Ahold Delhaize Sees Share Surge After Strong Q3 Results

Investing.com — Shares of Ahold Delhaize (AS:AD) rose by 5% on Wednesday following a robust set of third-quarter results that exceeded analysts' expectations in both European and U.S. markets.

Financial Highlights

• Group Net Sales: €22 billion, surpassing consensus estimate of €21.91 billion.
• Underlying Operating Income: €855 million, ahead of the €837 million forecasted.
• Operating Margin: 3.9%, slightly above predictions.

Regional Performance

• U.S. Operations:
  • Comparable sales grew by 1.2%, beating expectations of 1.0%.
  • Net sales reached €14.83 billion, surpassing forecasts despite challenges from 32 S&S store operations and a deli product recall.
• Europe Operations:
  • Comparable sales increased by 1.6%, exceeding the forecast of 1.0%.
  • Net sales totaled €8.50 billion, above the consensus estimate of €8.38 billion.
  • Underlying operating margin stood at 3.9%.

The recovery in Belgium, aided by a new operating model, drove strong performance in Europe, although reported EBIT was down by €101 million due to expenses linked to the Belgium Future Plan.

Market Outlook

Despite positive results, UBS analysts noted slightly higher expectations for the U.S. market, especially concerning S&S stores' investment costs impacting future margins. Ahold Delhaize maintains a full-year guidance of at least a 4.0% underlying operating margin, with a free cash flow projection of around €2.3 billion, slightly above consensus.

The company also announced a €1 billion share buyback program starting in 2025.

Morgan Stanley analysts predict that the ~4% margin goal for next year is achievable, with potential gains from U.S. volume recovery and European margin expansion, maintaining stable EPS revisions.