Ahold Delhaize's Q1 beats expectations, aims to increase volumes
Adds detail in paragraphs 6-9, updates shares
By Diana Mandia
May 8 (Reuters) -Supermarket group Ahold Delhaize AD.AS beat first-quarter core profit margin expectations and confirmed its guidance for 2024 on Wednesday, helped by European performance, while showing confidence in recovering volumes later this year amid slowing inflation.
The group shares were up 3.4% at 0913 GMT.
Supermarket firms, whose profits have been boosted in the last two years by a sharp rise in food prices, are struggling to maintain margins as food inflation has slowed, wages have jumped and shoppers have curbed their spending and opted more for private labels.
Ahold Delhaize reported higher-than-expected underlying operating income margin of 4% for the January-March period, compared to 3.8% expected by analysts polled by the company.
The group sawmargin improvement during the first quarter in Europe, with a 0.3 percentage-point (pp) rise to 3.2%, while it declined 0.2 pp to 4.6% in the United States, partly affected by cuts in benefits to low-income families that had helped them buy groceries.
Ahold, makes more than half of its revenues in the United States.
In Europe, Delhaize's already finalised agreements to franchise all of its 128 own-operated stores will play an important role in European margin recovery in the coming years, the group said.
The group says it is optimistic in price negotiations as inflation is slowing down after soaring in the last two years, with retailers claiming that producers' hikes were unjustified.
According to CEO Frans Muller,price conversations are stillvery intense between manufacturers and retailers, but both sides are now aimingto increase volumes.
"We come out of a period where we saw negative volumes or negative units. And that is not healthy for manufacturers and not for us. (...) manufacturers support this now more with more promotions or lower prices," Frans Muller said in a call with Reuters.
He added it expected positive developments in volumes in Europe and the United States by the end of the year.
"What we see is inflation coming down and volumes going up, those are the two trends," Muller noted.
The group' sales reached 21.72 billion euros in the quarter, slightly above a consensus of 21.53 billion euros.
Reporting by Diana Mandiá; Editing by Tom Hogue, Sonali Paul, Toby Chopra and Kim Coghill
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