S Group’s price campaigns increase operating result

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The S Group’s two-year strategy of strict cost control, the grocery trade, the increased number of customers and the consumer goods trade are the main factors  behind 2015 operating result improving from the previous year.

With the large price campaigns in Finland the sales volumes increased and the S Group’s grocery developed better than the market overall. But the Russian market lower the expectations.

The aggregate operating profit of the S Group for 2015 was 265 million EUR, an improvement from 2014’s 226 million. The consolidated result before taxes was 9.4 million EUR which was 30.3 million less than last year.

The strict focus on expenses and an increase in volumes leaved S Group’s grocery profit almost unchanged.

The supermarket trade includes the business operations in Estonia, Latvia, Lithuania and Russia.  Net sales from the supermarket trade totalled 447.5 million EUR. Net sales decreased by 16.8 per cent year-on-year, primarily because of lower net sales in Russia, which were mainly due to a weaker Russian rouble. The unstable economic situation in Russia had a powerful impact in 2015 and continues to lower expectations this year. Despite the weak outlook of the Russian economy, the result of the supermarket trade as a whole is expected to continue its improvement compared to the previous year due to the streamlining measures.

SOK’s CEO Taavi Heikkilä stresses that the Finnish price campaigns known as ”halpuuttaminen” is a long-term strategic change, which is carried out in strict accordance with the purpose of the cooperative.

”The number of customers has increased, that is, we have been able to produce more benefits to our customers with the campaign. Volumes have increased significantly and we managed to increase the market shares in our grocery stores. In addition to lower prices, we have been selling millions more of domestic products,” Heikkilä says.

Taavi Heikkilä also reveals that the savings and good performance make it possible to continue ”halpuuttamisen”-campaigns in the current year by a worth of approximately 50 million EUR. The third wave began about a month ago, and has received an excellent reception from customers, according to the financial statement.

Also in other businesses, such as tourism and catering trade as well as the ABC chain, sharpening concepts has spurred positive development. Both operations and result developed well.

For the whole S Group’s current year performance expectations are slightly lower than in 2015 due to investments in the campaigns. SOK Corporation’s operational result is expected to improve slightly compared to the 2015 result.

”An increase in value added tax is not an option now. It would hit especially lower-income consumers. The government must continue with determination deregulation. But the turn of actual liberalization of opening hours was good news for the trade sector.

At the end of 2015, S Group outlets had a total number of 1 632. Ten less than previous year.

The full financial statements in English can be found here.