Giant bolsters Ahold's quarter

Profit jumps 31.5%, much of it attributed to its Landover chain

Food industry

June 08, 2000|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

International food company Royal Ahold NV reported a 31.5 percent jump in first-quarter profit yesterday and attributed much of its U.S. sales growth to the performance of Giant Food Inc. of Landover.

Net earnings surged to $220 million in the quarter that ended April 23, up from $168.4 million in the corresponding period a year earlier. Earnings per common share rose 30.8 percent to 34 cents per share.

Operating results increased 30.8 percent to $434.9 million, up from $332.5 million in the first quarter of 1999, the company said.

"This, for us, was a fairly interesting quarter, because it is almost entirely autonomous growth," said Cees van der Hoeven, chief executive of Royal Ahold, commenting on the 31.5 percent profit increase. "There is no major acquisition that kicked in during the last 12 months. What we have seen is strong earnings from the U.S. and pretty good earnings from all of our other regions."

U.S. sales for the Netherlands-based company rose 5 percent to $6.4 billion. Royal Ahold acquired Giant in 1998 and owns four other East Coast chains. It attributed sales gains to strong same-store sales increases at Giant and Stop & Shop, Ahold's New England-based chain.

Bob Tobin, president and chief executive officer of Ahold USA, said yesterday that Giant and Stop & Shop both had histories of good management before their acquisition and are benefiting from cost controls and synergy among Ahold's U.S. chains.

"As we do our best practices with all of our companies, they're benefiting from that," Tobin said "We're making good companies better."

For instance, he said, "We're able to buy better because we're buying with one force, which allows us to buy better quality and to be able to buy on better terms and be more price competitive. ... All Ahold does is provide companies with the ability to be more competitive and to use the knowledge worldwide to become more competitive."

Ahold USA has consolidated its information systems and some of its finance operations, Tobin said. Additionally, Giant Food now handles pharmacy procurement and shipping for all Ahold USA chains, Tobin said.

Royal Ahold also said yesterday that it expects full-year earnings per share to rise between 17 percent and 20 percent, which will include Ahold's recent acquisitions of Columbia-based food distributor U.S. Foodservice and Swedish food distributor ICA. "For the rest of the year, the focus will be on the inclusion of ICA AB and U.S. Foodservice, and this will further establish Ahold's strong track record in acquisitions," said John Ebbing, an analyst at Theodoor Gilissen Bankiers in Amsterdam.

Bloomberg News contributed to this article.

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