Food Lion 2004 Annual Report Download - page 4

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LETTER FROM
THE CHAIRMAN&
THE CHIEF EXECUTIVE
OFFICER
We are happy to provide you w ith this report on 2004,
a very good year for Delhaize Group. We im plemented
major strategic initiatives, and our operating companies
successfully focused on reinforcing their retail concepts,
pursuing executional im provem ents and effectively shar-
ing learning across the Group.
Sales m om entum w as strong throughout the year. While
the 9.1% low er U.S. dollar pushed total sales dow n by
4.5%, organic sales, adjusted for acquisitions, divesti-
tures, currency fl uctuations and calendar effects, w ere
positive by 2.8%. Com parable store sales grew by 1.5%
in the U.S. and by 2.2% in Belgium .
Our earnings before goodwill and exceptionals increased
by 6.0% and our net earnings by 23.5%. In local curren-
cies, earnings before goodw ill and exceptionals grew by
13.2% and net earnings by 31.7%. These strong results
allowed us to continue our solid free cash fl ow generation
and the reduction of our net debt to 76.5% of equity.
Based on our strong performance in 2004, the Board of
Directors w ill propose at the Ordinary General M eeting
of M ay 26, 2005, to pay a EUR 1.12 gross dividend
(EUR 0.84 after 25% w ithholding tax), a 12.0% increase
over last year.
Our increased fi nancial fl exibility allow ed us to increase
our sales in 2004 through fi ll-in acquisitions. Hannaford
acquired Victory Super M arkets, signifi cantly reinforcing
its presence in M assachusetts. Food Lion acquired ten
stores from Winn-Dixie. Additional changes to our busi-
ness portfolio included Kash n’ Karry’s withdraw al from
the east coast of Florida and the Orlando m arket and the
divestiture of our Thai operations. These divestitures
allowed us to focus our fi nancial and human resources
on m ore promising assets.
In 2005, w e will continue to leverage those strategic
thrusts that have helped us deliver the strong results
of 2004. Each operating com pany will continue to
develop initiatives on: Concept Leadership, Executional
Excellence, the development of a Learning Com pany, an
Attractive Workplace and good Corporate Citizenship.
Concept Leadership rem ains the m ain driver of organic
growth in our different m arkets. Based on the success
of m arket renew als in Raleigh and Charlotte, North
Carolina, Food Lion will accelerate the program and
renew tw o m arkets in 2005: Greensboro, North Carolina,
and Baltim ore, Maryland. In Florida, we w ill continue
the conversion of Kash n’ Karry stores to Sweetbay
Supermarket. Hannaford w ill integrate the Victory stores
into its netw ork. Our other operating com panies will
continue to strengthen their differentiation through com -
mercial initiatives.
An important focus point in 2005 will be Executional
Excellence. Focusing on better execution, both in the
stores and in the supply chain, w ill increase customer
satisfaction and overall effi ciency. Food Lion and Kash
n’ Karry w ill continue to leverage their new inventory
and m argin m anagement system to im prove their opera-
tions. Encouraged by the results of this system in our
U.S. operations, w e decided to begin w ork on a sim ilar
Dear Shareholder,
Pierre-Olivier Beckers (L)
Georges Jacobs (R)
DELHAIZE GROUP  ANNUAL REPORT 2004
2