EBITDA increase by 53.7%, Cash EPS by 15.4%
BRUSSELS, Belgium, September 6, 2001 - Delhaize Group (Euronext Brussels: DELB, NYSE: DEG), the Belgian international food retailer, reported today an increase of cash earnings per outstanding share by a strong 15.4% to EUR 1.07 in the second quarter of 2001. Delhaize Group's sales rose by 39.8% to EUR 5.5 billion, and its earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 53.7% to EUR 412.7 million. This resulted in a solid EBITDA margin for Delhaize Group of 7.5% (6.8% in the second quarter of 2000), positioning Delhaize Group as one of the most profitable international food retailers.
'The second quarter of 2001 was a milestone in the history of our Group', said Pierre-Olivier Beckers, President and Chief Executive Officer of Delhaize Group. 'Delhaize Group closed successfully the share exchange with Delhaize America and the listing on the New York Stock Exchange. These not only gave us a more attractive financial and operational structure, but were also managed without distraction of the operations. Delhaize America continued its strong operational performance and synergy development between its banners, resulting in an increase of Delhaize America's EBITDA margin to 8.5% of sales, up from 7.5% in the previous year. Delhaize Belgium had strong growth, in both sales and EBITDA.'
In the second quarter of 2001, Delhaize Group achieved sales of EUR 5.5 billion, an increase of 39.8% over the second quarter of the prior year. These results include since July 31, 2000 the sales of Hannaford Bros. Organic sales growth was 3.0%(excluding acquisitions, divestitures, currency fluctuations and adjusted for the 13th week at Delhaize America in the second quarter of 2001). During the second quarter of 2001, Delhaize Group extended its sales network with 38 stores to a total of 2,440 outlets.
Compared to 2000 figures adjusted for Delhaize America results on a thirteen-week basis, the sales increase amounted to 31.3%. In the second quarter of 2000, Delhaize America's results were for a twelve week quarter. In 2001, Delhaize America has adjusted its calendar to four thirteen week quarters to align with Delhaize Group.
In the second quarter of 2001, Delhaize Group's earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 53.7% to EUR 412.7 million. Compared to 2000 figures adjusted for Delhaize America's results on a thirteen-week basis, the increase amounted to 46.8%. In the second quarter of 2001, Delhaize Group posted an EBITDA margin of 7.5% of sales compared to 6.8% in the second quarter of 2000.
For the thirteen-week period ended June 30, 2001, Delhaize Group posted earnings before goodwill amortization and exceptional items of EUR 86.9 million compared to EUR 48.3 million in the second quarter of 2000, an increase of 80.1%. In the second quarter of 2001, per outstanding share Delhaize Group's cash earnings increased by 15.4% to EUR 1.07. Compared to 2000 figures adjusted for Delhaize America results on a thirteen-week basis, the increase in cash earnings per outstanding share amounted to 12.2%.
In the second quarter of 2001, net earnings after goodwill amortization and exceptional items of Delhaize Group was EUR 46.8 million, an increase by 1.5% compared to EUR 46.1 million the previous year. Per outstanding share, reported earnings amounted to EUR 0.58 in the second quarter of 2001, compared to EUR 0.89 in the second quarter of 2000, a decrease of 35.0%. Compared to 2000 figures adjusted for Delhaize America results on a thirteen-week basis, the decrease amounted to 36.1%. The decrease is the result of higher financial expenses and amortization of goodwill related to the acquisition of Hannaford Bros. and the share exchange with Delhaize America, and one-time costs due to the share exchange of Delhaize Group with Delhaize America and the listing on the New York Stock Exchange.
During the twenty six-week period ended June 30, 2001, cash earnings amounted to EUR 133.3 million compared to a total of EUR 90.1 million in the same period of 2000, an increase of 48.0%. Per outstanding share, cash earnings increased by 15.4% from EUR 1.73 in the first half of 2000 to EUR 2.00 in the same period in 2001. In the first half of 2001, Delhaize Group reported earnings were EUR 73.5 million compared to EUR 86.2 million in the same period of 2000, a decrease of 14.7%. Per outstanding share, reported earnings were EUR 1.10 in the first half of 2001 compared to EUR 1.66 in the same period of 2000, or a decrease of 33.5% due to the same reasons as mentioned for the second quarter results.
Delhaize Group is confident in its existing guidance for 2001. Delhaize Group expects in 2001 an increase of its sales network by 192 stores (+ 8.4%) to a total of 2,502 stores. Sales are expected to exceed EUR 20 billion, while earnings before interest, taxes, depreciation and amortization are expected to rise by 20 to 25%. Cash earnings per outstanding share are expected to increase by 15 to 20% (on the assumption of a full year 2001 average exchange rate of 1 EUR = 0.96 USD and without a significant share buyback).
Geographical Overview
In the geographical overview is given the contribution to the Group results of the different geographical operations. 'Other European operations' include the contributions of Alfa-Beta (Greece), Delvita (Czech Republic and Slovakia) and Mega Image (Romania).
United States
In the thirteen-week period ended June 30, 2001, sales of Delhaize America stood at USD 3.7 billion (EUR 4.3 billion), an increase of 28.9% over the comparable thirteen-week period of the prior year. Comparable store sales (which include relocations and expansions) for the thirteen-week period increased 0.1%. At the end of the second quarter of 2001, Delhaize America was operating 1,443 supermarkets. During the quarter, 20 new stores, including two relocated stores, were added, while 59 stores were remodeled or expanded.
Earnings before interest, taxes, depreciation and amortization increased by 46.4% over the comparable thirteen-week period of the prior year to USD 318.0 million (EUR 364.4 million). The EBITDA margin increased from 7.5% to 8.5% of sales.
In the second quarter of 2001, the contribution of Delhaize America to the cash earnings of Delhaize Group were USD 67.0 million (EUR 76.8 million), an increase by 106.3% compared to USD 32.5 million (EUR 34.8 million) in the comparable thirteen-week period in 2000. Second quarter reported earnings amounted to USD 45.5 million (EUR 52.1 million) compared to USD 32.0 million (EUR 34.3 million) in the comparable thirteen-week period in 2000.
Second quarter's strong results reflect continuing gross margin improvement over the last several quarters and good cost control. The benefits of the merger with Hannaford Bros. continue to be realized as planned. Delhaize America achieved approximately USD 14 million in benefits from best practices and synergy development in the second quarter of 2001 for a total of USD 34 million achieved since the July 31, 2000 merger date. The USD 40 million synergies targeted for the first full year after the acquisition of Hannaford Bros., will be exceeded.
Delhaize Group feels comfortable with its earlier announced guidance on the U.S. activities. In 2001, sales of Delhaize America are expected to grow approximately 17-18%, with comparable store sales growth to be 1.5-2.0%. In 2001, EBITDA of Delhaize America is expected to increase between 25 and 30%.
On September 6, 2001, Delhaize Group will file with the Securities and Exchange Commission a Form 6-K disclosing the separate financial statements for Delhaize America for the quarter ended June 30, 2001. It will be available on the Delhaize Group website at www.delhaizegroup.com.
In the second quarter of 2001, Super Discount Markets achieved sales of USD 69.1 million (EUR 79.2 million) and an EBITDA of USD 0.1 million (EUR 0.1 million). As of the end of the second quarter of 2001, Super Discount Markets was operating 30 Cub Foods supermarkets or Save-A-Lot discount stores.
Europe
In the second quarter of 2001, the Belgian operations of Delhaize Group achieved sales of EUR 801.8 million, an increase of 8.0%. Delhaize Belgium continued to increase its market share through successful merchandising initiatives in existing stores and the growth of its sales network (especially affiliated stores under the banner AD Delhaize). Comparable store sales increased by 4.8%. The Belgian sales network was extended with six AD Delhaize, Proxy Delhaize, Delhaize City and Shop 'n Go stores, four Di stores and two Tom & Co stores. EBITDA were up by 5.8% to EUR 42.9 million, resulting in an EBITDA margin of 5.3%.
During the second quarter of 2001, sales in the other European operations of Delhaize Group (Greece, Czech Republic, Slovakia and Romania) were up by 28.3% to EUR 317.8 million. EBITDA decreased by 29.7% to EUR 10.6 million. At the end of June 2001, Delhaize Group operated 230 stores in its other European operations, including 105 stores in Greece, 99 in the Czech Republic, 16 in Slovakia and ten in Romania.
Asia
Sales of the operating companies of Delhaize Group in Asia rose during the second quarter of 2001 by 24.2% to EUR 45.3 million. EBITDA amounted to EUR 0.9 million, compared to EUR -1.0 million for the second quarter of 2000. In the second quarter of 2001, the sales network increased by seven stores to a total of 78 stores, including 22 in Thailand, 25 in Indonesia and 31 in Singapore.
Report of the Statutory Auditors
We have conducted a limited review of the half year accounts of Delhaize Group as at 30 June 2001. Our limited review did not reveal any significant adjustments which would be required to be made to the half year accounts as presented.
Deloitte & Touche Reviseurs d'Entreprises, represented by Mr James Fulton.
Definitions
- Cash earnings – reported earnings plus goodwill amortization, store closings charges in the normal course of business and exceptional items
- Cash EPS – cash earnings divided by the weighted average number of shares outstanding during the period
- Comparable store sales – sales from the same stores, including relocations and expansions
- EBITDA – earnings before interest, taxes, depreciation and amortization
- Organic sales growth – sales growth excluding sales from acquisitions, divestitures and currency fluctuations
Delhaize Group
Delhaize Group is a food retailer headquartered in Belgium, and listed on Euronext Brussels and the New York Stock Exchange. At the end of the second quarter of 2001, Delhaize Group's sales network consisted of 2,440 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 website at
www.delhaizegroup.com. Questions can be sent to
investor@delhaizegroup.com.
Some of the statements in this press release and other written and oral statements made from time to time by Delhaize Group and its representatives are 'forward-looking statements' within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of Securities Exchange Act of 1934, as amended, and involve a number of risks and uncertainties. These statements include, but are not limited to, statements about strategic options, future strategies and the anticipated benefits of these strategies. These statements are based on Delhaize Group's current expectations. Delhaize Group's actual results could differ materially from those stated or implied in such forward-looking statements. Risks and uncertainties that could cause actual results to differ materially from those stated or implied by such forward-looking statements are described in Delhaize Group's Annual Report on Form 20-F for the year ended December 31, 2000 and other periodic filings made by Delhaize Group with the U.S. Securities and Exchange Commission, which risk factors are incorporated herein by reference. Delhaize Group disclaims any obligation to update developments of these risk factors or to announce publicly any revision to any of the forward-looking statements contained in this release, or to make corrections to reflect future events or developments.
Delhaize Group will conduct an investor's conference call at 3:00 p.m. CET (9:00 a.m. EST) on Thursday September 6, 2001. The conference call will be broadcast live over the internet from 3:00 p.m. CET (9:00 a.m. EST) at
www.delhaizegroup.com. An audio replay of this webcast will be available at the same website starting at 8:00 p.m. CET (2:00 p.m. EST) on September 6, 2001.
Financial Calendar
October 26, 2001 – Third quarter 2001 results
January 9, 2002 – Preliminary sales figures 2001
February 21, 2002 – Annual results 2001
Click here for the Second Quarter 2001 Figures (Unaudited)
Contacts
| Guy Elewaut |
+ 32 (0)2 412 29 48
+ 32 (0)477 50 07 96 |
| Geoffroy d'Oultremont |
+ 32 (0)2 412 83 21 |
| Amy Shue (US investors) |
+ 1 (704) 633-8250, ext. 2529 |
| Ruth Kinzey (US media) |
+ 1 (704) 633-8250, ext. 2118 |