2011-02-03 08:00:00 CET
2011-02-03 08:01:00 CET
REGULATED INFORMATION
Kesko Oyj - Financial Statement Release
Financial statements for the period 1 Jan.-31 Dec. 2010
KESKO CORPORATION STOCK EXCHANGE RELEASE 03.02.2011 AT 09.00 1(30)
Financial performance in brief:
*The Kesko Group's net sales for January-December increased by 3.9%. In October-
December, the growth rate stood at 7.3%
*The operating profit excluding non-recurring items for January-December was
€268.1 million, up €112.8 million on the previous year (€155.4 million). In
October-December, the operating profit excluding non-recurring items was €80.5
million (€68.0 million). Profitability improved in all divisions
*The Board of Directors proposes a dividend of €1.30 per share
*The Kesko Group's net sales are expected to grow during the next twelve months.
Throughout 2010, Kesko's profitability performance has been excellent, except
for the building and home improvement trade. During the next twelve months, the
store site network will be significantly expanded, regardless of which the
operating profit excluding non-recurring items is expected to remain at the
achieved level.
Key performance indicators
1-12/2010 1-12/2009 10-12/2010 10-12/2009
Net sales, € million 8,777 8,447 2,310 2,153
Operating profit excl. non-recurring
items, € million 268.1 155.4 80.5 68.0
Operating profit, € million 306.7 232.3 82.8 118.1
Profit before tax, € million 312.4 216.6 87.3 116.3
Capital expenditure, € million 325.3 198.0 201.6 41.5
Earnings/share, €, diluted 2.06 1.27 0.59 0.73
Earnings/share excl. non-recurring
items, €, basic 1.78 0.71 0.58 0.36
31.12.2010 31.12.2009
Equity ratio, % 53.4 54.1
Equity/share, € 21.81 20.39
FINANCIAL PERFORMANCE
Net sales and profit for January-December 2010
The Group's net sales in January-December 2010 were €8,777 million, which is
3.9% up on the corresponding period of the previous year (€8,447 million). Net
sales increased in all divisions. In Finland, net sales increased by 4.3% and in
other countries by 2.2%. International operations accounted for 16.7% (17.0%) of
the net sales. In the food trade, net sales continued to grow steadily, and K-
food stores' grocery sales performance exceeded the market performance. The net
sales growth recorded in the building and home improvement trade in the spring
accelerated towards the year end.
1-12/2010 Net sales, M€ Change, % Operating profit Change, M€
excl. non-recurring
items, M€
Food trade 3,896 +2.6 160.1 +27.0
Home and speciality
goods trade 1,569 +0.7 66.0 +36.5
Building and home
improvement trade 2,519 +9.0 24.0 +12.1
Car and machinery trade 955 +0.8 33.1 +32.7
Common operations and
eliminations -162 -3.5 -15.0 +4.4
Total 8,777 +3.9 268.1 +112.8
The operating profit excluding non-recurring items for January-December was
€268.1 million (€155.4 million), representing 3.1% (1.8%) of the net sales.
Profitability continued to improve in the last quarter of the year. The
operating profit excluding non-recurring items includes an €8 million amount
recognised as revenue in connection with the transfer of the pension insurance
portfolio. In the comparative period, the operating profit excluding non-
recurring items was negatively impacted by the €9 million amount of impairments
and expense provisions recognised on the Baltic agricultural supplies business.
Improved management of inventory processes, coupled with cost reductions
significantly contributed to the improvement of the Group's profitability. All
divisions recorded higher year-on-year operating profits excluding non-recurring
items.
Operating profit was €306.7 million (€232.3 million). The operating profit
includes a net total of €38.6 million of non-recurring gains on disposals, and
provisions related to the reorganisation of the service station grocery store
business of Pikoil Oy, a Kesko Food subsidiary. The non-recurring items for the
comparative period included a net total of €77.0 million of gains on the
disposal of real estate, and impairments. The Group's profit before tax for
January-December was €312.4 million (€216.6 million).
The Group's earnings per share were €2.06 (€1.27). The Group's equity per share
was €21.81 (€20.39).
In January-December, the K-Group's (i.e. Kesko's and the chain stores') retail
and B2B sales (VAT 0%) were €10,977 million, up 4.2% compared to the previous
year. During the same period, K-food stores' grocery sales grew by 4.2% (VAT
0%). In January-December, the K-Group chains' sales entitling to K-Plussa points
were €5,456 million excluding tax, up 4.6% compared to the previous year. In
January-December, the K-Plussa customer loyalty programme gained 92,040 new
households. At the end of December, there was 2,098,747 K-Plussa households.
Net sales and profit for October-December 2010
The Group's net sales in October-December 2010 were €2,310 million, which is
7.3% up on the corresponding period of the previous year (€2,153 million). Net
sales increased by 7.8% in Finland. The growth strengthened especially in the
building and home improvement trade and the car and machinery trade. The
comparable net sales of the car and machinery trade grew by 19.2%. The
discontinued Baltic grain and agricultural inputs trade has been eliminated from
the comparable net sales. In the other countries, net sales increased by 4.4%.
International operations accounted for 15.6% (16.1%) of the net sales.
10-12/2010 Net sales, M€ Change, % Operating profit Change, M€
excl. non-recurring
items, M€
Food trade 1,022 +5.3 36.8 +3.1
Home and speciality
goods trade 501 +0.1 45.7 +6.0
Building and home
improvement trade 625 +19.1 -0.2 +1.9
Car and machinery trade 203 -1.0 3.9 +1.1
Common operations and
eliminations -42 -11.5 -5.7 +0.3
Total 2,310 +7.3 80.5 +12.5
The operating profit excluding non-recurring items was €80.5 million (€68.0
million), representing 3.5% (3.2%) of the net sales. The operating profit
excluding non-recurring items improved on the previous year in all divisions.
Operating profit was €82.8 million (€118.1 million), including a net total of
€2.3 million of non-recurring gains on disposals. The non-recurring items for
October-December of the previous year included a net total of €50.1 million of
gains on the disposal of real estate and impairments. The Group's profit before
tax for October-December was €87.3 million (€116.3 million).
The Group's earnings per share were €0.59 (€0.73). The Group's equity per share
was €21.81 (€20.39).
In October-December, the K-Group's (i.e. Kesko's and the chain stores') retail
and B2B sales (VAT 0%) were €2,914 million, up 7.0% compared to the previous
year. In October-December, the K-Group chains' sales entitling to K-Plussa
points were €1,497 million excluding tax, up 5.3% compared to the previous year.
Finance
In January-December, the cash flow from operating activities was €438.2 million
(€378.8 million) and included a €151.6 million amount of pension assets returned
by the Kesko Pension Fund. The cash flow from investing activities was €-239.6
million (€31.0 million). It included a €123.6 million (€252.0 million) amount of
proceeds from the sale of fixed assets.
In January-December, the Group's liquidity and solvency remained at an excellent
level. At the end of the period, liquid assets totalled €847 million (€715
million). Interest-bearing liabilities were €477 million (€456 million) and
interest-bearing net debt €-370 million (€-259 million) at the end of December.
Equity ratio was 53.4% (54.1%) at the end of the period.
In January-December, the Group's net finance income was €6.0 million (net
finance costs €16.0 million). The costs for hedging currency exposures, which
had increased the net finance costs in the previous year, normalised to €1.8
million (€17.9 million).
The cash flow from operating activities in October-December was €169.4 million
(€123.1 million) and included a €125.1 million amount of returned pension
assets. The net cash flow from investing activities was €-192.8 million (€96.4
million). It included a €8.1 million (€157.8 million) amount of proceeds from
the sale of fixed assets.
In October-December, the Group's net finance income was €4.6 million (net
finance costs €1.8 million). They included a €1.7 million amount of interest on
the returned excess paid by the Kesko Pension Fund.
Taxes
The Group's taxes in January-December were €96.7 million (€82.4 million). The
effective tax rate was 31.0% (38.0%), affected by loss-making foreign
operations.The Group's taxes in October-December were €24.7 million (€41.8 million). The
effective tax rate was 28.3% (35.9%).
Capital expenditure
In January-December, the Group's capital expenditure totalled €325.3 million
(€198.0 million), or 3.7% (2.3%) of the net sales. Capital expenditure in store
sites was €212.2 million (€161.2 million) and other capital expenditure €113.1
million (€36.7 million). Capital expenditure in foreign operations represented
13.1% (35.5%) of total capital expenditure.
In October-December, the Group's capital expenditure totalled €201.6 million
(€41.5 million), or 8.7% (1.9%) of the net sales. Capital expenditure in store
sites was €118.5 million (€30.0 million) and other capital expenditure €83.2
million (€11.5 million). Capital expenditure in foreign operations represented
6.5% (40.1%) of total capital expenditure. The capital expenditure in October-
December includes a €126 million amount of real estate acquisitions from the
Kesko Pension Fund. The acquired real estate comprises store and office
properties used by the Group itself.
Personnel
In January-December, the average number of employees in the Kesko Group was
18,215 (19,200) converted into full-time employees. In Finland, the average
decrease was 370 people, while outside Finland, it was 616.
At the end of December 2010, the total number of employees was 22,124 (22,207),
of whom 12,720 (12,959) worked in Finland and 9,404 (9,248) outside Finland.
Compared to the end of December 2009, there was a decrease of 239 people in
Finland. Outside Finland, the number of personnel increased by 156 people,
compared to the end of December 2009.
In January-December, the Group's staff cost decreased by €14.6 million, or by
2.7%, compared to the previous year. In October-December, the staff cost
increased by €8.2 million, or by 6.0%, compared to the previous year.
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
1-12/2010 1-12/2009 10-12/2010 10-12/2009
Net sales, € million 3,896 3,798 1,022 970
Operating profit excl. non-recurring
items, € million 160.1 133.1 36.8 33.7
Operating profit as % of net sales
excl. non-recurring items 4.1 3.5 3.6 3.5
Capital expenditure, € million 117.2 69.4 57.4 9.9
Net sales, € million 1-12/2010 Change, % 10-12/2010 Change, %
Sales to K-food stores 2,996 +3.7 797 +7.0
Kespro 688 +1.7 172 +1.6
Others 212 -8.2 53 -5.1
Total 3,896 +2.6 1,022 +5.3
January-December 2010
In the food trade, the net sales for January-December were €3,896 million
(€3,798 million), up 2.6%. During the same period, the grocery sales of K-food
stores increased by 4.2% (VAT 0%). Good sales performance was achieved
especially by K-citymarkets and K-supermarkets. The sales of Pirkka products
increased by 11.2% (VAT 0%). In 2010, the growth rate of the total grocery trade
market in Finland is estimated at some 2.5% (VAT 0%) compared to the previous
year (Kesko's own estimate). In 2010, prices are estimated to have remained at
the previous year's level, although they increased during the last part of the
year. K-food stores strengthened their market share in 2010.
In January-December, the operating profit excluding non-recurring items of the
food trade was €160.1 million (€133.1 million), or €27.0 million up on the
previous year. In addition to good retail sales performance, profitability
improved due to more efficient purchasing, logistics, store site and chain
operations. Operating profit was €158.4 million (€170.6 million). Non-recurring
items totalled €-1.7 million, the most significant items of which were gains on
the disposal of real estate, and the provisions for the reorganisation of the
service station grocery store business of Pikoil Oy, a Kesko Food subsidiary.
In January-December, capital expenditure in the food trade was €117.2 million
(€69.4 million), of which capital expenditure in store sites was €102.4 million
(€56.2 million).
October-December 2010
In the food trade, the net sales for October-December were €1,022 million (€970
million), up 5.3%. During the same period, the grocery sales of K-food stores
increased by 5.8% (VAT 0%).
In October-December, the operating profit excluding non-recurring items of the
food trade was €36.8 million (€33.7 million). Operating profit was €37.2 million
(€58.7 million). In the comparative year, the operating profit was increased by
a €33.1 million amount of non-recurring gains on real estate disposals.
In October-December, capital expenditure in the food trade was €57.4 million
(€9.9 million), of which capital expenditure in store sites was €53.8 million
(€6.4 million).
In October-December 2010, one new K-citymarket was opened in Iisalmi and two new
K-supermarkets. In addition, K-supermarket Kankaanpää was extended into a K-
citymarket, and other renovations and extensions were carried out in 28 stores.
The most significant store sites being built are the new K-citymarkets in
Hyvinkää, in Palokka, Jyväskylä, in Kouvola, in Karisto, Lahti, in Päivölä,
Seinäjoki and in Äänekoski. K-supermarket Jättijako in Vantaa is being extended
into a K-citymarket. New K-supermarkets are being built in Kilo, Espoo, in
Jalasjärvi, in Veikkola, Kirkkonummi, in Lappeenranta, Mäntyharju, Pietarsaari,
Pori, Savonlinna and Vihti.
Home and speciality goods trade
1-12/2010 1-12/2009 10-12/2010 10-12/2009
Net sales, € million 1,569 1,558 501 500
Operating profit excl. non-recurring
items, € million 66.0 29.5 45.7 39.7
Operating profit as % of net sales
excl. non-recurring items 4.2 1.9 9.1 7.9
Capital expenditure, € million 45.3 29.6 28.4 6.8
Net sales, € million 1-12/2010 Change, % 10-12/2010 Change, %
Anttila 505 -1.6 174 -3.0
K-citymarket home and speciality goods 620 +4.2 198 +0.4
Intersport 173 +5.1 55 +18.4
Indoor 155 -0.5 40 +4.4
Musta Pörssi 96 -10.6 29 -17.6
Kenkäkesko 23 -6.5 5 +36.6
Total 1,569 +0.7 501 +0.1
January-December 2010
In the home and speciality goods trade, the net sales for January-December were
€1,569 million (€1,558 million), up 0.7%. K-citymarket's net sales performance
was good especially in clothing and household goods. The net sales were also
increased by the stores opened in the previous year. Intersport's and especially
Budget Sport's sales were up on the previous year. Sunday opening had a clearly
positive impact on the sales performance in January-April and in September-
October.
The operating profit excluding non-recurring items of the home and speciality
goods trade for January-December was €66.0 million, showing a €36.5 million
year-on-year increase, which is attributable to improved productivity and more
efficient purchasing operations. The operating profit for January-December was
€103.4 million (€66.5 million). The non-recurring items include gains on real
estate disposals, which totalled €37.4 million. The most significant disposal
was the sale of Anttila's logistics centre in Hämeenkylä.
Capital expenditure in the home and speciality goods trade in January-December
was €45.3 million (€29.6 million).
At the beginning of the year, Kodin Ykkönen in Kaisaniemi, Helsinki was closed
down due to the termination of the lease. The K-citymarket in downtown Pori was
converted into a K-supermarket early in the year. A new K-citymarket was opened
in Kankaanpää in November 2010. The Anttila department store in Jyväskylä was
relocated to a new site in March 2010. Indoor disposed of its operating
activities in Latvia in March. A new Kodin Ykkönen was opened in Lappeenranta at
the end of May.
October-December 2010
In the home and speciality goods trade, the net sales for October-December were
€501 million (€500 million), up 0.1%.
Successful timing of marketing and product offer for the winter season boosted
the sales of footwear, clothing and sports equipment. Especially Intersport and
Budget Sport increased their sales from the previous year. Home decoration
products showed a positive sales performance, Asko and Sotka increased their
sales from the previous year. The sales of the home and speciality goods trade
was weakened by the price erosion in entertainment electronics and their weaker
than expected demand.
The operating profit excluding non-recurring items of the home and speciality
goods trade for October-December was €45.7 million, a €6.0 million year-on-year
increase. The operating profit excluding non-recurring items was impacted by
improved productivity and healthy stocks. The operating profit for October-
December was €45.6 million (€66.5 million).
Capital expenditure in the home and speciality goods trade in October-December
was €28.4 million (€6.8 million).
The construction of Anttila's new automated logistics centre in Kerava was
completed. The centre will start operating in stages during the first months of
2011. The logistics centre will make e-commerce and department store logistics
significantly more efficient.
Building and home improvement trade
1-12/2010 1-12/2009 10-12/2010 10-12/2009
Net sales, € million 2,519 2,312 625 525
Operating profit excl. non-recurring
items, € million 24.0 11.9 -0.2 -2.1
Operating profit as % of net sales
excl. non-recurring items 1.0 0.5 0.0 -0.4
Capital expenditure, € million 78.2 84.7 44.9 19.4
Net sales, 1-12/2010 Change, % 10-12/2010 Change, %
€ million
Rautakesko Finland 1,163 +10.2 281 +24.1
K-rauta Sweden 208 +11.1 49 +14.2
Byggmakker Norway 547 +14.7 134 +11.3
Rautakesko Estonia 52 -17.6 13 -3.0
Rautakesko Latvia 47 -1.1 11 +9.9
Senukai Lithuania 227 -12.8 62 +9.6
Rautakesko Russia 204 +20.5 53 +27.2
OMA Belarus 74 +38.5 22 +71.2
Total 2,519 +9.0 625 +19.1
January-December 2010
In the building and home improvement trade, the net sales for January-December
were €2,519 million (€2,312 million), up 9.0%. The building and home improvement
market in all of Rautakesko's operating countries was on the increase during the
latter half of the year. In 2010, the market grew by some 8% in Finland, some
5% in Norway and some 6% in Sweden. During the first months of the year, the
market decreased in the Baltic countries and Russia, but returned to growth
during the year also in these countries. The market development in Belarus has
been steady.
In January-December, the net sales in Finland were €1,163 million, an increase
of 10.2%. The building and home improvement product lines contributed €842
million to the net sales in Finland, an increase of 13.1%. The agricultural
supplies trade contributed €321 million to the net sales, up 3.2%.
The net sales from foreign operations in the building and home improvement trade
were €1,357 million (€1,257 million), an increase of 8.0%. The net sales from
foreign operations increased by 1.4% in terms of local currencies. In Sweden,
net sales decreased by 0.2% in terms of kronas. In Norway, net sales increased
by 5.2% in terms of krones. In Russia, net sales increased by 9.9% in terms of
rubles, and in Belarus, by 40.6% in terms of rubles. Foreign operations
contributed 53.9% to the net sales of the building and home improvement trade.
The operating profit excluding non-recurring items of the building and home
improvement trade was €24.0 million (€11.9 million). Operating profit improved
in Finland and Lithuania. In Russia, profitability decreased because of new
store openings. The operating profit including non-recurring items was €23.9
million (€19.6 million).
Capital expenditure in the building and home improvement trade totalled €78.2
million (€84.7 million), of which 54.4% (82.8%) abroad. During the year, a new
uniform enterprise resource planning system was adopted in Russia, Sweden,
Estonia and Latvia.
In January-December, new K-rauta stores were opened in Palokka, Jyväskylä, in
Stockholm, Sweden and in Kaluga and Tula, Russia. In June, the first full-
service building and home improvement store was opened in Minsk, Belarus.
The retail sales of the K-rauta and Rautia chains in Finland grew by 6.2% to
€1,009 million (VAT 0%). The sales of Rautakesko B2B Service increased by
23.0%, as the building industry rapidly recovered. As a whole, the growth rate
of Rautakesko's building materials sales is estimated to have exceeded that of
the market in Finland. The retail sales of the K-maatalous chain were €378
million (VAT 0%), up 0.7%.
October-December 2010
In the building and home improvement trade, the net sales in October-December
were €625 million (€525 million), up 19.1%, as the market situation improved
towards the end of the year.
The net sales in Finland were €281 million, an increase of 24.1%. The building
and home improvement product lines contributed €190 million to the net sales in
Finland, an increase of 17.3%. The net sales of the agricultural supplies trade
were €92 million, up 41.1%.
The net sales from foreign operations in the building and home improvement trade
were €344 million (€298 million), an increase of 15.3%. The net sales from
foreign operations increased by 11.0% in terms of local currencies. In Sweden,
net sales increased by 1.5% in terms of kronas. In Norway, net sales increased
by 6.7% in terms of krones. In Russia, net sales increased by 21.7% in terms of
rubles, and net sales in Belarus were up by 69.5% in terms of rubles. Foreign
operations contributed 55.0% to the total 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 €-0.2 million, up €1.9 million. The
operating profit including non-recurring items was €-0.2 million (€1.6 million).
Capital expenditure in the building and home improvement trade was €44.9 million
(€19.4 million).
In October-December, new K-rauta stores were not opened. In Salo, Finland, a new
Rautia-K-maatalous store was opened instead of previous separate stores. A new
Rautia-K-maatalous store is being built in Turku, and new K-rauta stores are
being built in Kuopio and Kouvola, Finland, in Uppsala and Haaparanta in Sweden,
one in St. Petersburg and two in Moscow, Russia.
The retail sales of the K-rauta and Rautia chains in Finland increased by 8.7%
to €238 million (VAT 0%). The sales of Rautakesko B2B Service increased by
35.0%. The retail sales of the K-maatalous chain were €111 million (VAT 0%), up
35.8%.
Car and machinery trade
1-12/2010 1-12/2009 10-12/2010 10-12/2009
Net sales, € million 955 947 203 205
Operating profit excl. non-recurring
items, € million 33.1 0.3 3.9 2.7
Operating profit as % of net sales
excl. non-recurring items 3.5 0.0 1.9 1.3
Capital expenditure, € million 17.8 13.4 4.7 4.9
Net sales, € million 1-12/2010 Change, % 10-12/2010 Change, %
VV-Auto 668 +11.7 151 +20.5
Konekesko 287 -17.9 52 -34.7
Total 955 +0.8 203 -1.0
January-December 2010
In January-December, the net sales of the car and machinery trade were €955
million (€947 million), up 0.8%. The comparable net sales of the car and
machinery trade grew by 15.1%. The impact of the car tax change (effective 1
April 2009) and the discontinued Baltic grain and agricultural inputs trade have
been eliminated from the comparable net sales.
VV-Auto's net sales for January-December were €668 million (€598 million), an
increase of 11.7%. In the first part of the year, the net sales performance was
lowered by the car tax change effective 1 April 2009, causing the car tax to be
excluded from net sales. VV-Auto's comparable net sales growth was 19.1%. In
Finland, new registrations of passenger cars increased by 23.6% and those of
vans by 27.3% compared to the previous year. In January-December, the combined
market share of passenger cars imported by VV-Auto rose to 18.9% (18.5%) and
that of vans to 22.3% (20.9%).
Konekesko's net sales for January-December were €287 million (€350 million),
down 17.9% compared to the previous year, as a result of the planned
discontinuation of the Baltic grain and agricultural inputs trade. Konekesko's
comparable net sales grew by 6.2%. The net sales in Finland were €193 million,
up 1.2%. The net sales from Konekesko's foreign operations were €96 million,
down 41.0%. In line with its strategy, Konekesko concentrates on the machinery
trade also in the Baltic countries.
In January-December, the operating profit excluding non-recurring items of the
car and machinery trade was €33.1 million, which was €32.7 million higher than
in the previous year. The profit performance was affected by VV-Auto's strong
sales growth, cost savings achieved in the division, as well as the €9 million
impairment charges and expense provisions recognised by Konekesko on the Baltic
agricultural supplies business for the first quarter of 2009. The operating
profit for January-December was €33.9 million (€-5.1 million).
Capital expenditure in the car and machinery trade was €17.8 million (€13.4
million) in January-December.
October-December 2010
In October-December, the net sales of the car and machinery trade were €203
million (€205 million), down 1.0%. The comparable net sales of the car and
machinery trade grew by 19.2%. The discontinued Baltic grain and agricultural
inputs trade has been eliminated from the comparable net sales.
VV-Auto's net sales in October-December were €151 million (€125 million), an
increase of 20.5%. The net sales increased due to a good general trend in the
market. At the end of December, order books were still higher than in the
previous year.
Konekesko's net sales in October-December were €52 million (€80 million), down
34.7%. Konekesko's comparable net sales grew by 15.7% from the previous year.
In October-December, the operating profit excluding non-recurring items of the
car and machinery trade was €3.9 million, which was €1.1 million higher than in
the previous year. The operating profit for October-December was €3.9 million
(€-2.7 million).
Capital expenditure in the car and machinery trade was €4.7 million (€4.9
million) in October-December.
Changes in the Group composition
There were no significant changes in the Group composition during the reporting
period.
Resolutions of the Annual General Meeting 2010 and decisions of the Board's
organisational meeting
Kesko Corporation's Annual General Meeting held on 29 March 2010 adopted the
financial statements for 2009 and discharged the Board of Directors' members and
the Managing Director from liability. The Annual General Meeting also resolved
to distribute a dividend of €0.90 per share, or a total amount of
€88,547,166.90, as proposed by the Board. The dividend pay date was 12 April
2010. The Annual General Meeting also resolved to leave the number of members of
the Board of Directors 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 proposal to amend the Article of
Association providing for the convocation period so that the notice of a General
Meeting shall be given not later than three weeks before the General Meeting,
but in any case at least nine days before the record date of the General
Meeting, referred to in Chapter 4, Article 2, Subsection 2 of the Companies Act.
The resolutions of the Annual General Meeting were announced in more detail in a
stock exchange release on 29 March 2010.
The organisational meeting of Kesko Corporation's Board of Directors, held after
the Annual General Meeting, decided to leave the compositions of the Board's
Audit Committee and Remuneration Committee unchanged. The decisions of the
Board's organisational meeting were announced in a stock exchange release on 29
March 2010.
Shares, securities market and Board authorisations
At the end of December 2010, Kesko Corporation's share capital totalled
€197,282,584. Of all shares 31,737,007, or 32.2%, were A shares and 66,904,285,
or 67.8%, were B shares. The aggregate number of shares was 98,641,292. Each A
share entitles to ten (10) votes and each B share to one (1) vote. In January-
December, the share capital was increased three times as a result of the share
subscriptions with the options of the 2003 stock option scheme. The increases
were made on 11 February 2010 (€128,424), 3 May 2010 (€422,754) and 3 June 2010
(€88,348) and announced in stock exchange notifications on the same days. The
subscribed shares were included on the main list of NASDAQ OMX Helsinki for
public trading with the old B shares on 12 February 2010, 4 May 2010 and 4 June
2010.
The price of a Kesko A share quoted on NASDAQ OMX Helsinki (the Helsinki stock
exchange) was €23.60 at the end of 2009, and €34.70 at the end of 2010,
representing an increase of 47.0%. Correspondingly, the price of a B share was
€23.08 at the end of 2009, and €34.93 at the end of 2010, representing an
increase of 51.3%. In January-December, the highest A share price was €36.45 and
the lowest was €23.16. For B shares, they were €37.49 and €22.40 respectively.
In January-December, the Helsinki stock exchange (OMX Helsinki) All-Share index
rose by 18.7%, the weighted OMX Helsinki CAP index by 24.8%, while the Consumer
Staples Index was up 31.0% during the same period.
At the end of December 2010, the market capitalisation of A shares was €1,101
million, while that of B shares was €2,337 million. Their combined market
capitalisation was €3,438 million, an increase of €1,152 million from the end of
2009. In January-December 2010, 4.4 million A shares were traded on the Helsinki
stock exchange at a total value of €133 million, while 52.7 million B shares
were traded at a total value of €1,575 million.
The number of 2003F stock options of the 2003 scheme traded in 2010 was 273,212
at a total value of about €3.4 million. The 2003 option scheme expired on 30
April 2010.
In addition, the company operates the 2007 stock option scheme for management
and key personnel, which comprises 2007A options, whose exercise period began on
1 April 2010, and 2007B and 2007C options, whose exercise periods will begin at
the beginning of April in 2011 and 2012 respectively. The 2007A options have
also been included on the official list of the Helsinki stock exchange since 1
April 2010, and 15,150 options were traded during the reporting period at a
total value of €24,490.
The Board of Directors was authorised 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. The authorisation also includes a rights issue. The authorisation
has not been used. Further information on Board authorisations is available at
www.kesko.fi.
At the end of December 2010, the number of shareholders was 38,258, which was
630 less than at the end of 2009. At the end of December 2010, foreign ownership
of all shares was 26%, and foreign ownership of B shares was 38%.
Flagging notifications
On 27 July 2010, the Kesko Pension Fund sold such a number of Kesko A shares
owned by it to Kruunuvuoren Satama Oy that its holding of Kesko shares, as a
percentage of votes carried by all Kesko shares, fell below 5%, and
respectively, the number of votes carried by shares held by Kruunuvuoren Satama
Oy exceeded 5% of votes carried by all Kesko shares. The matter was announced in
a stock exchange release on 27 July 2010.
On 29 October 2010, Kesko Corporation received a notice according to which the
aggregate holding of Kesko shares by the K-Retailers' Association, its Branch
Clubs and the Foundation for Vocational Training in the Retail Trade exceeded 5
percent on 28 October 2010. The matter was announced in a stock exchange release
on 29 October 2010.
Main events during the reporting period
On 1 July 2010, Kesko sold ten properties to Ilmarinen Mutual Pension Insurance
Company and Kruunuvuoren Satama Oy, a joint venture established by Ilmarinen,
the Kesko Pension Fund and Kesko Corporation. The debt-free selling price of the
properties totalled €107.5 million. The gain on the sale of the properties was
€47.4 million. In the same connection, the Kesko Pension Fund sold seven retail
store properties owned by it to Kruunuvuoren Satama Oy. The Kesko Group
companies leased the properties for the Kesko Group companies' use, mainly on
15-year leases with extension options. In consequence, the Kesko Group's lease
liabilities increased by about €120 million. Kesko Corporation has made a
capital contribution of approximately €33 million to the joint venture. Its
ownership interest and voting rights in Kruunuvuoren Satama Oy are 49%. The
company is included in the Kesko Group's financial reporting as an associate
starting from 1 July 2010 (stock exchange releases on 1 July 2010).
On 1 September 2010, the management of the statutory pension liability and the
related insurance portfolio of some 3,100 people employed by the Kesko Group
were transferred from the Kesko Pension Fund to Ilmarinen Mutual Pension
Insurance Company. The matter was announced in a stock exchange release on 1
September 2010. As a result of the transfer, Kesko recorded an €8 million
actuarial gain in the income statement in September, not treated as a non-
recurring item. The fair value of the Kesko Pension Fund plan assets exceeded
the amount of its pension liabilities. The difference was recognised as pension
assets in Kesko's statement of financial position. Pension assets were returned
to the Kesko Group companies in December. In addition, the Kesko Pension Fund
returned the contributions it had charged in the first part of the year, which
produced a total cash inflow of €152 million.
Responsibility
In November 2010, the Pirkka recycled plastic bag received the Recovery Award of
the Year, granted by the Association of Environmental Enterprises and
Uusiouutiset, the Finnish Recycling News magazine.
In November, K-food stores made non-disposable fruit bags available in their
fruit and vegetable departments in response to consumers' wishes. The sales of
these bags help support the Emergency Youth Shelters maintained by the Finnish
Red Cross.
In November, the results of the responsibility survey ordered by the Helsingin
Sanomat newspaper showed that consumers perceive Pirkka as Finland's third most
responsible brand after Valio and Fazer.
In November-December, K-food stores joined the international Pampers-UNICEF
vaccine campaign for the third time. The campaign raises funds for UNICEF to
work for the protection against tetanus.
In November, Kesko's 2009 Corporate Responsibility Report ranked second in the
Corporate Responsibility 2010 competition. The focal points in the competition
were energy and material efficiency, and the diversity and management of working
life. As part of its energy efficiency work, Kesko joined the supporters of the
CANEMU (Finnish abbreviation 'HINKU') project in November. The carbon neutral
municipalities (CANEMU) aim to reduce at least 80% of their greenhouse gas
emissions from the 2007 level by 2030.
In November, special events taking place in Kodin Ykkönen department stores
marked the start of cooperation between Kodin Ykkönen and Plan. The profits from
the sales of Plan products and the collected funds go in full to Plan's
activities for the rights of the children of the world.
Kesko donated €35,000 and the Christmas card money to the Good Christmas Spirit
collection, which raised over one million euros. The total funds donated to the
collection were used for 15,000 vouchers distributed to Finnish low-income
families with children, facing difficult situations in life.
Kesko's sustainable development awards for 2011 were opened for application in
January. The theme for the awards, this year distributed for the seventh time,
is material efficiency. Kesko will distribute rewards amounting to €30,000 to
promoters of sustainable development in May.
Risk management
Kesko's risk management is proactive and an integral part of management and day-
to-day activities. The objective of Kesko's risk management is to ensure the
implementation of the Group strategy, the delivery of customer promises, the
maintenance of shareholder value, and the continuity of business. The risk
management policy approved by the Board of Directors guides risk management in
the Kesko Group. The policy defines the objectives, principles, responsibilities
and key practices of risk management. The management of financial risks is based
on the Group's treasury policy, confirmed by Kesko's Board of Directors. The
management of business operations and the Group units' managements are
responsible for risk management in practice.
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 as part of business
activities at the Group,
division, company and unit levels in all of Kesko's operating countries.
Kesko has a uniform risk assessment and reporting system. Risks are identified
and prioritised by assessing the impact and probability of their
materialisation, and the level of management. Risk management responses,
schedules and responsibilities are established. The risks classified as critical
and their management responses are discussed quarterly by the management boards.
The development of a risk situation is assessed on the basis of the progress
made through the responses and the changes in external factors. In addition,
risk assessments are made concerning significant projects related to capital
expenditure or changes in operations.
The divisions make risk assessments and update them in accordance with the
strategy process and the rolling planning framework. The division parent
companies' managements and the Group management regularly discuss the division
parent companies' risks and how to manage them. In their respective
responsibility areas, the Group units have assessed the risks threatening the
Group's objectives and the management of such risks.
On the basis of these risk analyses, the Group's risk management function
prepares quarterly summaries of significant risks and their management.
The Group's risk map, the most significant risks and uncertainties as well as
changes in and responses to them, are reported to the Kesko Board's Audit
Committee in connection with handling the interim reports and the financial
statements. The Chair of the Audit Committee reports on risk management to the
Board of Directors. Kesko's Board of Directors discusses the most significant
risks and the responses required to control them, and assesses the efficiency of
risk management. The following is a description of the risks and uncertainties
assessed to be significant.
Significant risks and uncertainties
Kesko's objective is to expand operations abroad, especially in the food trade,
and to further expand the international store network of its building and home
improvement trade. Failures in international expansion projects may put growth
and profitability at risk. In international operations, uniform operating
practices and processes are a prerequisite for efficiency and synergy benefits.
In Rautakesko, category management, purchasing and sourcing are managed in a
centralised manner, and the adoption of a shared information system supporting
these operations is progressing. There is a risk that unless the new selection
management and purchasing model or information system work as planned,
efficiency benefits will not be achieved.
For the purpose of increasing market share, good store sites are a key
competitive factor. The acquisition of store sites can be slowed by scarcity of
plots, zoning and permit procedures and trends in plot prices. Considerable
amounts of capital or lease liabilities are tied up in store properties for
years. As a result of changes in the market situation, there is a risk that a
store site becomes unprofitable and that operations end while the long-term
liabilities remain.
The attainment of objectives requires efficient store concepts which attract
customers. If the concepts are not competitive, sales and market share
performance fail to achieve the targets.
The intensive increase in the supply of electronic services, e-commerce growth,
internationalisation and social media are significantly changing consumer
behaviour and the operating systems of trade. Future success relies on the
ability to combine the possibilities of online trading, electronic customer
communications and the retailer business model into an efficient system.
Instability in the euro zone financial market continues, although the real
economy has returned to growth. Increases in taxes and public charges resulting
from public sector indebtedness, coupled with tightened financial markets impact
consumers' purchasing power and can deteriorate consumer confidence and
willingness to invest.
Regulations restricting efficient trading operations have increased and continue
to increase also at the level of the European Union. Such a development can
weaken the trading sector's possibilities to serve customers and operate
efficiently.
The trading sector is characterised by increasingly complicated and long supply
chains and a dependency on information systems, telecommunications and external
service providers. Failures in the supply chain and payment systems can cause
major losses in sales and profit.
Failure in the protection of personal information and card payments can cause
losses, claims for damages and endanger reputation.
Expansion and operations in Russia and Belarus involve country risks. The
unpredictability of officials and sudden changes in legislation and the
interpretation and application of laws, as well as corruption can complicate
operating activities or delay expansion.
Crime is becoming more professional and an increasing part of crimes are
committed through data networks. There is a risk that controls against such
crime are not sufficient.
In business divisions that are strongly dependent on individual principals and
suppliers, such as the car and machinery trade, ownership arrangements, changes
in a principal's or supplier's strategy concerning the product selection,
pricing and distribution channel solutions can mean a reduction in
competitiveness or sales, or loss of business.
The implementation of strategies and the achievement of goals require competent
and motivated people. There is a risk that the trading sector will not attract
the most competent people.
A failure in the quality assurance of the supply chain or in product control may
result in financial losses, the loss of customer confidence or, in the worst
case, a health hazard.
Different aspects of responsibility are increasingly important for customers,
and possible responsibility failures would weaken Kesko's reputation. Kesko's
challenges in responsibility work include communicating its responsibility
policies to suppliers, retailers and customers, and ensuring the ethicality of
production.
Non-compliance with legislation, agreements and Kesko's responsibility
guidelines can result in fines, compensation for damages and other financial
losses, and a loss of confidence or reputation.
The objective of Kesko's communications is to produce and publish reliable
information at the right time. If some information published by Kesko proved to
be incorrect or a release failed to meet regulations, it can result in investors
and other stakeholders losing confidence, and possible sanctions.
Accidents and damages caused by, for example, natural phenomena cannot always be
prevented. The financial consequences of damages are covered with insurance, in
accordance with the policy defined by the Kesko Board of Directors.
Further information about the risks, uncertainties and their management
responses relating to Kesko's operating activities, and about Kesko's risk
management system and principles is available on the company's website at
www.kesko.fi/en/Investors/Keskos-Corporate-Governance.
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 (1/2011-12/2011) in comparison with the 12 months preceding
the accounting period (1/2010-12/2010).
The outlook for trends in consumer demand has remained steady, as a result of
high consumer confidence and continuously low interest rate levels.
Nevertheless, the trend in economic development continues to involve significant
uncertainties relating to the evolution of total production, tightening taxation
and possible ramifications of disturbances in the financial market.
The steady development of the grocery trade and the home and speciality goods
trade is expected to continue. The building and home improvement market is
expected to strengthen as a result of increasing housing construction. In the
car and machinery trade, the sales of new cars are expected to grow, and the
situation in the machinery market is expected to recover gradually.
The Kesko Group's net sales are expected to grow during the next twelve months.
Throughout 2010, Kesko's profitability performance has been excellent, except
for the building and home improvement trade. During the next twelve months, the
store site network will be significantly expanded, regardless of which, the
operating profit excluding non-recurring items is expected to remain at the
achieved level.
Proposal for profit distribution
The parent's distributable profits are €1,152,126,586.65, of which the profit
for the financial year is €189,532,714.65.
The Board of Directors proposes to the Annual General Meeting to be held on 4
April 2011 that the distributable profits be used as follows:
€1.30 per share, or a total of €128,233,679.60, be distributed as dividends.
€1,023,892,907.05 are carried forward in equity.
Annual General Meeting
The Board of Directors decided to convene the Annual General Meeting at the
Helsinki Fair Centre on 4 April 2011 at 13.00. Kesko Corporation will publish a
notice of the Annual General Meeting at a later date.
Annual Report 2010 and corporate governance statement
Kesko will publish the 2010 Annual Report, which contains the report by Kesko's
Board of Directors and the financial statements for 2010, and a separate
Corporate Governance Statement on week 10 on its website at www.kesko.fi.
Helsinki, 2 February 2011
Kesko Corporation
Board of Directors
The information in the financial statements report is unaudited.
Further information is available from Arja Talma, 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
Paavo Moilanen
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 performance indicators
Net sales by segment
Operating profit by segment
Segments' operating profits excl. non-recurring items
Segment's operating margins excl. non-recurring items
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
Group contingent liabilities
Calculation of performance indicators
K-Group's retail and B2B sales
Kesko Corporation's interim report for the period January-March will be released
on 28 April 2011. 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.
DISTRIBUTION
NASDAQ OMX Helsinki
Main news media
www.kesko.fi
ATTACHMENTS:
Accounting policies
This financial statements report 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 2009, with the exception of
the following changes due to the adoption of new and revised IFRS standards and
IFRIC interpretations.
-IFRS 3 (revised), Business combinations
-IAS 27 (revised), Consolidated and Separate Financial Statements
-IAS 39 (amendment), Financial Instruments: Recognition and Measurement -
Eligible hedged items
-IFRS 5 (amendment), Non-current assets held for sale and discontinued
operations
-IFRS 2 (amendment), Share-based Payment - Group cash-settled transactions
-IFRIC 9 and IAS 39, (amendments) Reassessment of Embedded Derivatives on
Reclassification
-IFRIC 17, Distributions of Non-cash Assets to Owners
- Annual amendments to the IFRSs (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.
In addition, the accounting policies have been changed as follows:
-The net sales from operations in Finland presented in the financial statements
report are inclusive of the export sales of the Finnish companies. Previously
exports were included in the net sales of other countries.
-Excise taxes have been reclassified from other operating costs to cost of goods
sold.
The comparative figures have been restated accordingly.
Consolidated income statement
(condensed)
(€ million)
1-12/ 1-12/ Change-% 10-12/ 10-12/ Change-%
2010 2009 2010 2009
Net sales 8,777 8,447 3.9 2,310 2,153 7.3
Cost of goods sold -7,547 -7,323 3.1 -1,964 -1,838 6.9
Gross profit 1,230 1,124 9.5 346 315 9.6
Other operating income 699 710 -1.6 179 232 -22.8
Staff cost -521 -535 -2.7 -145 -137 6.0
Depreciation and impairment
charges -121 -131 -7.9 -32 -43 -25.7
Other operating expenses -981 -935 4.9 -265 -249 6.3
Operating profit 307 232 32.0 83 118 -29.9
Interest income 22 21 2.9 7 4 57.6
Interest expenses -15 -20 -28.1 -3 -5 -29.9
Exchange differences and other
financial items -1 -17 -93.5 1 -2 (..)
Income from associates 0 0 (..) 0 0 (..)
Profit before tax 312 217 44.2 87 116 -25.0
Income tax -97 -82 17.4 -25 -42 -40.9
Profit for the period 216 134 60.7 63 75 -16.0
Attributable to
Owners of the parent 205 125 63.3 59 71 -17.7
Non-controlling interests 11 9 24.0 4 3 21.2
Earnings per share (€) for
profit attributable to equity
holders of the parent
Basic 2.08 1.28 62.6 0.60 0.73 -18.1
Diluted 2.06 1.27 62.1 0.59 0.73 -18.3
Consolidated statement of
comprehensive income
(€ million)
1-12/ 1-12/ Change% 10-12/ 10-12/ Change%
2010 2009 2010 2009
Net profit for the period 216 134 60.7 63 75 -16.0
Other comprehensive income
Exchange differences on
translating foreign operations 5 -3 (..) 2 0 (..)
Cash flow hedge revaluation 21 -4 (..) 13 6 (..)
Revaluation of available-for-sale
financial assets 1 -2 (..) 0 -2 -81.2
Other items -1 0 (..) - - -
Tax relating to other
comprehensive income -6 2 (..) -3 -1 (..)
Total other comprehensive income
for the period, net of tax 20 -7 (..) 11 3 (..)
Total comprehensive income
for the period 236 127 85.8 74 78 -5.6
Attributable to
Owners of the parent 224 123 82.4 69 75 -8.3
Non-controlling interests 12 4 (..) 5 3 74.6
(..) Change over 100%
Consolidated statement of financial position
(€ million), condensed
31.12.2010 31.12.2009 Change %
ASSETS
Non-current assets
Intangible assets 189 185 2.5
Tangible assets 1,261 1,111 13.5
Interests in associates and other
financial assets 61 36 69.5
Loans and receivables 72 71 1.2
Pension assets 186 315 -41.1
Total 1,769 1,717 3.0
Current assets
Inventories 757 665 13.7
Trade receivables 620 594 4.4
Other receivables 183 150 22.0
Financial assets at fair value through
profit or loss 242 213 13.6
Available-for-sale financial assets 549 428 28.4
Cash and cash equivalents 56 74 -24.1
Total 2,406 2,124 13.3
Non-current assets held for sale 1 1 42.5
Total assets 4,177 3,842 8.7
31.12.2010 31.12.2009 Change %
EQUITY AND LIABILITIES
Equity 2,151 2,005 7.3
Non-controlling interests 59 64 -9.2
Total equity 2,210 2,069 6.8
Non-current liabilities
Pension obligations 2 2 -4.9
Interest-bearing liabilities 235 262 -10.2
Non-interest-bearing liabilities 5 6 -19.0
Deferred tax liabilities 97 128 -24.1
Provisions 12 14 -19.6
Total 350 412 -14.9
Current liabilities
Interest-bearing liabilities 242 194 24.4
Trade payables 838 704 19.2
Other non-interest-bearing liabilities 507 434 16.9
Provisions 29 29 0.1
Total 1,616 1,361 18.8
Total equity and liabilities 4,177 3,842 8.7
(..) Change over 100%
Consolidated statement of changes in equity (€ million)
Share Issue Share Other Cur- Rev- Re- Non Total
capital of premi- reser- rency alu- tained control-
share um ves trans ation earn- ling-
capital lation sur ings inte-
differ- plus rests
ences
Balance at
1.1.2009 196 0 191 243 -10 2 1,344 61 2,026
Shares
subscribed
for with
options 1 0 4 5
Option cost 8 0 8
Dividends -98 0 -98
Other changes 0 1 0 1
Net profit
for the
period 125 9 134
Other
comprehensive
income
Exchange
differences
on
translating
foreign
operations 0 2 0 -5 -3
Cash flow
hedge
revaluation -4 -4
Revaluation
of available-
for-sale
financial
assets -2 -2
Tax relating
to other
comprehensive
income 2 2
Total other
comprehensive
income 0 2 -4 0 -5 -7
Balance at
31.12.2009 197 0 194 243 -7 -3 1,381 64 2,069
Balance at
1.1.2010 197 0 194 243 -7 -3 1,381 64 2,069
Shares
subscribed
for 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
Consolidated cash flow statement (€ million), condensed
1-12/ 1-12/ Change% 10-12/ 10-12/ Change%
2010 2009 2010 2009
Cash flow from operating
activities
Profit before tax 312 217 44.2 87 116 -25.0
Planned depreciation 116 117 -0.5 31 31 -1.4
Finance income and
costs -6 16 (..) -5 2 (..)
Other adjustments 97 -74 (..) 116 -50 (..)
Working capital
Current non-interest-bearing
trade and other receivables,
increase (-)/ decrease (+) -15 39 (..) 17 43 -60.6
Inventories
increase (-)/ decrease (+) -82 207 (..) -66 40 (..)
Current non-interest-bearing
liabilities,
increase (+)/decrease (-) 153 -84 (..) 51 -47 (..)
Financial items and tax -136 -59 (..) -63 -12 (..)
Cash flow from operating
activities 438 379 15.7 169 123 37.6
Cash flow from investing
activities
Capital expenditure -367 -223 64.9 -203 -61 (..)
Sales of fixed assets 124 252 -51.0 8 158 -94.9
Increase of non-current
receivables 0 0 (..) 0 0 (..)
Decrease of non-current
receivables 4 2 (..) 2 0 (..)
Net cash used in investing
activities -240 31 (..) -193 96 (..)
Cash flow from financing
activities
Increase (+)/ decrease (-) in
interest-bearing liabilities 39 -33 (..) 24 -27 (..)
Increase (-)/decrease (+) in
current interest-bearing
receivables 11 -14 (..) 1 -13 (..)
Dividends paid -106 -98 7.9 0 0 (..)
Equity increase 4 5 -8.1 0 2 (..)
Short-term money market
investments -114 -98 17.0 -16 -78 -79.7
Other items -15 4 (..) -3 -3 1.5
Net cash used in financing
activities -181 -234 -22.8 6 -119 (..)
Change in cash and cash
equivalents 18 175 -90.0 -18 100 (..)
Cash and cash equivalents
and current portion of
available-for-sale financial
assets at 1 Jan. 491 319 53.9 527 391 34.8
Translation difference and
revaluation 0 -3 (..) 0 0 (..)
Cash and cash equivalents
and current portion of
available-for-sale financial
assets at 31 Dec. 509 491 3.7 509 491 3.7
(..) Change over 100%
Group performance indicators
1-12/2010 1-12/2009 Change, pp
Return on capital employed, % 15.9 11.0 4.9
Return on capital employed excl. non-recurring
items, % 13.9 7.3 6.6
Return on equity, % 10.1 6.6 3.5
Return on equity excl. non-recurring items, % 8.7 3.8 4.9
Equity ratio, % 53.4 54.1 -0.7
Gearing, % -16.8 -12.5 -4.3
Change, %
Capital expenditure, € million 325.3 198.0 64.3
Capital expenditure, % of net sales 3.7 2.3 58.1
Earnings per share, basic, € 2.08 1.28 62.6
Earnings per share, diluted, € 2.06 1.27 62.1
Earnings per share excl. non-recurring items,
basic, € 1.78 0.71 (..)
Cash flow from operating activities,
€ million 438 379 15.7
Cash flow from investing activities,
€ million -240 31 (..)
Equity/share, € 21.81 20.39 7.0
Personnel, average 18,215 19,200 -5.1
(..) Change over 100%
Group performance indicators 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
by quarter 2009 2009 2009 2009 2010 2010 2010 2010
Net sales, € million 2,018 2,143 2,133 2,153 1,958 2,279 2,231 2,310
Change in net sales, % -11.4 -15.9 -12.4 -7.7 -3.0 6.4 4.6 7.3
Operating profit, € million 23.2 42.7 48.3 118.1 20.9 79.0 123.9 82.8
Operating margin, % 1.1 2.0 2.3 5.5 1.1 3.5 5.6 3.6
Operating profit excl. non-
recurring items, € million 3.4 36.4 47.5 68.0 20.9 78.1 88.7 80.5
Operating margin excl. non-
recurring items, % 0.2 1.7 2.2 3.2 1.1 3.4 4.0 3.5
Finance income/costs,
€ million -5.1 -4.4 -4.7 -1.8 0.8 -0.2 0.8 4.6
Profit before tax, € million 18.2 38.2 43.8 116.3 21.9 78.7 124.5 87.3
Profit before tax, % 0.9 1.8 2.1 5.4 1.1 3.5 5.6 3.8
Return on capital employed, % 4.2 8.0 9.4 22.9 4.4 16.0 26.3 17.4
Return on capital employed
excl. non-recurring items, % 0.6 6.8 9.2 13.2 4.3 15.8 18.8 16.9
Return on equity, % 2.4 4.6 5.2 14.7 2.9 10.6 16.1 11.5
Return on equity excl. non-
recurring items, % -0.6 3.7 5.0 7.7 2.9 10.5 11.1 11.2
Equity ratio, % 49.8 51.0 52.3 54.1 51.1 51.2 53.3 53.4
Capital expenditure, € million 51.5 55.8 49.2 41.5 42.0 45.7 35.9 201.6
Earnings per share, diluted, € 0.12 0.19 0.24 0.73 0.15 0.51 0.81 0.59
Equity per share, € 19.16 19.36 19.60 20.39 19.69 20.30 21.10 21.81
Segment information
Net sales by segment, 1-12/ 1-12/ Change 10-12/ 10-12/ Change
(€ million) 2010 2009 % 2010 2009 %
Food trade, Finland 3,896 3,798 2.6 1,022 970 5.3
Food trade, other countries* - - - - - -
Food trade total 3,896 3,798 2.6 1,022 970 5.3
- of which intersegment trade 162 162 0.1 40 43 -7.7
Home and speciality goods trade, Finland 1,553 1,538 1.0 497 496 0.2
Home and speciality goods trade, other
countries* 15 20 -22.8 4 4 -3.0
Home and speciality goods trade total 1,569 1,558 0.7 501 500 0.1
- of which intersegment trade 23 26 -10.2 7 10 -27.2
Building and home improvement trade,
Finland 1,163 1,055 10.2 281 227 24.1
Building and home improvement trade,
other countries* 1,357 1,257 8.0 344 298 15.3
Building and home improvement trade
total 2,519 2,312 9.0 625 525 19.1
- of which intersegment trade 0 2 -69.7 0 0 -89.7
Car and machinery trade, Finland 859 787 9.1 190 162 17.6
Car and machinery trade, other
countries* 96 160 -40.3 13 43 -70.1
Car and machinery trade total 955 947 0.8 203 205 -1.0
- of which intersegment trade 0 1 -41.6 0 0 57.0
Common operations and eliminations -162 -168 -3.5 -42 -47 -11.5
Finland total 7,309 7,010 4.3 1,949 1,807 7.8
Other countries total* 1,468 1,437 2.2 361 346 4.4
Group total 8,777 8,447 3.9 2,310 2,153 7.3
* Net sales in countries other than Finland.
Operating profit by segment (€ million) 1-12/ 1-12/ Change 10-12/ 10-12/ Change
2010 2009 2010 2009
Food trade 158.4 170.6 -12.2 37.2 58.7 -21.5
Home and speciality goods trade 103.4 66.5 36.8 45.6 66.5 -20.8
Building and home improvement trade 23.9 19.6 4.2 -0.2 1.6 -1.8
Car and machinery trade 33.9 -5.1 39.0 3.9 -2.7 6.5
Common operations and eliminations -12.8 -19.3 6.5 -3.7 -5.9 2.2
Total 306.7 232.3 74.4 82.8 118.1 -35.3
Operating profit excl. non-recurring 1-12/ 1-12/ Change 10-12/ 10-12/ Change
items by 2010 2009 2010 2009
segment (€ million)
Food trade 160.1 133.1 27.0 36.8 33.7 3.1
Home and speciality goods trade 66.0 29.5 36.5 45.7 39.7 6.0
Building and home improvement trade 24.0 11.9 12.1 -0.2 -2.1 1.9
Car and machinery trade 33.1 0.3 32.7 3.9 2.7 1.1
Common operations and eliminations -15.0 -19.4 4.4 -5.7 -6.0 0.3
Group total 268.1 155.4 112.8 80.5 68.0 12.5
Segments' 1-12/ 1-12/ Changepp 10-12/ 10-12/ Changepp
operating 2010, 2009 2010, 2009,
margins excl. % of net % of net % of net % of net
non-recurring sales sales sales sales
items
Food trade 4.1 3.5 0.6 3.6 3.5 0.1
Home and
speciality goods
trade 4.2 1.9 2.3 9.1 7.9 1.2
Building and
home improvement
trade 1.0 0.5 0.4 0.0 -0.4 0.4
Car and
machinery trade 3.5 0.0 3.4 1.9 1.3 0.6
Group total 3.1 1.8 1.2 3.5 3.2 0.3
Capital employed by segment, cumulative 1-12/ 1-12/ Change 10-12/ 10-12/ Change
average (€ million) 2010 2009 2010 2009
Food trade 592 636 -43 545 642 -97
Home and speciality goods trade 431 510 -78 424 493 -69
Building and home improvement trade 634 645 -11 616 624 -8
Car and machinery trade 169 244 -76 154 225 -71
Common operations and eliminations 101 80 21 167 80 87
Group total 1,928 2,115 -187 1,907 2,064 -158
Return on capital employed excl.
non-recurring items by segment, 1-12/ 1-12/ Change, pp 10-12/ 10-12/ Change, pp
% 2010 2009 2010 2009
Food trade 27.0 20.9 6.1 27.0 21.0 6.0
Home and speciality goods trade 15.3 5.8 9.5 43.0 32.2 10.9
Building and home improvement
trade 3.8 1.8 1.9 -0.1 -1.3 1.2
Car and machinery trade 19.6 0.1 19.5 10.0 4.8 5.2
Group total 13.9 7.3 6.6 16.9 13.2 3.7
Capital expenditure by 1-12/ 1-12/ 10-12/ 10-12/
segment (€ million) 2010 2009 Change 2010 2009 Change
Food trade 117 69 48 57 10 47
Home and speciality goods trade 45 30 16 28 7 22
Building and home improvement trade 78 85 -7 45 19 26
Car and machinery trade 18 13 4 5 5 0
Common operations and eliminations 67 1 66 66 0 66
Group total 325 198 127 202 42 160
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) 2009 2009 2009 2009 2010 2010 2010 2010
Food trade 888 974 966 970 912 976 986 1,022
Home and speciality goods
trade 346 331 381 500 355 334 378 501
Building and home improvement
trade 529 643 614 525 495 712 687 625
Car and machinery trade 296 233 213 205 236 298 218 203
Common operations and
eliminations -41 -39 -41 -47 -40 -41 -39 -42
Group total 2,018 2,143 2,133 2,153 1,958 2,279 2,231 2,310
Operating profit by segment (€ 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
million) 2009 2009 2009 2009 2010 2010 2010 2010
Food trade 42.3 33.8 35.8 58.7 31.7 42.2 47.3 37.2
Home and speciality goods trade -3.3 -3.6 7.0 66.5 0.1 7.0 50.6 45.6
Building and home improvement
trade -5.2 14.8 8.5 1.6 -13.8 17.9 19.9 -0.2
Car and machinery trade -6.0 1.9 1.7 -2.7 6.4 15.0 8.6 3.9
Common operations and eliminations -4.6 -4.3 -4.5 -5.9 -3.4 -3.2 -2.5 -3.7
Group total 23.2 42.7 48.3 118.1 20.9 79.0 123.9 82.8
Operating profit excl. non-
recurring items by segment (€ 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
million) 2009 2009 2009 2009 2010 2010 2010 2010
Food trade 33.8 30.1 35.5 33.7 31.7 42.1 49.5 36.8
Home and speciality goods trade -10.7 -6.0 6.5 39.7 0.1 7.0 13.2 45.7
Building and home improvement
trade -9.1 14.8 8.4 -2.1 -13.8 17.9 20.0 -0.2
Car and machinery trade -6.0 1.9 1.7 2.7 6.4 14.1 8.7 3.9
Common operations and eliminations -4.6 -4.4 -4.5 -6.0 -3.4 -3.1 -2.8 -5.7
Group total 3.4 36.4 47.5 68.0 20.9 78.1 88.7 80.5
Segments' operating
margins excl. non-recurring items 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
(€ million) 2009 2009 2009 2009 2010 2010 2010 2010
Food trade 3.8 3.1 3.7 3.5 3.5 4.3 5.0 3.6
Home and speciality goods trade -3.1 -1.8 1.7 7.9 0.0 2.1 3.5 9.1
Building and home improvement trade -1.7 2.3 1.4 -0.4 -2.8 2.5 2.9 0.0
Car and machinery trade -2.0 0.8 0.8 1.3 2.7 4.7 4.0 1.9
Group total 0.2 1.7 2.2 3.2 1.1 3.4 4.0 3.5
Personnel average and at 31 Dec.
Personnel average by segment
1-12/2010 1-12/2009 Change
Food trade 2,881 3,035 -154
Home and speciality goods trade 5,418 5,666 -249
Building and home improvement trade 8,379 8,804 -426
Car and machinery trade 1,138 1,291 -153
Common operations 399 403 -4
Group total 18,215 19,200 -985
Personnel at 31 Dec.*
by segment 2010 2009 Change
Food trade 3,106 3,288 -182
Home and speciality goods trade 7,887 8,073 -186
Building and home improvement trade 9,493 9,226 267
Car and machinery trade 1,205 1,196 9
Common operations 433 424 9
Group total 22,124 22,207 -83
* total number incl. part-time employees
Group contingent liabilities (€ million)
31.12.2010 31.12.2009 Change %
For own commitments 276 214 28,5
For shareholders 0 0 0.0
For others 6 7 -1.5
Lease liabilities for machinery and fixtures 22 22 0.9
Lease liabilities for real estate 2,322 2,337 -0.7
Contingent liabilities arising from
derivative financial instruments
Fair value
Values of underlying instruments at 31 Dec. 31.12.2010 31.12.2009 31.12.2010
Interest rate derivatives
Forward and future contracts - 12 -
Interest rate swap contracts 205 207 3.66
Currency derivatives
Forward and future contracts 224 441 -4.19
Foreign exchange contracts 100 100 -10.61
Commodity derivatives
Electricity derivatives 63 40 13.16
Calculation of performance indicators
Return on capital employed, % Operating profit x 100 / (Non-current
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)
Return on equity, % x 100 /
Shareholders' equity
(Profit/loss adjusted for non-
recurring items before tax - income
tax adjusted for the tax effect of
Return on equity excl. non-recurring non-recurring items) x
items, % 100 / Shareholders' equity
Shareholders' equity x 100 /
Equity ratio, % (Balance sheet total - prepayments
received)
(Profit - non-controlling interests) /
Earnings/share, diluted Average number of shares adjusted for
the dilutive effect of options
Earnings/share, basic (Profit - non-controlling interests) /
Average number of shares
(Profit adjusted for non-recurring
Earnings/share excl. non-recurring items, items - non-controlling interests)/
basic Average number of shares
Equity attributable to equity holders
Equity/share of 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.-31.12.2010 1.10.-31.12.2010
K-Group retail and B2B sales € million Change, % € million Change, %
K-Group food trade
K-food stores, Finland 4,343 3.8 1,154 5.7
Kespro 682 1.4 170 1.1
Food trade total 5,025 3.5 1,324 5.1
K-Group home and speciality goods trade
Home and speciality goods stores,
Finland 1,696 1.9 536 1.5
Home and speciality goods stores, Baltic
countries 15 -22.6 4 -2.6
Home and speciality goods trade total 1,712 1.6 540 1.4
K-Group building and home improvement
trade
K-rauta and Rautia 1,009 6.2 238 8.7
Rautakesko B2B Service 199 23.0 56 35.0
K-maatalous 378 0.7 111 35.8
Finland total 1,585 6.6 405 18.4
Building and home improvement stores,
other Nordic countries 1,073 12.6 274 9.0
Building and home improvement stores,
Baltic countries 328 -12.2 88 8.2
Building and home improvement stores,
other countries 277 24.6 75 37.1
Building and home improvement trade
total 3,262 7.5 841 15.4
K-Group car and machinery trade
VV-Autotalot 334 8.8 82 20.1
VV-Auto, import 354 15.4 75 25.3
Konekesko, Finland 193 0.8 39 6.8
Finland total 881 9.4 196 19.1
Konekesko, Baltic countries 97 -37.0 13 -65.8
Car and machinery trade total 978 2.0 209 3.0
Finland total 9,188 4.3 2,460 7.2
Other countries total 1,789 3.9 454 5.6
Retail and B2B sales total 10,977 4.2 2,914 7.0
[HUG#1484910]
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