Outlook for 1996
Sales and operating results expressed in local currencies in The Netherlands,
other countries in Europe and the United States, are expected to be higher than
in 1995. Consolidated net earnings will also be higher in 1996.
For 1996, we are expecting a continuation of the previous years'
trend in The Netherlands: a slight increase in spending on food
and consumables, reflecting limited growth in volume and a slight
increase in prices.
In 1996, Albert Heijn will continue to change its organiza
tional structure. The measures to be taken will lead to further
improvement in product flow management, cost structure and
above all, service to the customer. Albert Heijn will also seek to
improve customer service by taking advantage of the extension of
store opening hours in 1996. Albert Heijn once again expects a
higher operating result in 1996, with further increases in sales and
market share. The Ahold Specialty Stores also expect a further
growth in both sales and operating results in 1996. Growth will
mostly be due to an increase in franchising activity. Ahold
Institutional Food Supply expects to see a slight increase in sales
with continuing improvement in operating results. Ahold Food
Production also expects higher results. The wholesale organization
Schuitema expects a slight increase in sales, with operating results
at about the same level as last year.
The growth of activity in Portugal and the Czech Republic
will create increases in sales and operating results. The exceptionally
high growth rates achieved in previous years are likely to slow
somewhat.
We expect growth in consumer spending in the United
States to be lower than in 1995, though growth will differ from
region to region. We are assuming a further increase in prices.
The process of strengthening store formats and the introduction of
new market strategies will be actively pursued. Cooperation among
our chains is increasing in various fields. Sales and earnings will
continue to rise in the United States in 1996. BI-LO's results will
remain roughly the same as in 1995 due to strong competition.
With the opening of our regional office in Singapore and signing
of our initial cooperative agreements in the area, a good start has
been made in Asia. These efforts will continue to develop but will
still be of limited financial importance in 1996. The same is true of
our activities in Poland. These development activities are expected
to have a slightly negative impact on the results of 1996.
With regard to current activities, capital investment for
1996 will be NLG 1,300 million. About NLG 750 million of this
amount will be invested in Europe, mostly in The Netherlands, and
$350 million will be invested in the USA. A further $70 million in
capitalized lease commitments will be incurred.
We continue to seek growth opportunities through acquisi
tion or through cooperation with quality partners in Europe, North
America, and Asia.
While internal growth can be financed entirely from available
cash flow, sizeable future acquisitions will require external financing.
Net interest expense is likely to rise slightly, partly due to the effect
of new consolidations in 1995. Because of a change in applicable
international tax agreements, the tax burden will also show a slight
increase in 1996. Stockholders' equity is expected to grow, with a
further improvement in the equity ratio.
Expansion of our store chains and the extension of Dutch
opening hours should lead to new job opportunities. On the other
hand, the necessary organizational changes currently being imple
mented in a number of our operating companies will reduce
employment slightly. In total, we expect employment at Ahold to
show a small increase in 1996.
Corporate Executive Board
Zaandam, March 27, 1996
26 Annual Report 1995 Royal Ahold
