S&P Global Ratings on Dec. 18 affirmed the ratings of Koninklijke Ahold Delhaize NV at BBB/A-2 to reflect the Dutch grocer's strong operating performance.

The rating agency said Ahold Delhaize reported solid and sustainable same-store growth despite challenging retail markets in the U.S. and Europe.

Netherlands-based Ahold Delhaize owns retail chain Albert Heijn, which has stores in the Netherlands and Belgium; Etos, which operates in the Netherlands; and U.S. retail chains Food Lion, Giant, Stop & Shop and Peapod, among many other brands.

S&P said the integration of Ahold and Delhaize Group following their merger in 2016 has improved margins and cash generation.

The agency said it did not raise the company's rating as it forecasts debt-funded acquisitions amid ongoing shareholder remunerations and increasing capital expenditure.

S&P estimates Ahold Delhaize's EBITDA margin will increase by about 50 basis points to 60 basis points by the end of 2018 compared to adjusted pro forma 2016 levels.

S&P's outlook for Ahold Delhaize is stable to reflect its forecast that the company will continue to display modest revenue growth at constant foreign exchange rates while defending margins.

The rating agency added that it could raise Ahold Delhaize's rating if the retailer commits to a more conservative long-term financial policy, particularly in relation to potential larger debt-funded acquisitions.