Ahold's profits plummet 54 percent in 4th quarter

2 Md.-based subsidiaries of Dutch food retailer lead U.S. sales growth

March 08, 2002|By Gus G. Sentementes | Gus G. Sentementes,SUN STAFF

Dutch food retailer Royal Ahold NV's profits plummeted 54 percent in the fourth quarter, but the company's two Maryland-based subsidiaries - Giant Food Inc. and U.S. Foodservice - continued to lead the company's growth in the United States.

For the fourth quarter, net income at the world's third-largest supermarket operator fell to 169.5 million euros ($149 million), or 17 cents a share, from 370 million euros, or 46 cents a share a year earlier. Companywide sales rose 11.6 percent in the fourth quarter to 16.8 billion euros ($14.8 billion), and operating earnings rose 22.5 percent to 905.2 million euros ($794.4 million) from 738.9 million euros ($651.2 million) for the similar period in 2000.

Excluding goodwill amortization and one-time charges, earnings per share increased 16 percent last year. The news sent the company's American Depository Receipts up 6.35 percent, or $1.53, to $25.62 on the New York Stock Exchange.

The company's U.S. retail sales rose 8.9 percent to $5.6 billion in the fourth quarter, despite difficult market conditions after the events of Sept. 11, a company official said.

Stop & Shop of New England and Landover-based Giant led sales growth in Ahold's U.S. grocery business, while sales at U.S. Foodservice more than doubled for the year to $12.1 billion, mainly because of the acquisition of a competitor, Alliant Foodservice, which boosted the distributor's market position in the United States.

The company said its fourth-quarter earnings were affected by the devaluation of the Argentine peso and the integration of Alliant, for which it paid $2.2 billion. U.S. Foodservice said last week that it will close an Alliant distribution center and eliminate up to 110 jobs in Savage.

For the year, Ahold's sales rose 29.2 percent to 66.6 billion euros ($58.7 billion) from 51.5 billion euros ($45.4 billion) in 2000. Net income dropped slightly by 0.2 percent to 1.11 billion euros ($969.3 million).

The United States accounts for about three-fifths of the Zaandam, Netherlands-based company's sales. In Europe, which accounts for almost all other sales, operating profit rose 25 percent in the quarter.

Cees van der Hoeven, Ahold's chief executive officer, has said he wants to boost growth without making acquisitions this year, after making 18 in 2001. Ahold predicted a solid 15 percent earnings per share - an outlook that bests the 10 percent to 15 percent profit growth predicted yesterday by French rival Carrefour SA, Europe's largest food retailer.

"Ahold gave a better forecast than Carrefour yesterday," Anneke Groen, an analyst at Rabo Securities who recommends investors buy the shares, told Bloomberg News.

"They are better at integrating acquisitions and have more possibilities to generate savings."

Bloomberg News contributed to this article.

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