Ahold Profit Beats Forecasts; On Lookout for Acquisitions

Dutch supermarket group Ahold said on Wednesday its third-quarter net income rose to 214 million euros ($316.3 million), beating market expectations, adding it plans to pay an annual dividend for 2007.

The supermarket group, the seventh-biggest in the world by sales, said it now expects to meet the upper end of its targeted 4 to 4.5 percent retail operating margin for this year as it accelerates an overhaul of its supermarkets in the United States.

A Reuters poll of nine analysts had forecast net income of between 134 million and 211 million euros. Ahold owns the Netherlands' biggest supermarket chain Albert Heijn, but derives 60 percent of its sales in the United States.

"We continue to make good progress with our strategy. In the United States, our Value Improvement Program at Stop & Shop and Giant-Landover remains on track, with almost half the program completed," Chief Executive John Rishton said in a statement.

Ahold started a two-year revamp of its main U.S. chain in September 2006, which includes price cuts, more private label goods and more variety. Last month, it said it would upgrade 100 Giant Food supermarkets over the next three years.

Main U.S. chain Stop&Shop/Giant-Landover had $150 million in operating income, down $15 million, with margins hurt by the overhaul.

Smaller chain Giant-Carlisle reported a $5 million rise in operating income to $38 million.

Dutch supermarket chain Albert Heijn was the star performer as operating income rose 25 million euros to 132 million euros.

Ahold shares ended at 9.66 euros on Tuesday and are up 20 percent since the start of the year, outperforming a 1 percent rise in the DJ Stoxx retail index, with investors viewing the retailer as a recovery story.

On Lookout for Acquisitions

Ahold is on the lookout for acquisitions in the regions where it has operations, its chief executive said on Wednesday.

"We will continue to look for opportunities to acquire businesses in geographical regions we operate in," CEO John Rishton told reporters on a conference call. He declined to provide details.

Analysts have said smaller Belgian rival Delhaize would make a good merger candidate. Ahold owns the Netherlands' biggest supermarket chain Albert Heijn but derives 60 percent of its sales in the United States.