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Germany: Aldi Nord is making a profit again after two years of losses in Germany

Discount Retail Chain Aldi Nord Germany increased its operating result by around EUR 300 million in 2020 (US$ 360mio). Foreign business also generated more.

The Aldi Nord group can take a deep breath. Both in the home market and in the most important foreign companies, sales and profits are increasing. In the Corona year 2020, Aldi Nord was able to increase sales in Germany by 2.6% to gross EUR 13.53 billion (US$16.1 Bn).

The group of companies achieved an increase of 5.2% to gross 26.63 billion euros (US$32Bn). The growth in the home market was well below the discounters' average of almost 9 percent. But Aldi earned money again in the German branch business. After two years with losses in the operational business, the turnaround has succeeded. The discounter improved its operating result by around EUR 300 million in 2020. The dealer is likely to have achieved an operating profit of around EUR 200 million (US$240 mio).

The pandemic-related additional sales have at least made it easier for Aldi to return to profitability, it is said in the environment. "In our turnaround 2020, the corona effect does not play a major role," it says from the official side. The better result is due to an optimized range, improved processes and stricter cost management.

Aldi Nord has had difficult years. In 2018, the discounter reported red figures for Germany for the first time in the company's history. The loss after taxes in the branch business was around 45 million euros. This was followed by a minus of over 120 million euros (US$ 143mio) after taxes in 2019.

For Aldi Nord this meant red alert, because the home market accounts for half of sales. Only through income from real estate, coffee roasters and profitable international business was the group of companies able to write black numbers in 2018 and 2019. The trend reversal was achieved in Germany in 2020.

The losses in the branch business also had to do with enormous investments. All branches were converted to the new Aniko concept. In 2018 and 2019, Aldi invested over 650 million euros (US$775 mio) in the German regional companies that control the branch business. In Germany, the phase of branch streamlining has now been completed.

Of what was once more than 2,500 German Aldi Nord stores, around 2200 stores are currently still in operation. The discounter wants to close some blank spots on the map this year and open additional stores again. The growth of the group of companies should come more from abroad in the future.

Double-digit growth in Spain and Belgium and good organic growth in France strengthened the result. "The results abroad have improved significantly," says Aldi. In contrast to previous years, the discounter is now expanding more rapidly there. Above all, the takeover of Leaderprice in France raises high hopes.

In recent years, the extensive restructuring of the company has cost Aldi a lot of money. These investments should pay off in the coming years. The discounter has invested in IT, expansion and logistics. As a result, additional staff were hired for almost all business areas. Purchasing was reorganized and category management was set up. Around 2000 employees work in Essen.

The management is also becoming more international. IT experts, data analysts and Kashif Ansari, his own chief strategy officer, cavort there. In April, Oktawian Torchala, the previous head of Poland, will move to the head office as Vice-COO. A new addition comes from competitor Lidl in June. Timo Dietz will be responsible for quality assurance and corporate responsibility in the future.

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