Kesko promises new actions

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Kesko did not reach the market expectations for 2014.

“A good result in a difficult situation”, says CEO Mikko Helander.

Also K-Rauta and Byggmakker operations in Sweden and Norway loses sales.

 

1-12/2014 Net sales, € million

EUR

Change, % Operating profit
excl. non- recurring
items, € million
Change,
€ million
Food trade 4,316 -1.6 202.4 -0.8
Home and speciality goods trade 1,316 -9.6 -37.4 -29.0
Building and home improvement trade 2,598 -0.4 57.7 +32.0
Car and machinery trade 1,011 -2.5 29.6 -4.3
Common operations and eliminations -171 -0.8 -19.7 -4.0
Total 9,071 -2.6 232.6 -6.2

“As a whole, Kesko’s financial performance in 2014 was good despite the difficult market situation. In the food trade and the car trade, profit remained at a good level and the building and home improvement trade more than doubled its operating profit. In the home and speciality goods trade, profitability was negatively impacted by Anttila’s significant losses,” President and CEO Mikko Helander comments.

He says Kesko Group’s net sales for 2015 are expected to equal the level of 2014. Operating profit excluding non-recurring items for 2015 is expected to equal or fall slightly short of the level of 2014.

”We will respond to the increasing competition in the grocery trade by taking new measures which will improve our competitiveness. New actions with which will put an end to Anttila’s prolonged loss-making are planned. Preparatory work for the real estate arrangement continues and the arrangement is expected to be implemented during the first part of 2015, provided that the terms and conditions are acceptable to Kesko.”

The Group’s net sales for January-December 2014 were €9,071 million EUR, which is 2.6 percent down on the corresponding period of the previous year (€9,315 million). The general economic situation and consumer demand remained weak during the reporting period especially in Finland.
In the food trade, net sales decreased by 1.6 percent, in the home and speciality goods trade by 9.6 percent and in the machinery trade by 12.6 percent. In the building and home improvement trade, net sales in euros were at the previous year’s level, net sales in local currencies increased by 3.6 percent.
In the car trade, net sales increased by 1.5 percent.

Building and hardware segment’s foreign operations contributed 58.3 percent (56.9%) to the net sales of the building and home improvement trade. Kesko is represented in Sweden and Norway by K-Rauta and Byggmakker respectively. The retail sales of the K-rauta and Rautia chains in Finland were down by 2.1%  percent to €1,003 million (VAT 0%). The sales of Rautakesko B2B Service were at the previous year’s level. The K-Group’s sales of building and home improvement products in Finland decreased by a total of 1.8 percent while the total market is estimated to have fallen by some 4.2 percent (Kesko’s own estimate).

In terms of local currencies, the net sales from foreign operations increased by 9.5%. In Sweden, net sales in SEK were down by 1.0%. In Norway, net sales in NOK were down by 4.2%.

In Russia, net sales in roubles increased by 23.1%.

In January-December, the net sales from the foreign operations of the building and home improvement trade were €1,441 million (€1,435 million), an increase of 0.4%. In terms of local currencies, the net sales from foreign operations increased by 7.7%. In Sweden and Norway, net sales in local currencies were at the previous year’s level. In Russia, net sales in roubles increased by 10.5%. Foreign operations contributed 55.5% (55.0%) to the net sales of the building and home improvement trade.

The Group’s net sales in Finland decreased by 3.4 percent and in the other countries, net sales increased by 0.9 percent and by 8.2 percent in local currencies.
The weakening of the Russian rouble impacted net sales performance in euros especially in the building and home improvement trade.
International operations accounted for 18.4 percent (17.8%) of net sales.

The operating profit excluding non-recurring items for January-December was €232.6 million (€238.8 million). Profit was negatively impacted by the sales decrease of the home and speciality goods trade and especially by Anttila’s loss-making business. Operating expenses excluding non-recurring items decreased by €25.5 million (1.4%).

The Group’s net sales for October-December 2014 were €2,267 million EUR, which is 4.0 percent down on the corresponding period of the previous year (€2,362 million). In Finland, net sales were down 4.7 percent and 0.3 percent in the other countries. The net sales of the food trade decreased by 2.5 percent.

 

Food trade

1-12/2014 1-12/2013 10-12/2014 10-12/2013
Net sales, € million 4,316 4,387 1,119 1,148
Operating profit excl. non- recurring items, € million 202.4 203.3 46.7 48.3
Operating margin excl. non-recurring items, % 4.7 4.6 4.2 4.2
Capital expenditure,
€ million
91.4 91.6 19.4 23.7
Net sales, € million 1-12/2014 Change, % 10-12/2014 Change, %
Sales to K-food stores 3,233 -2.9 842 -3.0
Kespro 789 -1.7 200 -1.4
K-ruoka, Russia 103 +46.7 27 -5.6
Others 191 +3.6 50 +4.5
Total 4,316 -1.6 1,119 -2.5

 

Home and speciality goods trade

1-12/2014 1-12/2013 10-12/2014 10-12/2013
Net sales, € million 1,316 1,457 393 439
Operating profit excl. non-recurring items, € million -37.4 -8.3 11.0 21.6
Operating margin excl. non-recurring items, % -2.8 -0.6 2.8 4.9
Capital expenditure, € million 17.4 23.1 5.4 6.3
Net sales, € million 1-12/2014 Change, % 10-12/2014 Change, %
K-citymarket,
non-food
593 -5.5 183 -5.9
Anttila 324 -17.0 109 -16.6
Intersport, Finland 171 -10.0 46 -14.7
Intersport, Russia 15 -17.6 3 -16.2
Indoor 176 -3.3 46 -1.3
Musta Pörssi 20 -33.1 4 -45.7
Kenkäkesko 20 -5.6 4 +0.1
Total 1,316 -9.6 393 -10.4

 

 

Building and home improvement trade

1-12/2014 1-12/2013 10-12/2014 10-12/2013
Net sales, € million 2,598 2,607 585 596
Operating profit excl. non-recurring items, € million 57.7 25.7 11.9 -1.1
Operating margin excl. non-recurring items, % 2.2 1.0 2.0 -0.2
Capital expenditure,
€ million
60.0 37.8 16.2 11.4
Net sales,
€ million
 

1-12/2014
 

Change, %
10-12/2014 Change, %
Rautakesko, Finland 1,157 -1.3 244 -5.0
K-rauta, Sweden 194 -5.3 42 -5.3
Byggmakker, Norway 431 -8.4 93 -7.6
K-rauta, Estonia 78 +14.0 20 +12.3
K-rauta, Latvia 53 +2.7 13 +1.8
Senukai, Lithuania 312 +18.6 86 +19.5
K-rauta, Russia 250 -8.2 60 -9.4
OMA, Belarus 125 +17.8 28 +4.9
Total 2,598 -0.4 585 -1.9