Letter to shareholders
Anders Moberg, President and Chief Executive Officer
Dear Shareholder,
Welcome to our Annual Report for 2006.
This year was particularly significant for Ahold. We turned the
page on the recovery stage of our company and, following an
in-depth review of our retail operations, published our plans
for achieving sustainable growth for the future.
One of the most important steps we are taking is the intended
divestment of U.S. Foodservice based on our decision to
return to Ahold's roots with an exclusive focus on food retail.
We are proud of what we have been able to achieve with
U.S. Foodservice and are confident that we have positioned
the company for a bright and profitable future outside our
Group. Proceeds from the sale of U.S. Foodservice and the
other planned divestments will be used primarily for a return
to shareholders and to reduce debt.
We also reaffirmed Group financial targets, which are
to achieve sustainable 5 percent retail net sales growth,
mainly through growth in identical sales, and a sustainable
5 percent retail operating margin. Our target remains to
achieve investment grade.
Our new retail strategy entails many important changes for
Ahold. We are building our banners into powerful consumer
brands, refocusing our portfolio, and restructuring the
company into two continental platforms to leverage our
local knowledge and gain the advantages of scale. We are
reducing operating costs across the company by an
additional 500 million euros as well as implementing
50 percent cost savings at our Corporate Center, formerly
our Group Support Office.
You can read more about our plans in the Strategy section
of this Annual Report, which starts on page 7.
Changes like these require a strong team, and I am
delighted to have appointed Dick Boer and Lawrence
Benjamin to head our two continental platforms. Their skills
in transforming businesses will be extremely valuable as we
work to strengthen our local brands and transfer knowledge
globally to achieve valuable synergies.
There were a number of other significant developments over
the last year. We put in place new leadership in three of
Ahold's operating companies. Jose Alvarez was appointed
President and CEO of Stop Shop/Giant-Landover.
His leadership has been key in the implementation of our
Value Improvement Program there, which builds upon our
successful repositioning programs at Albert Heijn and ICA.
We named Johan Boeijenga to head up the business in
Central Europe. Johan is leading the transformation of
our Albert and Hypernova banners, focusing this year on
operational excellence.
Another important appointment was that of Carl Schlicker
to lead Giant-Carlisle/Tops. He is building on the work begun
by the team of Tony Schiano, who retired in 2007 after
a career with Ahold companies spanning 30 years.
We have also made some important new acquisitions in
attractive locations to enhance the business in our Giant-
Carlisle, Albert Heijn and Schuitema market areas in
the past year. These companies effectively rebranded the
acquired stores and reopened them in time for the important
holiday shopping season.
We still face many challenges. Consumer trends are evolving
at an increasingly rapid pace and the competition is fiercer
than ever, with hard discounters having an ever more
significant impact on the competitive landscape. All of our
companies operate in highly competitive markets.
But we are up to the challenges ahead. Our knowledge of
local markets and consumers, our experienced people, and
great store locations, give us a strong competitive position.
Today, after three years of hard work by people across the
company who have invested their passion and commitment
to rebuild its foundations, Ahold can now confidently look
ahead to opportunities to grow and prosper.
On behalf of the Corporate Executive Board,
Anders Moberg
President and Chief Executive Officer
Amsterdam, the Netherlands, March 21, 2007
Ahold Annual Report 2006
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