Food Lion 2012 Annual Report Download - page 28

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26 //
REVIEW
FINANCIAL REVIEW
Income Statement
In 2012, Delhaize Group achieved
revenues of €22.7 billion. This
represents an increase of 7.7% at
actual exchange rates, mainly due
to the strengthening of the U.S. dol-
lar by 8.3% against the euro com-
pared to 2011, or 2.9% at identical
exchange rates. Organic revenue
growth was 2.1%.
The revenue growth was the result
of the performance of all segments.
In the U.S. revenue growth was
0.9% in local currency, excluding
the impact of the 126 stores closed
in the fi rst quarter of 2012. Revenue
growth in Belgium was 1.6% as a
result of network growth and com-
parable store sales growth of 0.6%.
Finally, Southeastern Europe & Asia
delivered a solid revenue growth of
34.1% at identical exchange rates
following the acquisition of the
Maxi operations in 2011 (+10.0% at
identical exchange rates excluding
Maxi) and the strong performance
in Greece and Romania.
The U.S. operating companies gen-
erated 64% of Group revenues,
Belgium 22% and Southeastern
Europe and Asia 14%. Gross mar-
gin was 24.5% of revenues, a
102 basis points decrease at iden-
tical exchange rates due to price
investments across the Group. The
lower margin of our Maxi business
also contributed to the decreased
gross margin.
Other operating income was
€122 million, an increase of €4 mil-
lion compared to last year.
Selling, general and adminis-
trative expenses were 21.4% of
revenues and were fl at at identi-
cal exchange rates as expenses
related to our strategic initiatives
in the U.S. and salary indexations
in Belgium were offset by cost sav-
ings across the Group, a payroll
tax refund in Belgium related to the
prior year and the reduction of our
U.S. bonus accrual.
Other operating expenses were
€428 million compared to €169 mil-
lion last year primarily due to a
€125 million charge linked to the
portfolio optimization announced
in January 2012 and a €270 mil-
lion impairment charge recorded in
the fourth quarter of 2012, mostly
related to Maxi, and to a lesser
extent to planned Sweetbay store
closures.
Operating profi t decreased by
52% at actual exchange rates
to €390 million mainly due to
price investments, store closing
expenses of €125 million in the fi rst
quarter of 2012 and the impairment
charges of €270 million recorded in
the fourth quarter of 2012.
Underlying operating profi t
decreased by 13.4% at actual
exchange rates to €810 millions.
Net fi nancial expenses were
€241 million, an increase of
€50 million at identical exchange
rates mainly due to the premiums
paid as part of the debt refi nanc-
ing at the end of 2012 and to the
additional debt to partially fi nance
the Maxi acquisition. At the end of
2012, the average interest rate on
our long-term debt was 4.4% com-
pared to 5.0% at the end of 2011.
Net profi t from continuing opera-
tions decreased by 73.7% (-78.9%
at identical exchange rates) as a
result of the portfolio optimiza-
tion charge in the fi rst quarter, the
impairment charge in the fourth
quarter and a decline in operating
profi t which was partially offset by
the resolution of tax matters and
REVENUES
(in billions of €)
10
20.8
11
21.1
12
22.7
OPERATING MARGIN
(in %)
10
4.9
11
3.9
12
1.7
OPERATING PROFIT
(in millions of €)
10
1 024
11
813
12
390
NET PROFIT FROM
CONTINUING OPERATIONS
(in millions of €)
10
576
11
477
12
125