Ahold bites bullet with <i>?</i>3.2bn write-down

Ahold, the giant Dutch retailer at the centre of Europe's biggest ever accounting scandal, yesterday crashed to a loss of more than €1.2bn (£840m) after writing down assets by €3.2bn.

The huge write-downs follow the disclosure earlier this year that Ahold, the world's third biggest retailer, had systematically inflated its profits for three years through false accounting. Ahold was found to have breached 360 separate accounting standards, many of them to do with the way it reported sales and profits from overseas business such as US Foodservice.

The scandal led to the resignation in February of Ahold's then chief executive, Cees van der Hoeven, who had spent more than €19bn acquiring 50 companies around the world. A subsequent investigation into Ahold's books, published in July, showed it had overstated profits by €970m over the three-year period. Last year alone, sales were overstated by €10bn. Ahold's new chief executive Anders Moberg, who was parachuted in from Ikea last month to try to restore the group's fortunes, said: "We still have a difficult road ahead."

Mr Moberg is expected to announce a rights issue worth up to €3bn later this month to help bring Ahold's €11bn debt mountain down to more manageable proportions. He may also be forced into a sale of the Foodservice business, which was bought for $3.6bn in 2000.

Ahold's accounts had been eagerly awaited. In the event, it filed them just hours before its banks were due to cut off a €2.65bn loan facility.

Despite the enormous write-downs and losses, Ahold shares rallied, rising by as much as 7 per cent on relief that the company had at last clarified its exposure. The value of the company has more than tripled since its low point in March and now stands at €8.2bn.

"I intend to do everything in my power to get this company back on track," said Mr Moberg.

The restatement of revenues for last year stemmed from the incorrect reporting of sales from joint ventures in Scandinavia and Portugal. Ahold fully consolidated sales from the ventures even though it did not have controlling stakes in the businesses.

Separately, Dutch newspapers yesterday reported that Mr van der Hoeven and six of his fellow executives were paid €9.4m in bonuses in 2001 - one of the years covered by the period of accounting irregularities. The reports said Mr van der Hoeven alone received a bonus of €1.4m.