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Message from Dick Boer, Ahold CEO (continued)
Making healthy choices easy
and affordable
Responsible Retailing
Engaged associates
Our leadership
13
Creating value for our shareholders
Outlook for 2015
Our thanks
Ahold at a glance
Business review
Governance
Our focus on healthy own-brand products is only one
example of the work we are doing to help people
make healthy choices, as part of our responsible
retailing strategy. We're learning more about the
link between food and health, and it is clear that as
food retailers we can have a significant impact on
people's lives.
Our vision is to make healthy, fresh, sustainable food
available and affordable for all our customers - while
still offering plenty of choices for the occasional
indulgence when they are looking for it. We invest in
our own-brand ranges to offer healthy products at a
good value. We play an important role in showing
our customers how to use our great products through
our magazines - such as Allerhande, the most widely
read magazine among women in the Netherlands,
our websites and through social media. We have
programs in place in all our markets to educate
children on healthy eating - over the past five years
we've reached nearly 2.8 million children this way.
It is only by making healthy choices accessible to a
broad section of the population in our markets that
we can have a real impact on our customers' health,
and therefore their lives.
We want to be a better neighbor and a responsible
retailer everywhere we operate. I am very pleased
with the results we have achieved against our
responsible retailing targets this year. You can
read more about the work we are doing to be a
responsible retailer and a better neighbor in our
Responsible Retailing Report 2014.
As a retail company, our business is only as good
as our people, and so we are committed to being a
better place to work every day. Our 2014 Associate
Engagement Survey had its highest response rate in
three years and overall engagement was up 1% to
68% - a result that shows we are making progress
in creating a culture where associates feel engaged
and are focused on driving our strategy forward.
2014 was the first full year with our new Ahold
Executive Committee (ExCo) in place and having
leadership from key business and functional areas
in our top management team has already made a
positive impact.
We recently welcomed two new members to our
ExCo. Jan Ernst de Groot started on February 1,
2015, as Chief Legal Officer. He is responsible for
Ahold's legal affairs, governance and compliance
and heads up responsible retailing and product
integrity. Wouter Kolk was appointed CEO of
Albert Heijn, to succeed Sander van der Laan,
who stepped down as of February 1, 2015. I am
very pleased that we were able to appoint an
experienced leader with a strong track record from
within our own company to this important role.
I would like to take this opportunity to personally
thank Sander for his strong contributions to our
company over his 16-year career with Ahold.
Under his leadership, Albert Heijn ran memorable
commercial campaigns that were very popular
with customers, developed into a true multi-channel
business, and began operating successfully outside
its home market for the first time in Belgium. We wish
Sander all the very best.
In October, we announced that Lodewijk Hijmans
van den Bergh, Chief Corporate Governance
Counsel and member of the Management Board
and Executive Committee, would step down.
This will take effect as of March 1, 2015. I would
like to personally thank Lodewijk for his five years of
excellent service to our company. During his tenure
he successfully resolved some of Ahold's key legacy
issues, actively contributed to the development and
execution of our strategic agenda and played a
pivotal role in developing our Responsible Retailing
strategy. We are grateful for his many contributions
and wish him all the best in the future.
Ahold
Annual Report 2014
We also had some changes to our Supervisory
Board during the year. We welcomed a new
member when shareholders appointed René Hooft
Graafland to the Board in April, effective January 1,
2015. He came to us from Heineken, where he
will serve as CFO until April 2015, bringing a
wealth of experience in the areas of finance and
consumer goods. In June, the Supervisory Board
appointed Robvan den Bergh as interim Chairman
to temporarily replace Jan Hommen when he
became CEO of KPMG the Netherlands.
As our shareholders, you are the owners of our
company, and we always strive to make Ahold an
investment that brings you good value. Due to our
confidence in our Reshaping Retail strategy, and our
ongoing strong cash generation, we propose an
increase in our dividend to €0.48.
We continue to move towards a more efficient
capital structure. In 2014, we returned €2.7 billion
cash to shareholders through the completion of
our €2 billion share buyback program, €1 billion
capital reduction and reverse stock split, and a 7%
increase in our dividend. We remain committed to
our financial guidelines on leverage, liquidity and
credit rating. Going forward we aim to maintain
a balance between investing in profitable growth,
returning cash to our shareholders and reducing
debt and we will continue to move towards a more
efficient capital structure. In February, we announced
another €500 million share buyback program, to be
completed in the next twelve months.
We continue to invest in our customer proposition,
providing better value, quality and service to our
customers. These investments will continue to be
largely funded by our Simplicity program, that
is expected to deliver €350 million in cost and
efficiency improvements in 2015. As mentioned
earlier at our Online Strategy event, margins in
the Netherlands will be impacted by increased
investments, particularly at bol.com, to maintain strong
sales growth in our online business and to further
strengthen our market leading positions. Lower interest
rates will result in an increase in underlying pension
costs, especially in the Netherlands, although total
cash contributions will be lower than last year. In the
Czech Republic, we expect that the acquisition of
SPAR will remain slightly margin-dilutive in 2015,
but margin-enhancing from 2016 onwards with
an additional one-off cost of €40 million in 2015.
At current exchange rates, we expect free cash flow
for the year to be broadly in line with last year.
In closing, on behalf of my colleagues on the
Management Board and the Executive Committee,
I want to thank our 227,000 associates around
the company for their hard work and constant
drive to bring a better offering to our customers.
You will see examples throughout this report of how
our associates are making the difference for our
customers and communities through focus, innovative
thinking, and wholeheartedly striving to get better
every day. We are constantly working to make
Ahold a better place to work for them. I also want
to thank our customers for being our inspiration, and
for giving us the chance to serve them, 365 days
per year. We are grateful to our shareholders, for
your confidence in our company and our strategy
and for your support over the past year. It has been
a real privilege to again lead our great company
in 2014. Through our Reshaping Retail strategy we
will continue to become better every day for our
customers, while at the same time creating value for
our shareholders and other stakeholders.
Dick Boer
Chief Executive Officer
February 25, 2015
