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AMSTERDAM - Ahold NV, the world's third-largest food retailer, said Tuesday net profit declined 15 percent to 257.6 million euros ($256 million) in the third quarter and lowered its full-year outlook. The company, which ranks behind Wal-Mart Stores Inc. and France's Carrefour SA in sales, also announced a restructuring that calls for it to sell off non-core businesses.
In the year-earlier period, the Netherlands-based company earned 304.2 million euros. Ahold said profit in the just-ended quarter fell because of higher goodwill amortization, higher financial expenses, higher income taxes and unfavorable currency differences.
"We have had several disappointments coming from different directions, most particularly South America," said Ahold president and CEO Cees van der Hoeven. "Adding up the impact of the extremely difficult trading conditions, the huge impact of currency devaluations, the severe effect of the default of our former Argentine partner, Velox, the impact on financial expenses and the average tax rate, one can say that South America explains most of it."
Van der Hoeven announced that he has agreed to remain in his position for another five to seven years.
The company launched a three-year restructuring program with the goal of focusing on its primary food businesses while selling off non-core operations.
Ahold said it will establish internal targets focusing on improving free cash flow, reductions in capital expenses, working capital and operating costs. The targets are an acceleration of the company's "Economic Value Added" started in 2001, the company said.
Looking at the U.S. retail business, Ahold said sales rose both organically and as a result of the consolidation of Bruno's. Sales increased 11.5 percent, organic sales growth amounted to 3.4 percent, and comparable sales growth was 0.6 percent. Identical sales declined 0.2 percent, but even this number was better than that of most U.S. retail competitors, Ahold said.