Strategy Update
Dick Boer President and CEO
December 7, 2016 2
Together, we build Great Local Brands, bringing Fresh Inspiration Every Day 3 Highlights
Better Together
• Better Together strategy • Operating model
– Captures benefits of international scale to build – Committed to grow leading supermarket brands great local brands while remaining rigorously focused on cost discipline – Confirms merger rationale – New target to double net consumer online sales – Sets direction to realize full potential by 2020 from expected 2016 level of €2.3 billion
– Full commitment to Sustainable Retailing – Continued focus on strong free cash flow with €1.6 billion expected for 2017 • Combined company • Shareholder return – In full-execution mode following merger completion on July 23, 2016 – Dividend pay-out ratio of 40-50% of pro-forma underlying income from continuing operations – Integration is on track with clear visibility to generating €500 million in net synergies in 2019 – Launch €1 billion share buyback program in 2017 We integrated key trends and key strengths to build our Better 4 Together strategy
Key Trends Key Strengths More value Solid foundation
More convenience Better Together Great local brands • Best-in-class in Supermarkets Strategy • Superior omnichannel & More fresh & healthy digital offering
More personal Leadership
Our commitment to succeed
Proven track record in execution and integration 5 Let’s focus on the key trends affecting food retailing
Key Trends Key Strengths More value Solid foundation
More convenience Better Together Great local brands • Best-in-class in Supermarkets Strategy • Superior omnichannel & More fresh & healthy digital offering
More personal Leadership
Our commitment to succeed
Proven track record in execution and integration Shoppers continuously seeking value 6
Key Trends Customers are buying more value and more premium products Tech driving (price) transparency
The hybrid The hybrid The hybrid consumer consumer is consumer seeks low less attracted seeks greater costs for to mid- personal basic market offers value for
Value groceries goods with high emotional value
Relative price of purchase
Own brands building retailer brand equity
More value
More convenience
More fresh & healthy
More personal Customers looking for convenience across channels7
Key Trends Growth of ready-to-eat and fresh convenience
Increased ease of shopping
More value
More convenience
More fresh & healthy
More personal Increased focus on health & product origin 8
Key Trends “You are what you eat”
Fresher food through local sourcing & vertical integration
More value
More convenience
More fresh & healthy
More personal Seeking personal relevance and connection 9
Key Trends Digital solutions enable personalization of offers
Stronger local connection and better service
More value
More convenience
More fresh & healthy
More personal 10 We have key strengths to address these trends
Key Trends Key Strengths More value Solid foundation
More convenience Better Together Great local brands • Best-in-class in Supermarkets Strategy • Superior omnichannel & More fresh & healthy digital offering
More personal Leadership
Our commitment to succeed
Proven track record in execution and integration Ahold Delhaize is well positioned to continue winning11
Key Strengths • Great local brands with presence on both sides of the Atlantic
• Best-in-class Supermarket player
• Superior Omnichannel and Digital offering
• Operating cash flow among the leaders in the industry
• Deep experience Fresh and Own Brands, focus on affordability
• Frontrunner in Sustainable Retailing; and connected to Communities
• Great pools of talent and capabilities
• Leaders with proven track record in execution and integration
Key figures(1)
Underlying Employees Underlying operating Free Cash Stores worldwide Net sales operating income margin Flow Market cap worldwide Solid foundation (2) Great local brands €60.9b €2.2b 3.5% €1.7b €23.7b 6,590 375,000
Leadership (1) Pro Forma as of 2015; (2) Market cap as of December 5th, 2016 Great local brands on both sides of the Atlantic 12
Key Strengths US #1 or #2 in 24 DMAs* representing c. 80% of our US Sales
Food Lion Stop & Shop Hannaford Peapod
Giant Carlisle Giant Landover Martin’s Food Market bfresh
Europe
Super Indo • #1 in the Netherlands • #2 in Belgium Albert Heijn Etos Gall & Gall Bol.com Indonesia • #1 in Greece #1 in supermarkets • #2 in Czech Republic • #1 in Serbia Delhaize Le Lion Alfa Beta ENA Cash & Carry Albert
Solid foundation • #1 in Greater Bucharest
Great local brands • #1 in Portugal
Maxi Tempo Mega Image Pingo Doce Leadership *DMA = Designated Market Area Strong and experienced leadership team 13 Dick Boer Key Strengths President and Chief Executive Officer
Frans Muller Jeff Carr Deputy Chief Executive Officer and Chief Financial Officer Chief Integration Officer Acting COO, a.i., Delhaize America
Kevin Holt Pierre Bouchut Chief Operating Officer, Chief Operating Officer, Ahold USA Europe and Indonesia
Hanneke Faber Abbe Luersman Chief eCommerce and Chief Human Resources Innovation Officer Officer
Solid foundation Jan Ernst de Groot Marc Croonen Great local brands Chief Legal Officer Chief Sustainability, Transformation and Leadership Communications Officer 14 Building our Better Together Strategy
Key Trends Key Strengths More value Solid foundation
More convenience Great local brands • Best-in-class in Supermarkets • Superior omnichannel & More fresh & healthy digital offering
More personal Leadership
Our commitment to succeed
Proven track record in execution and integration 15 Better Together - Ahold Delhaize Strategic Framework
Our purpose Together, we build Great Local Brands, bringing Fresh Inspiration Every Day
Our sustainable business model Our promises
Save for our customers: Invest in our customer A better • Buy better proposition: place to • Operate smarter • Affordable for all shop • Waste less • Best own brands • Fresher & healthier Every • Most local & Day Fund growth personal service A better A better in key channels: place to neighbor • Supermarkets work • eCommerce • Smaller formats
Our values Courage Integrity Teamwork Care Humor We drive change, We do the right Together, we take We care for our customers, We are humble, down-to- are open-minded, thing and earn ownership, collaborate, our colleagues, and our earth, and we don’t take bold, and innovative. customers’ trust. and win. communities. ourselves too seriously. Together Great local brands
Our purpose
Together, we build Great Local Brands, bringing Fresh Inspiration Every Day.
Fresh inspiration Every Day 17 Better Together - Ahold Delhaize Strategic Framework
Our purpose Together, we build Great Local Brands, bringing Fresh Inspiration Every Day
Our sustainable business model Our promises
Save for our customers: Invest in our customer A better • Buy better proposition: place to • Operate smarter • Affordable for all shop • Waste less • Best own brands • Fresher & healthier Every • Most local & Day Fund growth personal service A better A better in key channels: place to neighbor • Supermarkets work • eCommerce • Smaller formats
Our values Courage Integrity Teamwork Care Humor We drive change, We do the right Together, we take We care for our customers, We are humble, down-to- are open-minded, thing and earn ownership, collaborate, our colleagues, and our earth, and we don’t take bold, and innovative. customers’ trust. and win. communities. ourselves too seriously. Our sustainable business model powers our strategy 18
Our Sustainable Save for our customers Business Model Invest in our customer proposition
Fund growth in key channels Save for our customers Buy better
Operate smarter
Waste less Saving for our customers begins with buying better 19 Examples Our Sustainable Business Buy better Model
Delhaize Belgium
Operate smarter Transformation
Plan
Save for our customers Waste less Buy better
Operate smarter
Waste less Our brands are operating smarter everyday 20 Examples Our Sustainable Business Buy better Model
Delhaize Belgium
Operate smarter Transformation
Plan
Save for our customers Waste less Buy better
Operate smarter
Waste less 21 Delhaize Belgium realized it needed to improve its cost position
Cost per productive hour Our 2014 Sustainable (2014, Delhaize* = 100) Business • Cost handicap in wage Model and labour conditions Delhaize* 100 • Competition leveraging scale and cost benefits Colruyt 84 • High operational costs in supply chain / logistics Carrefour 78 • Decreasing market share and profitability* Lidl 78
Aldi 77
Delhaize Belgium Save for our Albert Heijn 67 customers Transformation Plan Buy better
Operate smarter
Waste less (*) Company-operated supermarkets It developed and executed its Transformation Plan; 22 it is on track for €80M in savings
Our 2014 Current status Sustainable
Business • Cost handicap in wage • Leaner workforce Completed (2,083 vs 1,800 initially) and labour conditions Model • Adapted wage Completed • Competition leveraging measures and benefits scale and cost benefits • New store organization Completed (128 stores**) High operational costs in • • Store network Completed supply chain / logistics organization (close 1 store & 9 affiliate stores) Decreasing market share • • Efficiency projects Ongoing and profitability*
Delhaize Belgium On track for Save for our customers Transformation Plan €80M savings in 2018 Buy better
Operate smarter (*) Company-operated supermarkets Waste less (**) Final NSO wave started in November 2016 (37 stores) Executing the new commercial strategy is the 23 next step
Our 2014 Current status Commercial Strategy Sustainable Business • Cost handicap in wage • Leaner workforce and labour conditions Model • Adapted wage Revamped • Competition leveraging measures and benefits commercial plan scale and cost benefits • New store organization • High operational costs in • Store network Improved value supply chain / logistics organization proposition Decreasing market share • • Efficiency projects and profitability* New supplier collaboration model
Revisited Delhaize Belgium On track for Save for our assortment customers Transformation Plan €80M savings in 2018 Buy better
Operate smarter
Waste less (*) Company-operated supermarkets Wasting less is key to save for our customers 24 Examples Our Sustainable Business Buy better Model
Delhaize Belgium
Operate smarter Transformation
Plan
Save for our customers Waste less Buy better
Operate smarter
Waste less Our sustainable business model powers our strategy 25
Our Sustainable Save for our customers Business Model Invest in our customer proposition
Invest in our customer Fund growth in key channels proposition
Affordable for all
Best own brands
Fresher & healthier
Most local & personal Our brands are focused on four areas to differentiate our 26 customer proposition
Our Examples Sustainable Business Model Affordable for all
Best own brands
Fresher & healthier Invest in our customer proposition
Affordable for all Best own brands Most local & personal Fresher & healthier service Most local & personal Affordable for all – Zooming in on Food Lion 27
Our Sustainable Business Model • Conveniently located • Easy to shop stores, part stores of the neighborhood
• Low prices driven by • Great everyday prices strong promotions and good weekly deals
• Inconsistent fresh • Consistently fresh execution and perception products
• Vendor-driven center • Customer-driven Invest in our store assortment assortment customer proposition • Task-oriented leadership • Fast and easy Affordable for all and associates checkout experience
Best own brands
Fresher & healthier • Effective execution of • Caring, responsive and the basics available associates Most local & personal Affordable for all is a key pillar in Food Lion’s strategy 28
Our Sustainable Protecting and strengthening a strong price heritage is the most critical Business Model component of delivering Food Lion's strategy of Easy, Fresh & Affordable. You can count on Food Lion Every day!
• Affordability is one of the main pillars of the Easy, Fresh & Affordable strategy
• Continue investments to strengthen Food Lion's actual price position:
• Everyday pricing Invest in our customer • Timely promotions (MVP savings) proposition
Affordable for all • Further strengthen and accelerate price perception vs price leader Best own brands
Fresher & healthier
Most local & personal 29 Food Lion has been testing, refining and implementing since 2013
Our Easy, Fresh & Concept store Greenville DMA Charlotte DMA Sustainable Affordable strategy launches in second test market launches developed launches (47 stores) (142 stores) Business Concord NC Model 2013 2014 2015 2016 2017
Three lab stores test Wilmington DMA Raleigh DMA 2017: ~160 limited elements first test market launches stores planning launches (162 stores) underway (29 stores)
• More attractive layout in produce
Invest in our • Additional seafood focus customer • Refined value added meat offering proposition Charlotte DMA launches Affordable for all • Additional organics
Best own brands • More local / ethnic offering Fresher & healthier • Updated scheduling and productivity tools Most local & personal Easy, Fresh and Affordable is winning with customers 30
Our Sustainable Average Weekly Sales/Store Business Model Wilmington (29 stores) Greenville (47 stores) Raleigh (162 stores) Launch: Q3 2014 Launch: Q4 2014 Launch: Q4 2015
+10%
+3% +8%
Invest in our customer proposition 2014 2015 2016* 2014 2015 2016* 2014 2015 2016* Affordable for all
Best own brands
Fresher & healthier
Most local & personal *2016 is YTD 31 And continues to support the overall positive momentum
Our • Encouraging results Sustainable Business • Wilmington and Raleigh - Strong sales growth Model • Greenville - Successfully defend against significant competitive openings
• Charlotte - early confident results consistent with previous markets
• Deployment to the rest of the network
• Successful elements rolled out banner-wide
• Improving customer perception scores across the banner
• 380 stores completed (37% of total Food Lion sales) Invest in our customer • Nearly 540 stores (55% of total Food Lion sales) by the end of 2017 proposition
Affordable for all • Strong quarterly sales performance
Best own brands • 16 consecutive quarters of volume growth at Food Lion Fresher & healthier
Most local & personal • +2.9% real growth for Delhaize America in Q3 2016 Best own brands is the second focus area 32
Our Examples Sustainable Business Model Affordable for all
Best own brands
Fresher & healthier Invest in our customer proposition
Affordable for all Best own brands Most local & personal Fresher & healthier service Most local & personal 33 Our local ‘own brands’ are known for their quality and value
Our Award winning own brands Great potential to leverage Sustainable promoting innovation and healthy eating best practices across our brands (e.g. AH) Business Continuous improvement of own brands Model Europe: • ~50% own brand penetration
• Strong brand equities for own brands
US: Transparent communication to customers
• ~40% own brand penetration
• Natural/Organic brands progressing towards $1B Invest in our customer Recognized and awarded by customers proposition International own brands:
Affordable for all • 365 Delhaize own brand present Best own brands across Europe Fresher & healthier
Most local & personal Own Brand defined as every product that is not an international, national or regional brand Fresher & healthier is the third focus area 34
Our Examples Sustainable Business Model Affordable for all
Best own brands
Fresher & healthier Invest in our customer proposition
Affordable for all Best own brands Most local & personal Fresher & healthier service Most local & personal Alfa Beta is known across Greece for its fresh offering 35
Our Sustainable • 26.4% fresh market share in Greece Business • ~9 out of 10 customer satisfaction rating for fresh Model
“Every day, Alfa Beta offers the best Fresh Products, from every corner of Greece”
Invest in our customer proposition
Affordable for all
Best own brands
Fresher & healthier
Most local & personal Fresher & healthier - Zooming in on Healthier 36
Our Sustainable Equilibrium Healthier Super Lunch Business Corner assortment for kids Model
Health & Wellness concept with Reducing the level of salt and A range of nutritionally good coverage of food & non sugar in assortment balanced, tasty packaged food categories meals for kids’ school lunches
Invest in our customer proposition
Affordable for all
Best own brands
Fresher & healthier
Most local & personal Providing the most local and personal service is our fourth 37 area of focus
Our Examples Sustainable Business Model Affordable for all
Best own brands
Fresher & healthier Invest in our customer proposition
Affordable for all Best own brands Most local & personal Fresher & healthier service Most local & personal Most local & personal service 38
Our Most Local... Sustainable Business Model
...and Personal service to drive new growth
Invest in our customer Saving money proposition
Affordable for all Saving time Best own brands
Fresher & healthier Eating healthier
Most local & personal Our sustainable business model powers our strategy 39
Our Sustainable Save for our customers Business Model Invest in our customer proposition
Fund growth in key channels Fund growth in key channels
Supermarkets
eCommerce
Smaller formats 40 Ahold Delhaize is focused on expanding in three channels
Our Sustainable Business Model Supermarkets
eCommerce
Fund growth in key channels
Supermarkets Smaller formats
eCommerce
Smaller formats Supermarket is the key channel in our main markets 41
Our US - Delhaize America markets US - Ahold USA markets Sustainable * 15% Business 19% Model Supermarkets Supermarkets Discount * Discount * 25% Drug 24% Drug 60% 57%
Source: Nielsen AC View, DA Sales – 2015 DA; DMAs Source: Nielsen AC View, AUSA Sales – 2015 AUSA; DMAs representing 80% of AUSA sales
Netherlands Belgium
Supermarkets 13% 20% Supermarkets
15% Hypermarkets 3% Discount Fund growth in key Discount channels 13% Convenience & 59% Convenience 77% Supermarkets Other
Source: Planet Retail and Nielsen food grocery market based on Source: Nielsen, Planet retail – 2014 eCommerce consumer sales - 2015 Smaller formats * Supercenters and Dollar stores Ahold USA is heading Northeast 42
Our Ahold USA ambition Heading Northeast strategy Sustainable Business Model Ambition • Differentiating Customer Value Proposition to deliver
AUSA
• Better Value
• Improved Service
• Improved Quality Q3 2016 Ahold • Brands are progressing and continue Q3 2014 Ahold
Fund growth in key the journey Service andServiceQuality perception channels
Supermarkets
eCommerce Price perception Smaller formats Ahold USA has strong momentum 43
Our Sustainable Heading East Business – Affordable for All Model • Successive waves of price investments – five launched
• Significant marketing and communications support
Heading North – Fresher & Healthier • Major focus on Fresh
• Service and Quality improvement
Heading Northeast Fund growth in key – Building Great Local Brands channels • “My” Giant / Stop & Shop Supermarkets
eCommerce • Investing Digital Personalization
Smaller formats Ahold USA has improved both price positioning and price 44 perception Our Sustainable Improved EDL price positioning across Initial signs of improved customer price Business all our brands perception across all our brands Model Q3 2016 Price index and change vs. Q1 2014 Price Perception Q1 2014 – Q3 2016*
EDLP +5 Carlisle
+7 Landover +6 pts +4 pts improvement improvement +7 New York
New Fund growth in key +6 channels England
Supermarkets
eCommerce *Price comparisons against competitors in the market, weighted by volume and by competitive interaction with our stores; representing Smaller formats Source: Company tracking data 60-70% of total sales
While also investing in being fresher and healthier 45
Our New Produce Departments New Bakery Departments Sustainable Delivering ~4% ID sales growth and Delivering ~5% ID sales growth Business improved quality perception Model
Nature’s Promise Deli Grab & Go
Growing double digits vs LY Starting deployment
Fund growth in key channels
Supermarkets
eCommerce
Smaller formats Ahold USA is seeing encouraging signs of progress 46
Our While we have seen signs of improved sales trend - the focus is to continue to enhance our Sustainable execution and accelerate top line growth Business AUSA Food Market Volume Share Change Model 0.9 share points
0.9%
0.7%
(0.1)% AUSA AOC Market Volume Share Change
0.6 share points
Fund growth in key channels
Supermarkets
eCommerce
Smaller formats Source: Nielsen Scan Track . 47 Ahold USA will continue its progress and accelerate sales growth
Our • Good progress in our market share, price Sustainable positioning and brand perception Business • Real commitment to accelerate our sales Model growth • In 2017, we will continue to focus our efforts to better enable our local brands to connect with our customers: • Continue to invest in price and effective promotions • Launch additional waves focused on: • Fresh (Meat, Deli) • Center Store Experience • Own Brands
Fund growth in key • These waved customer value investments channels will continue to be fully funded through our Supermarkets cost savings initiatives, which are
eCommerce incremental to our synergies
Smaller formats
Stop & Shop Supermarkets in Greater New York 48
Our • Rebranded to Stop & Shop in Acquired 25 high-quality accelerated 1 week conversions Sustainable stores from A&P in white space locations Business • Strong store execution from day 1 Model July 2015 November 2015 2016
• #2 within New York DMA, closely following ShopRite
• +3.5pts Food, +2pts AOC share improvement
Fund growth in key • Sales post-conversion channels comparable to other NYM Supermarkets stores right away
eCommerce • Customer tracking scores Smaller formats matching other NYM stores Supermarkets – Zooming in on Hannaford 49
Our Quality perception Hannaford Key Sustainable • 188 stores scores (Q2 16) competitors (5) Business • Very high Net Promoter Score (65) Produce 56 22-50 Model • Loyal customer base • Fresh, service oriented Meat 52 15-50
• Priced right Seafood 53 12-52 • Local image, close to communities Deli 58 29-58 • High profitability • Positive volume growth over last 3 years Bakery 57 32-56
Fund growth in key channels
Supermarkets
eCommerce
Smaller formats Number of stores and NPS as of 2015 Supermarkets – Zooming in on CSE* 50
Our Sustainable #2 in Czech Republic #1 in Greater Bucharest Business Accelerated growth through Model Strong growth in supermarkets differentiated remodeling…
293 Supermarkets remodels YTD +3% sales 128 246 168
…combined with store-led interventions to maximize Innovative store concepts… operational performance and drive engagement 1 2
Fund growth in key Winning culture Great in Fresh 3 4 …with store related solutions based on customer channels needs Supermarkets Customer- Appealing eCommerce focused store ops Look & Feel Smaller formats * Central and Southeastern Europe Fund growth in key channels 51
Our Examples Sustainable Business Model Supermarkets
eCommerce
Fund growth in key channels
Supermarkets Smaller formats
eCommerce
Smaller formats 52 Smaller formats present a great opportunity in all our markets
Our Examples Sustainable Business Model Supermarkets
eCommerce
Fund growth in key channels
Supermarkets Smaller formats
eCommerce
Smaller formats 53 Most of our brands have strong expertise in smaller formats
Our #1 or #2 in smaller formats across Europe Sustainable Business Model
AH To Go - 100 M2 Etos – 214 M2 Gall & Gall – 90 M2 Proxy Delhaize - 560 M2 Delhaize Shop & Go - 150 M2
AB Shop & Go - 100 M2 AB Food Market - 390 M2 AB City - 450 M2 Shop & Go - 130 M2 Shop & Go – 100 M2
Test concepts in the US
Fund growth in key channels
Supermarkets
eCommerce Hannaford - 20,000 sqft bFresh - 10,000 sqft Smaller formats 54 Better Together - Ahold Delhaize Strategic Framework
Our purpose Together, we build Great Local Brands, bringing Fresh Inspiration Every Day
Our sustainable business model Our promises
Save for our customers: Invest in our customer A better • Buy better proposition: place to • Operate smarter • Affordable for all shop • Waste less • Best own brands • Fresher & healthier Every • Most local & Day Fund growth personal service A better A better in key channels: place to neighbor • Supermarkets work • eCommerce • Smaller formats
Our values Courage Integrity Teamwork Care Humor We drive change, We do the right Together, we take We care for our customers, We are humble, down-to- are open-minded, thing and earn ownership, collaborate, our colleagues, and our earth, and we don’t take bold, and innovative. customers’ trust. and win. communities. ourselves too seriously. Every day, a better place to shop 55
Our promises A better place to shop
Every
Day A better A better place to neighbor work
Equilibrium Own Brand line of Our Albert Heijn (health & wellness corner) fresh meal kits
Examples
``````
Better place to shop
Better place to work Associate summer Sustainable Super Lunch for Food donation Count on me Best store in town Better neighbor camps seafood kids Meat the Needs Better place to shop – Albert Heijn 56
Our promises Every AH store is right for its specific location Innovation & improvement in our assortment and in connection with its neighbourhood across all categories
Everbody Appie movement: locally connected Strong comparable sales growth Netherlands and personal (excl. Bol.com)*
Better place to shop
Better place to work *Includes Etos, Gall & Gall; Q4 2015 exlcudes week 53, no pro forma Better neighbor sales numbers for 2015
Every day, a better place to work 57
Our promises A better place to shop
`````` Every
Day A better A better place to neighbor work
Equilibrium Own Brand line of Our Albert Heijn (health & wellness corner) fresh meal kits
Examples
``````
Better place to shop
Better place to work Associate summer Sustainable Super Lunch for Food donation Count on me Best store in town Better neighbor camps seafood kids Meat the Needs Associates key to delivering great local brands 58
Our promises
375,000Associates
Over 83% participation top 10 rates in Global International Engagement Surveys food retailer
Balanced gender Inclusive and representation healthy workplace male / female
Courage Integrity Teamwork Better place to shop Values Care Better place to work 5 Humor Better neighbor
Every day, a better neighbor 59
Our promises A better place to shop
`````` Every
Day A better A better place to neighbor work
Equilibrium Own Brand line of Our Albert Heijn (health & wellness corner) fresh meal kits
Examples
``````
Better place to shop
Better place to work Associate summer Sustainable Super Lunch for Food donation Count on me Best store in town Better neighbor camps seafood kids Meat the Needs Sustainable Retailing is embedded in our Strategy60
Our promises
A better A better A better place to place to Ahold Delhaize ranks neighbor shop work among leaders in Dow
Jones Sustainability World Promote Create Reduce Index healthier healthy and inclusive food waste eating workplace • Ahold Delhaize Local Product safety Climate Associate Safety at Community & sustainability impact development work received a total score connection of 79
• Food and Staples Retailing industry
Better place to shop average score of 44
Better place to work
Better neighbor 61 Building our Better Together strategy
Key Trends Key Strengths More value Solid foundation
More convenience Better Together Great local brands • Best-in-class in Supermarkets Strategy • Superior omnichannel & More fresh & healthy digital offering
More personal Leadership
Our commitment to succeed
Proven track record in execution and integration 62 Clear measures to track strategy execution
Tracking the strategy execution using specific KPIs (e.g., market share, Net Promoter Score) and management incentives using a well-defined plan
Short-term Incentive Plans Long-term Incentive Plans
Financial Non-financial Financial Non-financial
Sustainable Retailing
Underlying Sales Operating Individual Return on Relative Operating Margin Growth Cash Flow KPIs Capital TSR Healthy DJSI Sales
30% 30% 30% 10% 40% 40% 10% 10%
Internal measures External measures 63 Ahold Delhaize… Better Together
… a solid foundation ... and a strong Better Together Strategy
• Great local brands • Built from powerful combined strengths • Both sides of the Atlantic • From companies with • Best-in-class Supermarkets • Complementary cultures • Similar values • Superior Omni-channel / Digital • Shared focus on the customer • Operating cash flow among industry leaders • Leveraging key industry and consumer trends • Proven skills in: • Clear growth drivers and business model • Fresh • Own brands • Focus on affordability • Sustainable retailing and community engagement • Great talent and leadership track record
Together, we build Great Local Brands, bringing Fresh Inspiration Every Day. 64 Cautionary notice
This communication includes forward-looking statements. All statements other than statements of historical facts may be forward-looking statements. Words such as strategic, sustainable, buy better, operate smarter, waste less, growth, invest, customer proposition, promises, follow-up, accelerating, opportunities, continuous learning, increasingly, incremental, future, road map, ambition, growth, going forward, model, innovation, leverage, proposition, leading to and well positioned or other similar words or expressions are typically used to identify forward-looking statements.
Forward-looking statements are subject to risks, uncertainties and other factors that are difficult to predict and that may cause actual results of Koninklijke Ahold Delhaize N.V. (the “Company”) to differ materially from future results expressed or implied by such forward-looking statements. Such factors include, but are not limited to risks relating to competition and pressure on profit margins in the food retail industry; the impact of the Company’s outstanding financial debt; future changes in accounting standards; the Company’s ability to generate positive cash flows; general economic conditions; the Company’s international operations; the impact of economic conditions on consumer spending; turbulences in the global credit markets and the economy; the significance of the Company’s U.S. operations and the concentration of its U.S. operations on the east coast of the U.S.; increases in interest rates and the impact of downgrades in the Company’s credit ratings; competitive labor markets, changes in labor conditions and labor disruptions; environmental liabilities associated with the properties that the Company owns or leases; the Company’s inability to locate appropriate real estate or enter into real estate leases on commercially acceptable terms; exchange rate fluctuations; additional expenses or capital expenditures associated with compliance with federal, regional, state and local laws and regulations in the U.S., the Netherlands, Belgium and other countries; product liability claims and adverse publicity; risks related to corporate responsibility and responsible retailing; the Company’s inability to successfully implement its strategy, manage the growth of its business or realize the anticipated benefits of acquisitions; its inability to successfully complete divestitures and the effect of contingent liabilities arising from completed divestitures; unexpected outcomes with respect to tax audits; disruption of operations and other factors negatively affecting the Company’s suppliers; the unsuccessful operation of the Company’s franchised and affiliated stores; natural disasters and geopolitical events; inherent limitations in the Company’s control systems; the failure or breach of security of IT systems; changes in supplier terms; antitrust and similar legislation; unexpected outcome in the Company’s legal proceedings; adverse results arising from the Company’s claims against its self-insurance programs; increase in costs associated with the Company’s defined benefit pension plans; and other factors discussed in the Company’s public filings and other disclosures.
Forward-looking statements reflect the current views of the Company’s management and assumptions based on information currently available to the Company’s management. Forward-looking statements speak only as of the date they are made, and the Company does not assume any obligation to update such statements, except as required by law.
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Together, we build Great Local Brands, bringing Fresh Inspiration Every Day