Koninklijke Ahold Del Ord

Ladies and gentlemen, good morning and welcome to the analyst conference call on the first quarter 2022 results of Al-Dalaza. Please note that this call is being webcasted 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, First Quarter 2022, and also in Al Deleuze's public filings and other disclosures. Al Deleuze's disclosures are available on aldeleuze.com. Forward-looking statements reflect the current views of Al Deleuze's management and assumptions based on information currently available to Al Deleuze's management. Forward-looking statements speak only as of the date they are made, and Al Deleuze 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 Al Deleuze. At this time, I would like to hand the call over to JP O'Meara, Senior Vice President, Head of Investor Relations. Please go ahead, JP.

Thank you, operator, and good morning, everyone. I'm delighted to welcome you to our Q1 2022 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 investors section of our website, ahuldales.com, which also provides extra disclosures and details for your convenience. To ensure everyone has the opportunity to get their questions answered today, I ask that you initially limit yourselves to two questions. If you have any further questions, then please re-enter the queue. I'll now turn the call over to Franz.

Thank you very much, JP, and good morning, everyone. I'm pleased to report a strong start to the year for ALDELEZ. In times like these, our strong global portfolio of number one and number two local brands provides distinct competitive and societal advantages. On the one hand, these allow us to successfully navigate short-term market volatility, and on the other, they provide operational bandwidth and financial stability so we can remain focused on our exciting long-term growth agenda. But before I go to that and our numbers, let me first start with the customer. For consumers, Q1 was characterized by significant challenges within and outside of our markets, headlined, of course, by the war in Ukraine. While we do not have direct operations in Ukraine or Russia, I'm extremely proud of associates at our brands. They quickly jumped into action and provided crucial support to those affected by this war. Our brands in Europe, together with Ajo de Les, donated more than €1.5 million worth of cash and in-kind support, and generated an additional €1.2 million in customer and associate donations to organizations like the Red Cross. Several brands are also supporting associates who are volunteering their time to provide on-the-ground support and are actively promoting jobs to Ukrainian people displaced by the violence. We will continue to provide support for as long as it is needed. We also know that consumers globally are feeling the pressure of high inflation rates. And therefore, we are working hard and having firm negotiations with suppliers to mitigate price increases where possible. We are also ensuring price increases are realistic and necessary via our should-cost models. As you know, we are, too, a manufacturer as well with our own private label brands. And therefore, we can deconstruct products down to component materials, like raw materials, packaging, energy, and transportation. So we have a good sense of what a product should cost. Moreover, we also have the powerful backdrop of our Leading Together strategy and the four priorities we are leaning on. to unlock even more value for our customers and our stakeholders. That starts with our consumer and customer value proposition. And as you can see with the many examples from the quarter on slide eight, all the local brands are continuously helping customers manage their omnichannel shopping baskets more efficiently. Our brands are also laser focused on helping consumers manage their spending by proactively highlighting savings opportunities along the customer journey. Powered by data and insights, we do this by the following things. Providing great value offers spearheaded by omnichannel loyalty programs. Prioritizing healthy food options through guiding stars and Nutri-Score linked promotions. And expanding the assortment and availability of high-quality, low-cost, home-brand products and bulk offerings. For example, as you can see on slide 10, own brand assortments, the page called own brand assortments, which offer great quality at reduced cost versus national brands. And these are being positioned more prominently and conveniently in stores and the omnichannel shopping journey through our apps and websites. As a reminder, we are very well positioned with our own brands relatively to peers. In the Benelux, own brands represent over half of all our brands' sales. And in the US, own brand penetration stands at approximately 30%, and our brands will continue to extend and invest in their presence and visibility in stores and online throughout 2022. All of the actions I just mentioned are clearly paying off, and we believe there is even more to gain going forward. Brand strength and relative market share are our most important measures of success. Our performance on these metrics again shines through in our results, which exceeded our original expectations. In Q1, net sales grew 8.3% to 19.8 billion euro, and diluted underlying earnings per share was up 1% to 55 cents. Now these results are coming off a very strong 2021, which large pandemic supported gains, especially with Bold.com being a big beneficiary. We therefore are very pleased that we have maintained the majority of these gains on an absolute basis and consolidated our market share positions in the process at the same time. In the US, FoodLine was a clear outperformer and right now is one of the fastest growing brands in the US with close to double digit comps. and we continue to make very good progress building new capabilities and consolidating activities in our support hubs, which is a central part of how we add speed and leverage scale to accelerate growth and drive costs lower over time. With a well-supported consumer environment in the US, we are in general more optimistic about our performance. In Europe, the reopening of societies across our markets and a return to normal life for most citizens created a challenging comparison in the Benelux. And this resulted in declining first quarter comparable sales and underlying operating profits for Europe. However, we see customer trust and loyalty as an important indicator of how well we are doing. And this is clearly reflected in the fact that our overall market share is increasing, being particularly robust at Albert Heijn and Bold.com. We expect the first quarter performance trends in both regions to continue in Q2 and potentially even intensify in Europe as inflation rates continue to peak. Therefore, to counter the market conditions we see in Europe, particularly challenging markets like Belgium, we will be proactive and swift and are focusing on two main approaches to strengthen our brands as well as intensifying our cost-saving efforts, which Nathalie will address in a moment. While adding additional short-term mitigation actions, our leading together operational priorities remain front and center in our work. Our omnichannel transformation agenda is core to this, and you can see on slide 12, we again accomplished a lot in the quarter. We continue to use a blend of organic investment and strategic partnerships to make smart choices to expand our grocery omnichannel proposition and reach. And as the industry is rapidly shifting to more same-day delivery options, we are positioning ourselves to accelerate in this space. For example, in the U.S., we have over 1,400 pickup points and have added new instant delivery options with partners such as Instacart. In Europe, Albert Heijn recently began making instant deliveries in Amsterdam by expanding its existing partnership with Deliveroo and thuisbesorgd.nl. to give sub-customers more ways to put a fresh, healthy meal on the table. We remain confident our brands will be winners from this long-term trend and fully expect to take significant market share as the more challenging environment shakes out competition. This is a good opportunity to spend a few minutes on how we intend to leverage our portfolio and to make it a priority to be bigger in this respect. Creating the ecosystem for smarter customer journeys is a clear passion of our company and a key differentiator from our peers. As you can see on slide 13, Albert Heijn and Bold.com have increased collaboration on several fronts in the area of joint loyalty, media monetization, and introducing new convenient customer solutions like joint parcel lockers. We also made good progress with Stop and Shop and Fresh Direct, where we plan to increase collaboration to accelerate growth and market share in New York City. I look forward to share more on this in the second half of the year. Finally, as you have seen at our AGM last month, we remain fully focused on our healthy and sustainability ambitions and have again made good progress on many fronts, as can be seen on slide 14. We were proud that Albert Heijn and bold.com were again recognized with the 2022 Sustainable Brand Index. Albert Heijn was voted the most sustainable market supermarket chain in the Netherlands for the sixth year in a row, and Bold.com was recognized as the most sustainable e-commerce brand for the second year in a row. Bold.com also became the first e-commerce company in the Netherlands and Belgium to be climate neutral, certified from the Climate Neutral Group. And in a similar light, our U.S. brand Hannaford also announced plans to be fully powered by renewable energy by 2024. In summary, all in all, I'm pleased with the performance of the business in what is an increasingly challenging environment, with the first quarter results better than our expectations. And many of these Q1 trends are continuing in Q2. Our strong global portfolio of number one and number two local brands provides ample opportunities and caution to navigate the environment. With our U.S. business remaining strong, our extensive toolkit to manage inflation, dependable cost-saving initiatives, and additional proactive action plans in Europe, we are increasing our 2022 earnings guidance today. And on that note, let me now hand over to Natalie, who will add her comments on the quarter, providing further specifics on the outlook, and update you on our progress on the sub-IPO of Bold.com.