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Ahold Delhaize to invest $480M to transform US supply chain

Koninklijke Ahold Delhaize NV on Dec. 10 said its U.S. division will invest $480 million to transform and expand its supply chain operations in the U.S. East Coast over three years.

The move is in line with the Dutch retailer's strategy to transition its U.S. supply chain into a fully integrated, self-distribution model.

As part of the investment, Ahold Delhaize will buy three distribution facilities from C&S Wholesale Grocers and lease two additional facilities. The company will also allocate funds into its two new fully automated frozen facilities that will be built in the Northeast and mid-Atlantic regions of the U.S.

"Through this initiative, we will modernize our supply chain distribution, transportation and procurement through a fully integrated, self-distribution model, that will be managed by our companies directly and locally," Ahold Delhaize USA CEO Kevin Holt said in a statement.

The company said the investment will not have any material impact on its 2019 results, and that its outlook remains the same. It noted that there will be transition expenses of about $50 million each in 2020 and 2021, and $60 million in 2022, which will likely impact underlying operating income. However, Ahold Delhaize said it expects an annual benefit on underlying operating income of over $100 million after the transition period.