July 23, 2020

Update with Ahold Delhaize CEO Frans Muller

Ahold Delhaize CEO Frans Muller (photo: Philipp von Bruchhausen)
(photo: Philipp von Bruchhausen)
Frans Muller: "We continue to evaluate M&A opportunities"
The fall-out from the coronavirus pandemic is taking an increasing toll of small- and medium-sized companies, the true creators of employment and wealth.

Many governments have already provided substantial relief packages for SMEs, but these will hardly suffice to avert a major recession.

Worried about the backlash from disgruntled taxpayers, politicians continue to tinker timidly with VAT percentages, and the like, without the gumption to create a new Marshall Plan for a post-Covid Europe. As so often during the bizarre course of human history, humble men and women shall reap as unaccountable bureaucrats have sown.

Meanwhile, how are the big ocean-going oil tankers of the industry faring? If they can't survive, no one can. So let's ask Frans Muller, CEO of Dutch-Belgian retail giant Ahold Delhaize, for a quick update...

Obviously, there are limits to what even the frontman of a publicly-quoted company can say in the closed period preceding the announcement of Q2 results on August 5.

Those analysts in New York and Amsterdam consulted by our newspaper expect another strong performance from the Zaandam-based company which reported a 12.7-per-cent hike in currency-adjusted revenues for Q1.

It should also be noted that Ahold Delhaize is well on track to achieve the €1bn in share buybacks planned for 2020. With the purchase of 62 'Bi-Lo' and 'Harveys Supermarkets' from Southern Grocers on the East Coast of America this June, the company has also shown that it is prepared to continue making fill-in acquisitions.

The Dutch market leader operates 18 retail brands in ten countries spanning a number of global regions (USA, Benelux, Central & South-Eastern Europe, and, in cooperation, South-East Asia). Last year Ahold Delhaize posted net revenues in 2019 a tad north of €66bn.

"We'll come out of the crisis in good shape"

Ahold Delhaize CEO Frans Muller (photo: Philipp von Bruchhausen)
(photo: Philipp von Bruchhausen)
Ahold Delhaize CEO Frans Muller
Mr Muller, what additional costs has the Covid-19 crisis created for Ahold Delhaize to date?
We have invested in a wide range of measures to keep our associates and customers safe, such as plexiglass shields at the cash registers. In recognition of their exceptional efforts, we also enhanced pay and benefits for associates. Combined, these measures resulted in more than €170 million in costs during the first quarter.

So will you be modifying your capex plans for this year?
Our outlook for capital expenditure for 2020 remains unchanged at approximately €2.5 billion. While some capital projects will be delayed because of the crisis, we are accelerating other investments in digital and omnichannel capabilities. Additionally, we have maintained our dividend policy and continued our share buyback program for 2020. Of course, we will monitor the economic situation on an ongoing basis.

Have you changed your international expansion strategy?
We continue to evaluate M&A opportunities that enable us to strengthen the market positions of our local brands. Given the uncertain environment, we will be carefully evaluating potential opportunities.

Have you sharpened your prices to help consumers in the current crisis?
Frans Muller, Ahold CEO (photo: Philipp von Bruchhausen)
(photo: Philipp von Bruchhausen)
"We are speeding up investments into our digital and omnichannel capabilities"
All prices are set by our local brands in response to local conditions which vary per market. As always, our focus is on providing customers with good and healthy products at affordable prices and they will continue doing this.

Have you revised your online strategy in the light of the coronavirus experience?
Customers have accelerated the shift to online and therefore we are speeding up investments into our digital and omnichannel capabilities. For example, we are adding new Click & Collect points in the U.S. and aim to have more than a thousand such locations by the end of this year.

We also expect online sales in the U.S. to increase by more than 50 per cent, from a previous forecast of 30 per cent.

And in Europe, we're increasing online capacity by accelerating the openings of new home-delivery fulfilment centers.

What changes have you noticed in customer shopping behavior and buying preferences during the crisis, and to what extent do you believe these will continue after the pandemic has subsided?
Frans Muller, Ahold CEO (photo: Philipp von Bruchhausen)
(photo: Philipp von Bruchhausen)
"I expect the crisis will drive consumers towards making healthier choices"
The shift to online groceries has accelerated, with more customers choosing home-delivery or Click & Collect. We expect this trend to continue and that's why we are accelerating investments in our omnichannel capabilities and fulfilment.

During lockdowns people have spent much more time at home and prepared their own meals. I expect some of this will stay even after restaurants reopen partly because of continued social distancing and partly because of continued economic uncertainty. That's why we continue to invest to improve our meal solutions offering and further develop our private label offering.

I expect the crisis will drive consumers toward making healthier choices. People suffering from obesity and diet-related diseases such as diabetes are at greater risk if they catch Covid-19.

So I expect that consumers will shift to more nutritious diets and we will support them by making it easier and more accessible to prepare a healthy meal. Our broad offering of private label products is well positioned to support customer choices here as well.

They say, one shouldn't waste a good crisis. Will Ahold Delhaize emerge from the Covid-19 scourge stronger or weaker?
Our priority is keep our associates and customers safe, work with our suppliers so that we continue to serve our communities, and invest in our omnichannel capabilities. In addition, we are working on providing healthier choices for our customers and becoming more sustainable. I believe that these ingredients combined will help us come out of the crisis in a good shape.

Lebensmittel Zeitung with its online sisters (photo: LZ)
Our German retail B2B newspaper, Lebensmittel Zeitung, in print & digital
Read in German
: 'Wir bauen online noch schneller aus' and 'Ahold Delhaize trotzt der Corona-Krise' by international editor Mike Dawson on page 8 of Lebensmittel Zeitung, no. 30, 24.07.2020. The latter article is also available on our website (paywall)

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