Ahold
Ahold: Royal Dutch Disaster Session 7 Management Accounting & Controls
Date 24-Feb-03
Issue: $500 million fraud
What:
Global food retailer with over 9,000 stores and 278,000 employees in 4 continents
2002 Sales -72 billion Euros up from 66 billion in 2001
Current outstanding loans of 13 billion euros due to 7 years of acquisitions
People:
Cees Van der Hoeven – CEO since 1993 (joined Ahold’s executive boar as CFO in 1985)
Michiel Muers 1997 – CFO graduated in business studies and economics
Jim Miller – USF CEO
Company: Royal (Koninklijke) Ahold
Holland – publicly traded company
Started as a supermarket chain of stores
1973 Abhold NV was formed and open the first chain of liquor stores
1970’2 they started to invest abroad – Spain and the US (Bi Lo)
Last family member retired in 1985 – new CEO Pierre Everaert
1990’s expanded into the Czech and Portugal – joint venture
1993 Evereart steps down and Cees Van der Hoeven (VDR) takes over
VDR started on the board in 1985 was disappointed when he did not get the job in 1985
Was awarded job as CFO
VDR had a very limited knowledge of accounting
Kept both roles as CEO and CFO till 1997
1997 Michiel Meurs (MM) appointed to CFO role (his background was in economics, business development and as a banker) VDR’s right hand man.
1992 – US 5 supermarket chains in eastern states generated 50% of total turnover an 57% of operating profit for the entire company.
1993 results disappointing
Ahold listed on the NYSE in 1993 in order to fund future expansion in US
US supermarket industry was very fragmented compared to Europe. Top 10 companies only had 40% of US market share
Walmart and Kmart were becoming a threat
Expansion Plans:
1994 VDR announced expansion plans sales and net profits to double every 5 years
2/3’s of growth from expansion (financed by cash flow) and 1/3 from acquisition (external sources)
EPS target growth 10% per year
1996 to 2001 spent over 20 billion euros on acquisitions
Large deal of autonomy in these
Date 24-Feb-03
Issue: $500 million fraud
What:
Global food retailer with over 9,000 stores and 278,000 employees in 4 continents
2002 Sales -72 billion Euros up from 66 billion in 2001
Current outstanding loans of 13 billion euros due to 7 years of acquisitions
People:
Cees Van der Hoeven – CEO since 1993 (joined Ahold’s executive boar as CFO in 1985)
Michiel Muers 1997 – CFO graduated in business studies and economics
Jim Miller – USF CEO
Company: Royal (Koninklijke) Ahold
Holland – publicly traded company
Started as a supermarket chain of stores
1973 Abhold NV was formed and open the first chain of liquor stores
1970’2 they started to invest abroad – Spain and the US (Bi Lo)
Last family member retired in 1985 – new CEO Pierre Everaert
1990’s expanded into the Czech and Portugal – joint venture
1993 Evereart steps down and Cees Van der Hoeven (VDR) takes over
VDR started on the board in 1985 was disappointed when he did not get the job in 1985
Was awarded job as CFO
VDR had a very limited knowledge of accounting
Kept both roles as CEO and CFO till 1997
1997 Michiel Meurs (MM) appointed to CFO role (his background was in economics, business development and as a banker) VDR’s right hand man.
1992 – US 5 supermarket chains in eastern states generated 50% of total turnover an 57% of operating profit for the entire company.
1993 results disappointing
Ahold listed on the NYSE in 1993 in order to fund future expansion in US
US supermarket industry was very fragmented compared to Europe. Top 10 companies only had 40% of US market share
Walmart and Kmart were becoming a threat
Expansion Plans:
1994 VDR announced expansion plans sales and net profits to double every 5 years
2/3’s of growth from expansion (financed by cash flow) and 1/3 from acquisition (external sources)
EPS target growth 10% per year
1996 to 2001 spent over 20 billion euros on acquisitions
Large deal of autonomy in these