Financial review (continued)
Ahold USA
The Netherlands
Other Europe
(1)
Net financial expense
Ahold Annual Report 2012 35 Ahold at a glance
Our strategy
Our performance
Governance
Financials
Investors
Operating income
In 2012, operating income was €1.2 billion, down €160 million or
11.9% compared to 2011Underlying operating income (which
excludes impairments, gains on the sale of assets, and restructuring
and related charges listed below and totaling €227 million in 2012)
was up 2.8% to €1.4 billion. Underlying operating margin, at 4.3% of
net sales in 2012, was 0.2 percentage points lower compared to 2011
due to investments in value and growth in our main markets.
Underlying Corporate Center costs were €82 million, up €2 million
compared to 2011Excluding the impact of our self-insurance
activities, underlying Corporate Center costs were also €82 million,
€12 million higher than last year.
You can read more about our operating companies' results in
Performance by segment.
Operating income
million
1,297
4.8%
1,336
1,347
1,202
4.7%
4.7%
1,187
4.5%
4.3%
2008 2009 2010 2011
I Operating income Underlying operating income margin
n millior
Underlying
operating
income
contribution
by segment
2012
I Ahold USA
I The Netherlands
I Other Europe
831 56%
644 43%
21 1%
Total (before Corporate
Center costs)
1,496 100%
Impairment of assets
Ahold recorded the following impairments and reversals of
impairments of assets (primarily related to stores) in 2012 and 2011
million
2012
2011
(36)
(18)
(23)
(2)
Total
(55)
(25)
Gains and losses on the sale of assets
Ahold recorded the following gains on the sale of non-current assets in
2012 and 2011:
million
2012
2011
Ahold USA
The Netherlands
Other Europe
Corporate Center
4
7
10
Total
21
12
Restructuring and related charges
Restructuring and related charges in 2012 and 2011 were as follows:
million
2012
2011
Ahold USA
The Netherlands
Other Europe
Corporate Center
(180)
26
(39)
(15)
Total
(193)
(15)
Restructuring and related charges at Ahold USA were connected
with the settlement of the U.S. frozen pension plan (€90 million).
Out of this total settlement (€121 million), a portion was also recorded
in Corporate Center (€31 million), along with acquisition costs
(€6 million) related to the acquisition of bol.com.
Additionally in 2012, we wrote down €88 million ($116 million) of
capitalized software development costs at Ahold USA. Ahold has been
conducting parallel implementations of a suite of retail applications in
both the United States and Europe. Following a review of our systems
development strategy we have decided to focus our resources on the
development of the retail suite in Europe where we already have
several elements successfully implemented. In the U.S. we will focus on
areas likely to provide the greatest benefits, such as customer loyalty,
point of sale and e-commerce.
In the Netherlands, restructuring and related charges resulted from a
gain on pension curtailment (€31 million).
In 2011, restructuring and related charges at Ahold USA mainly
resulted from the transition of certain logistics activities.
Net financial expense, at €227 million, decreased by €89 million
compared to 2011Last year, net financial expense included a financial
guarantee provision of €92 million, which was the estimated impact of
a judgment rendered in the Stop Shop Bradlees lease litigation with
Vornado (as further described in Note 9 to the consolidated financial
statements).
Interest expense, at €236 million, was down €9 million mainly
following debt reductions in 2012 of €0.4 billion, partly offset by a
stronger U.S. dollar against the euro in 2012. Net interest expense
of €226 million was at the lower end of our guidance of
€220-€240 million.
Income taxes
In 2012, income tax expense was €211 million, up €71 million
compared to last year. This was mainly due to a €109 million tax
benefit resulting from the release of an income tax contingency reserve
included in 2011 (as further described in Note 10 to the consolidated
financial statements). The effective tax rate, calculated as a percentage
of income before income taxes, was 22.0% (2011: 13.6% or 24.2%
when excluding the above-mentioned release).
