Ahold Delhaize Strong cost savings track record provides confidence for 2023
On Wednesday Ahold Delhaize surprised with a strong set of 4Q22 results, beating the margin estimates in both the EU & US by 50bps. The good performance was driven by lower energy costs in Europe and savings from the “Save For Our Customers” plan, which again exceed expectations, especially in 4Q22. Ahold Delhaize plans to accelerate the program in FY23, targeting more than € 1.0bn in savings. Although energy will continue to be a headwind in the EU, group margins should remain above 4% while keeping the underlying EPS stable. After revisiting our estimates to the upside, we bank on a 4.1% underlying EBIT margin for FY23. Moreover, with energy headwinds likely to fade beyond 2023, we see room for further margin improvements in the years thereafter. We reiterate our Buy rating and increase our TP from € 32.0 to € 33.0ps.Koninklijke Ahold Delhaize is an international group of supermarket and foodservice operators based in Europe and the U.S. Co. operates supermarkets and convenience stores. In addition, Co. provides online food retailing services. Co. also finances, develops and manages store sites and shopping centers. Ahold Europe comprises Albert Heijn in the Netherlands and Belgium; Etos, Gall & Gall, and albert.nl in the Netherlands; and Albert / Hypernova in the Czech Republic and Slovakia. Ahold USA is organized into four retail divisions: Giant Carlisle, Giant Landover, Stop & Shop New England, and Stop & Shop New York Metro. The Peapod online business is also part of Ahold USA.
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