Dutch retailer Ahold has booked an increase in first-half profits but its shares fell amid pressure on margins and the company's caution over future trading.
Earnings in the six months to the end of June climbed 8.2% to EUR530m (US$665.6m), the group reported today (23 August). Ahold said the boost was a result of a EUR14m charge related to disposals in 2011 that was not repeated this year.
Operating income amounted to EUR742m, up 3.2% on last year. However, underlying operating margin was 4.3% from 4.5% in the prior year period.
Shares in Ahold were down 3.16% at EUR10.10 at 14:19 CET this afternoon.
Net sales climbed 8% to EUR17.41bn. At constant exchange rates, net sales increased by 2.8%.
"We expect market conditions to remain difficult and are cautious about the potential impact of rising food commodity costs, particularly in the United States for the balance of the year," said Ahold CEO Dick Boer.
Click here for a round-up of what leading analysts said about Ahold's results and click here for coverage of the retailer's conference call, when it said it expects to see margins recover in the Netherlands.
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Amsterdam, The Netherlands - Ahold today published its interim report for the second quarter and half year 2012.
CEO Dick Boer said: "By investing in value for our customers, we were able to grow sales by 3.9% at constant exchange rates and we gained market share in all our major markets in a challenging economic environment. Despite a weak performance at Albert Heijn, underlying operating margin for the Group was in line with last year.
"We saw ongoing high levels of promotional activity in both the United States and the Netherlands with retail price inflation coming down, particularly in the United States. Our businesses in the United States achieved strong margins through stringent cost control. Margins in the Netherlands were negatively impacted by increased price investments and an unsuccessful promotional campaign. Our business in the Netherlands now includes bol.com, following the successful completion of the acquisition on May 9.
"We expect market conditions to remain difficult and are cautious about the potential impact of rising food commodity costs, particularly in the United States for the balance of the year. We are confident that we are well on track to deliver on our strategy and we will continue to invest in growth. We are pleased with the conversion of 15 Genuardi's stores to Giant Food Stores in the United States. We also completed the transaction with Jumbo concerning 82 stores in the Netherlands and we will start to convert the first 14 to Albert Heijn."
