Ahold Delhaize N : Q1 2023 Management Prepared Remarks

Management's Prepared Remarks

Q1 2023 Earnings Call

May 10, 2023

JP O'Meara

Senior Vice President, Head of Investor Relations

Good morning, operator, and thank you very much, and good morning, everybody else.

I am delighted to welcome you to our Q1 2023 results conference call.

On today's call are Frans Muller, our President & CEO and Natalie Knight, our CFO. After a brief presentation we will open the call for questions.

In case you haven't seen it, the earnings release and the accompanying presentation slides can be accessed through the Investors section of our website aholddelhaize.com, which also provides extra disclosures and details for your convenience.

To ensure everyone has the opportunity to get their questions answered today, I ask that you initially limit yourself to 2 questions. If you have further questions then feel free to re-enter the queue.

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To ensure ease of speaking, all growth rates mentioned in today's prepared remarks will be at constant exchange rates unless otherwise stated.

Therefore, I'll hand over to Frans.

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Frans Muller

President, Chief Executive Officer

Thank you JP and good morning everyone.

I am pleased to report a strong start to the year which clearly reflects the trust and confidence our customers continue to place in our great local brands.

In times like these, our international portfolio of number one and two local brands provides many advantages.

On the one hand, it provides operational bandwidth and financial stability. And this means we can remain focused on our long-term growth and omnichannel transformation agenda.  

On the other hand, it allows us to successfully navigate short-term market volatility. This means we can actively counterbalance divergent trends to best support our communities and associates.

For the quarter, the headline numbers are strong: net sales grew by more than 6 percent to 21.6 billion euro and diluted underlying earnings per share were up 10.5 percent to 61 cents.

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Our earnings trends were consistent with our expectations, driven by strong operating performance in the U.S. This was partially offset by increased energy costs in Europe and impacts at Delhaize Belgium (which I will come back to later). Foreign exchange shifts were also a positive in the quarter, which as you know are expected to become a negative as we go through the rest of the year.

While I am pleased with these headline figures, most important to me is the fact that we gained market share in most of our markets. The trends we have delivered in recent quarters continue to stick. Customers are buying more fresh and healthy products, more own brands and are increasingly utilizing our growing omni-channel ecosystem. And this is not by chance, its by design.

As you know, our business is built on some key fundamentals that have fueled sustained success year-in and year-out. Ánd these include:

• Building relative market share and brand strength by knowing our customers inside out,
• Relentlessly delivering a high value, high-touch customer proposition reflecting the needs of local communities,
• And constantly introducing new high-tech, innovative and scalable platforms across our operations to keep:
  o costs low, o waste low,

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1. and convenience and efficiency high.

As we boost this formula by adding more integrated and real-time data into the mix, we are creating smarter and more sustainable customer journeys. This will dramatically speed up the pace of innovation we are able to bring to market, stretching our capability gap to competitors even further.

So, to contextualize a little more, let's look at a few examples, where our innovation and operating excellence is really shining through.

Let's start with Albert Heijn, our largest brand in Europe. With inflation levels in the Netherlands at 18 percent in the first quarter, I am proud of how quickly the team pivoted the assortment to support customers. For example, Albert Heijn expanded its price favorites ('Prijsfavorieten'), which is a high-quality product, private label at discount prices, they increased that range to 2,000 products, including the brand's most popular fruits and vegetables.

Even more interesting for the long-term, however, was the first deployment of new technology around dynamic pricing and markdowns. Developed over three years by an excellent team of data scientists, this proprietary first-of-its-kind and at-scale solution is a game changer. And it is only possible given the maturity of integrated processes at Albert Heijn, linking together store processes, electronic shelf labels and machine learning algorithms. I am excited about the future value we will be able to extract

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