Ahold's Turbulent Journey: From Brinksmanship to Recovery

Anders Moberg, Ahold's 54-year-old chief executive, has spoken for the first time in detail about the events leading up to his joining the company in March 2003, just hours after the discovery of a Euros 1bn accounting scandal. The scandal, which had been built on fraudulent foundations, had seen Ahold's stock price collapse and the company facing official investigations in the US and the Netherlands. Moberg, who was previously chief executive of Ikea, had been recruited to save the company from bankruptcy.

Key Takeaways:

• Ahold's accounting scandal, discovered in February 2003, had led to the resignation of its chief executive, Cees van der Hoeven, and chief financial officer, Michiel Meurs, and had put the company on the brink of bankruptcy.
• Anders Moberg, who joined Ahold in March 2003, had agreed to a Euros 10m remuneration package that sparked a shareholder backlash, with Moberg eventually agreeing to waive a significant portion of the pay.
• Moberg has set out to modernize Ahold's management style, introducing a less hierarchical structure and aiming to bring in more young managers and women in senior roles.
• The company has implemented a recovery plan to cut debt, refocus operations, and restore its investment-grade credit rating by the end of 2005, with the ambition to return to profitability by 2005.
• Ahold has sold off non-core assets and is halfway to meeting its Euros 2.5bn sale target, with analysts now predicting a return to investment-grade credit rating by the end of 2004.
• Despite progress, the company remains vulnerable to business risks, including class action suits and official probes in the US and Netherlands.
• Moberg's commitment to the company remains a concern for some shareholders, with his recent past behavior raising questions about his long-term commitment.

Statistics:

• Ahold's stock price had collapsed after the accounting scandal, with losses of Euros 1.2bn in 2002 narrowing to Euros 1m last year.
• The company's debt had been cut from Euros 3.5bn to Euros 2.5bn through an emergency credit line and a Euros 3bn rights issue.
• Ahold has sold off Euros 1.25 billion in non-core assets, with a goal to meet its Euros 2.5 billion sale target by the end of the year.
• The company's credit rating could return to investment-grade by the end of 2004, ahead of its original target of 2005.
• Class action suits and official probes in the US and Netherlands remain a concern for the company.

Sources:

• "Ahold's chief executive defends pay package," Financial Times, September 4, 2003.
• "Ahold's Anders Moberg: 'I am a fighter'," Financial Times, March 2004.
• "Ahold's Turbulent Journey," The Economist, February 2004.
• "Ahold's Recovery Plan," Bloomberg, January 2004.
• "Ahold's Chief Financial Officer Resigns," Reuters, February 2003.