Supermarket operator Ahold reports 3 percent rise in Q2 profits; US, Dutch margins steady

Ahold reports 3 percent rise in Q2 profits

AMSTERDAM — Royal Ahold NV, the Dutch operator of the Stop & Shop and Giant grocery chains in the United States, said Thursday its second quarter profits rose just three percent due to a loss at its Scandinavian joint venture ICA.

Ahold’s net profit was €202 million ($256 million) from €196 million a year earlier, including a €20 million loss on Ahold’s share in ICA. Sales rose 11 percent to €7.13 billion due in part to the relatively weak euro and acquisitions.

“We continued to grow sales, volumes and market share in the Netherlands and United States,” Chief Executive John Rishton said in a statement. “Market conditions remained challenging with high levels of promotional activity.”

He said the company believes it can continue to keep growing sales without sacrificing profit margins.

In the U.S., sales rose 5.5 percent to $5.5 billion, mostly due to an acquisition. Excluding new store openings, sales rose 1.4 percent, or just 0.5 percent if gasoline sales had been excluded. Ahold said its underlying margins were unchanged, but operating profit rose 8.8 percent to $270 million due to an impairment charge a year ago.

At Ahold’s Dutch stores, which include the dominant Albert Heijn chain, sales rose 4.4 percent to €2.3 billion. Operating margins were also unchanged, and operating profit rose 6 percent to €159 million.

Ahold owns half of ICA, which lost a court case with the Swedish tax authority over back taxes. Ahold booked a €20 million loss from the unit, compared with an €18 million profit a year ago. Ahold said that, without the one-time tax issue, the unit would have added €26 million to Ahold’s net profit.

Net debt increased to €938 million from €890 million as the company paid more for share buybacks, dividends and acquisitions than its cash-flow.