* Adjusted operating profit 184 mln euros vs 177 mln euros
* 2012 cost savings seen at 550 mln euros from 500 mln
* Shares up 3 pct
BRUSSELS, Aug 22 Belgium-based supermarket
operator Delhaize benefited from store refits and
tight cost controls to limit a decline in second-quarter
operating profits and has increased its cost-cutting target for
the year, it reported on Wednesday.
The group, which derives some 65 percent of revenue from the
United States, increased it target for annual cost savings to be
achieved by the end of the year to 550 million from 500 million
euros, after reporting a better than expected 18 percent fall in
underlying second-quarter operating profits to 184 million euros
Analysts had on average forecast a profit of 177 million in
a Reuters poll.
The company's shares were up 3 percent at 34.18 euros by
1330 GMT, but remaining some 20 percent below the levels seen at
the start of 2012.
"There is still a lot of work to be done but there has been
a string of bad news for Delhaize and there were no bad
surprises today," said Pascale Weber, analyst at KBC Securities,
who upgraded her recommmendation to "buy" from "accumulate"
Delhaize said a programme to refurbish its Food Lion stores,
its biggest brand in the Unites States, has improved sales at
the 65 percent of the stores which have already been converted.
However, competitors had started to react.
"We will face a more aggressive competitive environment in
the second half of the year," Chief Executive Pierre Olivier
Beckers told a news conference at the group's headquarters in
In the United States, same store sales fell 0.6 percent, not
as bad as the 1.3 percent declined expected by brokers.
The operating margin there fell to 3.3 percent in the second
quarter from 4.3 percent for the same period in 2011. Delhaize
said it had not passed on most of the food price inflation to
Competition is heating up in United States with Kroger
, the largest U.S. supermarket group, and Wal-Mart
, the world's largest retailer, keeping prices low.
In July, Supervalu, the third-largest U.S.
supermarket chain, suspended its dividend to fund aggressive
price cuts aimed at winning back shoppers, while Safeway
said increased spending on advertising ate into profits.
In Belgium, Delhaize's same store sales increased 1.1 pct
ahead of expectations of a 0.85 percent fall.
Operating margins there decreased to 3.8 percent from 4.8
percent last year, as Delhaize offered lower prices to its
customers and paid higher wages to its staff because of
Belgium's automatic salary adjustment for inflation.