U.S. News

Ahold Expects Tough Fourth Quarter


Dutch retailer Ahold posted a third-quarter net profit on Friday, slightly above analysts' forecasts, and said the fourth quarter would continue to be challenging.

The world's fourth-biggest food retail and foodservice group by sales had a profit of 210 million euros ($277.1 million) compared with a loss of 236 million a year earlier, hurt by a class action settlement.

"As we anticipated, the third quarter was more challenging than the second quarter for U.S. retail, reflecting increased competitor activity and weaker economic conditions, leading to margin pressure, Chief Executive Anders Moberg said in a statement.

"We expect the fourth quarter to be equally challenging," he said.

A Reuters poll of 22 analysts had forecast on average net profit of 191 million euros, with operating profit seen at 324.4 million euros.

Ahold owns the Netherlands' biggest supermarket chain but makes 74% of its sales from its U.S. retail chains Stop & Shop, Giant-Landover, Tops and Giant-Carlisle, and catering-supply unit U.S. Foodservice.

Operating profit rose 7.5% to 273 million euros from a year ago, excluding the settlement effect.

"The core earnings are below market estimates and have taken a hit from U.S. retail, where operating margins are lower," said a Dutch-based analyst.

Ahold plans to sell U.S. Foodservice, the unit at the centre of a nearly 1 billion euro accounting scandal in 2003 and which is valued at up to 5.2 billion euros by analysts, to focus on its U.S. retail operations.

"The situation at Ahold is unchanged. The good parts continue to perform well, while the bad parts deteriorate. These numbers again prove that the U.S. retail restructuring is desperately needed," said a London-based trader.