Management's discussion and analysis
Net sales
Net sales in the arena increased 8.4 percent in 2006
(4.6 percent in 2005 excluding the impact of the
additional week in 2004). The increases in net sales were
primarily driven by the success of Albert Heijn's value
repositioning program and effective promotional activities.
Operating income
In 2006, operating income increased EUR 123 million to
EUR 411 million. The increase was primarily due to higher
identical sales and effective cost control at Albert Heijn.
Operating income for the arena decreased in 2005
compared to 2004 primarily as a result of higher pension
and other retirement costs.
Central Europe Arena
The following table sets forth net sales information and
operating loss for the Central Europe Arena in 2006, 2005
and 2004:
Operating income (loss) in EUR (55) (20) 10
Operating income (loss) as
a percentage of net sales (4.0%) (1.6%) 0.9%
Net sales
Net sales increased 11.3 percent in 2006 (11.8 percent
in 2005). The increases were attributable to favorable
changes in currency exchange rates, the acquisition of
58 Julius Meinl stores in the fourth quarter of 2005 and
the impact of new store openings.
Operating loss
In 2006, the arena's operating loss increased
EUR 35 million to EUR 55 million. The increase in the
operating loss was primarily due to a EUR 35 million
increase in impairment of assets.
The arena incurred a EUR 20 million operating loss in
2005 compared to EUR 10 million operating income in
2004. The decrease was attributable to project costs
related to the start-up of a new centralized accounting
center and the write-off of receivables and inventory in
2005 and the non-repetition of a EUR 10 million benefit
recognized in 2004 related to the release of a provision
for costs in connection with the termination of a shopping
center lease agreement.
48 Ahold Annual Report 2006
Schuitema
The following table sets forth net sales information and
operating income for Schuitema in 2006, 2005 and 2004
Operating income in EUR 74 95 67
Operating income as
a percentage of net sales 2.3% 3.0% 2.1%
Net sales
Net sales in the arena increased 1.8 percent in 2006
(0.2 percent in 2005 when excluding the impact of the
additional week in 2004). The increases were primarily
due to growth in identical sales.
Operating income
In 2006, operating income decreased EUR 21 million to
EUR 74 million. The decrease was primarily due to costs
related to the acquisition of new stores and increased
commercial activities.
Operating income at Schuitema increased in 2005
compared to 2004 primarily due to the non-repetition
of impairments in 2004.
U.S. Foodservice
The following table sets forth net sales information and
operating income for U.S. Foodservice in 2006, 2005
and 2004:
Operating income in EUR
Operating income in USD
Operating income as
a percentage of net sales
Net sales
Net sales increased 4.1 percent in 2006 and declined
0.5 percent in 2005 when excluding the impact of the
additional week in 2004. Net sales growth was negatively
impacted by 0.8 percent in 2006 and 2 percent in 2005 as
a result of the Sofco disposition in 2005 and the Company's
decision to exit certain businesses. During 2006 and 2005,
inflation had a negligible impact on net sales.
Operating income
In 2006, operating income increased USD 218 million to
USD 325 million or 1.7 percent of net sales. The increase
was primarily due to initiatives to improve gross margins,
enhance operations productivity and reduce
administrative costs.
Operating income in 2005 increased USD 40 million
compared to 2004 due to a higher gross profit margin,
driven primarily by significant vendor cost reductions,
which was partially offset by higher operating expenses,
including restructuring and other related charges of
USD 61 million in 2005.
2006
2005
2004
In millions, except percentages
(52 weeks)
(12 months)
(12 months)
Net sales in EUR
1,385
1,244
1,113
Change in identical sales
(5.5%)
(6.7%)
2006
2005
2004
In millions, except percentages
(52 weeks)
(52 weeks)
(53 weeks)
Net sales in EUR
15,300
14,872
15,170
Net sales in USD
19,217
18,468
18,847
2006
2005
2004
In millions, except percentages
(52 weeks)
(52 weeks)
(53 weeks)
Net sales in EUR 3,184 3,128 3,181
Change in identical sales 1.5%
258 86 54
325 107 67
1.7% 0.6% 0.4%
