Why Investing in Royal Ahold-Delhaize can be very lucrative

Dear PGM Blog reader,

In this weekend blog article, we want to take the opportunity to discuss with you, why Investing in “Royal Ahold-Delhaize” (AD.AS), can be lucrative for value investors.


Royal Ahold Delhaize is an international food retail group, with its head quarter in Zandaam, Netherland, operating supermarkets and e-commerce businesses.

Ahold Delhaize shares are listed on Euronext Amsterdam and Brussels, with ticker symbol AD, the company trades also in the USA on the OTCBB with the symbol ADRNY.

Its 21 local brands employ more than 375,000 associates in 6,500 stores in 11 countries. Formats include supermarkets, convenience stores, hypermarkets, online grocery, online non-food, drugstores, wine and liquor stores.

Its brands are active in the United States, the Netherlands, Belgium, the Czech Republic, Germany, Greece, Luxembourg, Romania and Serbia. It also participates in joint ventures in Indonesia and Portugal.

For fiscal year 2016, the company reported a proforma Net Sales of €62.6 billion and a proforma net operating income of €2.0 billion.


Ahold Delhaize was formed in July 2016 from the merger of Ahold and Delhaize Group. Delhaize Group dates back to 1867, when the Delhaize brothers opened a wholesale grocery business in Charleroi, Belgium. Ahold traces its roots back to 1887, when Albert Heijn opened a first store in the Dutch town of Oostzaan.


On Wednesday August 9, 2017, published strong second quarter 2017 results, driven by an improvement in sales and merger synergies resulting in higher margins.


  • Net sales increased by 67.3% to €16.1 billion (up 64.6% at constant exchange rates)
  • Net income increased by 68.2% to €355 million (up 66.5% at constant exchange rates)
  • Pro forma net sales increased by 3.4% to €16.0 billion (up 1.8% at constant exchange rates)
  • Pro forma underlying operating income increased by €64 million to €626 million, up 11.4%
  • Pro forma underlying operating margin increased to 3.9%, compared to 3.6% in Q2 2016
  • Strong free cash flow of €400 million, guidance of €1.6 billion for full year 2017 reiterated
  • Integration on track, with net synergies of €117 million delivered in the first half of 2017
  • Total expected merger synergies increased to €750 million, for which €250 will be reinvested in their brands.


A year after the merger between Ahold and Delhaize, the integration of the two companies is fully on track and delivering results and continue to focus on strengthening their local brands through, giving content to their strategy of “Better Together”

2017 Share buy back program:

On December 2016, the company announced a  €1 billion share buyback program, which commenced on January 9, 2017.  On Tuesday October 3rd, the company reported that it has repurchased 885,042 of Ahold Delhaize common shares in the period from September 25, 2017 up to and including September 29, 2017. The shares were repurchased at an average price of €15.58 per share for a total consideration of €13.8 million.

The total number of shares repurchased under this program to date is 45,098,758 common shares for a total consideration of €828 million.


The dividend policy of the company is, to target a payout ratio in the range of 40-50% of pro forma underlying income from continuing operations.

Below chart shows the dividend payout over the fiscal years 2006 – 2016.

As can be seen from above chart the company has increased its FY-2016 dividend, which was paid out April 26, 2017, with 10 percent from Euro 0.52 per share for FY-2015, to Euro 0.57 per share.

Based on the company’s, profile, brands, product mix,  fundamentals, strong balance-sheet and a price-to-sale ratio of 0.31, we have a BUY rating on the shares of the Ahold-Delhaize.

Ahold Delhaize Brands

Last but not least, before taking any investment decision, always take your investment horizon and risk tolerance into consideration and keep in mind that share prices don’t move in a straight line and that Past Performance Is Not Indicative Of Future Results.

Yours sincerely,

Eric Panneflek

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