Ahold Delhaize (ENXTAM: AD) 4Q and FY16 Results: Dutch Business Boosts Sales, Merger Synergies On-Target

Executive Summary

• Ahold Delhaize reported FY16 revenues of €49,695 million, up by 29.6% from FY15 at constant exchange rates (up 30.1% in reported currency).
• Pro forma FY16 revenues, which reflect the entirety of the merged group, were €62,331 million, up by 2.1% at constant currency (up 2.4% in reported currency) and slightly below the consensus estimate of €62,419.14 million.
• Gross margin declined by 42 basis points, SG&A as a percentage of sales fell by 15 bps and operating margin declined by 26 bps, all as reported. Diluted EPS shrank by 20.6% to €0.81 in FY16, below the consensus estimate of €0.93.
• Ahold Delhaize expects the deflationary environment in the US to continue through 1Q17 and confirms its target of realizing €220 million in net synergies in FY17, of which €22 million has already been realized in FY16.