Ahold Delhaize said on Wednesday that its first-quarter underlying operating income surpassed analysts' consensus, helped by continued strength in its U.S. business even as a weaker euro reduced reported results.
The Dutch supermarket group, which operates U.S. chains including Stop & Shop, Giant, Food Lion and Hannaford and runs Albert Heijn and Delhaize in the Netherlands and Belgium, reported underlying operating income of 896 million euros, a 0.7% increase on the prior year and higher than the 858 million euros that analysts had expected.
Measured at constant currency exchange rates, the company's core earnings rose by 8.1% versus the prior year, reflecting stronger underlying performance in the United States. The group noted that more than half of its revenue is generated in the U.S., making reported euro results sensitive to fluctuations in the dollar-euro exchange rate.
On the top line, first-quarter sales were up 2% at constant exchange rates but fell 4.3% on a reported basis as the translation of U.S. dollar sales into euros weighed on headline sales growth.
U.S. consumer sentiment dropped to an all-time low in April, the company said, with inflationary pressures related to the U.S.-Israeli war with Iran continuing to affect households. Management pointed to a number of cost pressures that have emerged as a result of geopolitical disruption.
"Disruptions from geopolitical volatility and tensions, including the recent armed conflict in the Middle East, are a reality our business has managed through before," CEO Frans Muller said in a statement. "We draw on previous experience and on the measures we have put in place over the past few years to limit the short-term impacts," he added.
The company highlighted how the conflict has disrupted shipping through the Strait of Hormuz, contributing to higher oil prices and increases in the cost of gasoline and diesel. It also said prices for other commodities, including fertilizers, petrochemicals and aluminium, have surged and are expected to affect consumers in the near term.
In corporate news, Ahold Delhaize said it has selected Kingfisher CEO Thierry Garnier to succeed Frans Muller as chief executive officer, with the handover scheduled for April 2027.
For reference, the company provided the exchange rate used in reporting: $1 = 0.8524 euros.