2012-02-02 08:00:00 CET
2012-02-02 08:00:41 CET
REGULATED INFORMATION
Kesko Oyj - Financial Statement Release
Kesko's 2011 financial statements release
KESKO CORPORATION STOCK EXCHANGE RELEASE 02.02.2012 AT 09.00 1(31)
Financial performance in brief:
*The Group's net sales for January-December increased by 7.8%.
*The operating profit excluding non-recurring items for January-December was
€278.9 million, up €10.8 million on the previous year (€268.1 million).
*The Board proposes a dividend of €1.20 per share.
*The Kesko Group's net sales are expected to grow during the next twelve months.
Owing to the uncertainty about economic development and consumer demand, and the
costs involved in the expansion of the store site network as well as expansion
of business operations in Russia, we are prepared for the 2012 operating profit
excluding non-recurring items to be lower than the 2011 operating profit
excluding non-recurring items. The Group has amended its future outlook with
regard to profitability performance. Previously, the operating profit excluding
non-recurring items was expected to remain at the achieved good level during the
next twelve months.
Key performance indicators
1-12/2011 1-12/2010 10-12/2011 10-12/2010
Net sales, € million 9,460 8,777 2,481 2,310
Operating profit excl. non-recurring
items, € million 278.9 268.1 71.5 80.5
Operating profit, € million 280.6 306.7 72.8 82.8
Profit before tax, € million 282.1 312.4 74.0 87.3
Capital expenditure, € million 425.4 325.3 104.5 201.6
Earnings/share, €, diluted 1.84 2.06 0.51 0.59
Earnings/share excl. non-recurring
items, €, basic 1.84 1.78 0.50 0.58
31.12.2011 31.12.2010
Equity ratio, % 53.9 53.5
Equity/share, € 22.20 21.81
FINANCIAL PERFORMANCE
Net sales and profit for January-December 2011
The Group's net sales in January-December 2011 were €9,460 million, which is
7.8% up on the corresponding period of the previous year (€8,777 million). In
Finland, net sales increased by 7.3% and in other countries by 10.1%.
International operations accounted for 17.1% (16.7%) of the net sales. Net sales
continued to grow steadily in the food trade, the building and home improvement
trade and the car and machinery trade.
1-12/2011 Net sales, M€ Change, % Operating profit Change, M€
excl. non-recurring
items, M€
Food trade 4,182 +7.3 172.2 +12.1
Home and speciality
goods trade 1,564 -0.3 36.6 -29.4
Building and home
improvement trade 2,716 +7.8 26.6 +2.6
Car and machinery trade 1,174 +23.0 51.8 +18.7
Common operations and
eliminations -176 +8.2 -8.3 +6.7
Total 9,460 +7.8 278.9 +10.8
The operating profit excluding non-recurring items for January-December was
€278.9 million (€268.1 million), representing 2.9% (3.1%) of the net sales.
Profitability improved in the car and machinery trade, the food trade and the
building and home improvement trade. The operating profit excluding non-
recurring items for January-December 2010 was improved by an €8 million amount
recognised as revenue in connection with the transfer of the pension insurance
portfolio. At the beginning of the year, the principle for allocating surplus
amounts related to the additional defined benefit obligation of the Kesko
Pension Fund to divisions was changed to correspond to the breakdown of pension
liabilities. For January-December 2011, the change contributed €-1.7 million to
the operating profit excluding non-recurring items in the food trade, and €-4.0
million in the home and speciality goods trade.
Operating profit was €280.6 million (€306.7 million). The operating profit
includes a €1.7 million amount of non-recurring items. The comparative period
included a net total of €38.6 million of non-recurring gains on real estate
disposals, and provisions related to the reorganisation of the service station
grocery store business of Pikoil Oy, a Kesko Food subsidiary. The Group's profit
before tax for January-December was €282.1 million (€312.4 million).
The Group's earnings per share were €1.84 (€2.06). The Group's equity per share
was €22.20 (€21.81).
In January-December, the K-Group's (i.e. Kesko's and the chain stores') retail
and B2B sales (VAT 0%) were €11,767 million, up 7.2% compared to the previous
year. In January-December, K-food stores' grocery sales grew by 5.9% (VAT 0%).
In January-December, the K-Group chains' sales entitling to K-Plussa points were
€5,699 million excluding tax, up 4.5% compared to the previous year. The K-
Plussa customer loyalty programme gained 88,736 new households in January-
December. At the end of December, there was 2,154,717 K-Plussa households and
3.7 million K-Plussa cardholders.
Net sales and profit for October-December 2011
The Group's net sales in October-December 2011 were €2,481 million, which is
7.4% up on the corresponding period of the previous year (€2,310 million). Net
sales increased by 7.4% in Finland and by 7.5% in other countries. International
operations accounted for 15.6% (15.6%) of the net sales. In the food trade, the
increase in net sales is attributable to the good grocery sales performance of
the K-food stores. Growth in the car and machinery trade was boosted by the
growth of the market and the market share.
10-12/2011 Net sales, M€ Change, % Operating profit Change, M€
excl. non-recurring
items, M€
Food trade 1,108 +8.4 38.6 +1.8
Home and speciality
goods trade 501 0.0 32.9 -12.7
Building and home
improvement trade 657 +5.1 -4.4 -4.2
Car and machinery trade 263 +29.7 7.0 +3.1
Common operations and
eliminations -48 +14.9 -2.6 +3.1
Total 2,481 +7.4 71.5 -9.0
In October-December, the operating profit excluding non-recurring items was
€71.5 million (€80.5 million), representing 2.9% (3.5%) of the net sales.
Profitability improved in the car and machinery trade and in the food trade. The
operating profit excluding non-recurring items of the home and speciality goods
trade and the building and home improvement trade weakened from the comparative
period.
Operating profit was €72.8 million (€82.8 million), including a €1.3 million
amount of non-recurring items. The Group's profit before tax for October-
December was €74.0 million (€87.3 million).
The Group's earnings per share were €0.51 (€0.59).
In October-December, the K-Group's (i.e. Kesko's and the chain stores') retail
and B2B sales (VAT 0%) were €3,092 million, up 6.0% compared to the previous
year. In October-December, K-food stores' grocery sales grew by 5.0% (VAT 0%).
In October-December, the K-Group chains' sales entitling to K-Plussa points were
€1,541 million excluding tax, up 3.0% compared to the previous year.
Finance
In January-December, the cash flow from operating activities was €215.7 million
(€438.2 million). The cash flow of the comparative period included a €151.6
million amount of returned pension assets. The cash flow from investing
activities was €-441.1 million
(€-239.6 million). It included a €8.2 million (€123.6 million) amount of
proceeds from the sale of fixed assets.
Throughout January-December, the Group's liquidity and solvency remained at an
excellent level despite a heavy capital expenditure programme. At the end of the
period, liquid assets totalled €367 million (€847 million). Interest-bearing
liabilities were €400 million (€477 million) and interest-bearing net debt €33
million (€-370 million) at the end of December. Equity ratio was 53.9% (53.5%)
at the end of the period. Kesko Corporation increased the Group's financial
resources by signing two €50 million five-year loan facilities.
In January-December, the Group's net finance income was €0.8 million (€6.0
million).
In October-December, the cash flow from operating activities was €46.6 million
(€169.4 million). The cash flow from operating activities in the comparative
period included a €125.1 million amount of returned pension assets. The cash
flow from investing activities was €-110.1 million (€-192.8 million). It
included a €2.0 million (€8.1 million) amount of proceeds from the sale of fixed
assets.
In October-December, the Group's net finance income was €0.8 million (€4.6
million).
Taxes
The Group's taxes in January-December were €85.2 million (€96.7 million). The
effective tax rate was 30.2% (31.0%), affected by loss-making foreign
operations.
The Group's taxes in October-December were €18.7 million (€24.7 million). The
effective tax rate was 25.3% (28.3%).
Capital expenditure
In January-December, the Group's capital expenditure totalled €425.4 million
(€325.3 million), or 4.5% (3.7%) of the net sales. Capital expenditure in store
sites was €361.8 million (€209.2 million), in acquisitions €21.8 million and
other capital expenditure was €41.8 million (€116.0 million). Capital
expenditure in foreign operations represented 31.7% (13.1%) of total capital
expenditure.
In October-December, the Group's capital expenditure totalled €104.5 million
(€201.6 million), or 4.2% (8.7%) of the net sales. Capital expenditure in store
sites was €89.1 million (€117.0 million), in acquisitions €0.7 million and other
capital expenditure was €14.8 million (€84.6 million). Capital expenditure in
foreign operations represented 18.5% (6.5%) of total capital expenditure.
Personnel
In January-December, the average number of employees in the Kesko Group was
18,960 (18,215) converted into full-time employees. In Finland, the average
increase was 141 people, while outside Finland, it was 604.
At the end of December 2011, the total number of employees was 23,375 (22,124),
of whom 13,124 (12,720) worked in Finland and 10,251 (9,404) outside Finland.
Compared to the end of December 2010, there was an increase of 404 people in
Finland and 847 people outside Finland.
In January-December, the Group's staff cost was €570.5 million, an increase of
9.6% compared to the previous year. The staff cost for the comparative period
was decreased by the €8.0 million amount recognised as revenue in connection
with the transfer of the pension insurance portfolio. In October-December, the
staff cost increased by 7.8% compared to the previous year and was €156.3
million.
SEGMENTS
Seasonal nature of operations
The Group's operating activities are affected by seasonal fluctuations. The net
sales and 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.
Food trade
1-12/2011 1-12/2010 10-12/2011 10-12/2010
Net sales, € million 4,182 3,896 1,108 1,022
Operating profit excl. non-recurring
items, € million 172.2 160.1 38.6 36.8
Operating profit as % of net sales
excl. non-recurring items 4.1 4.1 3.5 3.6
Capital expenditure,
€ million 221.5 117.2 62.3 57.4
Net sales, € million 1-12/2011 Change, % 10-12/2011 Change, %
Sales to K-food stores 3,251 +8.4 871 +9.1
Kespro 740 +7.5 188 +9.4
Others 191 -8.6 49 -5.9
Total 4,182 +7.3 1,108 +8.4
January-December 2011
In the food trade, the net sales for January-December were €4,182 million
(€3,896 million), up 7.3%. The sales of Pirkka products to K-food stores were
excellent, with sales growth standing at 32.3% (VAT 0%). During the same period,
the grocery sales of K-food stores increased by 5.9% (VAT 0%). Good sales
performance was achieved especially by the K-citymarket and K-supermarket
chains. In January-December, the growth rate of the total grocery trade market
in Finland is estimated at some 5.5% (VAT 0%) compared to the previous year
(Kesko's own estimate). The price change in the grocery market is estimated to
have stood at some +4% compared to the previous year (VAT 0%, Kesko's own
estimate).
In January-December, the operating profit excluding non-recurring items of the
food trade was €172.2 million (€160.1 million), or €12.1 million up on the
previous year. The profitability improvement is attributable to K-food stores'
and Kespro's good sales performance and cost management. Operating profit was
€173.7 million (€158.4 million). The non-recurring items of the comparative
period totalled €-1.7 million including gains on real estate disposals and
provisions for the reorganisation of the service station grocery store business
of Pikoil Oy, a Kesko Food subsidiary, as the most significant items.
Capital expenditure in the food trade was €221.5 million (€117.2 million), of
which capital expenditure in store sites was €211.3 million (€102.4 million).
October-December 2011
In the food trade, the net sales for October-December were €1,108 million
(€1,022 million), up 8.4%. During the same period, the grocery sales of K-food
stores increased by 5.0% (VAT 0%).
In October-December, the operating profit excluding non-recurring items of the
food trade was €38.6 million (€36.8 million), or €1.8 million up on the previous
year. Operating profit was €40.0 million (€37.2 million).
In October-December, capital expenditure in the food trade was €62.3 million
(€57.4 million), of which capital expenditure in store sites was €57.5 million
(€53.8 million).
In October-December 2011, two new K-citymarkets and six new K-supermarkets were
opened. Renovations and extensions were made in a total of 15 stores.
The most significant store sites being built are K-citymarkets in Hyvinkää,
Kauhajoki, Kokkola, Kouvola and Valkeakoski. K-supermarkets in Lieksa, Loimaa
and Mäntsälä are being extended into K-citymarkets and K-citymarket Imatra is
being extended. New K-supermarkets are being built in Kaisaniemi, Helsinki, in
Lahti, Kiiminki, Nurmijärvi, Pihtipudas, Pori, Sotkamo and in Hämeenkylä,
Louhela and Nikinmäki, Vantaa. K-market in Pälkäne is being extended into a K-
supermarket.
Home and speciality goods trade
1-12/2011 1-12/2010 10-12/2011 10-12/2010
Net sales, € million 1,564 1,569 501 501
Operating profit excl. non-recurring
items, € million 36.6 66.0 32.9 45.7
Operating profit as % of net sales
excl. non-recurring items 2.3 4.2 6.6 9.1
Capital expenditure, € million 61.8 45.3 11.3 28.4
Net sales, € million 1-12/2011 Change, % 10-12/2011 Change, %
K-citymarket home and speciality goods 642 +3.5 207 +4.3
Anttila 474 -6.0 163 -6.3
Intersport, Finland 170 -2.0 53 -3.9
Intersport, Russia 7 - 6 -
Indoor 178 +15.3 46 +15.0
Musta Pörssi 74 -23.2 22 -21.6
Kenkäkesko 23 -0.1 4 -18.5
Total 1,564 -0.3 501 0.0
January-December 2011
In the home and speciality goods trade, the net sales for January-December were
€1,564 million (€1,569 million), down 0.3%. K-citymarket home and speciality
goods, as well as Asko and Sotka increased their sales. The sales of Anttila
decreased. At the beginning of February, the Anttila department store in
Tikkurila was closed because its lease term expired. The Anttila department
store in Hämeenlinna was converted into a K-citymarket, which was opened in
September 2011. In April, a K-citymarket was opened in Tammisto, Vantaa and in
Palokka, Jyväskylä. In May, a K-citymarket was opened in Päivölä, Seinäjoki. In
November, a K-citymarket was opened in Karisma, Lahti and in Äänekoski. In
October, a Kodin Ykkönen was opened in Kuopio. Asko and Sotka opened new stores
in Porvoo in November. As a result of network restructuring, there were 14 less
Musta Pörssi stores at the end of the year compared to the previous year.
The operating profit excluding non-recurring items of the home and speciality
goods trade in January-December was €36.6 million (€66.0 million), showing a
€29.4 million year-on-year decrease. In addition to a decrease in Anttila's
sales, profitability was weakened by the launch of Anttila's new logistics
centre, the reform of K-citymarket's and Anttila's purchasing operations and the
expansion of store network. The operating loss from Russian Intersport
operations for August-December was €6 million, partly attributable to launching
costs. Operating profit was €37.0 million (€103.4 million). The operating profit
for the comparative period included €37.4 million of gains on the disposal of
real estate.
Capital expenditure in the home and speciality goods trade in January-December
was €61.8 million (€45.3 million).
October-December 2011
In the home and speciality goods trade, the net sales for October-December were
€501 million (€501 million), representing the level of the comparative year. K-
citymarket home and speciality goods, as well as Asko and Sotka increased their
sales. Anttila's sales decreased from the comparative period.
The operating profit excluding non-recurring items of the home and speciality
goods trade for October-December was €32.9 million (€45.7 million), showing a
€12.7 million year-on-year decrease. Profitability performance was impacted by
the reform of K-citymarket's and Anttila's purchasing operations and the
expansion of store network, decreased clothes and sports goods sales due to the
mild early winter months, and the costs arising from the launch of Intersport
operations in Russia. Operating profit was €32.9 million (€45.6 million).
Capital expenditure in the home and speciality goods trade was €11.3 million
(€28.4 million).
The acquisition of Intersport operations in Russia progressed according to plan.
By 31 December 2011, 36 stores had transferred to the Kesko subsidiary. In the
future, the objective is to double the Intersport store site network in Russia
by the end of 2015.
Building and home improvement trade
1-12/2011 1-12/2010 10-12/2011 10-12/2010
Net sales, € million 2,716 2,519 657 625
Operating profit excl. non-recurring
items, € million 26.6 24.0 -4.4 -0.2
Operating profit as % of net sales
excl. non-recurring items 1.0 1.0 -0.7 0.0
Capital expenditure, € million 109.8 78.2 20.6 44.9
Net sales,
€ million 1-12/2011 Change, % 10-12/2011 Change, %
Rautakesko Finland 1,233 +6.0 297 +5.4
K-rauta Sweden 215 +3.3 49 -0.2
Byggmakker Norway 592 +8.2 143 +7.0
Rautakesko Estonia 59 +13.6 15 +14.6
Rautakesko Latvia 53 +11.1 13 +16.5
Senukai Lithuania 249 +9.8 68 +8.8
Stroymaster Russia 237 +16.4 61 +15.2
OMA Belarus 80 +9.2 12 -46.9
Total 2,716 +7.8 657 +5.1
January-December 2011
In the building and home improvement trade, the net sales for January-December
were €2,716 million (€2,519 million), up 7.8%. Sales performance and structure
vary between countries and customer groups. There is also material variation
between the sales performances of product lines, with strongest growth in
building materials.
In January-December, net sales in Finland were €1,233 million (€1,163 million),
an increase of 6.0%. The building and home improvement product lines contributed
€892 million to the net sales in Finland, an increase of 5.9%. The agricultural
supplies trade contributed €341 million to the net sales, up 6.4%.
In January-December, the net sales from foreign operations in the building and
home improvement trade were €1,483 million (€1,357 million), an increase of
9.3%. The net sales from foreign operations increased by 12.6% in terms of local
currencies. In Sweden, net sales were down by 2.2% in terms of kronas. In
Norway, net sales increased by 5.3% in terms of krones. In Russia, net salesincreased by 18.2% in terms of roubles. In Belarus, net sales were up by 101.6%
in terms of roubles due to high inflation. Foreign operations contributed 54.6%
to the net sales of the building and home improvement trade.
In January-December, the operating profit excluding non-recurring items of the
building and home improvement trade was €26.6 million (€24.0 million), up €2.6
million compared to the previous year. The profit performance was impacted by
the sales growth mainly deriving from basic building materials with low margins,
the expansion of store network and by the costs related to the introduction and
development of the international enterprise resource planning system. Operating
profit was €26.3 million (€23.9 million).
In January-December, capital expenditure in the building and home improvement
trade totalled €109.8 million (€78.2 million), of which 85.8% (54.4%) abroad.
Capital expenditure in store sites was 89.3%.
During the year in Finland, a new K-rauta was opened in Kuopio and a K-rauta is
being built in Kouvola and Ylivieska. A new Rautia was opened in Oulu and a new
Rautia-K-maatalous in Turku and Suonenjoki. In Sweden, a K-rauta was opened in
Haaparanta and a K-rauta is being built in Uppsala and Linköping. In Russia, a
new K-rauta was opened in St. Petersburg and Moscow. One K-rauta is being built
and two sites were acquired for new K-rauta stores in Moscow. In addition,
several concept reforms and extensions were carried out in different countries.
The retail sales of the K-rauta and Rautia chains in Finland grew by 6.6% to
€1,075 million (VAT 0%). The sales of Rautakesko B2B Service increased by
13.9%. As a whole, the growth rate of Rautakesko's building materials sales is
estimated to have continued exceeding that of the market in Finland. The retail
sales of the K-maatalous chain were €417 million (VAT 0%), up 10.2%.
October-December 2011
In the building and home improvement trade, the net sales for October-December
were €657 million (€625 million), up 5.1%.Net sales in Finland were €297 million (€281 million), an increase of 5.4%. The
building and home improvement product lines contributed €203 million to the net
sales in Finland, an increase of 6.8%. The agricultural supplies trade
contributed €94 million to the net sales, up 2.4%.
The net sales from foreign operations in the building and home improvement trade
were €360 million (€344 million), an increase of 4.8%. The net sales from
foreign operations increased by 12.9% in terms of local currencies. In Sweden,
net sales decreased by 1.0% in terms of kronas. In Norway, net sales increased
by 3.1% in terms of krones. In Russia, net sales increased by 16.1% in terms of
roubles, and in Belarus, by 105.5% in terms of roubles as a result of high
inflation. Foreign operations contributed 54.9% to the net sales of the building
and home improvement trade.
In October-December, the operating profit excluding non-recurring items of the
building and home improvement trade was €-4.4 million (€-0.2 million), down €4.2
million. The decrease in the operating profit excluding non-recurring items from
the comparative period is attributable to the expansion of store network and the
costs related to the introduction and development of the international
enterprise resource planning system. Operating profit was €-4.5 million (€-0.2
million).
Capital expenditure in the building and home improvement trade was €20.6 million
(€44.9 million), of which 85.8% (28.9%) abroad. Capital expenditure in store
sites represented 74.7% of the total capital expenditure.
The retail sales of the K-rauta and Rautia chains in Finland grew by 6.5% to
€257 million (VAT 0%) in October-December. The sales of Rautakesko B2B Service
increased by 12.9%. The retail sales of the K-maatalous chain were €116 million
(VAT 0%), up 3.7%.
Car and machinery trade
1-12/2011 1-12/2010 10-12/2011 10-12/2010
Net sales, € million 1,174 955 263 203
Operating profit excl. non-recurring
items, € million 51.8 33.1 7.0 3.9
Operating profit as % of net sales
excl. non-recurring items 4.4 3.5 2.6 1.9
Capital expenditure, € million 29.9 17.8 9.4 4.7
Net sales, € million 1-12/2011 Change, % 10-12/2011 Change, %
VV-Auto 849 +27.0 203 +34.2
Konekesko 326 +13.6 61 +16.9
Total 1,174 +23.0 263 +29.7
January-December 2011
In January-December, the net sales of the car and machinery trade were €1,174
million (€955 million), up 23.0%. The comparable net sales of the car and
machinery trade grew by 26.0%. The discontinued Baltic grain and agricultural
inputs trade has been eliminated from the comparable net sales.
VV-Auto's net sales for January-December were €849 million (€668 million), an
increase of 27.0%. In Finland, new registrations of passenger cars increased by
12.6% and those of vans by 31.2% compared to the previous year. In January-
December, the combined market share of passenger cars and vans imported by VV-
Auto was 20.7% (19.3%). Volkswagen was the best selling passenger car and van
brand in Finland.
Konekesko's net sales for January-December were €326 million (€287 million), up
13.6% compared to the previous year. Konekesko's comparable net sales, from
which the discontinued Baltic grain and agricultural inputs trade has been
eliminated, grew by 23.5%. Net sales in Finland were €219 million, up 13.3%. The
net sales from Konekesko's foreign operations were €111 million, up 14.7%.
Konekesko's comparable net sales growth was attributable to the good performance
of the agricultural machinery trade in the Baltic countries.
In January-December, the operating profit excluding non-recurring items of the
car and machinery trade was €51.8 million (€33.1 million), up €18.7 million
compared to the previous year. The strong profit was attributable to excellent
sales performance. The operating profit for January-December was €51.9 million
(€33.9 million).
Capital expenditure in the car and machinery trade was €29.9 million (€17.8
million) in January-December.
October-December 2011
In October-December, the net sales of the car and machinery trade were €263
million (€203 million), up 29.7%.
VV-Auto's net sales for October-December were €203 million (€151 million), an
increase of 34.2%. The net sales growth is attributable to market growth and an
increase in the market share of passenger cars imported by VV-Auto. The combined
market share of passenger cars and vans imported by VV-Auto was 21.6% (18.0%) in
October-December.
Konekesko's net sales for October-December were €61 million (€52 million), up
16.9% compared to the previous year.
In October-December, the operating profit excluding non-recurring items of the
car and machinery trade was €7.0 million (€3.9 million), up €3.1 million
compared to the previous year. The strong profit was attributable to excellent
sales performance. The operating profit for October-December was €7.0 million
(€3.9 million).
Capital expenditure in the car and machinery trade was €9.4 million (€4.7
million) in October-December.
Changes in the Group composition
Kesko established a new subsidiary in Russia for Russian Intersport operations,
in which Kesko Corporation's and Melovest Ltd's ownership interests are 80% and
20% respectively. The acquisition of Intersport operations in Russia was
concluded on 24 August, 2011. By 31 December 2011, 36 stores had been
transferred to the Kesko subsidiary.
Shares, securities market and Board authorisations
At the end of December 2011, the total number of Kesko Corporation shares was
€98,645,042, of which 31,737,007, or 32.2%, were A shares and 66,908,035, or
67.8%, were B shares. At 31 December 2011, Kesko Corporation held 700,000 own B
shares. Each A share entitles to ten (10) votes and each B share to one (1)
vote. The company cannot vote with own shares held by it. At the end of December
2011, Kesko Corporation's share capital was €197,282,584. During the reporting
period, the number of B shares was increased twice to correspond to share
subscriptions with the option rights of the 2007 option scheme. The increases
were made on 31 May 2011 (2,750 B shares) and on 1 August 2011 (1,000 B shares)
and announced in a stock exchange notification on the same days. The subscribed
shares were listed for public trading on NASDAQ OMX Helsinki (the Helsinki stock
exchange) with the old B shares on 1 June 2011 and 2 August 2011. The combined
share subscription price of €87,637.50 received by the company was recorded in
the reserve of invested non-restricted equity.
The price of a Kesko A share quoted on NASDAQ OMX Helsinki was €34.70 at the end
of 2010, and €24.82 at the end of December 2011, representing a decrease of
28.5%. Correspondingly, the price of a B share was €34.93 at the end of 2010,
and €25.96 at the end of December 2011, representing a decrease of 25.7%. In
January-December, the highest A share price was €36.00 and the lowest was
€22.35. For B share, they were €35.97 and €22.21 respectively. In January-
December, the Helsinki stock exchange (OMX Helsinki) All-Share index fell by
30.1%, the weighted OMX Helsinki CAP index by 28.0%, while the Consumer Staples
Index was down by 24.3%.
At the end of 2011, the market capitalisation of A shares was €788 million,
while that of B shares was €1,719 million, excluding the shares held by the
parent company. The combined market capitalisation of A and B shares was €2,506
million, a decrease of €932 million from the end of 2010. In 2011, a total of
2.1 million A shares were traded on the Helsinki stock exchange at a total value
of €62 million, while 63.3 million B shares were traded at a total value of
€1,856 million. The Helsinki stock exchange performed 79% of all Kesko share
trades in 2011. In addition, Kesko shares were traded on multilateral trading
facilities, the most significant of which were Chi-X, BATS and Turquoise,
performing 12%, 5% and 3% of all Kesko share trades respectively (source: NASDAQ
OMX).
The company operates the 2007 stock option scheme for management and other key
personnel, under which the share subscription period of 2007A option rights runs
from 1 April 2010 to 30 April 2012, that of 2007B option rights from 1 April
2011 to 30 April 2013, and that of 2007C option rights will begin on 1 April
2012 and end on 30 April 2014. The 2007A and 2007B option rights have also been
included on the official list of the Helsinki stock exchange since the beginning
of the share subscription periods. A total of 221,662 2007A option rights were
traded during the reporting period at a total value of €184,113. A total of
102,410 2007B option rights were traded during the reporting period at a total
value of €1,081,731.
The Board of Directors was authorised by the Annual General Meeting of 4 April
2011 to acquire a total maximum of 1,000,000 own B shares. The authorisation is
valid until 30 September 2012. The Annual General Meeting also authorised the
Board to decide on the issuance of a maximum of 1,000,000 own B shares held by
the company itself. The authorisation is valid until 30 June 2014. The prior
authorisation by the Annual General Meeting of 30 March 2009 to issue a maximum
of 20,000,000 new B shares against payment or other consideration until 30 March
2012 is still valid. Authorisation has not been used. By virtue of the share
acquisition authorisation, a total of 700,000 own B shares were acquired from
the Helsinki stock exchange during the reporting period. The beginning of
acquisition was announced on a stock exchange release on 28 April 2011. Each
subsequent acquisition was announced in a stock exchange notification on the
same day. No company shares have been issued by virtue of the share issue
authorisations during the reporting period. Further information on the Board's
authorisations is available at www.kesko.fi.
At the end of 2011, the number of shareholders was 41,215, which is 2,957 more
than at the end of 2010. At the end of 2011, foreign ownership of all shares was
20%, and foreign ownership of B shares was 29%.
Flagging notifications
Kesko Corporation did not receive flagging notifications during the reporting
period.
Main events during the reporting period
Merja Haverinen, M.Soc.Sc., was appointed Kesko Corporation's Senior Vice
President for Corporate Communications and Responsibility starting from 1 April
2011. Paavo Moilanen, Senior Vice President for Corporate Communications and
Responsibility, retired on 1 April 2011 in accordance with his service contract.
(Stock exchange release on 4 February 2011)
Kesko's Annual General Meeting was held on 4 April 2011. President and CEO Matti
Halmesmäki announced in his review that Kesko Food will open four large-scale
grocery stores in Russia in 2012-2013. Kesko Food's objective is to achieve €500
million in net sales and a positive operating result in Russia by 2015. The
capital expenditure is estimated at €300 million in 2011-2015. At the same time
with new construction, Kesko Food will continue to explore business acquisition
opportunities in both St. Petersburg and Moscow. (Stock exchange release on 4
April 2011)
On 4 April 2011, Kesko's Board of Directors decided to introduce a new share-
based compensation plan for some 150 Kesko management personnel and other named
key personnel, in which a maximum of 600,000 own B shares held by the company
can be granted to people in the target group within a period of three years. The
purpose of the plan is to promote Kesko's business operations and to increase
the company's value by combining the objectives of the shareholders and the
management personnel. The plan encourages its participants to commit to the
Kesko Group and provides them with the opportunity to receive company shares, if
the targets set in the share-based compensation plan are achieved. The share-
based compensation plan includes three vesting periods, namely the calendar
years 2011, 2012 and 2013. A commitment period of three calendar years following
each vesting period is attached to the shares issued in compensation, during
which shares must not be transferred. (Stock exchange release on 4 April 2011)
Kesko Corporation's Board of Directors agreed to extend the term of Kesko
Corporation's Managing Director and Kesko Group's President and CEO Matti
Halmesmäki until the end of May 2015, when Mr. Halmesmäki will be 63. According
to the previous agreement, Mr. Halmesmäki's term would have expired in May
2012. (Stock exchange release on 25 May 2011)
Kesko signed agreements on the transfer of the Intersport licence in Russia to
Kesko with Intersport International and Intersport CIS. According to the letter
of intent signed on the same occasion, Kesko established a new company for
Intersport operations in Russia together with Melovest, the owner of Intersport
CIS. Melovest holds a 20% ownership interest in the new company. The acquisition
of Intersport operations in Russia was concluded and the subsidiary established
for the purpose started operating in August 2011. (Stock exchange releases on 3
June 2011 and 24 August 2011).
Jari Lind, Rautakesko Ltd's President and a member of Kesko's Corporate
Management Board, resigned on 9 June 2011. During the recruitment process of a
new president, Antti Ollila, Vice President for Rautakesko Commerce, was in
charge ad interim of the duties of the Rautakesko President. In consequence of
Lind's resignation, his membership of Kesko's Corporate Management Board ended.
(Stock exchange release on 9 June 2011)
Kesko's Corporate Management Board was revised. Arja Talma, 49, M.Sc. (Econ.),
eMBA, was appointed President of Rautakesko Ltd and Corporate Management Board
member responsible for Kesko's building and home improvement trade with effect
from 1 November 2011. Minna Kurunsaari, 46, LL.M., was appointed Kesko's
Corporate Management Board member responsible for the home and speciality goods
trade with effect from 1 December 2011. Minna Kurunsaari's responsibility area
will also include Kesko's electronic marketing and services projects. Jukka
Erlund, 37, M.Sc. (Econ.), eMBA, was appointed Kesko Corporation's Chief
Financial Officer (CFO) and Kesko's Corporate Management Board member with
effect from 1 November 2011. (Stock exchange release on 26 October 2011)
Resolutions of the 2011 Annual General Meeting and decisions of the Board's
organisational meeting
Kesko Corporation's Annual General Meeting, held on 4 April 2011, adopted the
financial statements for 2010 and discharged the Board members and the Managing
Director from liability. The General Meeting also resolved to distribute €1.30
per share as dividends, or a total of €128,233,679.60, as proposed by the Board
of Directors. The dividend pay date was 14 April 2011. The General Meeting also
resolved to leave the number of Board members unchanged at seven, elected
PricewaterhouseCoopers Oy as the company's auditor, with APA Johan Kronberg as
the auditor with principal responsibility, and approved the Board's proposals to
authorise the Board to acquire a total maximum of 1,000,000 own B shares, and to
issue a total maximum of 1,000,000 own B shares held by the company itself. The
General Meeting also approved the Board's proposal to decide in 2011 on the
donation of a total maximum of €300,000 for charitable or corresponding
purposes.
The organisational meeting of Kesko Corporation's Board of Directors, held after
the Annual General Meeting, decided to maintain the compositions of the Board's
Audit Committee and Remuneration Committee unchanged.
More detailed information on the resolutions of the 2011 Annual General Meeting
and on the decisions of the Board's organisational meeting was given in stock
exchange releases on 4 April 2011.
Responsibility
Kesko was awarded the highest score in the 'Consumer Staples' sector in the
Nordic Carbon Disclosure Climate Leadership Index in October.
In October, Kesko was included in the STOXX Global ESG Leaders index family,
which represents the leading global companies in terms of environmental, social
and governance criteria.
Anttila's new logistics centre gained ISO 14001 environmental certification in
November.
Kesko's 2010 Corporate Responsibility Report was chosen Finland's best and was
ranked the best also by students in the Corporate Responsibility Reporting
Competition in November.
Kesko participated in the Good Christmas Spirit collection to raise funds for
vouchers for low-income families with children in Finland. The Board donated
€35,000 to the collection.
Risk management
Kesko's risk management is proactive and an integral part of management and day-
to-day activities. The objective of risk management is to ensure the delivery of
customer promises in the Kesko Group, profit performance, dividend payment
capacity, shareholder value, the implementation of responsible operating
practices and the continuity of operations.
Risk management in the Kesko Group is guided by the risk management policy
confirmed by the Board of Directors. The policy defines the objectives and
principles, organisation, responsibilities and practices of risk management in
the Kesko Group. The management of financial risks is based on the Group's
finance policy, confirmed by Kesko's Board of Directors. The business division
and Group managements are responsible for the execution of risk management.
The Kesko Group applies a business-oriented and comprehensive approach to risk
assessment and management. This means that key risks are systematically
identified, assessed, managed, monitored and reported at the Group, division,
company and unit levels in all operating countries.
Kesko has a uniform risk assessment and reporting system. Risk identification is
based on business objectives and opportunities and the defined risk appetite.
Risks are prioritised on the basis of their significance by assessing the impact
and probability of their materialisation and the level of risk management. When
assessing the impact of materialisation, the impacts on reputation, employees'
wellbeing and the environment are considered in addition to financial impacts.
In connection with the strategy process, the divisions assess the risks and
opportunities concerning each strategic period. Near-future risks are identified
and assessed in accordance with the rolling planning framework. Risk assessment
also covers the risks concerning each division's subsidiaries and significant
projects.
A division's risk assessment, which includes risk management responses,
responsible persons and schedules, is considered by the division's management
team or the division Board quarterly prior to the disclosure of the interim
report. The Group functions assess the risks concerning their responsibility
areas at least once a year.
Risks and management responses are reported in accordance with Kesko's reporting
responsibilities. The divisions report on risks and changes in risks to the
Group's risk management function on a quarterly basis. Risks are discussed by
the risk reporting team including representatives of the divisions and the Group
functions. On that basis, the Group's risk management function prepares the
Group's risk map presenting the most significant risks and uncertainties and
their management.
The Group's risk map is reported to the Kesko Board's Audit Committee in
connection with considering the interim reports and the financial statements.
The Chair of the Audit Committee reports on risk management to the Board as part
of the Audit Committee's report. The Kesko Board considers the Kesko Group's
most significant risks and uncertainties and their management responses, and
assesses the efficiency and performance of risk management at least once a year.
The most significant risks and uncertainties are reported to the market by the
Board in the financial statements, and any material changes in them in the
interim reports.
The following describes the risks and uncertainties assessed as significant.
Significant risks and uncertainties
The financial market falling into crisis and the uncertainty prevailing in the
euro zone, increased taxes and public payments resulting from the indebtedness
of the public sector, coupled with increasing unemployment are weakening the
purchasing power and appetite for capital expenditure, as well as negatively
impacting consumer confidence and demand especially in the home and speciality
goods trade, the building and home improvement trade and the car and machinery
trade.
In Russia, Kesko is strongly expanding its business operations in the building
and home improvement trade and the sports trade and will open its first food
stores. With regard to expansion, it is critical to succeed in the acquisition
and building of good store sites, in the development of store concepts, in
purchasing and logistics, and in the recruitment of key personnel. The country
risks in Russia, such as corruption, the unpredictability of officials and rapid
changes in legislation and the application of laws, as well as sudden changes in
the operating environment can delay the expansion and complicate operating
activities.
E-commerce is becoming increasingly popular, international e-commerce increases
consumers' alternatives and buying decisions are increasingly often made based
on online information. The achievement of objectives requires both traditional
and online concepts attractive to customers, a multi-channel approach and
customer communications to support it.
The execution of changes in business operations requires increasingly
sophisticated resource planning and information systems. Failure in the
definition of changes, technology selection, change project management and
implementation would delay the execution of changes in business operations.
The trading sector is characterised by increasingly complicated and long supply
chains and a dependency on information systems, data communications and external
service providers. Failures in information and payment systems or in other parts
of the supply chain can cause significant losses in sales and weaken customer
satisfaction.
For the purpose of increasing market share, good store sites are a key
competitive factor. The acquisition of store sites can be delayed by zoning and
permit procedures and the availability and pricing of sites. Considerable
amounts of capital or lease liabilities are tied up in store properties for
years. Resulting from changes in the market situation, there is a risk that a
store site becomes unprofitable and that operations are discontinued while long-
term liabilities remain.
Increasing regulations restricting competitive trading conditions are being
imposed also by the European Union. Such a development would weaken the trading
sector's possibilities to serve customers and operate efficiently.
A failure in product safety control or in the quality assurance of the supply
chain can result in financial losses, the loss of customer confidence or, in the
worst case, a health hazard to customers.
In divisions strongly dependent on individual principals and suppliers, such as
the car and machinery trade, ownership arrangements and changes in a principal's
or supplier's strategy concerning product selections, pricing and distribution
channel solutions can mean weakened competitiveness, decreased sales, or loss of
business.
Crimes are increasingly committed through data networks and crime is becoming
more professional. Failure especially in the protection of payment transactions
and personal information can cause losses, claims for damages and endanger
reputation. There is a risk that controls against such crime are not sufficient.
Different aspects of responsibility are increasingly important for customers.
Possible failures of responsibility would weaken Kesko's reputation. Kesko's
challenges in responsibility work include communicating its responsibility
policies to suppliers, retailers and customers, and ensuring responsibility in
the supply chain.
Non-compliance with legislation and agreements can result in fines, compensation
for damages and other financial losses, and a loss of confidence and reputation.
Kesko's objective is to produce and publish reliable and timely information. If
some information published by Kesko proved to be incorrect or communications
failed to meet regulations, it can result in losing investor and other
stakeholder confidence and in possible sanctions.
Accidents, natural phenomena and epidemics can cause damages or business
interruptions which cannot be prevented.
Other risks and uncertainties relating to profit performance are described in
the Group's future outlook.
Future outlook
Estimates of the future outlook for the Kesko Group's net sales and operating
profit excluding non-recurring items are given for the 12 months following the
accounting period (1/2012-12/2012) in comparison with the 12 months preceding
the accounting period (1/2011-12/2011).
Resulting from the problems of European economies and financial markets, the
total production performance and consumer confidence have weakened, which is why
significant uncertainties are associated with the outlook for consumer demand.
In addition, cuts in public finances and tightening taxation may have a negative
impact on the development of purchasing power and consumer demand.
The steady growth in the grocery trade is expected to continue. Growth in the
home and speciality goods trade and the building and home improvement trade is
expected to even out in line with the overall consumer demand. In the car and
machinery trade, the market is expected to turn down, which is partly
attributable to the Finnish car tax increase effective 1 April 2012.
The Kesko Group's net sales are expected to grow during the next twelve months.
Owing to the uncertainty about economic development and consumer demand, and the
costs involved in the expansion of the store site network as well as expansion
of business operations in Russia, we are prepared for the 2012 operating profit
excluding non-recurring items to be lower than the 2011 operating profit
excluding non-recurring items.
Proposal for profit distribution
The parent's distributable profits are €1,101,552,277.88, of which the profit
for the financial year is €100,553,189.98.
The Board of Directors proposes to the Annual General Meeting to be held on 16
April 2012 that the distributable profits be used as follows:
A dividend of €1.20 per share is paid on shares held outside the company at the
date of dividend distribution. No dividend is paid on own shares held by the
Company at the record date of dividend distribution.
At the date of the proposal for distributions of profits, 1 February 2012, a
total of 97,945,042 shares were held outside the Company, amounting to a total
dividend of €117,534,050.40.
Annual General Meeting
The Board of Directors decided to convene the Annual General Meeting at the
Helsinki Fair Centre on 16 April 2012 at 13.00. Kesko Corporation will publish a
notice of the Annual General Meeting at a later date.
Annual Report 2011 and Corporate Governance Statement
Kesko will publish the 2011 Annual Report, which contains the report by Kesko's
Board of Directors and the financial statements for 2011, and a separate
Corporate Governance Statement on week 12 on its website at www.kesko.fi.
Helsinki, 1 February 2012
Kesko Corporation
Board of Directors
The information in the financial statements release is unaudited.
Further information is available from Jukka Erlund, Senior Vice President, CFO,
telephone +358 1053 22113, and Eva Kaukinen, Vice President, Corporate
Controller, telephone +358 1053 22338. A Finnish-language webcast from the media
and analyst briefing on the financial statements can be accessed at www.kesko.fi
at 11.00. An English-language web conference on the financial statements will be
held today at 14.30 (Finnish time). The web conference login is available at
www.kesko.fi.
Kesko Corporation's interim report for January-March will be released on 26
April 2012. In addition, the Kesko Group's sales figures are published each
month. News releases and other company information are available on Kesko's
website at: www.kesko.fi.
KESKO CORPORATION
Merja Haverinen
Senior Vice President, Corporate Communications and Responsibility
ATTACHMENTS
Accounting policies
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated cash flow statement
Group's performance indicators
Net sales by segment
Operating profit by segment
Operating profit excl. non-recurring items by segment
Operating margin excl. non-recurring items by segment
Capital employed by segment
Return on capital employed excl. non-recurring items by segment
Capital expenditure by segment
Segment information by quarter
Personnel average and at 31 December
Acquisitions
Group's contingent liabilities
Calculation of performance indicators
K-Group's retail and B2B sales
DISTRIBUTION
NASDAQ OMX Helsinki
Main news media
www.kesko.fi
ATTACHMENTS:
Accounting policies
This financial statements release has been prepared in accordance with the IAS
34 standard. The interim report has been prepared in accordance with the same
principles as the annual financial statements for 2010, with the exception of
the following changes due to the adoption of new and revised IFRS standards and
IFRIC interpretations.
IAS 24 (revised), Related Party Disclosures
IAS 32 (amendment), Financial Instruments: Presentation - Classification of
Rights Issues
IFRIC 14 (amendment), Prepayments of a Minimum Funding Requirement
IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments
Annual amendments to the IFRS (Annual Improvements)
The above amendments to standards and interpretations do not have a material
impact on the reported income statement, statement of financial position or
notes.
Excise taxes have been transferred from other operating expenses to the cost of
goods sold. The change has been applied retrospectively.
The Group accounts for real estate company acquisitions as acquisitions of
tangible assets. Previously, real estate company acquisitions were accounted for
as business combinations in accordance with IFRS 3. Adjustments related to
acquisitions have been recognised retrospectively.
Consolidated income statement (€
million), condensed
1-12/ 1-12/ Change% 10-12/ 10-12/ Change%
2011 2010 2011 2010
Net sales 9,460 8,777 7.8 2,481 2,310 7.4
Cost of goods sold -8,163 -7,547 8.2 -2,126 -1,964 8.2
Gross profit 1,297 1,230 5.5 356 346 2.9
Other operating income 705 699 0.9 188 179 4.9
Staff cost -571 -521 9.6 -156 -145 7.8
Depreciation and impairment charges -125 -121 3.2 -35 -32 7.3
Other operating expenses -1,026 -981 4.6 -280 -265 5.7
Operating profit 281 307 -8.5 73 83 -12.1
Interest income and other finance
income 22 23 -2.3 6 7 -17.2
Interest expense and other finance
costs -18 -15 16.9 -5 -3 33.3
Exchange differences -3 -1 (..) -1 1 (..)
Income from associates 1 0 (..) 0 0 (..)
Profit before tax 282 312 -9.7 74 87 -15.2
Income tax -85 -97 -11.9 -19 -25 -24.1
Profit for the period 197 216 -8.7 55 63 -11.7
Attributable to
Owners of the parent 182 205 -11.2 50 59 -14.5
Non-controlling interests 15 11 37.4 5 4 30.2
Earnings per share (€) for
profit attributable to equity
holders of the parent
Basic 1.85 2.08 -11.0 0.51 0.60 -14.3
Diluted 1.84 2.06 -11.1 0.51 0.59 -14.4
Consolidated statement of
comprehensive income
(€ million)
1-12/ 1-12/ Change% 10-12/ 10-12/ Change%
2011 2010 2011 2010
Net profit for the period 197 216 -8.7 55 63 -11.7
Other comprehensive income
Exchange differences on translating
foreign operations -17 5 (..) 2 2 -8.0
Adjustment for hyperinflation 6 - (..) 6 - (..)
Cash flow hedge revaluation -15 21 (..) -3 13 (..)
Revaluation of available-for-sale
financial assets 0 1 -88.3 0 0 (..)
Other items 0 -1 -83.5 - - -
Tax relating to other comprehensive
income 4 -6 (..) 1 -3 (..)
Total other comprehensive income for
the period, net of tax -22 20 (..) 6 11 -46.4
Total comprehensive income for the
period 175 236 -26.0 61 74 -16.9
Attributable to
Owners of the parent 170 224 -24.1 52 69 -25.1
Non-controlling interests 4 12 -62.5 9 5 (..)
(..) Change over 100%
Consolidated statement of financial position (€
million), condensed
31.12.2011 31.12.2010 Change, %
ASSETS
Non-current assets
Tangible assets 1,490 1,261 18.2
Intangible assets 189 180 5.4
Investments in associates and other
financial assets 69 61 12.4
Loans and receivables 80 72 11.6
Pension assets 200 186 7.7
Total 2,029 1,759 15.3
Current assets
Inventories 868 757 14.6
Trade receivables 700 620 13.0
Other receivables 218 183 19.6
Financial assets at fair value through
profit or loss 98 242 -59.6
Available-for-sale financial assets 186 549 -66.2
Cash and cash equivalents 84 56 49.8
Total 2,153 2,406 -10.5
Non-current assets held for sale 8 1 (..)
Total assets 4,190 4,167 0.5
31.12.2011 31.12.2010 Change, %
EQUITY AND LIABILITIES
Equity 2,175 2,152 1.1
Non-controlling interests 58 59 -0.3
Total equity 2,233 2,210 1.0
Non-current liabilities
Interest-bearing liabilities 210 235 -10.6
Non-interest-bearing liabilities 18 5 (..)
Deferred tax liabilities 91 87 4.5
Pension obligations 2 2 3.9
Provisions 10 12 -11.1
Total 332 340 -2.4
Current liabilities
Interest-bearing liabilities 190 242 -21.5
Trade payables 886 838 5.7
Other non-interest-bearing liabilities 526 507 3.6
Provisions 24 29 -18.6
Total 1,625 1,616 0.5
Total equity and liabilities 4,190 4,167 0.5
(..) Change over 100%
Consolidated statement of changes in equity (€ million)
Share Issue Share Other Cur- Revalu- Re- Non- Total
capital of premi- reser- rency ation tained cont-
share um ves trans- sur- earn- rol-
capital lation plus ings ling
differ- inte-
ences rests
Balance at
1.1.2010 197 0 194 243 -7 -3 1,381 64 2,070
Shares
subscribed
with options 1 4 4
Option cost 5 0 5
Dividends -89 -18 -106
Other changes 1 0 1
Net profit for
the period 205 11 216
Other
comprehensive
income
Exchange
differences on
translating
foreign
operations 0 4 0 1 5
Cash flow hedge
revaluation 21 21
Revaluation of
available-for-
sale financial
assets 1 1
Other items -1 -1
Tax relating to
other
comprehensive
income -6 -6
Total other
comprehensive
income 0 4 16 -1 1 20
Balance at
31.12.2010 197 0 198 243 -3 14 1,503 59 2,210
Balance at
1.1.2011 197 0 198 243 -3 14 1,503 59 2,210
Shares
subscribed
with options 0 0
Option cost 3 0 3
Own shares -23 0 -23
Dividends -128 -4 -133
Other changes 0 0 0 0 0
Net profit for
the period 182 15 197
Other
comprehensive
income
Exchange
differences on
translating
foreign
operations 0 -1 -17 -17
Adjustment for
hyperinflation 1 6 6
Cash flow hedge
revaluation -15 -15
Revaluation of
available-for-
sale financial
assets 0 0
Other items 0 0
Tax relating to
other
comprehensive
income 4 4
Total other
comprehensive
income 0 -1 -11 0 -11 -22
Balance at
31.12.2011 197 0 198 243 -3 3 1,537 58 2,233
Consolidated cash flow statement (€ million), condensed
1-12/ 1-12/ Change% 10-12/ 10-12/ Change%
2011 2010 2011 2010
Cash flow from operating
activities
Profit before tax 282 312 -9.7 74 87 -15.2
Planned depreciation 125 116 7.3 35 31 13.3
Finance income and costs -1 -6 -88.2 -1 -5 -83.7
Other adjustments -6 97 (..) -28 116 (..)
Change in working capital
Current non-interest-bearing
trade and other receivables,
increase (-)/ decrease (+) -89 -15 (..) -42 17 (..)
Inventories
increase (-)/ decrease (+) -119 -82 44.2 -72 -66 8.5
Current non-interest-bearing
liabilities,
increase (+)/decrease (-) 127 153 -17.1 109 51 (..)
Financial items and tax -103 -136 -24.4 -29 -63 -53.5
Net cash generated from
operating activities 216 438 -50.8 47 169 -72.5
Cash flow from investing
activities
Capital expenditure -449 -367 22.3 -112 -203 -44.7
Sales of fixed assets 8 124 -93.4 2 8 -75.0
Increase of non-current
receivables 0 - (..) 0 - (..)
Decrease of non-current
receivables - 4 (..) - 2 (..)
Net cash used in investing
activities -441 -240 84.1 -110 -193 -42.9
Cash flow from financing
activities
Increase (+)/ decrease (-) in
interest-bearing liabilities -58 39 (..) -20 24 (..)
Increase (-)/decrease (+) in
current interest-bearing
receivables -37 11 (..) -39 1 (..)
Dividends paid -133 -106 25.1 -1 - (..)
Equity increase 0 4 -97.9 0 - (..)
Acquisition of own shares -23 - (..) 1 - (..)
Increase (-)/ decrease (+) in short-
term money market
investments 199 -114 (..) 36 -16 (..)
Other items 1 -15 (..) 0 -3 (..)
Net cash used in financing
activities -51 -181 -71.7 -22 6 (..)
Change in cash and cash equivalents -277 18 (..) -86 -18 (..)
Cash and cash equivalents
and current portion of
available-for-sale financial
assets at 1 Jan. 509 491 3.7 315 527 -40.2
Currency translation difference
adjustment and revaluation -2 0 (..) 1 0 (..)
Cash and cash equivalents
and current portion of
available-for-sale financial
assets at 31 Dec. 231 509 -54.7 231 509 -54.7
(..) Change over 100%
Group's performance indicators
1-12/2011 1-12/2010 Change, pp
Return on capital employed, % 13.2 16.0 -2.8
Return on capital employed excl. non-recurring
items, % 13.1 14.0 -0.9
Return on equity, % 8.9 10.1 -1.2
Return on equity excl. non-recurring items, % 8.8 8.7 0.1
Equity ratio, % 53.9 53.5 0.4
Gearing, % 1.5 -16.8 18.2
Change, %
Capital expenditure, € million 425.4 325.3 30.8
Capital expenditure, % of net sales 4.5 3.7 21.3
Earnings per share, basic, € 1.85 2.08 -11.0
Earnings per share, diluted, € 1.84 2.06 -11.1
Earnings per share excl. non-recurring items,
basic, € 1.84 1.78 3.1
Cash flow from operating activities,
€ million 216 438 -50.8
Cash flow from investing activities,
€ million -441 -240 84.1
Equity/share, € 22.20 21.81 1.8
Personnel, average 18,960 18,215 4.1
(..) Change over 100%
Group's performance indicators 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
by quarter 2010 2010 2010 2010 2011 2011 2011 2011
Net sales, € million 1,958 2,279 2,231 2,310 2,103 2,472 2,404 2,481
Change in net sales, % -3.0 6.4 4.6 7.3 7.4 8.5 7.8 7.4
Operating profit, € million 20.9 79.0 123.9 82.8 35.7 83.9 88.2 72.8
Operating margin, % 1.1 3.5 5.6 3.6 1.7 3.4 3.7 2.9
Operating profit excl. non-
recurring items, € million 20.9 78.1 88.7 80.5 34.9 83.3 89.2 71.5
Operating margin excl. non-
recurring items, % 1.1 3.4 4.0 3.5 1.7 3.4 3.7 2.9
Finance income/costs,
€ million 0.8 -0.2 0.8 4.6 -0.6 0.3 0.3 0.8
Profit before tax, € million 21.9 78.7 124.5 87.3 36.1 84.0 88.0 74.0
Profit before tax, % 1.1 3.5 5.6 3.8 1.7 3.4 3.7 3.0
Return on capital employed, % 4.4 16.1 26.4 17.5 7.2 16.0 16.4 12.8
Return on capital employed
excl. non-recurring items, % 4.4 15.9 18.9 17.0 7.0 15.9 16.6 12.5
Return on equity, % 2.9 10.6 16.1 11.5 4.5 10.6 10.9 10.0
Return on equity excl. non-
recurring items, % 2.9 10.5 11.1 11.2 4.4 10.6 11.1 9.8
Equity ratio, % 51.3 51.4 53.4 53.5 54.4 52.1 54.0 53.9
Capital expenditure,
€ million 42.0 45.7 35.9 201.6 64.1 130.5 126.3 104.5
Earnings per share, diluted, € 0.15 0.51 0.81 0.59 0.25 0.55 0.53 0.51
Equity per share, € 19.69 20.30 21.11 21.81 22.04 21.21 21.66 22.20
Segment information
Net sales by segment 1-12/ 1-12/ Change 10-12/ 10-12/ Change
(€ million) 2011 2010 % 2011 2010 %
Food trade, Finland 4,182 3,896 7.3 1,108 1,022 8.4
Food trade, other countries* - - - - - -
Food trade total 4,182 3,896 7.3 1,108 1,022 8.4
- of which intersegment trade 168 162 4.1 44 40 10.4
Home and speciality goods trade, Finland 1,541 1,553 -0.8 490 497 -1.4
Home and speciality goods trade, other
countries* 23 15 50.3 11 4 (..)
Home and speciality goods trade total 1,564 1,569 -0.3 501 501 0.0
- of which intersegment trade 20 23 -15.8 7 7 -6.4
Building and home improvement trade,
Finland 1,233 1,163 6.0 297 281 5.4
Building and home improvement trade,
other countries* 1,483 1,357 9.3 360 344 4.8
Building and home improvement trade
total 2,716 2,519 7.8 657 625 5.1
- of which intersegment trade 12 0 (..) 3 0 (..)
Car and machinery trade, Finland 1,064 859 23.8 247 190 29.9
Car and machinery trade, other
countries* 110 96 15.4 16 13 26.4
Car and machinery trade total 1,174 955 23.0 263 203 29.7
- of which intersegment trade 1 0 (..) 0 0 -67.4
Common operations and eliminations -176 -162 8.2 -48 -42 14.9
Finland total 7,844 7,309 7.3 2,094 1,949 7.4
Other countries total* 1,616 1,468 10.1 388 361 7.5
Group total 9,460 8,777 7.8 2,481 2,310 7.4
* Net sales in countries other than Finland.
(..) Change over 100%
Operating profit by 1-12/ 1-12/ 10-12/ 10-12/
segment (€ million) 2011 2010 Change 2011 2010 Change
Food trade 173.7 158.4 15.4 40.0 37.2 2.8
Home and speciality goods trade 37.0 103.4 -66.4 32.9 45.6 -12.7
Building and home improvement trade 26.3 23.9 2.4 -4.5 -0.2 -4.3
Car and machinery trade 51.9 33.9 18.0 7.0 3.9 3.1
Common operations and eliminations -8.3 -12.8 4.4 -2.6 -3.7 1.1
Group total 280.6 306.7 -26.1 72.8 82.8 -10.0
Operating profit excl.
non-recurring items by 1-12/ 1-12/ 10-12/ 10-12/
segment (€ million) 2011 2010 Change 2011 2010 Change
Food trade 172.2 160.1 12.1 38.6 36.8 1.8
Home and speciality goods trade 36.6 66.0 -29.4 32.9 45.7 -12.7
Building and home improvement trade 26.6 24.0 2.6 -4.4 -0.2 -4.2
Car and machinery trade 51.8 33.1 18.7 7.0 3.9 3.1
Common operations and eliminations -8.3 -15.0 6.7 -2.6 -5.7 3.1
Group total 278.9 268.1 10.8 71.5 80.5 -9.0
Operating margin
excl. non-recurring 1-12/ 1-12/ 10-12/ 10-12/
items by segment 2011 2010 Changepp 2011 2010 Changepp
Food trade 4.1 4.1 0.0 3.5 3.6 -0.1
Home and speciality goods trade 2.3 4.2 -1.9 6.6 9.1 -2.5
Building and home improvement trade 1.0 1.0 0.0 -0.7 0.0 -0.6
Car and machinery trade 4.4 3.5 0.9 2.6 1.9 0.7
Group total 2.9 3.1 -0.1 2.9 3.5 -0.6
Capital employed by
segment, cumulative 1-12/ 1-12/ 10-12/ 10-12/
average (€ million) 2011 2010 Change 2011 2010 Change
Food trade 601 590 11 661 543 118
Home and speciality goods trade 437 431 6 472 424 48
Building and home improvement trade 696 627 69 709 609 100
Car and machinery trade 158 168 -11 184 154 30
Common operations and eliminations 236 101 135 256 167 90
Group total 2,129 1,918 211 2,282 1,897 385
Return on capital
employed excl. non- 1-12/ 1-12/ 10-12/ 10-12/
recurring items by segment, % 2011 2010 Changepp 2011 2010 Changepp
Food trade 28.6 27.1 1.5 23.4 27.1 -3.7
Home and speciality goods trade 8.4 15.3 -6.9 27.9 43.0 -15.1
Building and home improvement trade 3.8 3.8 0.0 -2.5 -0.1 -2.4
Car and machinery trade 32.8 19.6 13.2 15.2 10.0 5.1
Group total 13.1 14.0 -0.9 12.5 17.0 -4.4
Capital expenditure by 1-12/ 1-12/ Change 10-12/ 10-12/ Change
segment (€ million) 2011 2010 2011 2010
Food trade 221 117 104 62 57 5
Home and speciality goods trade 62 45 17 11 28 -17
Building and home improvement trade 110 78 32 21 45 -24
Car and machinery trade 30 18 12 9 5 5
Common operations and eliminations 2 67 -64 1 66 -65
Group total 425 325 100 105 202 -97
Segment information by quarter
Net sales by segment 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
(€ million) 2010 2010 2010 2010 2011 2011 2011 2011
Food trade 912 976 986 1,022 948 1,077 1,049 1,108
Home and speciality goods
trade 355 334 378 501 348 339 376 501
Building and home improvement
trade 495 712 687 625 570 757 731 657
Car and machinery trade 236 298 218 203 279 342 290 263
Common operations and
eliminations -40 -41 -39 -42 -42 -43 -42 -48
Group total 1,958 2,279 2,231 2,310 2,103 2,472 2,404 2,481
Operating profit by segment 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
(€ million) 2010 2010 2010 2010 2011 2011 2011 2011
Food trade 31.7 42.2 47.3 37.2 42.1 45.9 45.7 40.0
Home and speciality goods trade 0.1 7.0 50.6 45.6 -7.4 2.8 8.7 32.9
Building and home improvement
trade -13.8 17.9 19.9 -0.2 -9.1 18.8 21.0 -4.5
Car and machinery trade 6.4 15.0 8.6 3.9 12.2 19.7 13.0 7.0
Common operations and eliminations -3.4 -3.2 -2.5 -3.7 -2.2 -3.3 -0.2 -2.6
Group total 20.9 79.0 123.9 82.8 35.7 83.9 88.2 72.8
Operating profit excl.
non-recurring items by 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
segment (€ million) 2010 2010 2010 2010 2011 2011 2011 2011
Food trade 31.7 42.1 49.5 36.8 41.4 45.8 46.4 38.6
Home and speciality goods trade 0.1 7.0 13.2 45.7 -7.4 2.4 8.7 32.9
Building and home improvement trade -13.8 17.9 20.0 -0.2 -9.1 18.8 21.3 -4.4
Car and machinery trade 6.4 14.1 8.7 3.9 12.2 19.6 13.0 7.0
Common operations and eliminations -3.4 -3.1 -2.8 -5.7 -2.2 -3.3 -0.2 -2.6
Group total 20.9 78.1 88.7 80.5 34.9 83.3 89.2 71.5
Operating margin excl.
non-recurring items by 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
segment 2010 2010 2010 2010 2011 2011 2011 2011
Food trade 3.5 4.3 5.0 3.6 4.4 4.3 4.4 3.5
Home and speciality goods trade 0.0 2.1 3.5 9.1 -2.1 0.7 2.3 6.6
Building and home improvement trade -2.8 2.5 2.9 0.0 -1.6 2.5 2.9 -0.7
Car and machinery trade 2.7 4.7 4.0 1.9 4.4 5.7 4.5 2.6
Group total 1.1 3.4 4.0 3.5 1.7 3.4 3.7 2.9
Personnel average and at 31 Dec.
Personnel average by segment
1-12/2011 1-12/2010 Change
Food trade 2,706 2,881 -175
Home and speciality goods trade 5,754 5,418 336
Building and home improvement trade 8,874 8,379 495
Car and machinery trade 1,206 1,138 67
Common operations 420 399 21
Group total 18,960 18,215 745
Personnel at 31.12.*
by segment 2011 2010 Change
Food trade 2,984 3,106 -122
Home and speciality goods trade 8,765 7,887 878
Building and home improvement trade 9,895 9,493 402
Car and machinery trade 1,250 1,205 45
Common operations 481 433 48
Group total 23,375 22,124 1,251
* total number incl. part-time employees
Acquisitions
On 3 June 2011, Kesko Corporation signed an agreement on the transfer of the
Intersport licence in Russia to Kesko with Intersport International Corporation
and OOO Intersport CIS. Kesko established a new subsidiary in Russia for
Intersport operations in Russia, in which Kesko Corporation's and Melovest Ltd's
ownership interests are 80% and 20% respectively. On 24 August, 2011, the
acquisition of Intersport operations in Russia was concluded and by 31 December
2011, 36 sports stores had been transferred to OOO Johaston. The aggregate cost
of acquisition was €21.8 million.
Over a four month period, OOO Johaston contributed net sales of €7 million and
an operating loss of €6 million to the Kesko Group. The impact of OOO Johaston
on the Group's net sales and operating profit for the whole period cannot be
reliably estimated, because OOO Johaston's business component was composed only
as a result of an acquisition.
The acquisition has been accounted for in accordance with the revised IFRS 3
standard effective 1 July 2009.
€ million
Cash consideration 21.8
Fair value of net assets acquired 21.8
Analysis of net assets acquired
€ million Fair value
Intangible rights 7.2
Property, plant and equipment 11.4
Inventories 4.5
Deferred tax -1.4
Net assets acquired 21.8
Cash consideration 21.8
Remaining consideration 1.2
Cash outflow from acquisition 20.6
Group's commitments (€ million)
31.12.2011 31.12.2010 Change,%
Own commitments 182 276 -34.0
For shareholders 0 0 0.0
For others 8 6 23.4
Lease liabilities for machinery and equipment 26 22 18.2
Lease liabilities for real estate 2,303 2,322 -0.8
Own commitments do not include lease liabilities.
Liabilities arising from
derivative instruments
Fair value
Values of underlying instruments at 31 December 31.12.2011 31.12.2010 31.12.2011
Interest rate derivatives
Interest rate swaps 208 205 4.05
Currency derivatives
Forward and future contracts 358 224 -3.39
Currency swaps 100 100 -7.68
Commodity derivatives
Electricity derivatives 32 63 -3.38
Calculation of performance indicators
Operating profit x 100 / (Non-current
Return on capital employed, % assets + Inventories + Receivables +
Other current assets - Non-interest-
bearing liabilities) on average for the
reporting period
Return on capital employed excl. non- Operating profit excl. non-recurring
recurring items, % items x 100 / (Non-current assets +
Inventories + Receivables + Other current
assets - Non-interest-bearing
liabilities) on average for the reporting
period
(Profit/loss before tax - income tax) x
Return on equity, % 100 /
Shareholders' equity
(Profit/loss adjusted for non-recurring
items before tax - income tax adjusted
for the tax effect of non-recurring
Return on equity excl. non-recurring items) x
items, % 100 / Shareholders' equity
Shareholders' equity x 100 /
Equity ratio, % (Balance sheet total - prepayments
received)
(Profit/loss - non-controlling interests)
Earnings/share, diluted /
Average number of shares adjusted for the
dilutive effect of options
(Profit/loss - non-controlling interests)
Earnings/share, basic /
Average number of shares
Earnings/share excl. non-recurring (Profit/loss adjusted for non-recurring
items, basic items - non-controlling
interests)/Average number of shares
Equity attributable to equity holders of
Equity/share the parent /
Basic number of shares at balance sheet
date
Gearing, % Interest-bearing net liabilities x 100 /
Shareholders' equity
K-Group's retail and B2B sales, VAT 0% (preliminary data):
1.1.-31.12.2011 1.10.-31.12.2011
K-Group's retail and € million Change, % € million Change, %
B2B sales
K-Group's food trade
K-food stores, Finland 4,581 5.5 1,207 4.6
Kespro 732 7.4 186 9.4
Food trade total 5,314 5.7 1,393 5.2
K-Group's home and speciality goods
trade
Home and speciality goods stores,
Finland 1,673 -1.4 515 -3.9
Home and speciality goods stores, other
countries 23 51.5 11 (..)
Home and speciality goods trade total 1,697 -0.9 525 -2.6
K-Group's building and home improvement
trade
K-rauta and Rautia 1,075 6.6 257 6.5
Rautakesko B2B Service 226 13.9 63 12.9
K-maatalous 417 10.2 116 3.7
Finland total 1,718 8.4 435 6.6
Building and home improvement stores,
other Nordic countries 1,159 8.0 299 8.9
Building and home improvement stores,
Baltic countries 363 10.8 97 10.6
Building and home improvement stores,
other countries 317 14.7 73 -2.7
Building and home improvement trade
total 3,557 9.0 904 6.9
K-Group's car and machinery trade
VV-Autotalot 422 24.6 108 29.4
VV-Auto, import 447 28.1 101 36.4
Konekesko, Finland 217 12.4 44 14.8
Finland total 1,086 23.3 253 29.1
Konekesko, Baltic countries 114 17.6 17 28.3
Car and machinery trade total 1,200 22.7 270 29.1
Finland total 9,791 6.6 2,596 5.4
Other countries total 1,976 10.4 496 9.3
Retail and B2B sales total 11,767 7.2 3,092 6.0
(..) Change over 100%
[HUG#1582040]
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