Core business
Prompted in part by increased internationalization and the prospective disappearance
of internal European boundaries after 1992, Ahold in 1989 tightened its focus on its core
business: the distribution of goods to consumers. Reflecting this was the decision to
withdraw from the recreational and restaurant sectors, as both AC Restaurants and
Ostara were sold to their managements in 1989. AC Restaurants ceased to be included
in the consolidation as from the fourth quarter. The two restaurants in Zaandam were
retained.
Growth in earnings
Whereas 1988 may go down in history as a year of unparalleled expansion for Ahold,
fiscal 1989 was characterized chiefly by noteworthy growth in net earnings. This was
caused by considerable increases in operating results in The Netherlands and the
United States. Further earnings per share growth will remain an important Ahold
priority in coming years as well.
Consolidated sales rose from Dfl 15.3 billion in 1988 to Dfl 17.7 billion in 1989, a 15.7%
rise. Consolidated operating results rose from Dfl 238.2 million in 1988 to Dfl 312.5
million. Consolidated net earnings rose by 33.6% to Dfl 194.6 million, while earnings
per common share of Dfl 8.43 were 21.0% ahead of the prior year level. We consider
these increases, which were achieved despite unabated competition, to be highly satis
factory.
Excluding franchised stores, the total number of retail outlets in The Netherlands and
the United States rose by 205 to 1,223. The total sales area increased by 9.1% to
12,269,712 square feet.
n
Acquisitions and other investments
Early in January 1989 Ahold bought the Gall Gall and Party Shop liquor store chains.
The two companies were merged with Ahold's Alberto liquor stores to form a chain of
275 stores operating under the Gall Gall name.
In the United States, BI-LO strengthened its market position in Greenville (S.C.), Char
leston (S.C.) and Charlotte (N.C.) with the acquisition of 21 supermarkets in early 1989.
Ahold also increased its interest in the food wholesale company Schuitema nv from 55%
to 63% last year. Ahold's 1988 purchase of a block of shares representing 45% of
Schuitema's capital had prompted a lawsuit against Schuitema by certain former major
shareholders. Their claims were rejected by the court. The subsequent appeal was also
won on all counts by Schuitema. The judgment of the Court of Appeal upheld our view
that Ahold had properly acquired the Schuitema shares.
Through cross-participations, as mentioned above, Ahold acquired interests in Argyll
and Casino of 1.6% and 4%, respectively.
In 1989, Grootverbruik Ahold (GVA), our institutional sales entity, continued to expand
through the acquisition of three small companies. The acquisitions strengthened GVA's
position in the fresh food and non-food sectors.
Net earnings
xDfl 1,000.000
180
160
140
120
100
80
60
40
20
85
86
87
88
89
Investing activities
Cash flow
x Dfl 1,000,000
1000
900
800
700
600
500
400
300_
200
100
Key figures Koninklijke Ahold nv*
1989 (1988)
Sales (xDJll million
Invested capital (x Dfl 1 million)
Number of employees, average
Full-time equivalents, average
Excluding activities sold in 1989
Including Dfl45 (38) million to third parties
Retail Trade
The Netherlands
8,286 7,590)
1,526 1,128)
40,520 (38,607)
21,812 (20,542)
Retail Trade
United States
8,606 6,954)
2,008 2,008)
38,373 (35,665)
27,020 (25,627)
Food Production
Ahold
522 478)*
132 117)
1,428 (1,372)
1,324 (1,210)
8I7||8|8|
Institutional
Food Supply
636 562)
193 285)
1,141 (1,012)
1,041 973)
Services
-(
384 (324)
207 (227)
186 (207)
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