Investing.com -- Shares of Ahold Delhaize (AS:AD)saw a positive uptick following the company's second quarter results, which surpassed estimates across both its US and European operations.

At 6:57 am (1057 GMT), Ahold Delhaizewas trading 3.3% higher at €30.23.

As per UBS Global Research, the company reported Group Net Sales of €22.3 billion, exceeding the consensus estimate of €22.13 billion.

Group Underlying Operating Income also surpassed expectations, coming in at €933 million compared to the consensus of €868 million and UBS's estimate of €878 million. The Group's operating margin stood at 4.2%, outperforming the consensus of 3.9% and UBS's 4.0%.

“We are conscious that positioning in AD had moved modestly longer in recent weeks, with the stock performing as a safe haven in the face of turbulent markets,” said analysts at Jefferies in a note.

In the US, comparable sales showed a slight decline of -0.4% versus the consensus of -0.5%, with net sales reaching €13.57 billion, slightly above the expected €13.56 billion.

The US underlying operating margin improved by 8 basis points to 4.7%, compared to the consensus of 4.4%. US EBIT was reported at €632 million, outperforming the consensus of €601 million and UBS's €608 million estimate. The company attributed this success to vendor allowances and cost savings.

In Europe, comparable sales grew by 2.4%, ahead of the 1.7% consensus and close to UBS's 2.5% estimate. Net sales in Europe were €8.77 billion, surpassing the consensus of €8.56 billion and UBS's estimate of €8.54 billion.

The European underlying operating margin was 3.7%, above the consensus of 3.4% and UBS's 3.5% estimate. Europe’s underlying operating income was €324 million, which is about 11% ahead of consensus, driven by strong performance in Belgium and lower energy costs.

The Group's Free Cash Flow (FCF) was €378 million, a 22% year-over-year decline primarily due to an unfavorable cash flow difference from an incidental tax refund in the prior year and a negative working capital development of €212 million due to timing differences.

However, the company's effective cost management was evident, with Group Segmental EBIT at €956 million, 7.0% ahead of the consensus of €893 million, UBS added.

Ahold Delhaize maintained its FY24 guidance, with the group underlying operating margin expected to be at least 4.0%, aligning with the consensus. The company also targets cost savings of at least €1 billion.

FCF is projected to be around €2.3 billion, slightly ahead of the consensus of €2.22 billion, with a capex of approximately €2.2 billion. EPS is expected to remain around the 2023 level, with the consensus predicting a -0.7% growth.

The company addressed the impact of the 32 Stop&Shop closures, anticipating a net sales impact of $100-$125 million in FY24 and $550-$750 million in FY25. Additionally, a non-recurring pre-tax charge of $160-$210 million is expected in Q3'24, though the cash impact remains unclear. The acquisition of Profi is slated to close in the fourth quarter.

Related Articles

Ahold Delhaize shares rise post strong Q2 earnings beat, maintains FY24 guidance

Airbnb shares slumps as weak forecast signals slowing travel demand

US auto regulator opens probe into more than 77,000 Nissan SUVs