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UPDATE 1-Ahold Delhaize cuts costs to beat Q1 expectations
May 10, 2017 / 5:29 AM / 6 months ago

UPDATE 1-Ahold Delhaize cuts costs to beat Q1 expectations

* Q1 op. profit 604 mln euros vs 589 mln expected

* Guides for higher margins in 2017 vs 2016

* Sales fall in U.S. in Q1, expects Q2 improvement (Adds details on regions)

BRUSSELS, May 10 (Reuters) - Retail group Ahold Delhaize reported on Wednesday a higher-than-expected operating profit in the first quarter, aided by cost savings that offset weaker sales in the United States.

The company, which was formed after Dutch Ahold merged with Belgium’s Delhaize last July, reported a first-quarter operating profit, adjusted for one-off items, of 604 million euros ($657.76 million), above the average forecast of 589 million euros in a Reuters poll.

Ahold Delhaize said it also expected profit margins for 2017 as a whole to be above those of last year, repeating that it was still aiming for 220 million euros of savings coming from the merger this year.

U.S. sales, excluding gasoline, dropped 1.8 percent in the first quarter for the former Ahold stores, such as Giant and Stop&Shop, while they were flat for the former Delhaize stores, such as Food Lion and Hannaford.

The company said it saw prices falling in both markets, but added that it expected the sales performance to pick up in the coming quarters.

In March, U.S. peer Kroger Co reported its first quarterly same-store sales decline in 13 years, in a sign of intensifying competition in the U.S. grocery industry.

Sales in the Netherlands increased by 3.3 percent in the first three months of 2017, while its Belgian stores saw a 0.6 percent drop. The group said it would refurbish 100 stores in Belgium in 2017. ($1 = 0.9183 euros) (Reporting by Robert-Jan Bartunek; editing by Philip Blenkinsop)

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