Food Lion 2013 Annual Report Download - page 41

Download and view the complete annual report

Please find page 41 of the 2013 Food Lion annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 176

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176

SOUTHEASTERN
EUROPE
Market
Without a doubt, 2013 was another challeng-
ing year for doing business in Southeastern
Europe. However, there have been signs of
improvement. In Serbia, for instance, GDP
growth turned slightly positive in the second
half of the year and the unemployment rate
(1)
declined from the record level of 25% it had
reached in 2012. In Greece, the unemploy-
ment has hopefully reached a peak and GDP
contraction has slowed. The bright spot in
the region has been Romania, where GDP
growth and consumer spending both seem to
indicate that the tough years of 2010 and 2011
have been digested.
Strategy
Delhaize Group continues to believe in and
stimulate the development of this region. This
is why, in 2013, we started building a new
distribution center in Serbia to reduce our
Direct-Store-Deliveries and to support our
growth ambitions. In Greece, Alfa Beta has
made the right strategic choices to win the
hearts and the wallets of Greek customers.
Market share was up again in 2013, reaching
a record level of 23% (Source: AC Nielsen). In
Romania, Mega Image is also gaining market
share, albeit mostly through its rapid store
expansion program.
Performance
For the full year 2013, revenues in Southeast-
ern Europe increased by 5.1% to €3.1 billion,
mainly as a result of volume growth in Greece
and 103 store openings in Romania. Compa-
rable store sales evolution for the region was
-0.3% for the year. During 2013, gross margin
increased by 31 basis points to 23.6% due to
improved procurement conditions in Romania
and Serbia. Selling, general and administra-
tive expenses as a percentage of revenues
increased by 16 basis points to 20.6% due to
higher expenses in Serbia and as a result of the
high growth in Romania. Underlying operating
margin was 3.6% (3.5% in 2012) while under-
lying operating profit was €114 million, or an
increase of 8.7% at identical exchange rates.
THE SOUTHEASTERN EUROPE SEGMENT HAS SHOWN THE
HIGHEST GROWTH WITHIN DELHAIZE GROUP. IN 2013, ALMOST
15% OF SALES CAME FROM THIS REGION. DELHAIZE GROUP HAS
MAINTAINED ITS INVESTMENT LEVELS IN GREECE, ROMANIA AND
SERBIA IN ORDER TO FURTHER EXPAND ITS STORE NETWORK AS
WELL AS TO DEVELOP AND IMPROVE ITS SUPPLY CHAIN.
ALBANIA AND
MONTENEGRO
In 2013, Delhaize Group made some
structural changes and strategic
choices to improve the overall
performance of the segment. As
a result, the operations in Albania
and Montenegro were sold. In
Montenegro, Delhaize Group and the
buyer, Expo Commerce, entered into
a franchise agreement whereby Expo
Commerce will continue to operate
the Maxi, Mini Maxi and Tempo
stores under the same names and to
offer Delhaize private brand products
in the stores. These transactions will
allow Delhaize Group to allocate
resources where they can deliver the
highest return and create the most
value for all of our stakeholders.
DELHAIZE GROUP ANNUAL REPORT 2013
SOUTHEASTERN EUROPE
39
(1) Source: Trading Economics.