00 Ahold ANNUAL REPORT 2002 61
BOARD GOVERNANCE HIGHLIGHTS OPERATING REVIEW FINANCIAL INVESTOR REL AT IONS
The following table sets out the net sales of our retail trade operations in the Latin America retail trade segment for fiscal
2002, fiscal 2001 and fiscal 2000:
Fiscal 2002 Fiscal 2001 Fiscal 2000
EUR Change EUR Change EUR
(in EUR millions, except percentages) (restated) (restated)
Brazil:
Bomprego 1,028 (19.3) 1,274 57.3 810
G. Barbosa 257
Argentina:
Disco 511
Chile, Peru and Paraguay:
Santa Isabel 347
Total Latin America 2j43 68.2 1274 573 8ÏF
Set forth below is a discussion of the operating income of our Latin America retail trade segment for fiscal 2002
compared to fiscal 2001 and fiscal 2001 compared to fiscal 2000. For a discussion of the operating income of Disco
and Santa Isabel, please see "Share in Income (Loss) of Joint Ventures and Equity Investees" on page 67.
- Fiscal 2002
Consolidated net sales in our Latin America retail trade segment increased by EUR 869 million, or 68.2%, to EUR 2.1
billion in fiscal 2002 compared to fiscal 2001. The increase in net sales was primarily attributable to the consolidation of
G. Barbosa, and the part-year consolidation of Disco, Santa Isabel and DAIH in fiscal 2002, as discussed above. Net sales
at Bomprego decreased by EUR 246 million, or 19.3%, to EUR 1.0 billion in fiscal 2002 compared to fiscal 2001.
Excluding the impact of currency exchange rates, net sales at Bomprego would have increased by EUR 45 million, or 4.6%,
in fiscal 2002 compared to net sales in fiscal 2001. In fiscal 2002, the inflation rate in Brazil was approximately 16%.
Bomprego's net sales in fiscal 2002 were negatively affected by the economic recession and the energy crisis in Brazil.
The Latin America retail trade segment incurred an operating loss of EUR 278 million in fiscal 2002 compared to operating
income of EUR 56 million in fiscal 2001. The fiscal 2002 operating loss was primarily caused by the consolidation of
Disco from the second quarter of fiscal 2002 and Santa Isabel and DAIH from the third quarter of fiscal 2002. DAIH
incurred substantial operating losses in fiscal 2002, as more fully discussed below. Such operating losses included a
EUR 199 million goodwill impairment charge with respect to DAIH's investment in Disco and Santa Isabel. The economic
crisis in Argentina, and to a lesser extent in Chile, resulted in a revised expectation of the future cash flows of each of
these operations. In addition, the offers we received from potential buyers for our operations were taken into consideration
in the impairment analysis. The fiscal 2002 operating loss for the Latin America retail trade segment also included a
EUR 54 million goodwill impairment charge with respect to Bomprego and G. Barbosa. This impairment was triggered by
the lower-than-expected operating performance of these operations. In addition, the fiscal 2002 operating loss included a
charge of EUR 10 million in fiscal 2002 relating to severance charges for the termination of employees as a result of the
reorganization of operations in our Latin America retail trade segment.
Operating income at Bomprego declined in fiscal 2002 compared to fiscal 2001, primarily as a result of the devaluation
of the Brazilian Real and the economic slowdown in Brazil as described above. In addition, Bomprego's gross profit
decreased, mainly due to the implementation of a new pricing strategy, which resulted in lower prices. We implemented
several cost reduction initiatives in Brazil in fiscal 2002.
- Fiscal 2001
Net sales in our Latin America retail trade segment increased by EUR 464 million, or 57.3%, to EUR 1.3 billion in fiscal
2001 compared to fiscal 2000. This increase mainly reflects the full-year consolidation of Bomprego.
Operating income in the Latin America segment increased by EUR 5.0 million, or 9.8%, to EUR 56 million in fiscal 2001
compared to fiscal 2000. As a percentage of net sales, operating income was 4.3% in fiscal 2001 compared to 6.3% in
fiscal 2000. The main cause of the decline in the operating income as a percentage of net sales in fiscal 2001 was
impairment charges incurred primarily as a consequence of the difficult economic conditions in Brazil.
