Please, click here for the full version of the press release (in PDF)

Koen Slippens, CEO

‘In a difficult economic climate we have invested large sums in our formats, our people and our back office, and have also managed to achieve profits well above our previous record. Those are good results and create a healthy basis for further success in the future. We propose increasing the dividend to €1.05 per share, of which €0.85 will be the normal dividend and €0.20 a variable element. It is thanks to our strong capital and liquidity that we are able to do this’.

Gross profit rose by 6.2% to €562 million. The gross profit margin was 0.1 percentage point higher at 23.2%, despite market pressure on prices. This increase was primarily the result of a higher proportion of sales from our own supermarkets, and an improved product mix and tight management of margins in our foodservice activities.

Total operating expenses as a percentage of sales were 0.3 percentage points lower at 19.0%, despite the higher proportion of sales from our own supermarkets. This was attributable on the one hand to the improvements in efficiency that resulted from completion of the PLOP (PaperLess Order Picking) project and on the other hand to lower operating expenses in our Amsterdam delivery-service outlet. The figures for 2010 also included substantial non-recurring expenses and book losses on assets sold as part of merging distribution centres in Amsterdam.

Total operating profit rose by €14 million to €105 million. As a percentage of sales this represented an increase of 0.3 percentage points to 4.3%.

The foodservice operating profit rose by €20 million to €98 million. As a percentage of sales this represented an increase of 1.1 percentage points to 6.1%. As well as benefiting from the absence of non-recurring expenses, our foodservice activities also managed to achieve a substantial organic improvement in profit.

The food retail operating profit fell, disappointingly, by €6 million to €7 million. The profit for the year, however, was adversely affected by several million euros of non-recurring expenses, relating to the integration of Sanders and one off project costs of one €1 million while the operating profit for 2010 was boosted by book profits of €2 million on assets sold. As a percentage of sales, food retail operating profit fell by 0.9 percentage points to 0.9%.

Earnings per share came out at €1.78, compared with €1.59 in 2010. This represents an increase of 11.9%. It is proposed to increase the normal dividend for 2011 by 21.4%. This translates into an amount of €0.85 per share and a pay-out rate of 48%. It is also proposed to pay an additional variable dividend of €0.20 per share, thus bringing the total dividend for the year to €1.05 per share. The group’s strong capital and liquidity allow this higher payment to be made to shareholders, without any adverse impact on the group’s ability to fund capital expenditure or acquisitions.

Outlook

We are dependent, directly and indirectly, on Dutch consumers' spending on food. Consumer confidence in late 2011 was extremely low, and there seems little reason to expect a recovery in 2012. Higher commodity prices on the world market mean there is also substantial food price inflation. Consumers will therefore be keeping a firm grip on their purse strings, not least because government measures are expected to result in lower incomes in real terms. These factors are not necessarily, however, grounds for pessimism. Businesses will undoubtedly be fighting hard to win their share of what little is being spent. And we will be no exception in this respect, both proactively as the leader in the foodservice market and reactively in the supermarket channel. In challenging market conditions, it is always entrepreneurial skills that make the difference, and it is a challenge we relish. Although some growth is forecast in the supermarket sector, this will be wholly attributable to inflation. There is also some inflation in the foodservice market, but this does not seem likely to translate into market growth. Our assumption in any event is that the market will stabilise, and there will therefore be a limited decline in volumes. Essentially, our expectations for 2012 are not significantly different from those for 2011, which is a positive outlook at a time when incomes are being squeezed and consumer confidence levels are so low.

We believe that our businesses are well positioned to take on the challenges of today’s markets. Against this background, our slogan for 2012 is ‘Growth fuelled by sales’. We will also be seeking to provide an extra boost to growth through appropriate acquisitions.

Our forecast for 2012 is essentially for very modest growth in the market, which we expect to outperform. As in recent years, pressure on prices will remain considerable, but we believe we can mitigate some of that pressure through smart margin management. The continuing benefits of the cost-containment measures introduced in recent years mean we are well placed for the future. We therefore have every confidence that Sligro Food Group will be able to continue playing a leading role in its sales markets.

To summarise, we are positive about 2012, but we never give firm forecasts.

The 2011 annual report will be published on 7 February 2012.

Please, click here for the full version of the press release (in PDF)

Developments in the first quarter of 2012 will be discussed in our trading update on 19 April 2012 and our half-year figures will be published on 19 July 2012.