€1.00
Message from Dick Boer, Ahold CEO (continued)
Better
place to shop
Better
place to work
Better
neighbor
Ahold Annual Report 2012 9
Ahold at a glance
Our strategy
Our performance
Governance
Financials
Investors
Building shareholder value
If we look back over the past five years, we've shown strong
performance in relation to our sector. We have been outperforming
our peers in sales growth in the food category in the Netherlands and
the United States year-over-year and have delivered above average
margin performance. Specifically, we have increased sales by €7.2
billion to €32.8 billion over a five year period - an annual average
growth of more than 5%, mainly from our existing businesses. We
have delivered best-in-class cash generation, going from €0.6 billion
in 2008 to €1.2 billion free cash flow in 2012.
In our view, creating shareholder value requires a balanced approach
of investing in growth while at the same time providing attractive
returns. We continue to achieve top quartile return on capital and total
shareholder return, relative to the group of food peers we compare
ourselves to. Our performance has enabled us to consistently deliver
attractive returns to our shareholders.
Strong cash generation made it possible for us to successfully
complete two share buy-back programs of €1.5 billion in total, return
€1.4 billion to shareholders in dividend payments, and reduce our
debt by €2 billion.
In 2012, adjusted earnings per share rose to €1.00, which enabled
us to further increase our dividend to €0.44 and increase the payout
ratio to 44%, which is within the range of 40-50% of adjusted net
income from continuing operations. Our solid balance sheet and
strong free cash flow generation enables us to launch a new 12-month
€500 million share buyback program.
Adjusted earnings
per share
We are reshaping retail
Last year we launched our strategy to reshape retail, and in 2012
began to reap the benefits. This strategy is helping us leverage the
consumer trends we see in our markets into growth opportunities for
our businesses.
Customers today expect more for less, and we are broadening our
offering to give them more of what they want. Our U.S. businesses
are improving their own-brand product lines to give customers more
choices at different price points to fit their budgets. We are on track to
build own-brand penetration to our target of 40%.
Advances in technology are enabling people to research and
buy anything they want, at any time of day, anywhere they happen
to be. We're building our online offering on both continents to
give customers more shopping alternatives, and we achieved
double-digit online sales growth in 2012.
Customers appreciate the convenience of the pick-up points we
opened during the year, including the first Peapod pick-up points in
the United States, and our first pick-up points in the Netherlands.
Results have exceeded our expectations and we will roll this service
out further in 2013.
Our acquisition of online retailer bol.com is enabling us to provide
Dutch and Belgian customers with a far wider selection of non-food
products, so they can come to us for more of what they need
every day.
We expanded our geographic reach during the year, to serve
customers we couldn't reach before, adding 15 Genuardi's stores
at Giant Carlisle in the United States, and agreeing with Jumbo on the
transfer of 82 new stores in the Netherlands, to be converted to the
Albert Heijn format. We also opened nine more supermarkets
in Belgium and our first three Albert Heijn to go convenience stores
in Germany.
On February 11, 2013, we announced that we reached an agreement
with Hakon Invest of Sweden to sell our 60% stake in joint venture ICA
AB, as we aim to focus on our growth strategy and on the businesses
we control. The transaction is expected to be completed in the middle
of 2013.
You can find more detail about our strategic progress in 2012 in the
Our strategy section of this report.
Investing in value for customers
Customers were focused on getting the most for their money in
2012 without compromising on quality. During the year, we were
able to simplify our business in order to save costs so that we could
invest more into offering great value to shoppers. In fact, we increased
the target for our 2012-2014 cost reduction program from €350
million to €600 million. This is an aggressive but achievable goal to
further drive our efforts to simplify our business where we see
opportunities - such as optimizing our commercial processes and
systems and driving own-brand profit through improved sourcing.
Getting better every day
In 2012, we launched our promises to get better every day for our
customers, employees and communities. Of course as retailers, we've
always been acutely focused on our relationship with customers and
how we can offer them something remarkable. But our businesses and
our employees have also operated at the heart of our communities
over the years - whether it is by investing in job creation, improving the
quality and safety of our neighborhoods by operating clean, modern
and efficient stores, or giving substantial funds and countless hours to
support good causes - such as ending child hunger - that help create
a healthier society. As a better neighbor we also work on reducing our
environmental impact and ensuring our products are sourced with
respect for people, animals and the environment. The well-being of
our employees and of those touched by our businesses is fundamental
to earning our customers' trust and loyalty.
