Ahold divestment part of 'Road to Recovery'

By Ahmed ElAmin

- Last updated on GMT

Related tags Ahold Foodservice Supermarket Currency

Royal Ahold's sale of Deli XL to South Africa-based Bidvest of
South Africa was cleared yesterday by the European Commission,
serving as a sign another investment company sees opportunity in
Europe's stagnant food marketplace.

The divestment is part of what Ahold calls its "Road to Recovery" plan to restructure its operations to focus on the retail sector in the Netherlands and to strengthen its financialposition by reducing debt.

Retailers are waging price wars throughout much of Europe in a bid to hold on to market share in a competitive market, as a result margins have fallen and many are restructuring operations andputting pricing pressure on their suppliers As a customer of the food processing industry Deli XL's change in ownership could affect the company's strategy in purchasing from them.

Deli XL supplies about 60,000 products to about 34,000 customers including hospitals, company canteens, schools, hotels and restaurants in the Netherlands and Belgium.

It had net sales of €819min 2004.

"Our strategy for the Dutch business is targeted on its retail activities," stated the company's president and chief executive Anders Moberg.

"The investment andmanagement attention needed to assume a greater role in European foodservice is inconsistent with this focus."

The transaction is valued at €140m, made up of cash, debt repaid to Ahold as well as assumed debt.

Earlier last month Ahold reported consolidated second quarter net sales of €10.4bn, a cecline of 0.9 per cent compared to same period last year.

Ahold said the results were affected by the lowerUS dollar exchange rate against the euro.

Consolidated second quarter 2005 net sales, excluding the currency impact, grew by 0.6 per cent on a like-for-like basis.

In the Netherlands, sales rose 4.9 per cent to €1.5bn.

Growth was driven by a 4.8 per cent growth at its supermarket chain Albert Heijn.

The company reported that sales in central Europerose two per cent to €412m. When the effects of currency are excluded sales rose by four per cent on a like for like basis.

The company's largest retail unit in the US, Stop & Shop/Giant-Landover, reported sales rose four per cent to $3.8bn.

However when compared on a like-for-like basis Stop & Shop sales grew only by 0.8 per cent while Giant-Landover suffered a 4.7 per cent decline.

The company blamed the drop on "competitivepressures".

Royal Ahold also owns Giant Carlisle and Tops in the US, where sales were flat when compared on a like-for-like basis.

On the 1 August Ahold announced it would buy 67 supermarkets in the Czech Republic from Julius Meinl.

The acquisition increases Ahold's stores in the Czech Republic to about 300 and in centralEurope to about 520.

The purchase is part of a plan to reinforcing the company's position in the region.

Bidvest is part of the Bidvest Group, a South-African investment holding company, holds interests in companies in the services, trading and distribution sectors.

In Europe, the Bidvest Group is active in the food services business in the UK through BFS Group, which trades under "3663 First for Food service".

Bidvest also owns foodservice operations inAustralia, New Zealand and South Africa.

Bidvest's investments had sales of €6.7bn in 2004.

External links to companies or organisations mentioned in this story: Royal Ahold Deli XL

Related topics Processing & packaging

Related news

Follow us


View more