f
H
KÜ1I3E3
36
Group performance overview (continued)
Results from operations
Ahold at a glance
Our strategy
Our performance
Governan
Financials
Investors
Ahold Annual Report 2013
As in previous years, our online grocery channel
achieved double-digit growth. This was supported
by our network of pick-up points, a broader
assortment of products, and an expanded
geographic coverage for home delivery. We will
continue to drive the roll-out of additional pick-up
points to offer this convenient shopping alternative
to our customers in coming years.
Bol.com, the largest non-food online retailer in
the Netherlands, which we acquired in 2012,
delivered strong double-digit growth partly fueled
by the launch of a number of new categories
and accelerated growth in Belgium. This year we
introduced successful omni-channel promotions
between Albert Heijn and bol.com.
In addition, bol.com and Albert Heijn completed
the rollout of pick-up points in over 700 Albert Heijn
stores for orders placed at bol.com.
In 2013, we divested our 60% stake in ICA for
€2.5 billion (including dividend). In order to
maintain an efficient capital structure and to
return proceeds to shareholders, we increased the
€500 million share buyback program initiated in
March 2013 to €2 billion. We will also execute a
€1 billion capital repayment with a reversed stock
split to take place in the first quarter of 2014.
We remain committed to maintaining a
balance between investing in profitable growth,
returning cash to our shareholders, and
reviewing opportunities for debt reduction, and
we will continue to move toward our capital
structure guidelines.
Strong cash flow generation has underpinned
our continued investment in growth, with capital
expenditure of €0.8 billion during the year.
We returned €1.2 billion cash to shareholders
through the share buyback program and a 10%
increase in our dividend. We also reduced our
exposure to U.S. multi-employer pension plans
through a settlement with the New England
Teamsters and Trucking Industry Pension Fund.
In 2013, we delivered on the guidance that we gave
on net interest expense, made capital expenditure
just below our guidance of around €0.9 billion, and
had a lower effective tax rate.
While we expect economic conditions to gradually
improve, we remain cautious in our outlook for
2014. We will continue to look for ways to simplify
our business in order to reduce costs so that we can
invest in our offering to further improve our value
proposition and offer customers a better shopping
experience every day. Reflecting the confidence
we have in our strategy and our ability to generate
cash, we propose a 7% increase in our dividend
to €0.47 per common share. This represents a
payout of 51% of adjusted income from continuing
operations that amounted to €807 million or €0.79
per share in 2013.
At current exchange rates, we expect net interest
expense for 2014 to be in the range of €200 million
to €220 million, excluding net interest on defined
benefit pension plans. Pension costs in underlying
operating income are expected to be €114 million
in 2014, €13 million less than in 2013. Total cash
contributions to pension plans are expected to
decrease by €22 million to €161 million in 2014.
We anticipate the effective tax rate to be in the mid-
twenties in 2014. Capital expenditures, excluding
acquisitions, are expected to be around €0.9 billion.
Our ambition for return on capital employed is to
stay in the top quartile of the food retail sector.
Ahold's 2013 and 2012 (as restated) consolidated income statements are summarized as follows:
million
2013
of
net sales
2012'
of
net sales
Net sales
32,615
100.0%
32,682
100.0%
Gross profit
8,682
26.6%
8,618
26.4%
Underlying operating expenses
(7,303)
(22.4)%
(7,206)
(22.1)%
Underlying operating income
1,379
4.2%
1,412
4.3%
Impairments
(83)
(37)
Gains on the sale of assets
28
21
Restructuring and related charges
(85)
(60)
Operating income
1,239
3.8%
1,336
4.1%
Net financial expense
(291)
(208)
Income taxes
(153)
(267)
Share in income of joint ventures
10
8
Income from continuing operations
805
2.5%
869
2.7%
Income from discontinued operations
1,732
46
Net income
2,537
7.8%
915
2.8%
1 See Note 3 to the consolidated financial statements for an explanation of the restatements
