Food Lion 2008 Annual Report Download - page 33
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2006 2007 2008
426
401
485
2006 2007 2008
352
410
467
and Hannaford, primarily through higher
private brand sales, and improved inventory
management at Hannaford and Sweetbay.
At Delhaize Belgium, gross margin declined
by 37 basis points to 19.3% of revenues due
to the negative impact of the conversion of
company-operated Cash Fresh stores to
affiliated stores and the sale of Di in 2007.
All our operating companies were impacted
by higher fuel costs.
Other operating income decreased by
11.4% to EUR 96 million due to lower gains
from the sale of Cash Fresh stores to
independents, and to the gain related to
the sale of Di in 2007. The prior year other
operating income also included a USD 11
million (EUR 8 million) gain on the disposal of
idle property by Hannaford, while Alfa-Beta
realized in 2008 a EUR 6 million gain on the
sale of fixed assets.
Selling, general and administrative
expenses (“SG&A”) increased by 11 basis
points to 20.8% of revenues (20.7% in
2007). In the U.S., SG&A as a percentage
of revenues increased by 18 basis points
to 22.2% of revenues as a result of higher
energy costs, increased staff costs at Food
Lion and Hannaford, and higher advertising
costs at Food Lion. At Delhaize Belgium,
SG&A expenses decreased by 29 basis
points to 16.4% of revenues mainly due to
cost saving initiatives, the sale of Di and the
Cash Fresh conversions. In Greece, SG&A
increased by 118 basis points to 20.0% of
revenues as a result of the unfavorable
impact of Plus Hellas. The negative impact of
the integration of Plus Hellas on the operating
profit of Alfa-Beta was EUR 11 million.
Other operating expenses amounted to
EUR 50 million in 2008, compared to EUR 36
million in 2007. The 2008 result was mainly
impacted by a USD 21 million (EUR 15 million)
impairment charge related to 19 Sweetbay
stores and a USD 24 million (EUR 16 million)
store closing charge (of which USD 7 million
impairment charge) on 7 other to be closed
Sweetbay stores in the fourth quarter.
Delhaize Group was again able to maintain
one of the best operating margins in its
industry at 4.8% of revenues. Operating
profit decreased by 3.5% at actual
Net profit
from Continuing Operations
(in millions of EUR)
Group Share in Net Profit
(in millions of EUR)
Basic Net Profit (Group Share) per
Share (in EUR)
exchange rates to EUR 904 million and
increased by 2.1% at identical exchange
rates. Excluding acquisitions and the 2008
impairment and store closing charges
at Sweetbay, Delhaize Group’s operating
profit would have increased by 6.9% at
identical exchange rates. Delhaize Group’s
U.S. business contributed 79.7% of the total
Group operating profit, Delhaize Belgium
18.3% and Greece 5.1%.
Net financial expenses amounted to EUR
202 million compared to EUR 332 million
in 2007. At identical exchange rates, net
financial expenses decreased by 35.6% as
a result of lower interest expenses following
the debt refinancing performed in 2007, and
because prior year included a EUR 101 million
charge related to that debt refinancing. At
the end of 2008, Delhaize Group’s financial
debt had an average interest rate of 5.6%
(6.7% in 2007 and 7.3% in 2006), excluding
finance leases and taking into account the
effect of interest rate swaps.
In 2008, Delhaize Group’s profit before tax
and discontinued operations increased by
16.3% to EUR 702 million mainly as a result
of lower financial expenses.
In 2008, income taxes amounted to EUR
217 million, a 6.5% increase compared to
2007. The effective tax rate decreased from
33.7% to 30.9% primarily due to the positive
resolution of federal tax matters in the U.S. in
2008 and the absence of an intercompany
dividend in 2008.
Net profit from continuing operations
increased by +21.2% at actual exchange
rates to EUR 485 million, or EUR 4.76 basic
per share (EUR 3.95 in 2007) as a result of
higher operating profit and a lower effective
tax rate. Excluding the impact of the 53rd
week, net profit from continuing operations
increased by 22.6% at identical exchange
rates.
In 2008, the result from discontinued
operations, net of tax, amounted to EUR -6
million compared to EUR 24 million in 2007
which included a positive accumulated
foreign currency translation adjustment
recorded as part of the closing of the sale
of Delvita. As a result of our decision to start
the process to sell our four German stores,
Delhaize Group Our Strategy
Our Activities in 2008
Corporate Governance
Risk Factors
Financial Statements Shareholder Information
at a Glance
> Financial Review
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> United States
> Belgium
> Greece
> Rest of the World
2006 2007 2008
3.71
4.20
4.70