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Ahold’s summary report for the fourth quarter and full year 2010 revealed “another solid performance in both the United States and Europe,” according to Dick Boer, CEO of the Amsterdam-based retail conglomerate. “Despite another challenging year for the food retail industry, we managed to successfully increase volumes and grow market share in each of our major markets,” he added.
Fourth-quarter operating income was 295 million euros (US $411 million), while net income for the quarter was 154 million euros (US $214.6 million). Full-year sales increased 4.4 percent at constant exchange rates and after adjusting for the impact of an extra week in 2009. The company reported an underlying retail operating margin of 4.9 percent; excluding the Ukrop's stores acquired in 2010, the underlying retail margin was 5.1 percent, the same as in 2009.
"In the fourth quarter, customers continued to focus on value, driving intense promotional activity, particularly in the United States,” noted Boer. “Operating margins were negatively impacted by cost inflation that was not fully passed on to customers. We increased volumes and improved market share in the Netherlands, the Czech Republic and in the United States.”
Despite Ahold’s satisfactory financial performance, however, he warned that the grocery industry wasn’t out of the recessionary woods just yet. "Although there are signs of a gradual economic recovery, we expect consumers to remain focused on value and cautious in their spending in an inflationary environment,” said Boer. “We will continue to reduce costs so that we can invest in our offering to improve the value we provide, while managing the balance between sales and margin.
Boer also noted that the company’s “strong balance sheet enables us to launch a new 1 billion euro (US $1.4 billion) share buyback program for the next 18 months while continuing to actively pursue our growth strategy and taking advantage of opportunities as they arise.”