Ahold’s Profits Jump Sharply in 4th Quarter

By ASSOCIATED PRESS

Royal Ahold NV, owner of Tops Markets and other U.S. supermarket chains, reported a sharp rise in fourth-quarter earnings and said it plans to boost its planned share buybacks by about $1.3 billion.

The company said it earned 239 million euros ($318 million) for the last three months of 2006, up from 103 million euros a year earlier.

Ahold had previously said its sales fell 2.8 percent to 10.4 billion euros ($13.5 billion) for the quarter. Without currency fluctuations, sales would have risen 3 percent, the company said.

Ahold wants to sell its U.S. Foodservice division, which distributes bulk food to cafeterias, as part of its long-term plan to recover from an accounting scandal in which it was forced to restate earnings from 1999-2001 downward, mostly due to fraud at that business.

“We plan to increase the amount we return to shareholders from 2 billion euros to 3 billion euros, subject to the divestment of U.S. Foodservice” with share buybacks in 2007, Ahold said in a statement. That 1 billion euro increase amounts to about $1.3 billion.

The company’s profit for the quarter was helped by a sharp reduction in financing costs, as net debt fell by around 900 million euros ($1.2 billion) to 4.6 billion euros ($6.1 billion), and it had a tax windfall of 79 million euros ($105 million).

Ahold reported operating income of 167 million euros ($222 million) from its retail stores.

Among U.S. operations, sales were essentially flat at the company’s Stop & Shop and Giant-Landover chains, down at Tops and Giant-Carlisle chains, an up at the remaining stores.

At U.S. Foodservice, sales were up 5.1 percent and operating profit was $81 million, back in the black after a year of restructuring.

Full-year net profit came to 899 million euros ($1.2 billion), up from 120 million euros in 2005, when Ahold paid $1.1 billion to settle a class action lawsuit with shareholders. Annual sales were 44.9 billion euros ($59.8 million) versus 44.0 billion euros in 2005.

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