Koninklijke Ahold Del Ord

Ladies and gentlemen, good morning and welcome to the analyst conference call on the second quarter and half-year 2021 results of Aral Doheze. 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 result, performance or event to differ materially from those included in the statement. Such risks and uncertainties are discussed in the interim report, second quarter and half year 2021 and also in AHAL De Hesse public findings and other disclosures. AHAL De Hesse disclosures are available on ahaldehesse.com. Forward-looking statements reflect the current views of AHEL Delhaize Management and assumptions 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 statement, 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 AHA Dohaese. 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. As operator said, I'm JP O'Meara, the new incoming Head of Investor Relations, and I'm delighted to welcome you all to our Q2 2021 results conference call. On today's call are Franz Muller, our CEO, and Natalie Knight, our CFO. Alvin Concepcion, the outgoing head of investor relations, is also joining us today. 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, aroldelhaize.com. To ensure everyone has the opportunity to get their questions answered today, I ask that you please 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 announce that we are planning to host our Investor Day on November 15th, 2021. Please save the date for now with more details to follow in due course. Now I'd like to hand it over to Franz.

Thank you very much, JP, and welcome on board. Good morning, everyone. We are pleased with our second quarter performance in which associates in all of our brands continued to work tirelessly in a rapidly shifting environment. We would also like to express our support for everyone impacted by the recent floodings in the Netherlands and Belgium, as well as the fires in Greece and the tornadoes in the Czech Republic. We are committed to serving these communities and our branch associates during these difficult times. In this regard, we remain on track to deliver on our pledge to contribute 20 million euros in charitable donations in 2021. And again, this is just a portion of our broader spending for COVID-19 related care and other initiatives, which amounted to 84 million euros in the second quarter. In Q2, our brands, together with suppliers, remained focused on fulfilling their vital role in society by maintaining food and product supplies to local communities. 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. 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. Now let me highlight our key financial results. As a reminder, the second quarter 2020 was a particularly difficult quarter to comp against, as it represented the height of COVID-19 stock up activity. which drove 20.6% comp sales growth in the US and 10.2% comp sales growth in Europe during the year-ago period. In that light, I'm very proud of our second quarter performance, in which US comp sales excluding gas were only down 1.5% versus last year's very robust sales levels. And our European comp sales excluding gas grew even 2.4% year-over-year. On a two years stack comp sales basis, US and Europe grew 19.1% and 12.6% respectively, both representing an acceleration versus 2020. This strong result comes against a backdrop in which several communities across our markets reopened during the second quarter, suggesting that new behaviors picked up by consumers during the COVID pandemic continue to be quite sticky, as demand for food at home remains very resilient. At the same time, our results also underscore that our operations are exiting the COVID pandemic in a stronger position. led by our omnichannel platform, which continued to drive strong market shares during the quarter. As such, our online business posted strong double-digit growth in the second quarter, and our underlying operating margins were very strong in the context of historical levels prior to COVID-19. This has prompted us to once again raise our 2021 EPS guidance, reflecting the strength of our first half year results and we also increase our group underlying operating margin outlook to approximately 4.3 percent up from our original guidance of at least four percent. Naturally of course we'll go into more detail on the financial performance in the second quarter as well as our outlook for 2021. So let me move to slide five. where we show why we continue to have confidence in the strength of our omnichannel proposition, which is being enhanced by the significant reinvestments we are making back into the business. On this slide, we highlight some of the key initiatives we are driving to increase our share of the customer wallet and improve our online capabilities. In support of our online fulfillment capacities, we are opening two new home delivery centers in New York, which will go live in 2022. We are also scheduling to open our first home delivery fulfillment center in Serbia in early 2022 as well. And in the second quarter, we expanded the acceptance of SNAP EBT benefits for online grocery orders, which is now available at all our U.S. brands, improving accessibility for low-income customers. Our no-fee home delivery service AHA Compact Albert Heijn Compact added 20 new areas during Q2 and is now in 26 areas across the Netherlands available. And our focus on productivity will be enhanced by an AI-enabled end-to-end forecasting and replenishment system being finalized later this year. Slide 6 highlights some of the key achievements in the US. We remain on track for A plus 70% online sales growth in 2021, bolstered by the expansion of our click and collect capacity, as well, of course, with our fresh direct acquisition. Speaking of click and collect, we opened 86 additional click and collect locations during the second quarter and remain on pace to end 2021 with approximately 1400 click and collect locations, up from 1100 at the beginning of this year. We also remodeled 14 additional stop-and-shop stores in the second quarter, bringing the total number of stores remodeled since inception of the program to nearly 100. And we continue to see solid sales uplifts from our remodeled stores. And finally, from a brand perspective, I'd like to call out Foodline, which achieved its 35th consecutive quarter of positive comparable sales growth. And in addition, the 71 stores that have been integrated year-to-date 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 both the Netherlands and Belgium in the quarter. This was driven by both strong campaigns during the European Championships and continued strong performance of health and sustainability activities. We were encouraged by the 24.2% growth in net consumer online sales at Boll.com during the second quarter, which came on top of the 65.4% growth in the year-ago period. And the number of sellers on the platform also continued to grow and now stands at 47,000. We are pleased with the Dutch regulator ACM's approval of Albert Heijn's pending acquisition of 38 Dane stores, which remains on track to close in the next quarter. And in the second quarter, Albert Heijn upgraded another 18 stores to its fresh and technology-focused format, and they are performing right in line with expectations. We remain on track to remodel approximately 60 stores by the year-end. And in Belgium, Albert Heijn continued to expand its home delivery service by doubling its coverage versus the first quarter to 800,000 households. The BelAz Super Plus loyalty plan, which gives rewards and discounts to consumers of healthy and sustainable products, continues to gain traction, providing a nice sales uplift. And the program ended in the second quarter with approximately 1.9 million members, up from 1.7 in the first quarter. We were also very much encouraged by the rebound seen in the performance at our central and southeastern European brands. I move in the meantime to slide number eight. We continue to make progress in elevating our health and sustainability strategy and I'll discuss a few of these items. We are proud to be one of the leading signers of the EU code of conduct for responsible food business and marketing practices as part of the European Green Deal, which is committed to shifting to a sustainable food system. And as part of the pact, we have made 10 commitments in the area of healthier choices, product transparency, waste reduction and climate impact. Following successful implementation in other European markets, Mega Image in Romania became the first food retailer to introduce the Nutri-Score nutritional navigation system across its own brand products. And in the US, we are pleased with our result that 52.4% of our Q2 sales are healthy, earning the Guiding Stars 1, 2 or 3 rating. This is in line with our company-wide ambition to raise sales of healthy own products to 51% by the end of 2022. In 2020, we already reached 49.8%. And in the US, the giant company rolled out the Flash Food app across all stores in June. The app reduces waste and promotes healthy eating by providing customers with significant discounts on fresh foods nearing their best before date. And finishing on a very positive note, let me now hand over to Natalie.