands and associates for their immediate responses and hard work to support disaster relief. Food Lion donated more than $3.8 million and over one million pounds of food and supplies to help those affected by the hurricanes, with support from its customers and charitable foundation. And Albert sent several truckloads of humanitarian aid to support communities impacted by flooding. 

"Returning to our performance this quarter, group net sales increased by 1.0% at constant rates and comparable sales growth excluding gasoline was 1.4%. Thanks to strong operational execution by our teams and associates in the quarter, diluted underlying EPS was €0.62, an increase of 7% at actual rates. On an IFRS basis, we delivered operating income of €583 million and diluted EPS of €0.40. IFRS results were impacted by non-recurring costs, largely related to the costs associated with the previously announced closure of underperforming stores at Stop & Shop and the transition of stores as part of the Delhaize Belgium Future Plan. Excluding these effects, our underlying operating margin improved modestly in the quarter, driven by a continued recovery in Europe and a stable U.S. performance. 

"In the U.S., we continue to see momentum building, and I expect further improvements in trends through the holiday season. In Q3, net sales declined by 0.1% at constant rates, while comparable sales excluding gasoline increased by 1.2%. Excluding weather and calendar impacts, comparable sales growth excluding gasoline was consistent with last quarter. As in previous quarters, net sales were lower due to the Interim report, Third quarter 2024 Page 3/33 divestment of FreshDirect and lower gasoline sales. During the third quarter, net sales and comparable sales were also impacted by the ramp down of operations at the 32 Stop & Shop stores planned for closure and a recall of Boar's Head deli products. These two items had a combined negative impact on comparable sales of approximately $70 million in the quarter. In Europe, strong growth rates and market share gains in the Netherlands and Belgium have continued. Net sales increased by 2.6% at constant rates, while comparable sales excluding gasoline increased by 1.6%, despite the cessation of tobacco sales at Albert Heijn, which had a negative impact of 3.3 percentage points. 

"Rolling out new technology and innovation is a fundamental enabler of our Growing Together strategy, particularly as we look to elevate the customer experience and bring more value to shoppers in real time. For example, Albert Heijn expanded its dynamic markdown technology to also include non-perishable products, supporting the brand's customer value proposition while reducing food waste and contributing to our Save for Our Customers program. Delhaize in Belgium is the third of our brands in Europe to transition to our modular e-commerce platform, following Albert and Delhaize Serbia earlier this year. Through technologies like this, as well as other improvements along the shopping journey, we are already seeing strong growth rates in several countries. For example, Albert’s loyalty sales penetration has increased by more than 8 percentage points in the last 12 months, with further growth expected as we roll out more features and functions. 

"Improvements in technology and innovation are also supporting robust growth in online sales in both regions, driven by double-digit growth in online grocery sales, excluding the divestment of FreshDirect. We continue to see strong growth in both our pick-from-store and third-party marketplace channels. Over the past 12 months, we have opened over 70 new pick-from-store locations in the U.S. Customers are also responding positively to our partnership with DoorDash; we have seen triple the number of orders in Q3 compared with Q1. In the Netherlands, Albert Heijn's online business, which has been one of the brand's growth drivers for many years, continues to experience double-digit sales growth rates. To keep up with demand, the brand has increased customer accessibility by strengthening its logistics network. Our second mechanized Home Shop Center in Zwolle is hitting all its milestones, enabling the brand to supply groceries to even more customers in the northeast of the Netherlands. With a sizeable part of our orders in the Netherlands now serviced in an automated way, I am excited that we have a strong recipe for success and can scale this part of our business efficiently and sustainably. 

"Densifying and growing markets through a strong network of local stores is another key pillar for growth. Investing more in our winning propositions, unlocking further efficiency and shifting additional capital to even more profitable and obvious growth opportunities are important parts of our growth philosophy. This quarter, we have seen strong progress on existing initiatives and kicked off significant new projects. Food Lion completed its 167-store remodeling program in the Raleigh-Durham market, bringing our latest omnichannel concept to one of the brand's largest markets. We celebrated the one-year anniversary of the first Jan Linders store joining the Albert Heijn brand, with sales outperforming expectations. Alfa Beta in Greece expanded its franchise network with the acquisition of six stores from a local chain. In Belgium, Delhaize finalized the store transitions as part of its Future Plan, with the last store converting this week. 

"As 2024 draws to a close, I am proud of how we are navigating this year. Managing a business in an environment with low top-line inflation and high cost inflation is a challenging task, requiring strong discipline. Our track record of keeping our own house in order is paying off. The strong brand equity and customer loyalty enjoyed by our great local brands has enabled us to maintain, and even strengthen, several of our leading market positions. While there is still plenty of hard work ahead to realize the full potential of our strategy, we will continue to be prudent as we balance our short-term goals with our longterm aspirations. We are well on track to deliver on our 2024 commitments and we reiterate our guidance for the year. I am also pleased to announce the continuation of our €1 billion annual share buyback program in 2025, which underscores our confidence in the direction of our business for the year ahead. 

"Over the next months, our priority is to ensure we invest in delivering a strong holiday season to carry momentum into the new year. I am confident that our brands are well positioned to offer customers everything they need to create wonderful holiday memories with their families and loved ones." 

Q3 Financial highlights

Group highlights

Group net sales were €22.0 billion, an increase of 1.0% at constant exchange rates and up 0.2% at actual exchange rates. Group net sales were driven by comparable sales growth excluding gasoline of 1.4% and net store openings, including the conversion of Jan Linders stores. Group net sales growth was partially offset by the divestment of FreshDirect and lower gasoline sales. Q3 Group comparable sales excluding gasoline had a net positive impact of approximately 0.3 percentage point from weather and calendar. This was offset by a 1.2 percentage-point negative impact from the cessation of tobacco sales at supermarkets in the Netherlands. 

In Q3, Group online sales increased by 5.1% at constant exchange rates. This was driven by double-digit growth in online grocery excluding FreshDirect. The divestment of FreshDirect had a negative impact of 7.3 percentage points. 

Group underlying operating margin was 3.9%, an increase of 0.1 percentage points at constant exchange rates due to strong performance in Europe and stable underlying performance in the U.S., partially offset by a decrease in insurance results at the Global Support Office. 

In Q3, Group IFRS operating income was €583 million, representing an IFRS operating margin of 2.7%. IFRS results were €272 million lower than underlying results, mainly due to costs related to the closure of Stop & Shop stores and to the Belgium Future Plan. 

Diluted EPS was €0.40 and diluted underlying EPS was €0.62, up 7.0% at actual currency rates compared to last year's results. 

In the quarter, Ahold Delhaize purchased 8.7 million own shares for €260 million, bringing the total amount to €761 million in the first three quarters of the year.

U.S. highlights

U.S. net sales were €13.5 billion, a decline of 0.1% at constant exchange rates and down 1.0% at actual exchange rates. U.S. comparable sales excluding gasoline increased by 1.2%, driven by continued growth in pharmacy sales and benefiting from a net positive impact of approximately 0.5 percentage points due to calendar and weather, partially offset by a combined negative impact of 0.5 percentage points due to the ramp down of operations at 32 Stop & Shop stores planned for closure and a recall of Boar's Head deli products. Net sales were negatively impacted by the divestment of FreshDirect and lower gasoline sales. Food Lion and Hannaford continue to lead the U.S. brands' performance, with 48 and 13 consecutive quarters of positive sales growth, respectively. 

In Q3, online sales declined 0.1% in constant currency, negatively impacted by 15.4 percentage points due to the divestment of FreshDirect. This was partially offset by double-digit online growth at Food Lion, Hannaford and The GIANT Company. 

Underlying operating margin in the U.S. was 4.2%, up 0.1 percentage points due to a change in margin mix primarily resulting from the divestment of FreshDirect. This was partially offset by higher store labor and hired service costs. 

In Q3, U.S. IFRS operating margin was 2.9%. IFRS results were €171 million lower than underlying results, mainly due to the closure of Stop & Shop stores. The non-recurring pre-tax charges amounted to $136 million, below the range communicated in Q2 2024, due to favorable proceeds from asset sales. 

Europe highlights

European net sales were €8.5 billion, an increase of 2.6% at constant exchange rates and 2.2% at actual exchange rates. The higher net sales were largely due to an increase in comparable sales of 1.6% and net store openings, including the conversion of Jan Linders stores, partially offset by a 0.3 percentage points impact from the conversion of stores in Belgium to affiliates. Europe's comparable sales excluding gasoline included a negative impact of 3.3 percentage points resulting from the cessation of tobacco sales at supermarkets in the Netherlands. 

In Q3, online sales increased by 10.0%, driven by double-digit growth in grocery online sales led by strong performance at Albert Heijn.

Underlying operating margin in Europe was 3.9%, up 0.5 percentage points. The increase was primarily driven by performance recovery in Belgium due to the change in the operating model. Europe's Q3 IFRS operating margin was 2.7%. IFRS results were €101 million lower than underlying results, mainly due to costs associated with the Delhaize Belgium Future Plan.

Outlook

Ahold Delhaize reiterates the company's 2024 outlook, which it announced with its Q4 2023 results publication. Underlying operating margin is expected to be 4.0% or higher, in line with the Company's historical profile. Underlying EPS is expected to be at around 2023 levels at current exchange rates. Free cash flow is expected to be around €2.3 billion. Net capital expenditures are expected to total around €2.2 billion, lower than the prior year, mainly due to divestments of facilities in the U.S. Overall, we continue to maintain strong levels of investments into our brands' store networks, the further rollout of omnichannel capabilities, and advancing our healthy and sustainable initiatives. 

The following are changes in the business that will impact comparable performance for 2024 and that have been incorporated into our Outlook:

• The divestment of FreshDirect, which will reduce the amount of 2024 reported net sales and online sales for the U.S. segment by $600 million.
• The cessation of tobacco sales, which will impact Albert Heijn's net sales. Albert Heijn stopped selling tobacco in its own-operated supermarkets on January 1, 2024, and in all supermarkets on July 1, 2024. This will have around a two to three percentage-point impact on reported and comparable store sales in Europe in 2024.
• The closure of 32 underperforming Stop & Shop stores was completed at the beginning of November. The estimated net impact to 2024 reported net sales from these closures is between $100 and $125 million.

The acquisition of Profi is expected to close in late Q4 2024 or early Q1 2025, and will double the size of our operations in Romania. As the timing of the closing is uncertain, our 2024 Outlook excludes any impact from this transaction. 

Ahold Delhaize remains committed to its share buyback program and we are completing our €1 billion share repurchase in 2024 as planned. Ahold Delhaize announces a €1 billion share buyback program to start at the beginning of 2025.

^{1. Excludes M&A.}

^{2. Calculated as a percentage of underlying income from continuing operations.}

^{3. Management remains committed to our share buyback and dividend programs, but, given the uncertainty caused by the wider macro-economic consequences due to increased geopolitical unrest, will continue to monitor macro-economic developments. The program is also subject to changes resulting from corporate activities, such as material M&A activity.}

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