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Investing.com -- Ahold Delhaize (AS:AD) shares rose Wednesday after the Dutch food retailer reported third-quarter results that topped expectations, lifted by solid U.S. sales and higher margins.
The company posted third-quarter sales of €22.5 billion and operating profit of €933 million, exceeding consensus estimates of €22.5 billion in sales and €866 million in EBIT.
Earnings per share came in at €0.67, compared with forecasts of €0.62. Jefferies said the results represented an 8% EBIT beat, underpinned by “exceptionally strong U.S. sales and margin performance.”
Comparable sales in the United States rose 2.9%, above expectations of 2.5%, driven by continued growth in online and pharmacy operations.
The U.S. EBIT margin widened by 40 basis points to 4.6%, from 4.1%in the previous year. In contrast, comparable sales in Europe increased 2.8%, missing consensus estimates of 3.7%, while regional EBIT margin held steady at 3.9%.
Group Support Office costs, including insurance, totaled €34 million, coming in slightly lower than the €38 million projected.
The figure reflects the company’s central expenses, such as corporate overheads and insurance, which were €4 million below expectations, indicating tighter control over administrative spending.
Net interest expenses totaled €155 million, compared with expectations of €164 million, indicating the company paid €9 million less in interest costs than projected. Free cash flow for the quarter stood at €389 million, bringing financial net debt to €15.9 billion, up €1.28 billion year over year.
Ahold Delhaize maintained its full-year outlook, assuming an average EUR/USD exchange rate of 1.10.
The company reiterated guidance for mid- to high-single-digit growth in earnings per share and confirmed its free-cash-flow target of at least €2.2 billion, broadly in line with market expectations of €2.17 billion. It also announced a €1 billion share buyback program for next year.
Jefferies described the results as “entirely consistent” with its September upgrade of the stock, which anticipated a re-acceleration of U.S. volume growth leading to margin expansion.
“A reiteration of FY guidance should directly address one of the key bear debates in the stock,” the brokerage said.