Koninklijke Ahold Del Ord

Ladies and gentlemen, good morning and welcome to the analyst conference call on the fourth quarter and full year 2024 results of Aarhus Delhaize. Please note that this call is being webcast and recorded. During this call, Aarhus Delhaize anticipates making projections and forward-looking statements. All statements other than statements of historical facts may be forward-looking statements. Forward-looking statements are subject to risks and uncertainties and other factors that are difficult to predict and that may cause our actual results to differ materially from future results expressed or implied by such forward-looking statements. Therefore you should not place undue reliance on any of these forward-looking statements. The introduction will be followed by a Q&A session. Any views expressed by those asking questions are not necessarily the views of our Dalherza. 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 very much, Sharon, and good morning, everyone. I'm delighted to welcome you all to our 2024 Results Conference Call. On today's call, our friends, Muller, our President and CEO, and Yolanda Putz-Byle, 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, aholdelez.com. These will provide 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 yourself to two questions, that's two questions, not five-part questions, And if you have further questions, then feel free to re-enter the queue. To ensure ease of speaking, all growth rates mentioned in today's prepared remarks will be at constant exchange rates unless otherwise stated. And with that, Frans, over to you.

Thank you very much, JP, and good morning, everyone. Reflecting on the year, I'm proud of all that we have accomplished. If I were to choose three words to summarize our year, it would be commitment, consistency, and clarity. Commitment is staying true to our values to deliver for our customers every day. And consistency is sticking to our plans, realizing another year of strong underlying performance. And clarity, being clear on where we are heading as a company through our growing together strategy. Commitment starts with our people. 2024 has been a dynamic and disruptive year with a lot of things to deal with, inflation, volatility in commodities and supply chain, social and political tensions, and fast-paced changes due to new technologies in how we work and how we live. Creating value for customers, catering to their local circumstances and specific needs, continues to be a tangible differentiator for our business. And for this, I would like to thank our passionate associates for living our values and their dedication to our performance-driven culture. Moving to consistency, this for me means sticking to our promises. In 2024, we said you could depend on us for four things. A relentless focus on the customer, our price positioning, and leveraging the strength of our great local brands. Continued advancement of our own brand strategies, increasing penetration and category depth. further simplification and modernization of our organization to sustain growth, and as always, continuing to be laser focused on cost control and cash flow to reinvest in our customers and our company. Looking at our scorecard, we were indeed consistent and achieved or exceeded all of our key goals for the year. At the same time, we also had the room to kickstart several growing together initiatives which will pave towards 2025. And finally, clarity, which is ultimately the key to great execution. In May and June, we crystallized our game plan and ambitions for the coming four years, building on our core strength and looking with an open mind to the future. We have an ambitious growth plan where we want to grow faster than the industry, maintaining leading margins, and deliver sustainable earnings growth. And I'm particularly proud of how quickly our teams have stepped into our new strategy, with several actions already well underway. Let me share a few highlights in this respect. First area is investing in our winning CVP, the customer value proposition. We want our customers to have vibrant experiences every time they interact with our brands, whether in-store or digitally. or at the intersection of the two. To that end, we are elevating our digital solutions and also adding some secret sauce through AI and predictive analytics. In the US, our brands delivered 12 billion personalized offers for the year, a one billion increase compared to 2023. And we also announced a new partnership with Inmar Intelligence on digital coupons, to further improve offer types and savings. At Alphabeta in Greece, the modular e-commerce platform was launched, the final in a series of six launches across the European market. At Albert in the Czech Republic, the first brand on the new app earlier, monthly app users have increased by over 20% and loyalty sales have increased nearly 10% compared to 2023. In tandem with our digital experiences, we also have been working hard on our assortment throughout the year, ensuring we offer the customer the freshest, healthiest products on the market at great competitive prices. In this respect, strengthening own brand assortment is key, and we have a big ambition to increase own brand penetration over time to 45%. Albert Heijn is a front runner in own brand execution. And in 2024, more than 150 own brand products and product lines were award winning in consumer taste and quality elections. Our CSE brands made progress on the product harmonization, bringing an additional 500 products, both price value and assortment differentiators to the range. These products also play a vital role in increasing regional price favorites, with all the CSE brands now having a minimum of 825 price favorites in their everyday assortment, which is an increase of 15% compared to 2023. In the U.S., a major focus has been on raising the awareness of own brand quality and price relatively to national brands. And during the last quarter, U.S. own brand sales growth outpaced the rest of the store in both dollars and units. The second next aspect I would like to highlight today is the progress we are making to densify and grow our markets. By prioritizing, optimizing, and sharpening our portfolio, you will see a more pronounced and rigorous focus on growing customer reach and extending leading positions in our most profitable markets. During our Strategy Day in May, JJ presented a clear view for the future potential of the U.S. brands in this respect. One of those is the Giant Company, which has a regional presence, local customer base, and leading market positions, which is why I'm pleased about the new store opening of the brand in Philadelphia in December, with two additional stores in the works for 2025. Additionally, 95% of the store fleet is now remodeled with the latest floor design. On the flip side, making necessary interventions when brands are challenged is an essential contributor to elevating the quality of our sales. The successful completion of the Belgium Future Plan affiliation project and the closure of the identified underperforming stop-and-shop locations demonstrated our company's ability to do so. And with these projects behind us, I will share next steps the teams are focused on a little bit later. Next, let's spend a moment on leveraging and lowering our cost base. In an environment where inflationary costs are a concern for many households, our brands remain proactive to ensure that essential items are affordable and within reach for every wallet size. This is fueled by our Save for Our Customers program, where we are proud that we exceeded our plans, generating over 1.35 billion euros in cost savings in 2024. And although we always can do better, two things we do really well in this respect are fact-based negotiations through our shoot cost models and simplification where we challenge ourselves to continuously improve and magnify best practices. Two good examples of simplification through collaboration from last year include for example in the US the team began streamlining the support brands into one out the last USA support organization supporting all of our five local brands in a consistent and cost-efficient manner in the CSE region the brands have completed the first phase of a project to standardize labor management allowing for optimized store execution additionally Commercial operations have been standardized across all the CSE brands, including one centralized data support team, consistent training across buyers, and aligned calendars for negotiations. This will also provide opportunities for PROFI to leverage as we unlock synergies in the coming years. Finally, let me spend a moment on healthy communities and planet. While the environment we operate in continues to evolve, our role and commitment to support healthy communities and planet is unchanged. These topics remain key for long-term business resilience, are a competitive advantage and align very closely with our values. Our brands continue to implement projects to promote healthy, affordable food, drive sustainable business practices like reducing food waste and energy consumption, and encourage diversity and inclusion in the workplace, reflecting and respecting the local communities in which we operate. One such example is Albert Heijn in the Netherlands. Its focus on healthy and sustainable products has contributed significantly to its growth in market share and customer loyalty. Their percentage of home-rent healthy food sales increased to close 200 basis points in 2024, while the organic range and the plant-based assortment, the brand AHA Albert Heijn Terra, are extremely popular. So in summary, as we leave 2024 behind, there are lots of positives to leverage and build upon in 2025. I will share a few of our plans for the year a little bit later, but now over to Jolanda, to share her remarks and insights in our numbers.