Filed by Koninklijke Ahold N.V. Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Delhaize Group Commission File No.: 333-13302 Date: November 12, 2015
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Third quarter 2015 results
November 11, 2015
Filed by Koninklijke Ahold N.V.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Delhaize Group
Commission File No.: 333-13302
Date: November 12, 2015
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Group highlights Q3 2015
Strong sales performance, with Group sales up 13.0% (up 1.7% at constant exchange rates)
Sales excluding gas up 3.3% at constant exchange rates
Underlying operating income increased to €319 million; underlying operating margin at 3.8% Strong free cash flow of €230 million, up €160 million
Identical sales in the Netherlands up 4.0%, reflecting positive trends at Albert Heijn and in online
Underlying sales trends in the United States continued to improve, with identical sales growth of 1.8% excluding gas, adjusted for competitive disruption last year Agreement reached for Stop & Shop to acquire 25 A&P stores in New York
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Group performance
(in millions of euros)
Net sales
Net sales growth excluding gas Underlying operating income Underlying operating margin
Operating income
Income from continuing operations
Net income
Quarter 3
2015 2014 Change Change*
8,440 7,472 13.0% 1.7%
3.3%
319 285 11.9% 1.0%
3.8% 3.8%
284 274 3.6% (6.9%)
189 177 6.8% (4.9%)
189 178 6.2% (5.3%)
Net sales excl. gas up 3.3%*, with an improved sales trend in the majority of our markets Margins maintained at 3.8% due to strong Simplicity results Net income includes €12 million merger related costs and €11 million related to withdrawal from a multi-employer pension plan in the U.S.
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| At constant exchange rates |
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Performance by segment
(in millions of euros)
Net sales
Net sales excl gas
Underlying operating income
Underlying operating margin
Identical sales growth excl gas
Quarter 3
Ahold USA The Netherlands Czech Republic
2015 Change* 2015 Change 2015 Change*
5,248 (1.4%) 2,796 7.4% 396 5.5%
0.8% 7.4% 6.4%
212 6.8% 129 1.6% 5 nm
4.0% 0.2 4.6% (0.3) 1.3% 1.6
0.4% (0.8) 4.0% 5.1 (0.7%) 1.3
Net sales in the U.S. excl. gas up 0.8%, positive underlying identical sales growth of 1.8% adjusted for competitive disruption in New England
Strong sales growth in the
Netherlands, particularly in Fresh at Albert Heijn and growth in online
Underlying operating profit margin in the Czech Republic showed further improvement
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| At constant exchange rates |
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Operating cash flow generation
(in millions of euros)
Operating cash flow* Change in working capital Income tax paid Net investment
Interest and dividend joint ventures
Free cash flow
Quarter 3
2015 2014 Change
529 454 75
(31) (158) 127
(80) (26) (54)
(160) (171) 11
(28) (29) 1
230 70 160
Positive change in working capital partly offset by a higher income tax charge YTD free cash flow of €783 million, up €341 million versus YTD Q3 2014 FY 2015 free cash flow expectations slightly ahead of last year
* From continuing operations before changes in working capital and income tax paid
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Business highlights: Ahold USA
Focused investments in quality, service and price
Super KVIs rollout to be completed in 2016
New produce departments launched in over 300 stores, showing an encouraging volume uplift. To be completed by mid-2016
New bakery pilot started in 15 stores
Second value investment with price reductions on thousands of products
New brand campaign launched helping customers “save time, save money and eat well”
New grocery shopping experience opened: bfresh™
Two stores launched at approx. 10,000 sq.ft., with focus on fresh foods, smart value and local convenience
Broad offer of natural and organic, vegan and gluten-free options, and foods from around the world
A new take on freshly prepared foods in its Little Kitchen™
A small range of daily nonperishables to offer a one-stop shop for urban shoppers
25 A&P stores converted to Stop & Shop in NYM area
Conversion of all 25 stores to be completed in November
Total acquisition costs of $150 million
Capex of $2-3 million per store falls within 2015 guidance
Sales post-conversion expected to grow to be comparable to NYM stores
First 12 months slightly dilutive on underlying margin, year two and beyond no margin impact expected
Restructuring costs of around $10 million expected in Q4 2015
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Business highlights: the Netherlands
Innovation continues at Albert Heijn
Acceleration of new products; 1,000 skus introduced since the beginning of the year
Fully self-scan supermarket opened. Scanning done via mobile phone or handheld scanner
Over 200 stores enabled with mobile self-scanning since March
Online pilot store launched on Alibaba’s Tmall platform in China with approx. 100 skus
Continued focus on Fresh
Improved fresh deli assortment with an expanded assortment, better quality and improvements to own-brand deli products
New ready-made meals introduced that cater to customer demands for healthier and tastier prepared foods
Pilot of a “healthier checkout” in 100 stores
Rebrand of and
Etos and Gall & Gall brands refreshed, reflecting focus on quality, service and advice
Gall & Gall rolled out “Everyone an expert” strategy
Etos own-brand launched at Ahold USA offering affordable beauty care products
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Business highlights: Czech Republic
Supermarkets drive growth in third quarter
Favorite store concept successfully rolled out to all 240 supermarkets
Positive customer reactions result in sales uplift and identical growth
New in-store communication following Albert rebranding features craftsmanship of our suppliers and quality of fresh food
Focus on improving the performance of our larger stores
After successful trial in six compact hypers, Favorite store concept rolled out to 35 large former SPAR stores
Store-centric model (SCM) introduced at Albert, with help from Stop & Shop. SCM is a modern concept used in the U.S. to improve execution of key processes by empowering store associates
Other initiatives launched to further improve performance
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Business highlights: Online
Continuing strong growth at bol.com
Consumer sales up more than 30%
79 million visits in Q3, up 26%
Now offering an assortment of 10 million products
Plaza consumer sales up 78%, now representing over 20% of total sales
Consumer sales in Belgium up 71%
Expanding the assortment and customer base at ah.nl
Net sales up nearly 30%
High customer growth in existing markets following focus on quality of service (completeness) and improved shopping experience
Introduction of new products and solutions: Allerhande box, fresh bread, double frozen assortment, medicines and B2B improvements
Now offering an assortment of 28,500 products
Accelerating momentum at Peapod
Back to double-digit sales growth
Increasing marketing efforts after New Jersey warehouse improved capacity usage and service levels
Meal kits introduced for busy families, “Local Farm” boxes following local buying trend, and
“Fruit & Indulgence” snack box targeting B2B customers
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Ahold Delhaize proposed merger remains on track
Integration planning progressing well
Closing still anticipated in mid-2016
Different workstreams in place to manage key topics, including: synergies, strategy and operating model
Strong focus on key milestones
Ahold F-4 (U.S. SEC)
European prospectus (AFM)
EGMs
Merger clearance in the U.S. and Belgium
Joint CEO roadshows coming up
Roadshows planned in the coming weeks with Dick Boer and Frans Muller
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Legal notices
No offer or solicitation
This communication is being made in connection with the proposed business combination transaction between Koninklijke
Ahold N.V. also known as Royal Ahold (“Ahold”) and Delhaize Group NV/SA (“Delhaize”). This communication is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities or the solicitation of any vote or approval in any jurisdiction in connection with the proposed transaction or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law.
No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and applicable Dutch, Belgian and other European regulations. This communication is not for release, publication or distribution, in whole or in part, in or into, directly or indirectly, any jurisdiction in which such release, publication or distribution would be unlawful.
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Legal notices
Important additional information will be filed with the SEC
In connection with the proposed transaction, Ahold will file with the U.S. Securities and Exchange Commission (the “SEC”) a registration statement on Form F-4 that will include a prospectus. The prospectus will be mailed to the holders of American Depositary Shares of Delhaize and holders of ordinary shares of Delhaize (other than holders of ordinary shares of Delhaize that are non-U.S. persons (as defined in the applicable rules of the SEC). INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC
CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT AHOLD, DELHAIZE, THE TRANSACTION AND RELATED MATTERS. Investors and security holders will be able to obtain free copies of the prospectus and other documents filed with the SEC by Ahold and Delhaize through the website maintained by the SEC at www.sec.gov. In addition, investors and security holders will be able to obtain free copies of the prospectus and other documents filed by Ahold with the SEC by contacting Ahold Investor Relations at investor.relations@ahold.com or by calling +31 88 659 5213, and will be able to obtain free copies of the prospectus and other documents filed by Delhaize by contacting Investor Relations Delhaize Group at Investor@delhaizegroup.com or by calling +32 2 412 2151.
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Forward-looking statements
This communication contains forward-looking statements, which do not refer to historical facts but refer to expectations based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those included in such statements. These statements or disclosures may discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to Ahold or Delhaize in connection with their intended merger, based on current beliefs of management as well as assumptions made by, and information currently available to, management. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “plan,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “may,” “possible,” “potential,” “predict,” “project” or other similar words, phrases or expressions. Many of these risks and uncertainties relate to factors that are beyond Ahold’s or Delhaize’s control. Therefore, investors and shareholders should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: the occurrence of any change, event or development that could give rise to the termination of the merger agreement; the ability to obtain the approval of the transaction by Ahold’s and Delhaize’s shareholders; the risk that the necessary regulatory approvals, including but not limited to merger clearance, may not be obtained or may be obtained subject to conditions that are not anticipated; failure to satisfy other closing conditions with respect to the transaction on the proposed terms and time frame; the possibility that the transaction does not close when expected or at all; the risks that the new businesses will not
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be integrated successfully or promptly or that the combined company will not realize the expected benefits from the transaction; Ahold’s or Delhaize’s ability to successfully implement and complete its plans and strategies and to meet its targets; risks related to disruption of management time from ongoing business operations due to the proposed transaction; the benefits from Ahold’s or Delhaize’s plans and strategies being less than anticipated;
Furthermore, this communication contains Ahold forward-looking statements as to acquisition by Stop & Shop New York Metro of A&P stores, free cash flow, focus on investments in quality, service and price, new grocery shopping experience bfresh , innovation, focus on fresh, rebranding of Etos and Gall & Gall, improvement of the performance of Ahold’s larger stores in the Czech Republic and online activities. These forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond Ahold’s ability to control or estimate precisely, such as the effect of general economic or political conditions, fluctuations in exchange rates or interest rates,
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increases or changes in competition, Ahold’s ability to implement and successfully complete its plans and strategies, the benefits from and resources generated by Ahold’s plans and strategies being less than or different from those anticipated, changes in Ahold’s liquidity needs, the actions of competitors and third parties and other factors discussed in Ahold’s public filings and other disclosures. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this communication. Ahold does not assume any obligation to update any public information or forward-looking statements in this communication to reflect subsequent events or circumstances, except as may be required by applicable laws. Outside the Netherlands, Koninklijke Ahold N.V., being its registered name, presents itself under the name of “Royal Ahold” or simply “Ahold.”
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Thank you