Deutsche Bank Conference Paris June 21, 2012 Pierre Bouchut EVP - - PowerPoint PPT Presentation

Deutsche Bank Conference – Paris – June 21, 2012

Pierre Bouchut – EVP & Chief Financial Officer

2

“This presentation includes forward-looking statements within the meaning of the U.S. federal securities laws that are subject to risks and uncertainties. Forward-looking statements describe further expectations, plans, options, results or strategies. Actual

• utcomes and results may differ materially from those projected depending upon a variety
• f factors, including but not limited to changes in the general economy or the markets of

Delhaize Group, in consumer spending, in inflation or currency exchange rates or in legislation or regulation; competitive factors; adverse determination with respect to claims; inability to timely develop, remodel, integrate or convert stores; and supply or quality control problems with vendors. Additional risks and uncertainties that could cause actual results to differ materially from those stated or implied by such forward-looking statements are described in our most recent annual report or Form 20-F and other filings with the Securities and Exchange Commission. Delhaize Group disclaims any obligation to update or revise the information contained in this presentation.”

Forward looking statements

3

Delhaize Group is an international supermarket operator1

• Revenues

€21.1 billion

• EBITDA

€1.5 billion

• Stores

3 408

– 2 561 supermarkets – 773 convenience stores – 74 discount stores

• Countries

11

• Employees 160 000
• Selling m²

5.4 million m²

1 All figures as of December 31, 2011

4

With a number of key strengths

• Supermarket and convenience expertise
• Private brands experience1
• Belgium / 56% of revenues
• U.S. / 27% of revenues
• SEE&A / 18% of revenues
• Diversified geographic exposure1
• U.S. / 65% of revenues, 1 650 stores
• Belgium / 23% of revenues, 821 stores
• SEE&A / 12% of revenues, 937 stores
• Integrated logistics
• Strong brand equity at Hannaford, Delhaize Le Lion and Alfa Beta

1 All figures as of December 31, 2011

5

But confronted with several ongoing challenges

• Economic headwinds
• Rapid and structural change in consumer behavior, notably in the U.S.
• Increasingly competitive environment in Belgium
• Ongoing integration of Maxi
• Uncertainty in Greece

6

Which has led us to establish clear and actionable priorities in keeping with our New Game Plan

• Ongoing repositioning at Food

Lion1

• Price investments at Delhaize

Le Lion and Hannaford

• SG&A reduction
• Accelerated expansion in

selected markets and formats

• Focus on Free Cash Flow

1 Representing close to 50% of our Group revenues

7

Food Lion brand repositioning puts the focus back on the customer

Competitive and consistent prices (Promotional  EDLP) Improved produce, particularly assortment and freshness Better shopping experience (clean and easy place to shop)

1 Closure of 126 underperforming stores in the U.S. and 20 underperforming stores in Southeastern Europe which resulted in €127 million impairment charges in Q4 2011 and in €200 million

negative impact on earnings in 2012

PRICE QUALITY SIMPLICITY

• Portfolio optimization announced in

January 2012 1

• Food Lion repositioning centered

around:

8

This repositioning is being rolled out through successive phases…

May 2011 March 2012 August 2012 172 stores 268 stores 269 stores Raleigh Richmond Norfolk Roanoke Charlottesville Charlotte Greensboro Greensville/ Spartanburg Phase 1 Phase 2 Phase 3 Late 2012 / Early 2013 177 stores Phase 5

Approximately 80% of network repositioned by early 2013

Phase 4

9

With encouraging results

Same store March 2012 April 2012 May 2012 # transactions growth 5.4% 5.8% 4.4% # items per transactions growth 11.5% 12.0% 6.3%

Difference between Phase One and the rest of Food Lion network

Same store March 2012 April 2012 May 2012 Volume growth 10.3% 10.6% 6.8%

10

In Belgium, we will continue to invest to improve the value proposition to our customers

Price-index Colruyt vs. Delhaize (100)

Private brands1 – Number of SKUs

90 91 92 93 94 95 96 97 98 2004 2006 2008 2010

96.9 91.2 93.8

2012

First price (452)

1 Figures as of December 31, 2011

Mainstream (5 634) Premium (147) 6 233 private brand products

A private brand offering which provides an unparalleled value proposition to our customers

11

• Expansion of store network (25 new stores in

Belgium this year)

• Roll out New Generation Store concept
• New functional furniture
• Innovation and differentiation
• Store efficiency
• Modern colors and revamped look
• Stepping up number of remodelings (double

compared to 2011)

• Acceleration of e-commerce development

While reinforcing our historical strengths

1989 Home-delivery 2001 2009 Pick-up at store & home delivery Pick-up at store

12

In Greece, our team has been proactive and has managed to successfully increase market share while maintaining profitability

14.5% 16.8% 18.1% 19.3%

10.0% 12.0% 14.0% 16.0% 18.0% 20.0% 2008 2009 2010 2011 3% 5% Market share Operating margin Understanding client needs is even more critical in difficult times

13

4.9% 4.8% 4.9% 5.0% 4.4% 3.5%

2007 2008 2009 2010 2011 Q1 2012 2012e

Our decided Food Lion repositioning and our price investments result in a decrease in our underlying operating margin

Delhaize Group underlying operating margin evolution1

1 At actual exchange rates; operating margin for 2007; underlying operating margin for 2008-2012

Best-in-class operating margin Impact of our proactive decision to invest in long- term growth initiatives

14

Improved price perception Improve price and shopping experience Drive sales momentum and create sales leverage Generate cost savings

Virtuous cycle of retail

As a result, cost savings are critical in financing our price investments and other sales growth initiatives

15

Therefore, we have decided to further intensify our cost savings program

2010 2011 2012 2013 2014

• Improve supplier terms
• Reduce HQ costs
• Eliminate complexity
• Acceleration of non-food

Global Procurement

• SAP Retail implementation
• Store productivity

232 407

Short-term source of savings Medium-term source of savings

550 Cumulative gross cost savings (€ in millions) Significant reservoir of cost savings

500 target

16

And to focus on generating a minimum of €500 million in Free Cash Flow through Capex discipline and Working Capital improvements

• More disciplined and selective

capital expenditures

• Capex guidance revised down by

€100 million to €700-750 million for 2012

• Working capital improvements
• Inventories
• Accounts payable

2011 2012 3431

1 Excluding Delta Maxi acquisition purchase price

Free Cash Flow (€ in millions)

500 target

17

Delhaize 31% Delhaize 2.8x

Moody’s Standard & Poor’s

• Adj. RCF

/ Adj. Net Debt

• Adj. Debt

/ Adj. EBITDA

• Adj. FFO

/ Adj. Net Debt

• Adj. Net Debt

/ Adj. EBITDA

Baa2 Baa3

Ba1

BBB BBB- BB+

Delhaize 24% Delhaize 3.1x

30% 25% 20% 18% 3.0x 3.5x 4.0x 4.5x 35% 30% 25% 20% 3.0x 2.5x 2.0x 3.5x

With the view of reinforcing our BBB-/Baa3 credit rating1i

1 All figures as of December 31, 2011

18

We also plan to expand in key areas to support sustained

• rganic growth
• Target to open between 200 and

230 new stores in 2012

• Strong expansion plans at Mega

Image in Romania

• Solid expansion plans at Super

Indo in Indonesia

• Build out to density the

Philadelphia and Pittsburgh markets with Bottom Dollar Food over 2012 and 2013

• Increased number of

remodelings at Delhaize Le Lion

Q1 2012

2.3%

Organic revenue growth

0.7%

Q1 2011

19

We confirm our outlook for 2012

• Opening of 200 to 230 new stores in 2012 (20 to 50 net new stores

after portfolio optimization and store closings)

• Approximately 700 Food Lion stores repositioned by year-end 2012
• Intensive focus on price competitiveness
• Expect to exceed the €500 million gross cost savings target by the

end of 2012 and intensify cost savings program

• Target of €500 million Free Cash Flow generation in 2012 through

more disciplined capital expenditures (€700-750 million in 2012) and improvements in working capital

• Underlying operating profit expected to decrease by 15% to 20% at

identical exchange rates

20

We are working on the right initiatives and are confident that over time, they will lead us back to profitable growth

• Sucess of Food Lion

brand repositioning

• Price investments at

Hannaford and Delhaize Le Lion

• Cost savings
• Expansion

Improved pricing Sales growth Cost savings Expansion & new store openings

21