April 16 - Axfood opened 2008 with good sales growth and a continued stable operating profit. Sales for the first quarter amounted to SEK 7,495 m (6,943), an increase of 8.0%. Operating profit was SEK 240 m (258), with an operating margin of 3.2% (3.7%). Operating profit a year earlier included a positive one-time effect of SEK 19 m from Willys.
• Axfood's consolidated sales amounted to SEK 7,495 m (6,943) during the period, an increase of 8.0%.
• Like-for-like sales rose 6.0% during the period. Retail sales for Group-owned stores increased by 8.6%.
• Operating profit for the period January–March was SEK 240 m (258). Operating profit for the same period a year ago included a one-time positive effect of SEK 19 m.
• Profit after financial items for the period was SEK 226 m (253).
• Profit after tax for the period was SEK 163 m (182), and earnings per share were SEK 3.10 (3.47).
• Axfood expects operating profit for 2008 to be level with 2007.
CEO'S COMMENTS
Axfood opened 2008 with good sales growth and a continued stable operating profit. Sales for the first quarter amounted to SEK 7,495 m (6,943), an increase of 8.0%. Operating profit was SEK 240 m (258), with an operating margin of 3.2% (3.7%). Operating profit a year earlier included a positive one-time effect of SEK 19 m from Willys.
Willys grew its sales by 8.2% and posted a strong result of SEK 167 m (140). To strengthen its market position and favourable development, a new marketing programme has been introduced, and a renewal of the concept has been initiated. The renewal entails, among other things, a focus on fresh and organic products as well as an expansion of the product offering by approximately 1,000 items. Two pilot stores have been successfully opened in western Sweden. Following evaluation, the concept will be introduced at an additional eight stores during the autumn. Four new store openings are planned during the remainder of the year.
Hemköp continued its development work with focus on sales growth. Necessary quality assurance of store operations was carried out during the period, and priority has been given to implementation of a new price and assortment strategy over promotional campaigns, which had an adverse effect on sales and operating profit. The effects of this realignment are not expected to be visible until the end of the year. Establishment of three new stores is planned for 2008. One of these is the newly acquired Vi store in Solna.
The acquisition of PrisXtra was completed on 28 January, and integration work with Axfood was begun thereafter. Dagab began deliveries to PrisXtra in March. Sales are according to expectation, and a new store will be opened during the autumn in central Stockholm.
Dagab's development is proceeding according to plan, with good cost control and a continued high level of delivery reliability. For Axfood Närlivs, sales as well as earnings for the cash and carry units have shown stable development in the face of intensifying competition.
During the period, Axfood implemented necessary price increases to compensate for higher raw material prices. We expect to make additional price increases during the remainder of 2008 – mainly for dairy products and meat. However, our analysis for the time being is that retail food consumption will not been affected by this.
Axfood is firmly committed to its strategic orientation. To meet continued rising competition, shifting consumption trends and inflation, we are continuing our systematic work on developing group structures as well as concepts. Axfood is continuing its work on generating organic growth at the same time that strategic acquisitions are not being ruled out. Adept cost control, investments and streamlining initiatives will contribute to efficiency, stronger market position and profitable growth.
Axfood's goal is to continue to be the most profitable company in the industry also in 2008, and as previously, we believe that our operating profit for the year will be level with 2007.