FINANCIAL PERFORMANCE IN BRIEF, CONTINUING OPERATIONS:
10-12/2020
- Group net sales for continuing operations in October-December totalled €2,662.3 million (€2,734.2 million), an increase of 4.5% in comparable terms, reported net sales decreased by 2.6%
- Comparable operating profit totalled €165.6 million (€129.7 million), up by €44.6 million when Kesko Senukai is treated as a joint venture also for the comparison period (illustrative comparison figures)
- Operating profit totalled €155.6 million (€127.8 million)
- Comparable earnings per share were €0.31 (€0.23)
- Reported earnings per share for continuing operations were €0.29 (€0.22)
1-12/2020
- Group net sales for continuing operations in January-December totalled €10,669.2 million (€10,720.3 million), an increase of 3.6% in comparable terms, reported net sales decreased by 0.5%
- Comparable operating profit totalled €567.8 million (€461.6 million), up by €118.9 million when Kesko Senukai is treated as a joint venture also for the comparison period (illustrative comparison figures)
- Operating profit totalled €600.2 million (€447.8 million)
- Comparable earnings per share were €0.97 (€0.74)
- Reported earnings per share for continuing operations were €1.09 (€0.83)
- The Board proposes a dividend of €0.75 per share, proposed to be paid in two instalments
KEY PERFORMANCE INDICATORS
10-12/2020 | 10-12/2019 | 1-12/2020 | 1-12/2019 | |
Continuing operations | ||||
Net sales, € million | 2,662.3 | 2,734.2 | 10,669.2 | 10,720.3 |
Operating profit, comparable, € million | 165.6 | 129.7 | 567.8 | 461.6 |
Operating margin, comparable, % | 6.2 | 4.7 | 5.3 | 4.3 |
Operating profit, € million | 155.6 | 127.8 | 600.2 | 447.8 |
Profit before tax, comparable, € million | 150.4 | 107.7 | 481.9 | 370.7 |
Profit before tax, € million | 138.4 | 105.7 | 527.6 | 403.3 |
Cash flow from operating activities, € million | 308.4 | 273.2 | 1,152.4 | 893.1 |
Capital expenditure, € million | 55.5 | 83.3 | 398.4 | 686.1 |
Earnings per share, €, basic and diluted | ||||
Continuing operations | 0.29 | 0.22 | 1.09 | 0.83 |
Discontinued operations | - | 0.01 | - | 0.03 |
Group, total | 0.29 | 0.23 | 1.09 | 0.86 |
Earnings per share, comparable, €, basic | ||||
Continuing operations | 0.31 | 0.23 | 0.97 | 0.74 |
1-12/2020 | 1-12/2019 | |
Continuing operations | ||
Return on capital employed, comparable, % | 12.0 | 9.6 |
Group | ||
Return on equity, comparable, % | 17.8 | 15.1 |
Kesko is reporting
10-12/2020* | 10-12/2019 | 1-12/2020 | 1-12/2019 | |
Continuing operations | ||||
Net sales, € million | 2,662.3 | 2,509.8 | 10,242.6 | 9,862.0 |
Operating profit, comparable, € million | 165.6 | 121.1 | 553.6 | 434.7 |
Operating margin, comparable, % | 6.2 | 4.8 | 5.4 | 4.4 |
Operating profit, € million | 157.2 | 119.1 | 540.0 | 421.0 |
*Reported 10-12/2020
In this financial statements release, the comparable change (%) in net sales has been calculated in local currencies and excluding the impact of Kesko Senukai and the acquisitions and divestments completed in 2019 and 2020. The comparable operating profit has been calculated by deducting items affecting comparability from the reported operating profit. The illustrative performance indicators have been calculated for the reporting period 1-12/2020 and the comparison periods as if Kesko Senukai had been consolidated as a joint venture.
OUTLOOK AND GUIDANCE FOR 2021
Kesko estimates that its comparable operating profit in 2021 will be in the range of €520-620 million. The illustrative comparable operating profit in 2020 was €553.6 million.
The range for
Overall, the outlook for Kesko's business in 2021 is positive. We anticipate moderate growth in Finnish grocery trade. Recovery in the foodservice business largely depends on the pandemic situation. Renovation building is expected to grow in the Northern European construction market. In housing construction, new construction volumes are expected to decrease overall, but to remain stable in the construction of small housing and vacation homes. The Finnish car trade market is expected to grow in 2021.
PRESIDENT AND CEO MIKKO HELANDER:
Kesko had a very strong year in 2020. We were able to significantly increase our profit - in comparable terms, by nearly €120 million. We have been growing our sales and profitability for a long time, which acts as strong indication that our growth strategy is working and being successfully executed. Less than half of our profit improvement in 2020 was attributable to the positive impacts of the Covid-19 pandemic. Our ability to ensure the safety of our customers and personnel during these exceptional times also contributed to our good performance.
In 2020, our net sales grew by 3.6% in comparable terms, totalling €10,669 million. Our comparable operating profit rose to a record €568 million, representing an increase of €118.9 million when accounting for the change in the consolidation method of Kesko Senukai. Our good ability to produce a profit and strong financial position enable investments in growth and good dividend capacity. Kesko's Board proposes to the Annual General Meeting a dividend of €0.75/share, totalling nearly €300 million, proposed to be paid in two instalments.
In the grocery trade division, good progress continued also in 2020. Our K-food stores gained market share for the fifth consecutive year. The division's net sales grew by 3.6%, and its comparable operating profit rose to €375 million. Our strategic objective is to constantly improve customer experience in both physical stores and digital channels, utilising, for example, store-specific business ideas. In the online sales of groceries, we were agile in our response to the growth in demand, and our online customers are also active visitors to our physical stores. The operating environment for Kespro's foodservice business was made challenging by Covid-19 related restrictions. Nonetheless, Kespro managed an excellent increase in market share and secured good profitability.
Sales grew and profit improved also in the building and technical trade division, indicating a functional strategy and its good execution. The division's net sales grew by 5.7% in comparable terms, and its comparable operating profit rose to a new level at €188 million. Profit grew clearly in Finland, Sweden and Norway. Consumer sales grew particularly strongly in 2020, but development was also good on the B2B side in both building and home improvement trade and Onninen's technical wholesale. Growth in consumer sales was also underpinned by stronger market demand. In addition to organic growth, we continued to execute our growth strategy with the acquisitions of the Carlsen Fritzøe building and home improvement trade chain in Norway and the MIAB and Bygg & Interiör businesses in Sweden.
In the car trade division, the market weakened considerably in the first half of the year due to the decline in consumer demand caused by the Covid-19 pandemic and delays in car deliveries. However, the situation improved in the latter half of the year, and the net sales for Kesko's car trade rose to nearly €900 million, with an operating profit of €23 million.
Kesko celebrated its 80th anniversary in 2020 with focus on work. Trust towards
Overall, the outlook for Kesko's business in 2021 is positive. Kesko estimates that the comparable operating profit for its continuing operations will be in the range of €520-620 million in 2021. The range for 2021 profit guidance is wide due to the uncertainties related to the Covid-19 pandemic.
I want to thank everyone at
Keskon vuosi 2020 oli erittäin vahva. Toteutimme kasvustrategiaamme onnistuneesti myös koronaepidemian aiheuttamissa poikkeusoloissa. Onnistuimme varmistamaan turvalliset työolosuhteet henkilöstöllemme ja turvallisen kauppa-asioinnin asiakkaillemme. Päivittäistavarakaupassa myynti kasvoi, markkinaosuus vahvistui ja kannattavuus parani edelleen. Rakentamisen ja talotekniikan kaupan kehitys oli kautta linjan vahvaa sekä rautakaupassa että teknisessä tukkukaupassa. Autokaupassa alkuvuosi oli vaikea, mutta kauppa piristyi selvästi vuoden loppua kohti. Vuonna 2020 K valittiin jälleen kerran maailman vastuullisimmaksi ruokakaupaksi. Kotimaassa luottamus K:hon on viime vuosina parantunut merkittävästi. Taloudellisen menestyksen lisäksi juhlimme työn merkeissä Keskon 80-vuotista historiaa.
Vuonna 2020 liikevaihtomme kasvoi vertailukelpoisesti 3,6 % ja oli 10 669 milj. euroa. Vertailukelpoinen liikevoitto oli ennätykselliset 568 milj. euroa, ja se kasvoi 119 milj. euroa, kun otetaan huomioon Kesko Senukain yhdistelytavan muutos. Vuonna 2020 kasvua tuki strategian määrätietoinen toteutus sekä osaltaan myös hyvä markkinatilanne. Hyvä tuloksentekokyky ja vahva taloudellinen asema mahdollistavat investoinnit kasvuun ja hyvän osingonmaksukyvyn. Hallituksen osinkoehdotus yhtiökokoukselle on X,XX €/osakkeelta eli yhteensä XXX milj. euroa. Osinko esitetään maksettavaksi kahdessa erässä.
Päivittäistavarakaupassa hyvä kehitys jatkui myös vuonna 2020. K-ruokakauppojen markkinaosuusuus vahvistui kuudetta vuotta peräkkäin. Liikevaihto kasvoi 3,6 % ja vertailukelpoinen liikevoitto nousi 375 milj. euroon. Strategisena tavoitteenamme on jatkuvasti parantaa asiakaskokemusta niin kivijalkakaupoissa kuin digitaalisissa kanavissa muun muassa kauppakohtaisen liikeidean kautta. Ruoan verkkokaupassa pystyimme ketterästi vastaamaan kasvaneeseen kysyntään ja ruoan verkkokaupan asiakkaat asioivat aktiivisesti myös kivijalkakaupoissamme. Kespron foodservice-liiketoiminnassa toimintaympäristö oli haastava koronaepidemian hillitsemiksi asetettujen rajoitusten vuoksi. Kespro onnistui kuitenkin erinomaisesti markkinaosuutensa kasvattamisessa ja hyvän kannattavuutensa turvaamisessa.
Myös rakentamisen ja talotekniikan kaupassa myynnin kasvu ja tulosparannus osoittavat, että strategia ja sen toteutus toimivat hyvin. Liikevaihto kasvoi vertailukelpoisesti 5,7 % ja vertailukelpoinen liikevoitto nousi uudelle tasolle 202 miljoonaan euroon. Tulos vahvistui selvästi Suomessa, Ruotsissa ja Norjassa. Vuoden aikana kuluttajamyynti kasvoi erityisen vahvasti, mutta myös yritysasiakaskauppa kehittyi hyvin sekä rautakaupassa että Onnisen teknisessä kaupassa. Kasvua tuki myös vahvistunut markkinakysyntä. Orgaanisen kasvun lisäksi jatkoimme kasvustrategian toteutusta yritysostoilla, hankimme Carlsen Fritzøe-rautakauppaketjun Norjassa sekä MIAB- ja Bygg&Interiör -liiketoiminnot Ruotsissa.
Autokaupassa markkina heikentyi voimakkaasti vuoden 2020 alkupuolella koronaepidemian aiheuttaman kulutuskysynnän laskun sekä toimitusaikojen hidastumisen seurauksena. Tilanne kuitenkin parani toisella vuosipuoliskolla ja Keskon autokaupan liikevaihto nousi lähes 900 milj. euroon ja liikevoitto oli 23 milj. euroa.
Keskon liiketoiminnan osalta näkymät ovat alkaneelle vuodelle hyvät. Koronaepidemiatilanteella ja rokotusten edistymisellä on merkittävä vaikutus talouteen ja kuluttajakäyttäytymiseen. Yhtiö arvioi vertailukelpoisen liikevoiton vuonna 2021 olevan haarukassa XXX-XXX miljoonaa euroa.
Kiitän kaikkia keskolaisia, K-kauppiaita ja heidän henkilökuntaansa, osakkeenomistajiamme ja yhteistyökumppaneitamme siitä arvokkaasta työstä, jota olette tehneet menestymisemme eteen.
IMPORTANT EVENTS
Kesko's new financial targets,
Thanks to the successful execution of its growth strategy, Kesko achieved its previous financial targets at the end of
The new medium-term financial targets for profitability, as approved by the Board of Directors of
Positive profit warning,
Kesko raised its guidance for the comparable operating profit for its continuing operations in 2020. Kesko estimated that the comparable operating profit for its continuing operations would be in the range of €510-570 million in 2020. The guidance upgrade was based on better than anticipated sales development in all divisions, improved cost efficiency, and a more positive outlook for the remainder of the year.
On
Before, the company estimated that the comparable operating profit for continuing operations would be in the range of €430-510 million. In the previous guidance, Kesko Senukai was treated as a subsidiary for the full year 2020. (Stock exchange releases 17.9.2020)
Positive profit warning,
Kesko raised its guidance for the comparable operating profit for its continuing operations, issued in connection with the company's interim report on
Share issue without payment (share split)
Kesko`s Annual General Meeting on
Profit warning,
Kesko issued a profit warning due to the Covid-19 pandemic and related global economic uncertainty. Kesko estimated at the time that the comparable operating profit for its continuing operations would be in the range of €400-450 million in 2020. (Stock exchange release 18.3.2020)
Strategic review of operations in the Baltics and Belarus and consolidation of Kesko Senukai in Kesko's Group reporting
Kesko is reporting
In its half year financial report on
After re-examining the conditions for consolidation, Kesko has deemed that it no longer exercises the type of control referred to in IFRS 10 over Kesko Senukai. Consequently, Kesko has decided to classify Kesko Senukai as a joint venture. Due to the change in classification, from
Main impacts of the Covid-19 pandemic on KESKO'S business in 2020
The Covid-19 pandemic began affecting Kesko's business operations from mid-March onwards. Impacts of the exceptional situation varied between the divisions. In the grocery trade, net sales grew in all grocery store chains and K-Citymarket's home and speciality goods. Demand also increased for online sales of groceries. Restrictions imposed on restaurants and events due to the pandemic impacted Kespro's foodservice business negatively. The growth in grocery sales to K-food stores exceeded the decrease in foodservice net sales. In the building and technical trade, Covid-19 related circumstances and restrictions varied between businesses and operating countries. Nonetheless, the market remained good for both B2C and B2B trade. In the car trade, the pandemic weakened customer demand for both new and used cars in the first half of the year. Net sales saw a turnaround and began to grow in the latter half of the year as demand strengthened.
Key measures in managing the exceptional situation included ensuring the safety of customers and personnel, and securing operational purchasing and supply chains under all circumstances. We also quickly increased our online sales services. Development projects were postponed, as we focused on managing the situation. We secured cash flow by e.g. ensuring the availability and sufficiency of financing, managing the credit risks associated with amounts due from customers, cutting investments and adjusting fixed costs.
FINANCIAL PERFORMANCE FOR CONTINUING OPERATIONS
In the table of key performance indicators of this "Financial performance for continuing operations" section, illustrative Group performance indicators are used alongside the reported performance indicators that are based on the consolidated financial statements, to depict the change in comparable operating profit as if Kesko Senukai had been consolidated in the consolidated financial statements as a joint venture also in the comparison period. The change based on the illustrative comparison figures is reported in the column "Change, € million, Illustrative comparison figures."
NET SALES AND PROFIT FOR OCTOBER-
10-12/2020 | Net sales, € million | Change, % | Change, comparable, % |
Operating profit, comparable, € million |
Change, € million |
Change, € millionIllustrative comparison figures* |
Grocery trade | 1,517.2 | +4.2 | +4.2 | 123.2 | +24.5 | +24.5 |
Building and technical trade, excl. speciality goods trade and Kesko Senukai | 862.3 | +14.6 | +7.1 | 38.3 | +21.1 | +21.1 |
Speciality goods trade | 55.3 | -26.2 | -4.3 | 4.5 | +3.0 | +3.0 |
Kesko Senukai | - | - | - | 1.5 | -10.6 | -2.0 |
Building and technical trade, total | 917.6 | -12.7 | +6.3 | 44.3 | +13.4 | +22.0 |
Car trade | 233.6 | +2.3 | +2.3 | 6.2 | -2.8 | -2.8 |
Common functions and eliminations | -6.1 | (..) | (..) | -8.0 | +0.9 | +0.9 |
Total | 2,662.3 | -2.6 | +4.5 | 165.6 | +35.9 | +44.6 |
(...) Change over 100%
* Kesko Senukai treated as a joint venture in the illustrative comparison figures
Net sales for the Group's continuing operations grew in comparable terms by 4.5% in October-December. Kesko's businesses and operating countries have been affected by the exceptional circumstances brought on by the Covid-19 pandemic in different ways. Net sales grew in comparable terms in all divisions. The Group's net sales increased in comparable terms by 3.8% in Finland, and by 9.3% elsewhere. The comparable change % has been calculated in local currencies and excluding the impact of Kesko Senukai and acquisitions and divestments completed in 2019 and 2020. The change in the Group's reported net sales in October-December was -2.6%, negatively impacted by the consolidation of Kesko Senukai as a joint venture in the consolidated financial statements from
Net sales grew in the grocery trade division in all grocery store chains and K-Citymarket's home and speciality goods trade. The restrictions imposed on restaurants and events due to the Covid-19 pandemic negatively impacted Kespro's foodservice business, and Kespro's net sales decreased by 17.3%. However, the growth in grocery sales to K-food stores clearly exceeded the decrease in the net sales for Kespro's foodservice business.
Net sales for the building and technical trade division grew in comparable terms in Finland, Sweden, Norway and Poland. Net sales grew in both B2C and B2B trade. Net sales were boosted by the acquisitions of Mark & Infra i
In the speciality goods leisure trade, net sales decreased. As part of the strategy for the leisure trade, during the reporting period, Kesko initiated measures to discontinue its The Athlete's Foot and Kookenkä chains.
Net sales for the car trade division grew by 2.3% in October-December.
The comparable operating profit for the Group's continuing operations in October-December totalled €165.6 million, representing a growth of €35.9 million for the period. The growth in comparable operating profit was €44.6 million when Kesko Senukai is treated as a joint venture also for the comparison period (illustrative comparison figures). Profitability improved in the grocery trade division due to good retail sales development and improved operational efficiency. In the building and technical trade division, the comparable operating profit for the building and home improvement trade grew in Finland, Sweden and Norway. The acquisitions carried out in Norway and Sweden in 2018-2020 accounted for €9.7 million (€1.5 million) of the comparable operating profit. Onninen's comparable operating profit also clearly strengthened and grew in Finland, Norway and Poland. Kesko Senukai, consolidated as a joint venture, had a €1.5 million impact on the Group's comparable operating profit (€12.1 million, consolidated as a subsidiary). Fair value allocation of €4.4 million has been deducted from the share of result of the Kesko Senukai joint venture. In the car trade, comparable operating profit decreased.
Items affecting comparability, € million | 10-12/2020 | 10-12/2019 |
Operating profit, comparable | 165.6 | 129.7 |
Items affecting comparability | ||
+gains on disposal | 3.5 | 3.3 |
-losses on disposal | -0.1 | -0.9 |
+/-structural arrangements | -13.5 | -4.3 |
Items affecting comparability, total | -10.1 | -1.9 |
Operating profit | 155.6 | 127.8 |
The most significant items affecting comparability were the €10.4 million costs related to the discontinuation of The Athlete's Foot and Kookenkä chains in the leisure trade.
Net finance costs, income tax and earnings per share
10-12/2020 | 10-12/2019 | |
Continuing operations | ||
Net finance costs, € million | -15.0 | -21.3 |
Interests on lease liabilities, € million | -18.8 | -23.5 |
Profit before tax, comparable, € million | 150.4 | 107.7 |
Profit before tax, € million | 138.4 | 105.7 |
Income tax, € million | -24.7 | -14.9 |
Earnings per share, comparable, € | 0.31 | 0.23 |
Earnings per share, € | 0.29 | 0.22 |
Group | ||
Equity per share, € | 5.52 | 5.11 |
The net finance costs for the Group's continuing operations were positively impacted by the recovery of valuation losses on investments of liquid assets and the €2.2 million positive revaluation of non-current financial assets measured at fair value. The share of result of associates, reported under financial items, was €-2.2 million (€-0.8 million), or €0.3 million (€-0.5 million) in comparable terms excluding items affecting comparability included in the share of result of associates.
The comparable profit before tax for the Group's continuing operations in October-December grew thanks to operating profit growth and reduction in net finance costs compared to the year before. The Group's effective tax rate was 17.9% (14.1%). The Group's effective tax rate was impacted by tax-exempt sales gains in both the reporting and the comparison period.
Earnings per share and comparable earnings per share for the Group's continuing operations grew compared to the year before.
NET SALES AND PROFIT FOR JANUARY-
1-12/2020 | Net sales, € million | Change, % | Change, comparable, % |
Operating profit, comparable, € million |
Change, € million |
Change, € million Illustrative comparison figures* |
Grocery trade | 5,732.0 | +3.6 | +3.6 | 375.2 | +47.3 | +47.3 |
Building and technical trade, excl. speciality goods trade | 3,424.3 | +9.5 | +6.5 | 169.4 | +70.8 | +70.8 |
Speciality goods trade | 215.2 | -37.9 | -5.5 | 7.4 | -2.1 | -2.1 |
Kesko Senukai | 427.3 | -50.3 | - | 25.1 | -9.6 | +3.2 |
Building and technical trade, total | 4,066.2 | -6.1 | +5.7 | 201.9 | +59.1 | +71.9 |
Car trade | 892.6 | +3.3 | -3.3 | 23.4 | -3.3 | -3.3 |
Common functions and eliminations | -21.4 | (..) | (..) | -32.7 | +3.2 | +3.2 |
Total | 10,669.2 | -0.5 | +3.6 | 567.8 | +106.2 | +118.9 |
(..) Change over 100%
* Kesko Senukai treated as a joint venture in the illustrative comparison figures
In comparable terms, net sales for the Group's continuing operations grew by 3.6%. The change in the Group's reported net sales in January-December was -0.5%, impacted by the consolidation of Kesko Senukai as a joint venture in the consolidated financial statements from
Net sales grew in the grocery trade division in all grocery store chains and K-Citymarket's home and speciality goods trade. Net sales decreased in Kespro's foodservice business due to the Covid-19 pandemic and related restrictions.
Net sales for the building and technical trade division grew in comparable terms in Finland, Sweden, Norway and Poland. Net sales were boosted by the acquisitions of K-Bygg in 2019, Mark & Infra i
In the car trade division, net sales increased due to the acquisitions carried out in 2019, but in comparable terms, net sales decreased. The decrease in net sales was impacted by the weakened demand witnessed in the first year-half, and longer car delivery times.
The comparable operating profit for the Group's continuing operations grew by €106.2 million in January-December, or by €118.9 million with Kesko Senukai treated as a joint venture also for the comparison period (illustrative comparison figures). Profit development in January-December was also positively affected by the Covid-19 pandemic and resulting changes in consumer behaviour. Kesko estimates that less than half of the profit improvement in 2020 is attributable to the pandemic. In the grocery trade division, profitability improved thanks to good grocery sales development in the grocery store chains and cost adjustment measures especially in Kespro's foodservice business and K-Citymarket's home and speciality goods trade. The decrease in Kespro's net sales, resulting from restrictions imposed due to the Covid-19 pandemic, had a weakening impact on Kespro's comparable operating profit for the reporting period. In the building and technical trade division, the comparable operating profit for building and home improvement trade grew in Finland, Sweden and Norway. The acquisitions carried out in Norway and Sweden in 2018-2020 accounted for €33.9 million (€14.5 million) of the comparable operating profit. Onninen's comparable operating profit clearly strengthened and grew in Finland, Sweden, Norway and Poland. In the Baltics, Onninen's comparable operating profit remained at level of the previous year. Kesko Senukai had a €25.1 million impact on the Group's comparable operating profit (€34.7 million, consolidated as a subsidiary). Kesko Senukai has been consolidated as a joint venture from
Items affecting comparability, € million | 1-12/2020 | 1-12/2019 |
Operating profit, comparable | 567.8 | 461.6 |
Items affecting comparability | ||
+gains on disposal | 9.8 | 4.6 |
-losses on disposal | -0.2 | -0.9 |
+/-structural arrangements | 22.8 | -17.5 |
Items affecting comparability, total | 32.4 | -13.8 |
Operating profit | 600.2 | 447.8 |
The most significant items affecting comparability in January-December were the positive profit impact of €46.1 million resulting from the change in the consolidation method of Kesko Senukai; the €2.5 million negative profit impact of changes in the store site network in Sweden; the €6.4 million sales gain from the divestment of machinery trade operations in the Baltics, completed on
Net finance costs, income tax and earnings per share
1-12/2020 | 1-12/2019 | |
Continuing operations | ||
Net finance costs, € million | -86.8 | -91.4 |
Interests on lease liabilities, € million | -83.3 | -95.4 |
Profit before tax, comparable, € million | 481.9 | 370.7 |
Profit before tax, € million | 527.6 | 403.3 |
Income tax, € million | -92.3 | -69.6 |
Earnings per share, comparable, € | 0.97 | 0.74 |
Earnings per share, € | 1.09 | 0.83 |
Group | ||
Equity per share, € | 5.52 | 5.11 |
Net finance costs for the Group's continuing operations were up in January-December due to exchange differences and change in the fair value of interest rate derivatives. Of the exchange differences, €-2.8 million was due to exchange rate losses on euro-denominated loan financing in January-June at Kesko Senukai's Belarussian subsidiary OMA, and €-1.7 million due to the weakening of the Norwegian krone, Swedish krona and Polish zloty. The share of result of associates amounted to €14.3 million (€46.8 million), or €1.5 million (€0.7 million) in comparable terms. The share of result of associates included a €11.6 million profit related to the dissolution of
The comparable profit before tax for the Group's continuing operations in January-December grew thanks to operating profit growth and reduction in net finance costs compared to the year before. The Group's effective tax rate was 17.5% (17.3%). The Group's effective tax rate decreased due to a positive profit impact of €46.1 million arising from the change in the consolidation method of Kesko Senukai, recognised as an item affecting comparability, tax-exempt sales gains, and share of result of associates and joint ventures totalling €21.8 million. The Group's effective tax rate was raised by a €3.7 million residual tax related to a reassessment decision on 2013 and 2014 for
Earnings per share and comparable earnings per share for the Group's continuing operations grew compared to the year before.
Cash flow and financial position
€ million | 10-12/2020 | 10-12/2019 | 1-12/2020 | 1-12/2019 |
Continuing operations | ||||
Cash flow from operating activities | 308.4 | 273.2 | 1 152.4 | 893.1 |
Cash flow from investing activities | -42.7 | -61.1 | -413.7 | -620.3 |
Group | ||||
Cash flow from financing activities | -284.2 | -217.0 | -707.5 | -295.4 |
€ million | ||
Group | ||
Liquid assets | 306.0 | 169.0 |
Interest-bearing liabilities | 2,616.3 | 3,037.3 |
Lease liabilities | 2,025.0 | 2,422.2 |
Interest-bearing net debt excl. lease liabilities | 285.3 | 446.1 |
Interest-bearing net debt/EBITDA, excl. IFRS 16 impact, rolling 12 months | 0.4 | 0.9 |
Gearing, % | 105.5 | 134.0 |
Equity ratio, % | 33.1 | 31.2 |
In October-December, the cash flow from operating activities for the Group's continuing operations totalled €308.4 million (€273.2 million). Cash flow increased due to operating profit growth and improved capital efficiency. The cash flow from operating activities for discontinued operations in the comparison period totalled €0.1 million. The Group's cash flow from operating activities totalled €308.4 million (€273.3 million).
The cash flow from investing activities for the Group's continuing operations in October-December totalled
€-42.7 million (€-61.1 million), which included acquisitions totalling €9.7 million.
In January-December, the cash flow from operating activities for the Group's continuing operations totalled €1,152.4 million (€893.1 million). The cash flow from operating activities for continuing operations in the comparison period included a €48.3 million return of surplus assets paid by
The cash flow from investing activities for the Group's continuing operations in January-December totalled
€-413.7 million (€-620.3 million), which included €155.7 million in acquisitions, a negative €92.7 million impact of the change in Kesko Senukai's consolidation method, and a positive €19.6 million cash flow impact of the divestment of Baltic machinery trade operations. The acquisition of the store property of K-Citymarket in Järvenpää, previously leased by Kesko, is reported under cash flow from financing activities. The cash flow from investing activities for the comparison period included acquisitions totalling €280.7 million and
The Group's liquidity remained strong throughout the year despite the economic uncertainty caused by the Covid-19 pandemic.
CAPITAL EXPENDITURE
€ million | 10-12/2020 | 10-12/2019 | 1-12/2020 | 1-12/2019 |
Capital expenditure, continuing operations | 55.5 | 83.3 | 398.4 | 686.1 |
Store sites | 16.8 | 32.3 | 125.8 | 227.7 |
Acquisitions | 12.4 | 0.2 | 159.1 | 290.5 |
IT | 5.6 | 11.9 | 25.6 | 33.9 |
Other investments | 20.7 | 38.8 | 87.9 | 134.0 |
Capital expenditure in store sites decreased in October-December by €15.5 million compared to the year before.
Capital expenditure in store sites in January-December was increased in part by the acquisition of the store property of K-Citymarket in Järvenpää in the first quarter.
Acquisitions in January-December consisted of Mark & Infra i
Personnel
1-12/2020 | 1-12/2019 | |
Average number of personnel converted into full-time employees, continuing operations | 17,629 | 20,846 |
Personnel at the end of the reporting period | ||
Finland | 12,647 | 12,657 |
Other countries | 5,003 | 12,511 |
Total | 17,650 | 25,168 |
The change in the consolidation method of Kesko Senukai had a marked impact on the number of Group employees outside Finland.
In the first year-half, Kesko carried out adjustment measures due to a reduction in workloads brought on by the Covid-19 pandemic. In total, some 2,500 Kesko employees in Finland working in business operations and support functions were affected by the various adjustment measures. Of those, temporary lay-off measures affected some 2,000 employees. Adjustment measures were also carried out in Kesko's operations in Sweden, Norway, Poland and the Baltic countries.
SEGMENTS
SEASONAL NATURE OF OPERATIONS
The Group's operating activities are affected by seasonal fluctuations. The net sales and the operating profits of the reportable segments are not earned evenly throughout the year. Instead, they vary by quarter depending on the characteristics of each segment. In terms of the level of operating profit, the second and third quarter are the strongest, whereas the impact of the first quarter on the full year profit is the smallest. The acquisitions of Suomen Lähikauppa, Onninen and the Norwegian Skattum Handel AS, Gipling AS, the DIY retail business of Sørbø, Carlsen Fritzøe Handel AS and Flokkmann, and the
GROCERY TRADE
October-
10-12/2020 | 10-12/2019 | |
Net sales, € million | 1,517.2 | 1,456.0 |
Operating profit, comparable, € million | 123.2 | 98.6 |
Operating margin, comparable, % | 8.1 | 6.8 |
Return on capital employed, comparable, %, rolling 12 months | 16.9 | 14.5 |
Capital expenditure, € million | 15.6 | 32.2 |
Personnel, average | 6,346 | 5,956 |
Net sales, € million | 10-12/2020 | 10-12/2019 | Change, % | Change, comparable, % |
Sales to K-food stores | ||||
K-Citymarket, food | 348.7 | 312.9 | 11.4 | 11.4 |
K-Supermarket | 401.8 | 367.4 | 9.4 | 9.4 |
K-Market | 363.0 | 337.2 | 7.7 | 7.7 |
K-Citymarket, non-food | 182.1 | 176.2 | 3.3 | 3.3 |
Kespro | 197.7 | 239.0 | -17.3 | -17.3 |
Others | 23.9 | 23.3 | 2.6 | 2.6 |
Total | 1,517.2 | 1,456.0 | 4.2 | 4.2 |
Net sales for the grocery trade in October-December amounted to €1,517.2 million (€1,456.0 million), an increase of 4.2%. Net sales grew in all grocery store chains and K-Citymarket's home and speciality goods. The restrictions imposed on restaurants and events due to the Covid-19 pandemic negatively impacted Kespro's foodservice business, and Kespro's net sales decreased by 17.3%. However, the growth in grocery sales to K-food stores clearly exceeded the decrease in the net sales for Kespro's foodservice business.
The total grocery market in Finland (incl. VAT) is estimated to have grown by approximately 9.4% in October-December (Finnish Grocery Trade Association PTY) and retail prices are estimated to have risen by some 1.4% (incl. VAT, PTY's price development estimate).
The comparable operating profit for the grocery trade in October-December totalled €123.2 million (€98.6 million), up by €24.5 million. Profitability improved due to good retail sales development and improved operational efficiency. Operating profit for the grocery trade totalled €123.0 million (€98.5 million). Items affecting comparability totalled €-0.2 million (€-0.2 million).
Capital expenditure for the grocery trade totalled €15.6 million (€32.2 million), of which €14.1 million (€20.5 million) was in store sites.
Two new K-Supermarket stores and one K-Market store opened in October-December. Remodelling and extensions were made in a total of 10 stores. The most significant store sites under construction are
K-Supermarket stores in Turku, Tampere, Jyväskylä and Espoo.
January-
1-12/2020 | 1-12/2019 | |
Net sales, € million | 5,732.0 | 5,531.2 |
Operating profit, comparable, € million | 375.2 | 327.9 |
Operating margin, comparable, % | 6.5 | 5.9 |
Return on capital employed, comparable, % | 16.9 | 14.5 |
Capital expenditure, € million | 125.4 | 180.8 |
Personnel, average | 6,197 | 6,063 |
Net sales, € million | 1-12/2020 | 1-12/2019 | Change, % | Change, comparable, % |
Sales to K-food stores | ||||
K-Citymarket, food | 1,291.7 | 1,150.4 | 12.3 | 12.3 |
K-Supermarket | 1,549.6 | 1,417.0 | 9.4 | 9.4 |
K-Market | 1,434.9 | 1,336.3 | 7.4 | 7.4 |
K-Citymarket, non-food | 585.5 | 584.6 | 0.2 | 0.2 |
Kespro | 777.9 | 935.5 | -16.8 | -16.8 |
Others | 92.4 | 107.4 | -14.0 | -14.0 |
Total | 5,732.0 | 5,531.2 | 3.6 | 3.6 |
Net sales for the grocery trade in January-December amounted to €5,732.0 million (€5,531.2 million), an increase of 3.6%. Net sales grew in all grocery store chains and K-Citymarket's home and speciality goods trade. Net sales decreased in Kespro's foodservice business due to the Covid-19 pandemic and related restrictions.
The total grocery market in Finland (incl. VAT) is estimated to have grown by approximately 8.6% in January-December (Finnish Grocery Trade Association PTY) and retail prices are estimated to have risen by some 1.9% (incl. VAT, PTY's price development estimate).
The comparable operating profit for the grocery trade in January-December totalled €375.2 million (€327.9 million), up by €47.3 million. Profitability improved thanks to good grocery sales development in the food store chains and cost adjustment measures. The decrease in Kespro's net sales, resulting from restrictions imposed due to the Covid-19 pandemic, had a weakening impact on Kespro's comparable operating profit for the reporting period. Operating profit for the grocery trade totalled €373.7 million (€334.6 million). Items affecting comparability totalled €-1.5 million (€6.7 million).
Capital expenditure for the grocery trade totalled €125.4 million (€180.8 million), of which €109.7 million (€157.0 million) was in store sites.
Two new K-Supermarket stores and eight new K-Market stores (four replacement new buildings) opened in January-December. Remodelling and extensions were made in a total of 43 stores.
Number of stores | 12/2020 | 12/2019 |
K-Citymarket | 81 | 81 |
K-Supermarket | 241 | 243 |
K-Market | 769 | 777 |
Neste K | 72 | 73 |
Others | 73 | 78 |
Total | 1,236 | 1,252 |
In addition, 469 K-food stores offer online grocery sales services to their customers.
BUILDING AND TECHNICAL TRADE
The change in Kesko Senukai's consolidation method from a subsidiary to a joint venture as of
October-
10-12/2020 | 10-12/2019 | |
Net sales, € million | 917.6 | 827.2 |
Building and technical trade, excl. speciality goods trade and Kesko Senukai | 862.3 | 752.2 |
Building & home improvement trade | 458.3 | 370.2 |
Onninen | 416.9 | 398.4 |
Speciality goods trade | 55.3 | 75.0 |
Operating profit, comparable, € million | 44.3 | 22.3 |
Building and technical trade, excl. speciality goods trade and Kesko Senukai | 38.3 | 17.2 |
Building & home improvement trade | 19.5 | 3.4 |
Onninen | 18.5 | 13.9 |
Speciality goods trade | 4.5 | 1.6 |
Kesko Senukai | 1.5 | 3.5 |
Operating margin, comparable, % | 4.8 | 2.7 |
Building and technical trade, excl. speciality goods trade and Kesko Senukai | 4.4 | 2.3 |
Building & home improvement trade | 4.3 | 0.9 |
Onninen | 4.4 | 3.5 |
Speciality goods trade | 8.2 | 2.1 |
10-12/2020 | 10-12/2019 | |
Return on capital employed, comparable, %, rolling 12 months | 11.2 | 7.4 |
Capital expenditure, € million | 16.8 | 18.2 |
Personnel, average | 6,072 | 13,012 |
Net sales, € million | 10-12/2020 | 10-12/2019 | Change, % | Change, comparable, % |
Building and home improvement trade, Finland | 207.7 | 201.0 | +3.3 | +3.1 |
K-Rauta, Sweden | 41.0 | 33.9 | +20.9 | +15.9 |
K-Bygg, Sweden | 61.9 | 49.6 | +24.9 | +13.8 |
Byggmakker and Carlsen Fritzøe, Norway | 148.4 | 86.3 | +71.9 | +12.8 |
Building and home improvement trade, total | 458.3 | 370.2 | +23.8 | +8.0 |
Onninen, Finland | 244.1 | 226.8 | +7.6 | +7.6 |
Onninen and MIAB, Sweden* | 23.6 | 25.8 | -8.6 | -10.4 |
Onninen, Norway | 64.7 | 59.9 | +8.1 | +15.1 |
Onninen, Baltics | 21.6 | 23.1 | -6.2 | -6.2 |
Onninen, Poland | 63.8 | 63.7 | +0.1 | +5.1 |
Onninen, total* | 416.9 | 398.4 | +4.6 | +6.6 |
Building and technical trade excl. speciality goods trade, total | 862.3 | 752.2 | +14.6 | +7.1 |
Leisure trade, Finland | 55.3 | 57.8 | -4.3 | -4.3 |
Machinery trade | - | 17.2 | - | - |
Speciality goods trade, total | 55.3 | 75.0 | -26.2 | -4.3 |
Total | 917.6 | 827.2 | +10.9 | +6.3 |
* Onninen's comparable net sales development in Sweden calculated minus internal net sales in Sweden to K-Rauta.
Net sales for the building and technical trade in October-December totalled €917.6 million (€827.2 million). Reported net sales increased by 10.9%, in comparable terms net sales grew by 6.3%. Net sales grew in comparable terms in Finland, Sweden and Norway. Net sales were boosted by the acquisitions of Mark & Infra i
Net sales for the building and technical trade in Finland in October-December totalled €494.7 million (€475.0 million), up by 4.2%. In comparable terms, net sales in Finland increased by 4.1%. Net sales from international operations totalled €422.9 million in October-December (€352.2 million), up by 20.1%. In comparable terms, net sales from international operations grew by 9.3%.
Net sales for the building and home improvement trade grew in both B2C and B2B trade. Net sales grew in Finland, Sweden and Norway.
Onninen's net sales grew in comparable terms in Finland, Norway and Poland, and decreased in Sweden and the Baltics.
In the speciality goods leisure trade, net sales decreased. As part of the strategy for the leisure trade, during the reporting period, Kesko initiated measures to discontinue its The Athlete's Foot and Kookenkä chains.
The comparable operating profit for the building and technical trade in October-December totalled €44.3 million (€22.3 million), up by €22.0 million. The comparable operating profit grew in the building and home improvement trade in Finland, Sweden and Norway. The acquisitions carried out in Norway and Sweden in 2018-2020 accounted for €9.7 million (€1.5 million) of the comparable operating profit. Onninen's comparable operating profit grew in Finland, Norway and Poland. In the Baltics, Onninen's comparable operating profit remained at level of the previous year.
Operating profit for the building and technical trade totalled €32.4 million (€19.7 million). Items affecting comparability totalled €-11.9 million (€-2.6 million). The most significant items affecting comparability in the reporting period were the €10.4 million costs related to the discontinuation of The Athlete's Foot and Kookenkä chains in the leisure trade.
Capital expenditure for the building and technical trade in October-December totalled €16.8 million (€18.2 million). Capital expenditure included €12.4 million in acquisitions.
No new stores were opened in October-December.
The most significant store sites under construction are one K-Bygg store in Sweden, and one Onninen Express store in Finland and one in Poland.
January-
1-12/2020 | 1-12/2019 | |
Net sales, € million | 3,639.5 | 3,472.8 |
Building and technical trade, excl. speciality goods trade and Kesko Senukai | 3,424.3 | 3,126.1 |
Building & home improvement trade | 1,845.8 | 1,589.0 |
Onninen | 1,625.6 | 1,587.7 |
Speciality goods trade | 215.2 | 346.7 |
Operating profit, comparable, € million | 187.7 | 115.9 |
Building and technical trade, excl. speciality goods trade and Kesko Senukai | 169.4 | 98.5 |
Building & home improvement trade | 99.5 | 48.6 |
Onninen | 70.7 | 50.0 |
Speciality goods trade | 7.4 | 9.5 |
Kesko Senukai | 11.0 | 7.8 |
Operating margin, comparable, % | 5.2 | 3.3 |
Building and technical trade, excl. speciality goods trade and Kesko Senukai | 4.9 | 3.2 |
Building & home improvement trade | 5.4 | 3.1 |
Onninen | 4.4 | 3.2 |
Speciality goods trade | 3.4 | 2.7 |
1-12/2020 | 1-12/2019 | |
Return on capital employed, comparable, % | 11.2 | 7.4 |
Capital expenditure, € million | 186.3 | 332.7 |
Personnel, average | 9,308 | 12,630 |
Net sales, € million | 1-12/2020 | 1-12/2019 | Change, % | Change, comparable, % |
Building and home improvement trade, Finland | 971.6 | 908.4 | +7.0 | +6.8 |
K-Rauta, Sweden | 186.1 | 163.7 | +13.7 | +12.6 |
K-Bygg, Sweden | 228.4 | 132.8 | +72.0 | +9.6 |
Byggmakker and Carlsen Fritzøe, Norway | 463.0 | 386.9 | +19.7 | +7.9 |
Building and home improvement trade, total | 1,845.8 | 1,589.0 | +16.2 | +7.9 |
Onninen, Finland | 985.2 | 909.6 | +8.3 | +8.3 |
Onninen and MIAB, Sweden* | 101.5 | 121.2 | -16.3 | -5.6 |
Onninen, Norway | 227.6 | 237.8 | -4.3 | +4.2 |
Onninen, Baltics | 80.1 | 85.2 | -6.1 | -6.1 |
Onninen, Poland | 234.1 | 237.2 | -1.3 | +2.0 |
Onninen, total* | 1,625.5 | 1,587.7 | +2.4 | +5.2 |
Building and technical trade excl. speciality goods trade, total | 3,424.3 | 3,126.1 | +9.5 | +6.5 |
Leisure trade, Finland | 192.4 | 203.7 | -5.5 | -5.5 |
Machinery trade | 22.8 | 143.0 | -84.1 | - |
Speciality goods trade, total | 215.2 | 346.7 | -37.9 | -5.5 |
Total | 3,639.5 | 3,472.8 | +4.8 | +5.7 |
* Onninen's comparable net sales development in Sweden calculated minus internal net sales in Sweden to K-Rauta.
Net sales for the building and technical trade in January-December totalled €3,639.5 million (€3,472.8 million). Net sales grew by 4.8%, or by 5.7% in comparable terms. Net sales grew in comparable terms in Finland, Sweden, Norway and Poland. In the Baltics, net sales decreased. The weakening of the Norwegian krone and the Polish zloty against the euro diminished net sales development in Norway and Poland in euro terms. The comparable change % has been calculated in local currencies and excluding the impact of Kesko Senukai and the acquisitions and divestments completed in 2019 and 2020. The exceptional circumstances related to the Covid-19 pandemic have impacted the businesses and operating countries in different ways from March onwards.
In Finland, net sales for the building and technical trade in January-December totalled €2,102.7 million (€1,992.8 million), up by 5.5%. In comparable terms, net sales in Finland grew by 6.2%. Net sales from international operations amounted to €1,536.8 million (€1,480.0 million) in January-December, an increase of 3.8%. In comparable terms, net sales from international operations grew by 5.1%.
Net sales for the building and home improvement trade grew in Finland, Sweden and Norway.
Onninen's net sales grew in comparable terms in Finland, Norway and Poland. In Sweden and the Baltic countries, net sales decreased compared to the year before.
In the speciality goods leisure trade, net sales decreased.
The comparable operating profit for the building and technical trade in January-December totalled €187.7 million (€115.9 million), up by €71.9 million. The comparable operating profit for the building and home improvement trade grew by €50.8 million, and grew in Finland, Sweden and Norway. The acquisitions carried out in Norway and Sweden in 2018-2020 accounted for €33.9 million (€14.5 million) of the comparable operating profit. Onninen's comparable operating profit grew in Finland, Sweden, Norway and Poland. In the Baltics, Onninen's comparable operating profit remained at level of the previous year.
The comparable operating profit for the building and technical trade totalled €124.4 million (€92.3 million) in Finland, €15.4 million (€-6.2 million) in Sweden and €29.5 million (€10.3 million) in Norway.
Operating profit for the building and technical trade totalled €177.7 million (€100.7 million). Items affecting comparability totalled €-10.0 million (€-15.2 million). The most significant items affecting comparability were the €10.4 million costs related to the discontinuation of The Athlete's Foot and Kookenkä chains in the leisure trade, the €2.5 million negative profit impact of changes to the store site network in Sweden, and the €6.4 million sales gain on the divestment of machinery trade operations in the Baltics, completed on
Capital expenditure for the building and technical trade totalled €186.3 million (€332.7 million) in January-December. Capital expenditure included €159.1 million (€233.2 million) in acquisitions.
Kesko reports
Kesko Senukai financials, € million | 10-12/2020 | 10-12/2019 | 1-12/2020 | 1-12/2019 |
Net sales | 243.6 | 224.8 | 921.7 | 860.1 |
Operating profit | 22.9 | 12.1 | 59.3 | 34.6 |
Operating profit, comparable | 22.9 | 12.1 | 59.3 | 34.7 |
Net profit for the period | 11.8 | 7.1 | 30.7 | 15.9 |
1.5 | 3.5 | 11.0 | 7.8 | |
Assets | 760.8 | 721.2 | ||
Liabilities | 549.4 | 529.2 | ||
Equity | 211.4 | 191.9 |
The figures include Kesko Senukai's business and real estate companies. A €4.3 million profit impact of fair value allocation has been deducted from
Number of stores | 12/2020 | 12/2019 |
Building and technical trade | ||
K-Rauta, Finland | 130 | 131 |
K-Rauta, Sweden | 17 | 18 |
K-Bygg, Sweden | 36 | 34 |
Byggmakker and Carlsen Fritzøe, Norway | 86 | 63 |
Onninen, Finland | 57 | 57 |
Onninen and MIAB, Sweden | 3 | - |
Onninen, Norway | 18 | 18 |
Onninen, Baltics | 17 | 17 |
Onninen, Poland | 36 | 36 |
Speciality goods trade | ||
Intersport, Finland | 52 | 54 |
Budget Sport | 10 | 10 |
The Athlete's Foot | 9 | 9 |
Kookenkä | 32 | 34 |
Total | 503 | 481 |
In addition, building and technical trade stores offer extensive e-commerce services to their customers.
Three Onninen stores in Finland operate on the same store premises with K-Rauta.
CAR TRADE
October-
10-12/2020 | 10-12/2019 | |
Net sales, € million | 233.6 | 228.5 |
Operating profit, comparable, € million | 6.2 | 9.0 |
Operating margin, comparable, % | 2.6 | 3.9 |
Return on capital employed, comparable, %, rolling 12 months | 6.3 | 9.5 |
Capital expenditure, € million | 17.5 | 21.6 |
Personnel, average | 1,289 | 1,334 |
Net sales, € million | 10-12/2020 | 10-12/2019 | Change, % | Change, comparable, % |
Car trade | 233.6 | 228.5 | +2.3 | +2.3 |
Net sales for the car trade in October-December amounted to €233.6 million (€228.5 million), an increase of 2.3% from the previous year. Net sales increased as demand strengthened for both new and used cars.
The combined market performance of first registrations of passenger cars and vans was -10.0% (11.6%) in October-December. The combined market share of the Volkswagen, Audi, SEAT, Porsche and Bentley passenger cars and Volkswagen and MAN vans imported by the car trade division was 17.7% (16.4%) in October-December.
The comparable operating profit for the car trade in October-December totalled €6.2 million (€9.0 million). Operating profit for the car trade in October-December was €6.2 million (€8.0 million). Items affecting comparability in the comparison period totalled €-1.0 million.
Capital expenditure for the car trade totalled €17.5 million (€21.6 million).
January-
1-12/2020 | 1-12/2019 | |
Net sales, € million | 892.6 | 863.9 |
Operating profit, comparable, € million | 23.4 | 26.8 |
Operating margin, comparable, % | 2.6 | 3.1 |
Return on capital employed, comparable, % | 6.3 | 9.5 |
Capital expenditure, € million | 64.7 | 131.3 |
Personnel, average | 1,283 | 1,179 |
Net sales, € million | 1-12/2020 | 1-12/2019 | Change, % | Change, comparable, % |
Car trade | 892.6 | 863.9 | +3.3 | -3.3 |
Net sales for the car trade in January-December totalled €892.6 million (€863.9 million). In comparable terms, net sales decreased by 3.3% in January-December. The comparable change % has been calculated excluding the impact of acquisitions completed in 2019. The Covid-19 pandemic weakened customer demand for both new and used cars in the first half of the year. Net sales saw a turnaround and began to grow in the latter half of the year thanks to strengthened demand.
The combined market performance of first registrations of passenger cars and vans was -15.6% (-5.4%) in January-December. The combined market share of the Volkswagen, Audi, SEAT, Porsche and Bentley passenger cars and Volkswagen and MAN vans imported by the car trade division was 16.9% (16.9%) in January-December.
The comparable operating profit for the car trade in January-December totalled €23.4 million (€26.8 million). Operating profit for the car trade in January-December totalled €23.3 million (€25.5 million). In the comparison period, Items affecting comparability totalled €-1.2 million, related to efficiency improvement measures and structural arrangements carried out.
Capital expenditure for the car trade totalled €64.7 million (€131.3 million). Capital expenditure for the comparison period contained the acquisitions of Huittisten Laatuauto and the Volkswagen, Audi and SEAT businesses of LänsiAuto and
Number of stores | 12/2020 | 12/2019 |
K-Auto | 42 | 42 |
AutoCarrera | 4 | 3 |
Total | 46 | 45 |
CHANGES IN GROUP COMPOSITION
On
On
K-Rauta in Sweden.
On
On
SHARES, SECURITIES MARKET AND BOARD AUTHORISATIONS
At the end of
These treasury shares accounted for 1.22% of the total number of B shares, 0.83% of the total number of shares, and 0.22% of the votes attached to all shares in the Company. The total number of votes attached to all shares was 1,542,611,260. Each A share carries ten (10) votes and each B share one (1) vote. The Company cannot vote with own shares held by it as treasury shares and no dividend is paid on them. At the end of
The price of a Kesko A share quoted on Nasdaq Helsinki was €58.80 at the end of 2019 (€14.70 with the share split), and €20.00 at the end of 2020, representing an increase of 36.1%. Correspondingly, the price of a B share was €63.08 at the end of 2019 (€15.77 with the share split), and €21.04 at the end of
At the end of
In January-December, a total of 10.6 million A shares were traded on Nasdaq Helsinki (calculated with the post-split number of shares). The exchange value of the A shares was €175.3 million. Meanwhile, 249.0 million B shares were traded (calculated with the post-split number of shares), with an exchange value of €4,434.2 million. Nasdaq Helsinki accounted for over 90% of the trading on Kesko's A shares in January-December and over 80% of the trading on B shares. Kesko shares were also traded on multilateral trading facilities, the most significant of which was Cboe (source: Euroland).
The number of registered shareholders rose by 38.8% in 2020. At the end of
Kesko has a share-based commitment and incentive scheme. To implement the scheme, Kesko's Board of Directors may decide, within share issue authorisations granted by the Company's General Meeting, to transfer Kesko B shares held by the Company as treasury shares. In January-
Kesko's Annual General Meeting of
KEY EVENTS DURING THE REPORTING PERIOD
The Market Court in Finland announced its decision on Kesko's acquisition of the Heinon Tukku foodservice wholesale company, prohibiting the transaction. (Press release 17.2.2020)
Kesko agreed to acquire the Swedish Mark & Infra i
Kesko issued a profit warning due to the Covid-19 pandemic and related global economic uncertainty. Kesko cancelled its previous outlook statement regarding the net sales for continuing operations and changed the outlook statement regarding the comparable operating profit for continuing operations, both issued in connection with the financial statements release on
Kesko's Board of Directors decided to cancel the Annual General Meeting convened for
Kesko announced that it would adjust its operations due to the Covid-19 pandemic. Temporary lay-off measures were estimated to affect approximately 2,000 Kesko employees in Finland - Kesko managed to significantly reduce the number with employee transfers between units. (Press release 3.4.2020)
Kesko's Annual General Meeting convened on
A total of 95,211,021 new A shares and 204,848,235 new B shares issued in the share issue without payment (share split) decided upon by the Annual General Meeting of
Kesko issued a positive profit warning and provided preliminary information on its second-quarter net sales and comparable operating profit. Kesko raised its guidance for the comparable operating profit for its continuing operations, issued in connection with the company's interim report on
Kesko's subsidiary Byggmakker Handel AS acquired Carlsen Fritzøe Handel AS, a Norwegian operator in the building and home improvement trade with net sales of approximately €201 million in 2019. The acquisition strengthens Kesko's position in the Oslo fjord region, where the Carlsen Fritzøe Handel network of 25 stores complements Kesko's existing Byggmakker store network. (Press releases
Kesko acquired the Swedish Bygg & Interiör building and home improvement trade stores. The acquisition complements Kesko's growing K-Bygg chain for professional builders in the Mälaren Valley region of Sweden. (Press release 2.9.2020)
Kesko's Annual General Meeting of
Kesko announced that it would be changing the consolidation method of Kesko Senukai, which is part of the building and technical trade segment and operates in the Baltic countries and Belarus, from a subsidiary to a joint venture in its consolidated financial statements as of
Kesko issued a positive profit warning and raised its guidance for the 2020 comparable operating profit for its continuing operations. Kesko estimated that the comparable operating profit for its continuing operations would be in the range of €510-570 million in 2020. The guidance upgrade was based on better than anticipated sales development in all divisions, improved cost efficiency, and a more positive outlook for the remainder of the year. (Stock exchange release 17.9.2020)
Karoliina Partanen, M.Sc. (Soc.), was appointed Executive Vice President in charge of Communications, Brand and Stakeholder Relations and a member of Kesko's Group Management Board as of
The new medium-term financial targets for profitability, as approved by the Board of Directors of
The Board of Directors of
KEY EVENTS AFTER THE REPORTING PERIOD
Riikka Joukio, M.Sc. (Tech.), eMBA, has been appointed Executive Vice President in charge of Corporate Responsibility and Public Affairs, and a member of Kesko's Group Management Board. Joukio will join the company on
RESOLUTIONS OF THE 2020 ANNUAL GENERAL MEETING AND DECISIONS OF THE BOARD'S ORGANISATIONAL MEETING
The Annual General Meeting of
The Annual General Meeting resolved that the Auditor's fee and the reimbursements of the Auditor's expenses will be paid according to an invoice approved by the Company. The Annual General Meeting elected the firm of authorised public accountants
The Annual General resolved, in accordance with the Board's proposal, to carry out a share issue without payment (share split). According to the resolution, in the share issue without payment, new shares were issued without payment to the shareholders in proportion to their existing holdings, so that three (3) new A shares were issued for each A share held, and three (3) new B shares for each B share held. In addition, new B shares were similarly issued without payment to the Company on the basis of B shares held by the Company. A total of 95,211,021 new A shares and a total of 204,848,235 new B shares were issued. The shares were issued to shareholders who were registered in the Company's register of shareholders maintained by
The Annual General Meeting resolved, in accordance with the Board's proposal, to authorise the Board to decide on the issuance of new B series shares as well as of own B shares held by the Company as treasury shares. The number of B shares thereby issued would total at maximum 40,000,000. The authorisation is valid until
The Annual General Meeting resolved, in accordance with the Board's proposal, to establish a Shareholders' Nomination Committee, and confirmed the Committee's rules of procedure.
The Annual General Meeting resolved, in accordance with the Board's proposal, to authorise the Board to decide on donations in a total maximum of €300,000 for charitable or corresponding purposes until the Annual General Meeting to be held in 2021, and to decide on the donation recipients, purposes of use and other terms of the donations.
The Board members were elected by the 2018 Annual General Meeting to serve the three-year terms provided in the Company's Articles of Association, ending at the close of the 2021 Annual General Meeting. The Board elects its Chairman and Deputy Chairman for the Board's whole three-year term of office. In the organisational meeting held by the Board after the Annual General Meeting of
The resolutions of the Annual General Meeting and the decisions of the Board's organisational meeting were communicated in more detail in stock exchange releases on
SUSTAINABILITY
The K Fishpaths collaboration between
In an effort to improve product transparency,
Kesko was again included in the Dow Jones Sustainability Index the
Kesko rose to the `A' List in CDP's climate change questionnaire Kesko joined the CDP Supply Chain programme to challenge its suppliers to reduce and report their emissions.
During 2020,
RISK MANAGEMENT
Risk management in
The Group's risk map, the most significant risks and uncertainties, as well as material changes in, responses to and indicators for them are reported to the Kesko Board's Audit Committee quarterly in connection with the review of interim reports, the half year financial report and financial statements. The Audit Committee Chair reports on risk management to the Board as part of the Audit Committee report. The most significant risks and uncertainties are reported to the market by the Board in the Report by the Board of Directors and any material changes in them in the interim reports and the half year financial report.
The following describes the risks and uncertainties assessed as significant.
Significant risks and uncertainties
Impact of economic uncertainty on Kesko's sales and profit
There is great uncertainty regarding developments with the pandemic and its duration, which impacts economic outlook and consumer behaviour in all of Kesko's operating countries. A significant weakening of the economy would impact especially the building and technical trade and the car trade. Extended restrictions on restaurants impact the foodservice business.
Competitive situation in the grocery trade
A weakening economy causes consumers to focus on price when it comes to decisions on products and services. This causes competition to tighten.
Impact of the Covid-19 pandemic on business continuity and personnel health
Large numbers of sick employees in the logistics centres or stores and key members of personnel getting sick could endanger the continuity of
Critical information falling into the wrong hands
Crime is increasingly committed through data networks and crime has become more international and professional. A failure to protect the security of payment transactions and personal data in particular can cause losses, claims for damages and reputational harm.
Business interruptions due to cybercrime and information technology failures
Growing threats necessitate quality actions from service providers, good data security, and sufficient data security skills from our personnel. Cyber-attacks could, for example, result in significant loss of sales and weakened customer satisfaction. In addition to cyber threats, failures may arise due to e.g. hardware failures, issues with data communications, and software errors.
Integration of acquisitions in the building and technical trade
There are operational risks related to the ongoing integration of acquisitions carried out in Sweden and Norway.
Product safety
A failure in product safety control or supply chain quality assurance could result in financial losses, loss of customer trust and reputation, or, in the worst case, a health hazard to customers.
Staff availability
The implementation of strategies and the achievement of objectives require competent and motivated personnel. The acquisitions carried out as well as other significant business and development projects, coupled with an increased need for special competencies increase the key-person risk and the dependency on individual expertise.
Compliance with laws and agreements
Changes in legislation and authority regulations could necessitate significant changes and result in additional costs. Compliance with laws and agreements is an important part of Kesko's corporate responsibility. Non-compliance can result in fines, claims for damages and other financial losses, and loss of trust and reputation. The EU General Data Protection Regulation has placed more importance on the need to protect personal data.
Store sites and properties
With a view to business growth and profitability, good store sites are a key competitive factor. The acquisition of store sites can be delayed by town planning and permit procedures and the availability and pricing of sites. Considerable amounts of capital or lease liabilities are tied up in properties for years. As a result of urbanisation, changes in the market situation, growing significance of e-commerce, or a chain concept proving inefficient, there is a risk that a store site or a property becomes unprofitable and operations are discontinued while long-term liabilities remain.
Responsible operating practices and reputation management
Various aspects of corporate responsibility, such as ensuring responsibility in the purchasing chain of products, fair and equal treatment of employees, the prevention of corruption, and environmental protection, are increasingly important to customers. Any failures in corporate responsibility could result in negative publicity for Kesko and cause operational and operational and financial damage. Challenges in Kesko's corporate responsibility work include communicating responsibility principles to customers and ensuring responsibility in the supply chain of products.
Climate change
Climate change risks are twofold. Risks for Kesko are related to increasing regulation and extreme weather phenomena. Increasing regulation necessitates changes in business operations and leads to additional costs. Increase in extreme weather phenomena can impact product availability and cause disturbances in logistics and the store site network. The impacts of Kesko's operations on the climate, in turn, are related to Kesko's energy solutions and emissions and the lifecycle impact of products and services sold.
Reporting to market
In its investor communication and financial reporting, Kesko follows the disclosure policy approved by Kesko's Board of Directors. Kesko's objective is to produce and publish reliable and timely information. Disclosure follows the principle of providing all market participants information in a timely manner and non-selectively to form the basis for the price formation of Kesko's financial instruments such as shares. If any information published by Kesko proved to be incorrect, or communications failed to meet regulations in other respects, it could result in losing investor and other stakeholder confidence and in possible sanctions. Significant business arrangements, tight disclosure schedules and dependency on information systems create challenges for the accuracy of financial information. The risk is mitigated by careful process scheduling and instructions and by ensuring the right resources, explicit responsibilities and sufficient competencies.
Risks of damage
Accidents, natural phenomena and pandemics can cause significant damage to people, property or business. In addition, risks of damage may cause business interruptions that cannot be prevented.
Proposal for profit distribution
The Board of Directors of
The first instalment, €0.38 per share, is to be paid to shareholders registered in the Company's register of shareholders kept by
The second instalment, €0.37 per share, is to be paid to shareholders registered in the Company's register of shareholders kept by
As at the date of the proposal for the distribution of profit,
The distributable assets of
Annual General Meeting
The Board of Directors has decided that the Annual General Meeting will be held on
Annual Report 2020, Corporate Governance Statement AND Remuneration report for Governing Bodies
Kesko will publish the Annual Report for 2020 in week 11 on its website at www.kesko.fi. The report will contain a strategy review, Report by the Board of Directors and the financial statements for 2020, sustainability reporting indicators (GRI), Kesko's Corporate Governance Statement, and Remuneration Report for Governing Bodies.
Helsinki,
Board of Directors
The information in this financial statements release is unaudited.
Further information is available from Jukka Erlund, Executive Vice President, Chief Financial Officer, telephone +358 105 322 113, Hanna Jaakkola, Vice President, Investor Relations, telephone +358 105 323 540, and Eva Kaukinen, Vice President, Group Controller, telephone +358 105 322 338. A Finnish-language webcast of the interim report briefing can be viewed at
ATTACHMENTS:
Kesko's financial statements release for the period 1 Jan. -
DISTRIBUTION
Main news media
www.kesko.fi
https://news.cision.com/k-ryhma/r/kesko-s-financial-statements-release-for-the-period-1-jan---31-dec--2020--record-result-in-2020,c3278417
https://mb.cision.com/Main/13061/3278417/1367139.pdf
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