Ahold Delhaize Earnings: Broadly in Line With Free Cash Flow Guidance, Ahead on Lower Investments

Ahold Delhaize released fourth-quarter and fiscal 2023 results with sales, excluding gas, up 1.8% and 3.9% respectively (up 1.9% and 3.8% respectively at constant exchange rates). Sales were slightly ahead of our annual estimates (EUR 88.65 billion versus EUR 88 billion in our model), with underlying operating income of EUR 3.604 billion (4.1% margin), slightly ahead of our EUR 3.583 billion estimate for the fiscal year. This was driven by the U.S. segment (EUR 2.553 billion versus our expectations for EUR 2.499 billion) with Europe largely in line (EUR 1.120 billion versus EUR 1.128 billion in our model). Comparable sales growth in fiscal 2023 was 2.3% for the United States and 6.5% for Europe, versus 1.9% and 6% in our model. In the U.S., the reduction in emergency federal supplemental nutrition assistance program benefits is still hitting top-line performance with net sales down 1.5% in the fourth quarter. Excluding one-offs and despite growth headwinds, the grocer was still able to maintain margins in the region, a testament to its continuing focus on efficiencies and cost-savings. In Europe, like-for-like sales growth was up 6.5% in the fourth quarter, signaling the first positive volume trend in over two years.