Apr 17, 2012
Amsterdam, The Netherlands - Ahold's Annual General Meeting of Shareholders on April 17, 2012, included a speech by Ahold Chief Executive Officer Dick Boer.
Ladies and gentlemen,
Welcome to our Annual General Meeting and thank you for being
here today. We appreciate your interest in our company. I
would like to talk to you this afternoon about our
performance in 2011 and the progress we have made in putting
our strategic priorities into action - and take a few moments
to reflect on Albert Heijn's 125th anniversary, which we
celebrate this year. I would also like to warmly welcome
Albert Heijn's wife, Monique, as our special guest today.
Perhaps you have already seen the anniversary-edition of
Allerhande magazine, which includes a column from Monique, as
well as a special recipe from the Heijn family. You can also
pick up a copy here today.
Before I start, I would like to introduce my two new
colleagues here on stage. Later today you will be asked to
vote for their proposed appointment to the Corporate
Executive Board.
James McCann joined Ahold in September last year as Chief
Commercial & Development Officer, a new role within the
board. James has retailing in his blood, having worked in
leading roles for a number of large international retailers,
such as Tesco and Carrefour, in various countries over the
course of his career.
In November 2011, Jeff Carr joined Ahold as Chief Financial
Officer. He has an impressive track record with companies on
both of the continents where Ahold operates. Jeff has been
CFO of listed companies since 2005, and has worked and lived
in both Europe and the United States. Jeff will take you
through our 2011 financial results later this afternoon.
Jeff succeeded Kimberly Ross, who left Ahold in November last
year. I would like to thank Kimberly for her enormous
contribution to the company in the ten years she was with
us.
I am pleased to report that 2011 was another successful year
for Ahold. We again achieved a solid performance in Europe
and the United States, and grew sales and income under
challenging economic circumstances. We increased sales by 5.5
percent at constant exchange rates to more than €30 billion
and we grew net income by 19 percent to over €1 billion.
This was despite the fact that customers remained cautious in
their spending and focused on value in an environment of
increasing inflation. Of course this solid performance is
thanks to the hard work of our people in our stores,
distribution centers, and offices, who put the customer first
every day.
In the Netherlands, Albert Heijn's formats remained
popular with customers in 2011. The company continued to
upgrade its supermarkets and develop its own-brand
assortment, launching an updated range of convenient fresh
products. And Albert Heijn again succeeded in launching
innovative marketing campaigns that were popular with
customers, including an animal-card collection campaign in
cooperation with the World Wide Fund for Nature. Overall,
Albert Heijn maintained its market share by offering a
relevant assortment, friendly service and great value.
We celebrated the 80th anniversary of Etos, our drugstore
company last year, and it was named the best drugstore in the
Netherlands for the third time. At the end of 2011, Etos
operated 536 stores -13 more than the previous year, and
again succeeded in growing sales.
Our Gall & Gall chain - the leading wine and liquor retailer
in the Netherlands - continued the rollout of its new store
format, remodeled or expanded 42 stores and opened 6 new
stores. The company ran several successful promotional
campaigns and grew sales.
Our fourth strong brand in the Netherlands is, of course, our
online delivery service albert.nl, which also celebrated an
important anniversary in 2011. Having been in business for 10
years now, it is relatively young compared to -our other
brands but, as we know, this is a very rapidly developing
market. I will discuss our plans for online retailing in more
detail in a few moments.
In the Czech Republic, our Albert stores increased
profitability, thanks to a continuous focus on improving the
commercial proposition and operational efficiency. Albert
also launched a new compact hypermarket format, designed to
provide an easy and more enjoyable shopping experience, along
with an improved assortment of food and non-food products at
competitive prices every day. The company made headlines in
the Czech Republic with its very successful Smurfs campaign,
based on similar customer campaigns at Albert Heijn. This is
a great example of sharing best practices across Ahold, to
benefit our stores and - more importantly - our customers. In
total, we now have 306 Albert and Hypernova stores in the
Czech Republic and Slovakia.
Our joint ventures in Europe, ICA and JMR, continued to make
good progress during the year and significantly improved
their contribution to our overall results.
At ICA, Per Strömberg has succeeded Kenneth Bengtsson, who
stepped down earlier this month after 11 years as President
and CEO. We thank Kenneth for his commitment and contribution
to the success of ICA, and we wish Per all the best in his
new role. In Sweden, ICA grew sales and market share. In
Norway, ICA has launched a new business plan to reposition
the business in this very challenging market.
In Portugal, economic conditions are also difficult, of
course, and consumer confidence low. Nevertheless, our joint
venture JMR continues to perform well with its strong
supermarket brand Pingo Doce, by putting more emphasis on its
own-brand products, and communicating effectively about its
competitive pricing.
Moving on to our brands in the United States, I would like to
start with Giant Landover, which celebrated its 75th
anniversary in 2011 with customers and employees. Giant
Landover performed well, in part thanks to the division's
successful store remodeling program, "Project
Refresh," which was completed last year, and by the
division's increased focus on its fresh assortment and
customer loyalty programs.
Stop & Shop New York Metro expanded its store portfolio last
year by acquiring stores in New Jersey and on Staten Island.
It continued its successful customer loyalty programs,
including one that gives customers a discount on gasoline
when they shop in our stores - a popular incentive,
especially with gas prices rising.
Stop & Shop New England opened a new concept supermarket with
new services and a pick-up point enabling customers to order
groceries online and pick them up at the store. It also
launched a mobile application that allows customers to scan
their groceries, tally their orders, receive personalized
offers, and pay using their smartphones.
Giant Carlisle, our fourth supermarket business in the United
States, delivered another outstanding performance. The
division opened its first store in the city of Philadelphia -
and partnered with Peapod, for the first time, to offer
online shopping and delivery to customers in the surrounding
area. So far this year, we have increased our presence in and
around Philadelphia even further by announcing the
acquisition of 16 Genuardi's supermarkets in the area.
Giant Carlisle is developing its formats, and has introduced
a more compact supermarket format.
I already mentioned our Peapod business, which started more
than 20 years ago and today is the leading online grocery
service in the United States. Peapod is growing every year,
especially in densely populated areas and by expanding to
cities such as Manhattan and Philadelphia. It has the
advantage of being able to grow faster by partnering with our
Ahold USA supermarket divisions. Sales at Peapod grew by
double digits last year, and the company also achieved a
significant milestone when it delivered its 20 millionth
order.
Let's move on to our strategic priorities for the
future.
At our shareholders' meeting last year, I had just
started as CEO of Ahold. At that time I presented six new
strategic pillars to reshape retail. These pillars are:
increasing customer loyalty, broadening our offering,
expanding our geographic reach, simplicity, responsible
retailing, and people performance.
Since then, we have worked hard to further develop these six
priorities. This has been the mission of the Ahold Strategy
Team, made up of Jeff Carr, James McCann, Lodewijk Hijmans
van den Bergh and myself, together with our Chief Operating
Officers in Europe and the United States, Sander van der Laan
and Carl Schlicker. This team has designed one global
strategy to grow the company and ensure that we continue to
be successful in the future.
New technologies and the increasing importance of social
media have put the customer firmly in the driver's seat.
Here's a video that illustrates the impact of some of
these developments.
The way people are shopping is changing dramatically.
Customers are able to choose how, when, and where they shop -
and how much they are willing to pay. So - today's
customer has all the power... and that's great news. It
keeps us focused and enables us to better respond to customer
needs and expectations. Ahold is in a strong position to take
advantage of these rapid developments in customer behavior,
shopping trends and the retail environment.
With our six strategic pillars, we are reshaping the way we
do business and accelerating our growth. We are building on
the foundation of our strong and successful local brands,
that have leading market positions and are very close to our
customers.
Our first pillar is strengthening our relationship with
customers. We have new customer loyalty initiatives that we
believe will add one to two percent to identical sales
growth. We want to be our customers' favorite place to
shop - and to turn customers into fans who love shopping with
us and recommend us to others.
In the United States, we implemented direct mail and email
programs last year targeted to the individual buying behavior
of 2.5 million shoppers - and we are expanding this program
in 2012. We are now in the process of personalizing customer
offers in the same way at Albert Heijn.
Our second pillar is focused on broadening our offering by
developing our store formats, building an even better, more
relevant assortment and expanding our online business. I will
now go into some detail on each of these three areas.
We are busy further developing and rolling out our successful
store formats. I gave you a few examples earlier of how we
are continually renewing and improving our stores.
We opened our first new Albert Heijn to go store last month,
with a brand new convenience concept and a new look and feel.
We will begin rolling out this concept in all "to
go" stores in the Netherlands and across the border. We
expect to open the first convenience store in Germany after
the summer, and have ambitious plans to expand our presence
there over time, starting in the state of Nordrhein
Westfalen.
Our assortment is another very important element of our
customer offering. At Ahold USA, we have made good progress
towards our goal of achieving 40 percent own-brand sales
penetration. We added new products and rolled out new
packaging to unify the brands across each of the divisions.
Other milestones in this area are Gall & Gall's launch of
a new own-brand line of products - the first liquor store
chain in the country to do so. And Albert Heijn introduced a
new category in its AH puur&eerlijk responsible products
range - sustainable seafood products - bringing the total
number of products under this successful own brand to over
500.
Let's move on to the third element of this pillar, online
retailing. It's our ambition to triple our online sales
to €1.5 billion by 2016. Looking back over the last 20 years,
we have successfully moved from a business model with stores
only, to one with stores supported by an online presence.
Now, we are leap-frogging to establish a truly integrated
online and offline offering.
We recognize that customers are in the lead - and we are
giving them the ability to choose between shopping at the
store, collecting online orders at a designated pick-up
point, or having their order delivered at home. In the second
half of this year we will begin to test pick up points here
in the Netherlands. At our U.S. chains, the first pick-up
points are already in operation.
Albert Heijn continues to develop its Appie smartphone
application, which now goes beyond building shopping-lists to
enabling customers to place an order for home delivery. The
app was named best of its type in the Netherlands. I already
mentioned the new smartphone apps we have introduced in the
United States, enabling people to tally their order and pay
for their groceries while they shop.
Of course the acquisition of bol.com, announced in February,
is a huge boost for our online ambition. Bol.com is one of
the most successful online stores in the Netherlands - a
testament to the entrepreneurial spirit, vision and skills of
its management and staff. Bol.com's strong position in
non-food, combined with albert.nl's current offering,
will significantly enhance our online presence. In addition,
the acquisition expands our presence in Belgium.
After the transaction is completed - which we expect to
happen in the second quarter - we will invest in bol.com and
its strong brand to enable it to further expand and enhance
its leading online position. Together we will be able to
offer customers even more choice, more convenience and more
value.
Our third strategic pillar is designed to expand Ahold's
geographic reach in existing and new markets. In 2011, we
grew on both continents, including with the opening of the
first Albert Heijn in Flanders, Belgium. The second store we
opened in Belgium happened to be our 3,000th store
Ahold-wide.
We now have three Albert Heijn stores in Flanders, and are
seeing very encouraging results - evidence that we can also
turn Belgian customers into fans. We aim to have 10 stores
open in Belgium by the end of the year and 50 within the next
five years. I already mentioned that we also expect to open
our first convenience stores in Germany in the second half of
this year and we are aiming to open at least 150 new
convenience stores in Europe by 2016.
In addition to growing the business in and around existing
markets, we are also exploring growth opportunities
elsewhere. Not every market is right for Ahold. We are
focusing on those markets where we can use our strengths. We
operate best in relatively well-developed and densely
populated areas that have the right customer base for the
types of stores we excel at.
We are seeing opportunities to acquire leading supermarket
businesses in new markets. As you can expect from us, we have
strict criteria for acquisitions. We are keen to grow, but
not at any price - we are committed to controlled, profitable
growth.
Now I will move on to the three pillars that are supporting
our growth initiatives.
Our fourth pillar focuses on simplifying the business,
leveraging our capabilities and scale, and reducing costs to
reinvest in providing value to our customers. We are
simplifying our IT systems, with the goal of reducing the
number of applications we are using by more than 50 percent.
We are putting in place standard systems across the
businesses that conform to our company-wide Ahold Retail
Model. With these initiatives and others, we were ahead of
our target to complete our €350 million cost savings program
for 2010-2012 at the end of last year. We have announced a
new €350 million cost savings program for the next three
years.
Our fifth pillar underscores our commitment to responsible
retailing. This is a crucial component of our strategy and an
essential part of the way we work at Ahold. With our more
than 3,000 stores and more than 200,000 employees, we are a
company that operates at the heart of society. We can - and
want to - contribute to improving the communities we serve
and the lives of people who shop with us. We have a
responsibility when it comes to our customers' health and
well-being, the sourcing of the products we sell, our impact
on the environment, the communities we serve, and the people
we employ.
In 2011, we made good progress on all of the targets we
established last year in our priority areas. For example, we
are well on our way to meeting our target of having 25
percent of our total food sales in healthy products by 2015.
We have reduced our CO2 emissions and further accelerated our
waste management programs.
We continue to work with our suppliers to ensure we are
providing safe and responsible products. We are expanding our
program to audit our suppliers on social compliance, and
making progress on increasing the sustainability of the
critical commodities we use. Improving the sustainability of
our products means ensuring respect for the people, animals
and environment involved in their production.
An example that is close to our hearts is the Albert Heijn
Foundation, which aims to improve living circumstances and
future prospects for the families and the employees of our
suppliers in Africa. Not only do we invest in better trade
conditions, but also in education, housing and medical aid.
We support the local communities, which also helps our
customers by improving the supply of high quality
products.
The sixth pillar of our strategy focuses on our people. We
are committed to investing in the development of our
employees, and building a diverse workforce. During 2011, we
strengthened our leadership team by making a number of senior
internal promotions and by hiring new people with the skills
and capabilities we need to implement our growth strategy -
now and in the future. We also made progress in transferring
the capabilities we have in our different companies through
temporary leadership exchanges and longer-term international
assignments. We strive to make Ahold and our businesses a
great place to work for all our employees.
In the year ahead, we will continue delivering on our six
strategic pillars to fulfill our vision to provide all our
stakeholders with better choice, better value, and a better
life, every day.
Looking ahead, we expect 2012 to be another challenging year
for the food retail industry. In the current macro-economic
environment, consumers will continue to look for value and
competition will remain intense. You will have seen that
consumer confidence levels in the Netherlands are at an
historic low point, and unemployment in the United States
remains relatively high. Our strong brands are well
positioned to grow in our major markets. However, as we said
on March 1, we anticipate our sales growth in the first
quarter - which for Ahold covers 16 weeks - will reflect the
difficult economic conditions and the timing of Easter.
We remain committed to providing attractive returns to our
shareholders, and as part of this commitment we have changed
our dividend policy to achieve a payout ratio of 40 to 50
percent of adjusted income from continuing operations. The
dividend of €0.40 per share proposed for 2011 reflects our
confidence in our new strategy and our proven ability to
generate cash. It represents an increase of 38 percent
compared to 2010 and gives our shareholders a competitive
return for our sector.
During 2012, we will take further steps to make our capital
structure more efficient by investing in growth, reducing
debt and returning cash to shareholders while remaining
committed to an investment grade credit rating. Jeff Carr
will expand on this in his presentation shortly.
This year, Ahold celebrates its 125th anniversary. Our
founding company - Albert Heijn - opened its first store in
the Netherlands in 1887. The grandson of our founder, who
died in January last year, built the company together with
his brother into one of the best-known brands in the
Netherlands and one of the most successful retailers in the
world. Over our history, we have grown by acquiring
businesses that each have their own rich heritage and a
commitment to the customer.
Let's look at a video celebrating the progress we've
made in the 125 years that Albert Heijn and Ahold companies
have been in business.
While we are celebrating our successes, we cannot of course
forget the low point in our history and the lessons we have
learned. . But we can be very proud of where the company
stands today and I am confident that we will continue to
thrive, thanks to the efforts and commitment of everyone
across the company.
Along with my colleagues on the Corporate Executive Board, I
would like to thank our employees for everything they did in
the past year to strengthen our businesses and to give our
customers a great shopping experience. The relationships they
build with our customers and the service they provide each
day are what make us successful, able to grow the business,
and continue to increase shareholder value.
I would now like to hand over to our CFO Jeff Carr.
Thank you.
distributed by |