Supermarket group Ahold Delhaize (AD.AS) expects food inflation in Europe to slow in the second half of this year, CEO Frans Muller said on Wednesday after the retailer delivered a lower profit margin in Europe that disappointed the market.
Ahold shares fell 1.7% by 0940 GMT after its operating profit margin in Europe fell to 2.8%, hit by higher energy costs and a strike at Delhaize Belgium. Analysts had expected a margin of 3% in Europe.
The retailer, which operates Food Lion, Giant, Hannaford, and Stop & Shop in the U.S. and Albert Heijn in the Netherlands, beat expectations for first quarter sales thanks to a boost from the U.S. where its underlying operating margin rose to 4.8%.
Muller said he saw food inflation in Europe slowing in the second half, with prices for sunflower oil and eggs in particular likely to fall back slightly.
Ahold, which makes more than half its revenues in the U.S., posted quarterly sales of 21.62 billion euros ($23.80 billion) to beat a 21.5 billion euro consensus from analyst forecasts compiled by the company.
"We don't expect the strike impact to continue into following quarters given most of the Belgian stores are open now," Bernstein analysts said in a note.
Online sales in the U.S. jumped by 11.9% compared to a year ago, helping overall online sales grow by 5.9%, as Ahold said its loyalty programs were helping to draw shoppers with personalised discounts.
Quarterly operating income was 822 million euros, in line with expectations of 823 million euros.
Ahold, which also has supermarkets in Czech Republic, Greece, Portugal, Romania, Serbia, and Indonesia, on May 1 said Jolanda Poots-Bijl would take over as chief financial officer on October 1, replacing outgoing CFO Natalie Knight.
($1 = 0.9084 euros)
