Koninklijke Ad N.V. S/Adr

Ladies and gentlemen, good morning and welcome to the Amnesty Conference call on the third quarter 2021 results of AHL Dalhousie. Please note that this call is being webcast and recorded. Please note that in today's call, forward-looking statements may be made. All statements other than statements of historical facts may be forward-looking statements. Such statements may involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those included in the statements. Such risks and uncertainties are discussed in the Interim Report, 3rd Quarter 2021 and also in Ahold Delhaize, Public Findings and Other Disclosures. Forward-looking statements reflect the current views of AHEL Delhaize Management, an assumption based on information currently available to AHEL Delhaize Management. Forward-looking statements speak only as of the date they are made and AHEL Delhaize does not assume any obligation to update such statements except as required by law. The introduction will be followed by a Q&A session. Any views expressed by those asking questions are not necessarily the views of AHEL Delhaize. At this time, I would like to hand over the call to JP O'Meara, Senior Vice President, Head of Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. I'm JP O'Meara, Head of IR, and I'm delighted to welcome you to our Q3 2020 results conference call. On today's call are Franz Muller, our CEO, and Natalie Knight, our CFO. After a brief presentation, we will open the call for questions. In case you haven't seen it, the earnings release and the accompanying presentation slides can be accessed through the investor section of our website at www.aholdelez.com. To ensure everyone has the opportunity to get their questions answered today, I ask you to initially limit yourself to two questions. If you have further questions, then please re-enter the queue. Before I turn over to Franz, I would like to remind you of our upcoming Investor Day which will be a virtual event held on November 15th at 2 p.m. Central European Time, 8 a.m. Eastern Time. We are excited to share our vision for the future and look forward to you joining us. I'll turn the call over to Fran.

Thank you very much, JP, and good morning, everyone. Our Q3 results once again showcased the strength of our omni-channel business model. As our local and trusted brand, showed resilience, building further on the 2020 COVID-related sales gains. The pandemic continues to underpin the importance of maintaining food and product supplies to local communities, a vital role that we remain focused on fulfilling. And we remain thankful for the efforts of associates who have put a consistent emphasis on safety, while at the same time providing great customer service and community support. The quarter also did not come without some unexpected external challenges. Our businesses, and especially the communities we serve, faced disruptions from the Belgian floods, tornadoes in the Czech Republic, fires in Greece, and Hurricane Ida in the U.S. But as always, our associates acted swiftly, and a dedication to their communities during these difficult times truly lived up to our core values. For that, I'm truly grateful. To meet associate, customer and community needs. And we are aware of the recent increases in infection rates in many of our markets and will continue to provide assistance in all our communities, including COVID-19 vaccination efforts in the US. For 2021, we remain on track to deliver on our pledge to contribute €20 million in COVID earmarked charitable donations, spread evenly between the US and Europe. A top priority is also our continued support of COVID-19 related health and safety measures, where we invested €66 million in the third quarter. Now let me highlight our key financial results. Overall, we are very pleased with the underlying Q3 performance in both the US and Europe, as we were able to grow sales and profits on top of a very strong quarter in the year-ago period. We have been able to retain a strong level of underlying consumer demand by continuing to adapt to the enduring consumer behavioural changes. This strong result comes against a backdrop in which several communities across our markets reopened, suggesting that many consumer habits formed during COVID-19 pandemic favoring food at home consumption and a focus on healthier eating are proving resilient. We have and will continue to make significant investments to address these trends. Central to this and all of our strategies is our omnichannel platform, which continued to drive strong market shares during the quarter. Our online business posted strong double-digit growth in its third quarter with these trends expected to continue. Due to the strong growth and continued save for our customer initiatives, our underlying operating margins were again very strong in the context of levels prior to COVID-19. And as a result, I'm pleased that you once again raised our 2021 underlying operating margin, underlying EPS guidance, and the free cash flow guidance, reflecting the strength of our year-to-date results. Next, we go into more detail on the third quarter financial performance, as well as a detailed outlook for 2021. But first, let me move on to slide five and spend a few moments on our omnichannel proposition, where we continue to go from strength to strength, where it is bringing new unique customer-facing experiences, or evolving the speed and efficiency of our operations each quarter, we are driving noticeable change. For example, our US supply chain transformation continues as planned, with 65% of our center store volume now self-distributed, up 50% versus last year. And we are on our way to being 100% self-distributed in 2023. We opened this week our new automated e-commerce fulfillment center in Philadelphia for the giant company, which will allow us to drive increasing efficiency and productivity gains. Our giant company, Henefert, and stop and shop brands in the US have recently introduced new 30 minutes delivery services, including fresh, prepared foods, and essential household products. Albert Heijn in the Netherlands has launched a new subscription service Albert Heijn Premium, becoming the first food retailer in the Netherlands with a subscription plan. And to encourage healthier eating, the service offers extra savings on the wedding products, as well as discounts on our bol.com and GAL&GAL subscription programs. And in Q3, our brands in Central and Southeastern Europe have expanded their online grocery delivery services. For example, Greece has expanded to another three cities, and the Czech Republic has significantly expanded their online offering to 350,000 people. This all serves to underpin our relentless focus to be the industry-leading local omnichannel retailer in all of our markets. And by capitalizing consumer changes through our unique, fresh, healthy, and private brand assortments as their local and trusted online and offline destination to drive retention, acquisition, and increasing share of wallet over time. Moving on to our regional performance, slide six highlights some of our key achievements in the US. The third quarter, US online sales grew by 53%, bolstered by the continued expansion of our click and collect capacity, as well as our fresh direct acquisition. Speaking of click and collect, we opened 102 additional click and collect locations during the quarter, and remain on pace to end 2021 with approximately 1,400 click and collect locations, up from 1,100 at the beginning of this year. We also remodeled 11 additional stop and shop stores in the third quarter, bringing the total number of stores remodeled since the inception of the program to more than 110. And we continue to see solid sales uplifts from our remodeled stores. Finally, from a brand perspective, I'd like again to call out FoodLine, our fastest growing grant in the US, which achieves its 36th consecutive quarter of positive comparable sales growth. And in addition, the 71 recently added stores in early 2021 have now been fully integrated and are exceeding sales expectations. Slide 7 highlights some of our key achievements in Europe. Our Benelux ecosystem continued to perform well and we gained market share in the region during the quarter. This was driven by strong marketing campaigns and continued solid execution of our health and sustainability activities. We were encouraged by the 19.2 growth in net consumer online sales at bol.com during the third quarter, which came on top of the almost 46% growth in the year ago period. The number of third-party sellers on the platform also continues to grow and now stands at 48,000. Albert Heijn completed the acquisition of 38 Dane stores in Q3. We expect all of these stores to be remodeled to the Albert Heijn fresh and technology-focused format by the mid of this November. And in Belgium, the Deleuze SuperPlus loyalty plan which provides extra rewards and discounts to consumers of healthy and sustainable products, continues to gain traction, providing a nice sales uplift. The program ended the third quarter with more than 2 million members in just one year since its inception. Moving on to slide eight, and we continue to make progress in elevating our healthy and sustainability strategy, and now discuss a few of those items. Bold.com, our online retail platform in the Benelux, has taken a step towards a sustainable ambition by utilizing new multi-packaging technology. And this makes Bold.com the first in the world to pack with multiple custom items in one box, which means we have a faster and more sustainable process and fewer delivery trips, and thereby reducing Bold.com's overall CO2 emissions and making us more cost-efficient at the same time. Following the success of its SuperPlus program, Deles has added a healthy membership program for companies, which provides discounts on healthy products with Nutri-Score A or B at Deles Belgium. And this allows us to introduce more healthier eating to these employees by providing special discounts, but also extended Deles reach to new customers who hadn't previously shopped our brand. And in September, our Albert brand was recognized as the leader in organic own-brand products by customers in the Czech Republic. And this is in turn strengthening Albert's proposition with customers, and it is driving market share gains at the brands at the same time. All in all, our continued efforts have been recognized by NSCI, which upgraded our 2021 ESG rating to a double A from our previous single A rating. We are proud of this achievement as MSCI is the most widely used ESG benchmark by our investors. And our progress here reflects our ambition to be an ESG leader, and we will continue to work hard toward this goal. Finishing on that very positive note, let me now hand over to Nathalie.