2013-10-24 08:00:00 CEST
2013-10-24 08:00:59 CEST
REGULATED INFORMATION
Kesko Oyj - Interim report (Q1 and Q3)
Kesko's interim report for the period 1 January to 30 September 2013
KESKO CORPORATION STOCK EXCHANGE RELEASE 24.10.2013 AT 09.00 1(31)
Financial performance in brief:
*The Group's net sales for January-September decreased by 3.8%.
*The retail and B2B sales (VAT 0%) of the K-Group (i.e. Kesko and chain stores)
for January-September decreased by 4.2%.
*The operating profit excluding non-recurring items was €172.0 million (€159.1
million).
*The Kesko Group's net sales and operating profit excluding non-recurring items
for the next twelve months are expected to remain at the level of the preceding
twelve months, unless the overall consumer demand weakens significantly.
Key performance indicators
1-9/2013 1-9/2012 7-9/2013 7-9/2012
Net sales, € million 6,953 7,227 2,374 2,449
Operating profit excl. non- recurring
items, € million 172.0 159.1 83.6 77.4
Operating profit, € million 180.4 160.2 84.1 77.4
Profit before tax, € million 174.4 158.4 81.5 76.1
Capital expenditure, € million 124.9 274.5 35.4 102.6
Earnings per share, diluted, € 1.15 1.03 0.53 0.50
Earnings per share excl. non-recurring
items, basic, € 1.09 1.03 0.53 0.51
30.9.2013 30.9.2012
Equity ratio, % 52.9 51.3
Equity per share, € 22.39 22.33
FINANCIAL PERFORMANCE
Net sales and profit for January-September 2013
The Group's net sales for January-September 2013 were €6,953 million, which is
3.8% down on the corresponding period of the previous year (€7,227 million).
Especially in Finland, the weakening of the general economic situation and
consumer demand contributed to the decline of net sales in the home and
speciality goods trade and the building and home improvement trade. In Finland,
net sales decreased by 3.3% and in the other countries by 5.8%. Net sales
performance in the other countries was materially impacted by the sales decline
in the building and home improvement trade in Norway resulting from the retailer
changes that took place in the Byggmakker chain in the previous year.
International operations accounted for 18.2% (18.6%) of net sales. Net sales
grew in the food trade and declined in the other divisions.
1-9/2013 Net sales, € Change, % Operating profit Change,
million excl. non- € million
recurring
items, € million
Food trade 3,239 +1.9 155.0 32.3
Home and speciality
goods trade 1,018 -8.8 -29.9 -17.2
Building and home
improvement trade 2,012 -7.3 26.8 2.7
Car and machinery
trade 811 -8.5 30.6 -6.7
Common operations and
eliminations -126 +1.9 -10.4 1.8
Total 6,953 -3.8 172.0 12.9
The operating profit excluding non-recurring items for January-September was
€172.0 million (€159.1 million). The enhancement measures of the profitability
programme had a significant positive impact on the Group's profit performance.
Operating expenses decreased by €57.0 million compared to the previous year
regardless of store site network expansion and cost inflation.
Operating profit was €180.4 million (€160.2 million). The operating profit
includes €8.4 million (€1.1 million) of non-recurring items. The non-recurring
items include gains on the disposals of properties in the amount of €9.4 million
(€2.7 million). The Group's profit before tax for January-September was €174.4
million (€158.4 million).
The Group's earnings per share were €1.15 (€1.03). The Group's equity per share
was €22.39 (€22.33).
In January-September, the K-Group's (i.e. Kesko's and the chain stores') retail
and B2B sales (VAT 0%) were €8,629 million, down 4.2% compared to the previous
year. The K-Plussa customer loyalty programme gained 54,036 new households in
January-September. At the end of September, there was 2,241,943 K-Plussa
households and 3.9 (3.9) million K-Plussa cardholders.
Net sales and profit for July-September 2013
The Group's net sales for July-September 2013 were €2,374 million, which is
3.1% down on the corresponding period of the previous year (€2,449 million). Net
sales decline was mainly attributable to the fall in the net sales of the home
and speciality goods trade and the building and home improvement trade. In
Finland, net sales decreased by 2.7% and in the other countries by 4.5%.
International operations accounted for 20.2% (20.5%) of net sales.
7-9/2013 Net sales, € Change, % Operating profit Change,
million excl. non- € million
recurring
items, € million
Food trade 1,095 +1.6 56.0 6.7
Home and speciality
goods trade 351 -10.9 -2.2 -3.0
Building and home
improvement trade 710 -6.4 23.9 6.0
Car and machinery
trade 260 +0.3 9.8 -1.6
Common operations and
eliminations -43 +4.6 -4.0 -1.7
Total 2,374 -3.1 83.6 6.3
The operating profit excluding non-recurring items for July-September was €83.6
million (€77.4 million). It represented 3.5% (3.2%) of net sales. Profitability
was improved through major cost adjustments in all divisions.
Operating profit was €84.1 million (€77.4 million). The operating profit
includes €0.5 million (€0.0 million) of non-recurring items. The non-recurring
items include gains on the disposals of properties in the amount of €0.4 million
(€0.0 million). The Group's profit before tax for July-September was €81.5
million (€76.1 million).
The Group's earnings per share were €0.53 (€0.50).
In July-September, the K-Group's (i.e. Kesko's and the chain stores') retail and
B2B sales (VAT 0%) were €3,011 million, down 3.5% compared to the previous year.
Finance
In January-September, the cash flow from operating activities was €299.3 million
(€206.4 million). The cash flow from investing activities was €-113.3 million
(€-275.0 million) including a €16.6 million (€22.6 million) amount of proceeds
from the sales of fixed assets.
The Group's liquidity remained at an excellent level in January-September. At
the end of the period, liquid assets totalled €537 million (€356 million).
Interest-bearing liabilities were €568 million (€640 million) and interest-
bearing net debt €31 million (€284 million) at the end of September. Equity
ratio was 52.9% (51.3%) at the end of the period.
In January-September, the Group's net finance costs were €5.4 million (€1.8
million). Interest expense was increased by the €250 million bond taken out in
September 2012.
In July-September, the cash flow from operating activities stood at €113.6
million (€150.5 million). The cash flow from investing activities was €-33.3
million (€-103.8 million) including a €2.6 million (€1.5 million) amount of
proceeds from the sales of fixed assets.
In July-September, the Group's net finance costs were €2.6 million (€1.3
million).
Taxes
The Group's taxes for January-September were €52.3 million (€47.7 million). The
effective tax rate was 30.0% (30.1%), affected by loss-making foreign
operations.
The Group's taxes for July-September were €24.0 million (€22.5 million). The
effective tax rate was 29.4% (29.5%).
Capital expenditure
In January-September, the Group's capital expenditure totalled €124.9 million
(€274.5 million), or 1.8% (3.8%) of net sales. Capital expenditure in store
sites was €92.5 million (€237.7 million), in IT €16.1 million (€17.9 million)
and other capital expenditure was €16.3 million (€18.9 million). Capital
expenditure in foreign operations represented 42.6% (19.6%) of total capital
expenditure.
In July-September, the Group's capital expenditure totalled €35.4 million
(€102.6 million), or 1.5% (4.2%) of net sales. Capital expenditure in store
sites was €26.1 million (€90.6 million), in IT €3.8 million (€4.4 million) and
other capital expenditure was €5.5 million (€7.5 million). Capital expenditure
in foreign operations represented 43.7% (29.2%) of total capital expenditure.
Kesko's strategic focus areas and profitability programme
The key focus areas in Kesko's business operations are to strengthen sales
growth and the return on capital in all divisions, to exploit business
opportunities in e-commerce and in Russia, and to maintain good solvency and
dividend payment capacity.
As a result of a weakened general economic situation, tightened competition and
an increase in the level of costs, Kesko is implementing the profitability
programme announced previously, which aims to ensure price competitiveness and
to improve profitability. The profitability programme includes significant
measures aimed to increase sales, to enhance purchasing operations and to adjust
costs, working capital and capital expenditure.
The Group level cost saving target is a total of around €100 million. Cost
savings are implemented in all divisions and in all operating countries. Most of
the cost savings are expected to be achieved in 2013. By the end of September
2013, Kesko's operating expenses were €1,302 million, representing a net
decrease of €57 million (-4.2%) from the previous year regardless of store site
network expansion and cost inflation.
The measures for staff cost enhancement were implemented as announced
previously. In addition to terminations, the reductions included reduced working
hours and retirement arrangements. Other significant savings are implemented by
adjusting especially marketing and store site expenses and by centralising ICT
purchases. In addition, special enhancement measures are targeted at operations
with low profitability.
In the next few years, capital expenditure will be aligned with funds generated
from operations to some €200-300 million per year.
Personnel
In January-September, the average number of employees in the Kesko Group was
19,478 (19,740) converted into full-time employees. In Finland, the average
decrease was 418 people, while outside Finland, there was an increase of 156
people.
At the end of September 2013, the number of employees was 23,200 (23,666), of
whom 12,156 (12,847) worked in Finland and 11,044 (10,819) outside Finland.
Compared to the end of September 2012, there was a decrease of 691 people in
Finland and an increase of 225 people outside Finland.
In January-September, the Group's staff cost was €449.3 million, showing a 0.5%
decrease compared to the previous year. In July-September, staff cost was €139.0
million, down 1.7% compared to the previous year.
SEGMENT INFORMATION
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
1-9/2013 1-9/2012 7-9/2013 7-9/2012
Net sales, € million 3,239 3,179 1,095 1,078
Operating profit excl. non- recurring
items, € million 155.0 122.7 56.0 49.4
Operating margin excl. non-recurring
items, % 4.8 3.9 5.1 4.6
Capital expenditure,
€ million 67.9 156.7 24.0 60.8
Net sales, € million 1-9/2013 Change, % 7-9/2013 Change, %
Sales to K-food stores 2,461 +0.4 820 -0.6
Kespro 600 +2.8 209 +2.0
K-ruoka, Russia 42 - 20 -
Others 136 -6.0 47 -2.5
Total 3,239 +1.9 1,095 +1.6
January-September 2013
In the food trade, the net sales for January-September were €3,239 million
(€3,179 million), up 1.9%. The grocery sales of K-food stores in Finland
remained at the level of the previous year (VAT 0%). In the grocery market,
retail prices are estimated to have changed by some +4.5% compared to the
previous year (VAT 0%, Kesko's own estimate based on the Consumer Price Index of
Statistics Finland), and the total market (VAT 0%) is estimated to have grown by
some 3% in January-September compared to the previous year (Kesko's own
estimate). The rise of consumer prices in the grocery trade has slowed towards
the end of the reporting period. The sales and profitability of Kespro and the
food stores in Russia were realised better than expected for the reporting
period.
In January-September, the operating profit excluding non-recurring items of the
food trade was €155.0 million (€122.7 million), or €32.3 million up on the
previous year. Profitability was improved by significant savings achieved from
enhanced operations and by the adjustment of capital expenditure. Operating
profit was €159.7 million (€125.4 million). Non-recurring income included €4.8
million (€2.7 million) of gains on the disposals of properties.
The capital expenditure of the food trade in January-September was €67.9 million
(€156.7 million), of which €60.0 million (€146.1 million) in stores sites.
July-September 2013
In the food trade, the net sales for July-September were €1,095 million (€1,078
million), up 1.6%.
The operating profit excluding non-recurring items of the food trade in July-
September was €56.0 million (€49.4 million), or €6.7 million up on the previous
year. Profit performance was affected by cost savings and a €1.4 million
unrealised gain on measurement of derivatives used for hedging electricity
purchases. Operating profit was €56.5 million (€49.4 million). Non-recurring
income included €0.4 million (€0.0 million) of gains on the disposals of
properties.
The capital expenditure of the food trade in July-September was €24.0 million
(€60.8 million).
In July-September 2013, a K-ruoka store was opened in St. Petersburg.
Renovations and extensions were carried out in a total of five stores.
The most significant store sites being built are a K-citymarket in the Puuvilla
shopping centre in Pori and a K-supermarket in downtown Helsinki, in Pohjois-
Haaga and Jakomäki, Helsinki, in Tapiola, Espoo, in Jyväskylä, Säkylä, Ikaalinen
and Kuhmo. The former K-citymarket Kokkola is being converted into a K-
supermarket and K-supermarket Reimari in Parainen is being extended.
The objective in Russia is to open, in addition to the existing three stores,
one new food store during the rest of 2013.
Numbers of stores at 30 Sep. 2013 2012
K-citymarket 80 79
K-supermarket 215 213
K-market (incl. service station stores) 445 451
K-ruoka, Russia 3 -
Others 178 206
Home and speciality goods trade
1-9/2013 1-9/2012 7-9/2013 7-9/2012
Net sales, € million 1,018 1,116 351 395
Operating profit excl. non-recurring
items, € million -29.9 -12.8 -2.2 0.9
Operating margin excl. non-recurring
items, % -2.9 -1.1 -0.6 0.2
Capital expenditure,
€ million 16.8 47.7 3.0 18.4
Net sales, € million 1-9/2013 Change, % 7-9/2013 Change, %
K-citymarket, home and speciality goods 434 -5.3 149 -7.6
Anttila 260 -17.8 89 -19.3
Intersport, Finland 137 +8.2 50 +8.1
Intersport, Russia 14 -30.6 4 -37.9
Indoor 136 -2.1 48 -4.6
Musta Pörssi 22 -45.7 6 -58.7
Kenkäkesko 18 -6.7 7 -10.6
Total 1,018 -8.8 351 -10.9
January-September 2013
In the home and speciality goods trade, the net sales for January-September were
€1,018 million (€1,116 million), down 8.8%. Consumer demand weakened and the
change in customer behaviour strengthened in the home and speciality goods trade
during the reporting period. Sales declined especially in the department store
trade. Net sales performance was also impacted by the change in Musta Pörssi's
business model and the adjustment of the Intersport store site network in
Russia. The sales and profitability of Intersport Finland and Asko and Sotka
stood at a good level.
The operating profit excluding non-recurring items of the home and speciality
goods trade for January-September was €-29.9 million (€-12.8 million), down
€17.2 million compared to the previous year. This performance was affected by
the weak profit performance of the department store trade. During the reporting
period, significant cost savings were implemented. Operating profit was €-25.5
million (€-12.8 million).
The capital expenditure of the home and speciality goods trade was €16.8 million
(€47.7 million) in January-September.
The network of Intersport Russia was restructured from 28 stores to 20 by the
end of May. In January-June, 15 Musta Pörssi stores were closed. In addition,
11 Musta Pörssi retailers continued as Musta Pörssi partners from the beginning
of June. In March, a new Budget Sport store was opened in Lielahti, Tampere. In
May, Anttila opened an extended Anttila department store in Citycenter, Helsinki
and a new Kodin1 department store for interior decoration and home goods in
Raisio. A Kodin1 department store for interior decoration and home goods was
closed in Länsikeskus, Turku.
July-September 2013
In the home and speciality goods trade, the net sales for July-September were
€351 million (€395 million), down 10.9%. Net sales performance was impacted by
the decrease in the sales of the department store trade in particular and the
significant adjustment of the store site networks of Musta Pörssi and Intersport
Russia.
The operating profit excluding non-recurring items of the home and speciality
goods trade for July-September was €-2.2 million (€0.9 million). Profitability
was negatively impacted by the weakened profit of the department store trade.
Operating profit was €-2.1 million (€0.9 million).
The capital expenditure of the home and speciality goods trade was €3.0 million
(€18.4 million).
In July-September, Kookenkä stores were closed in Turku and Pori.
Numbers of stores at 30 Sep. 2013 2012
K-citymarket, home and speciality goods* 81 80
Anttila department stores* 31 32
Kodin1 department stores for home goods and interior decoration* 13 12
Intersport 62 58
Budget Sport* 11 9
Asko and Sotka 84 82
Musta Pörssi* 6 31
Kookenkä* 46 47
Anttila, Baltics* 3 3
Intersport, Russia 20 31
Asko and Sotka, Baltics* 10 10
* incl. online stores
Building and home improvement trade
1-9/2013 1-9/2012 7-9/2013 7-9/2012
Net sales, € million 2,012 2,170 710 759
Operating profit excl. non-recurring
items, € million 26.8 24.1 23.9 17.9
Operating margin excl. non-recurring
items, % 1.3 1.1 3.4 2.4
Capital expenditure,
€ million 26.4 42.4 4.8 16.6
Net sales,
€ million 1-9/2013 Change, % 7-9/2013 Change, %
Rautakesko, Finland 916 -4.2 301 -2.5
K-rauta, Sweden 160 -4.5 57 -5.3
Byggmakker, Norway 370 -24.6 132 -22.1
K-rauta, Estonia 51 +7.0 20 +7.0
K-rauta, Latvia 39 +1.9 15 +0.5
Senukai, Lithuania 191 -1.0 77 +1.5
K-rauta, Russia 206 -3.7 78 -8.8
OMA, Belarus 79 +25.7 30 +18.8
Total 2,012 -7.3 710 -6.4
January-September 2013
In the building and home improvement trade, the net sales for January-September
were €2,012 million (€2,170 million), down 7.3%. Excluding the impact of
retailer changes in Norway, the decrease in net sales was 1.8%. The trend in
construction activity remained weak in Rautakesko's operating area. Sales
decrease was most significant in basic building materials.
In Finland, the net sales for January-September were €916 million (€956
million), a decrease of 4.2%. The building and home improvement products
contributed €625 million to the net sales in Finland, a decrease of 7.9%. The
agricultural supplies trade contributed €291 million to net sales, up 4.7%.
The retail sales of the K-rauta and Rautia chains in Finland decreased by 4.5%
to €790 million (VAT 0%). The sales of Rautakesko B2B Service were down 12.8%.
The retail sales of the K-maatalous chain were €352 million (VAT 0%), up 6.5%.
In January-September, the net sales from the foreign operations of the building
and home improvement trade were €1,095 million (€1,213 million), a decrease of
9.7%. In terms of local currencies and excluding the impact of retailer changes
in Norway, the increase in the net sales from foreign operations was 2.2%. In
Sweden, net sales in terms of kronas were down 6.1%. In Norway, net sales in
terms of krones decreased by 23.1%, which was affected by the changes that took
place in the Byggmakker chain last year. A decision has been made to introduce
new chain agreements in Norway starting from 1 January 2014 and to simplify the
existing company structure. In Russia, net sales in terms of roubles increased
by 0.9%. Foreign operations contributed 54.5% (55.9%) 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 for January-September was €26.8 million (€24.1 million), up
€2.7 million compared to the previous year. Due to enhancement measures, profit
performance was positive regardless of the decline in sales. Operating expenses
were lower than in the previous year regardless of the expansion of the store
site network. In the previous year, profit was negatively impacted by obsolete
inventories and trade receivables written off. Operating profit was €25.9
million (€22.4 million).
In January-September, the capital expenditure of the building and home
improvement trade totalled €26.4 million (€42.4 million), of which 45.3% (52.0%)
abroad. Capital expenditure in store sites represented 91.6% of total capital
expenditure.
July-September 2013
In the building and home improvement trade, the net sales for July-September
were €710 million (€759 million), down 6.4%. Excluding the impact of retailer
changes in Norway, net sales decreased by 1.5%.
In Finland, net sales were €301 million (€309 million), a decrease of 2.5%. The
building and home improvement products contributed €208 million to the net sales
in Finland, a decrease of 4.7%. The agricultural supplies trade contributed €93
million to net sales, up 2.8%.
The retail sales of the K-rauta and Rautia chains in Finland decreased by 2.5%
to €309 million (VAT 0%) in July-September. The sales of Rautakesko B2B Service
were down 7.0%. The retail sales of the K-maatalous chain were €115 million (VAT
0%), up 5.7%.
The net sales from the foreign operations of the building and home improvement
trade were €409 million (€450 million), a decrease of 9.1%. In terms of local
currencies and excluding the impact of retailer changes in Norway, the increase
in the net sales from foreign operations was 4.3%. In Sweden, net sales in terms
of kronas were down 2.9%. In Norway, net sales in terms of krones decreased by
16.6%, which was affected by the changes that took place in the Byggmakker chain
last year. In Russia, net sales in terms of roubles decreased by 1.3%. Foreign
operations contributed 57.6% (59.3%) 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 for July-September was €23.9 million (€17.9 million), up €6.0
million compared to the previous year. Due to enhancement measures, operating
expenses were lower than in the previous year regardless of the expansion of the
store site network. Operating profit was €23.9 million (€17.9 million).
The capital expenditure of the building and home improvement trade totalled €4.8
million (€16.6 million), of which 36.3% (47.9%) abroad.
Numbers of stores at 30 Sep. 2013 2012
K-rauta* 42 42
Rautia* 99 102
K-maatalous* 83 86
K-rauta, Sweden 21 22
Byggmakker, Norway 91 106
K-rauta, Estonia 8 9
K-rauta, Latvia 8 8
Senukai, Lithuania 17 17
K-rauta, Russia 14 14
OMA, Belarus 9 7
* In 2013, 1 K-rauta store and 47 Rautia stores also operated as K-maatalous
stores
in 2012, 1 K-rauta store and 50 Rautia stores also operated as K-maatalous
stores.
Car and machinery trade
1-9/2013 1-9/2012 7-9/2013 7-9/2012
Net sales, € million 811 887 260 259
Operating profit excl.
non-recurring items,
€ million 30.6 37.3 9.8 11.4
Operating margin excl. non-recurring
items, % 3.8 4.2 3.8 4.4
Capital expenditure, € million 11.8 23.4 3.0 4.7
Net sales, € million 1-9/2013 Change, % 7-9/2013 Change, %
VV-Auto 569 -8.6 172 +2.3
Konekesko 243 -8.6 88 -3.6
Total 811 -8.5 260 +0.3
January-September 2013
In January-September, the net sales of the car and machinery trade were €811
million (€887 million), down 8.5%. The decline in net sales was affected by the
weak market performance of the car and machinery trade in Finland.
VV-Auto's net sales for January-September were €569 million (€622 million), a
decrease of 8.6%. In January-September, the combined market performance of first
time registered passenger cars and vans was -9.3%.
In January-September, the combined market share of passenger cars and vans
imported by VV-Auto was 20.5% (20.4%). Volkswagen was the market leader in
passenger cars and vans.
Konekesko's net sales for January-September were €243 million (€265 million),
down 8.6% compared to the previous year. Net sales in Finland were €142 million,
down 17.1%. The net sales from Konekesko's foreign operations were €102 million,
up 5.8%.
In January-September, the operating profit excluding non-recurring items of the
car and machinery trade was €30.6 million (€37.3 million), down €6.7 million
compared to the previous year. The adjustment of costs and inventories of the
car and machinery trade was implemented as planned. Regardless of the weakened
market situation, the return on capital of the car trade remained at an
excellent level.
The operating profit for January-September was €30.6 million (€37.3 million).
The capital expenditure of the car and machinery trade for January-September was
€11.8 million (€23.4 million).
July-September 2013
The net sales of the car and machinery trade for July-September were €260
million (€259 million), up 0.3%.
VV-Auto's net sales for July-September were €172 million (€168 million), an
increase of 2.3%. In July-September, the combined market share of passenger cars
and vans imported by VV-Auto was 20.2% (21.2%).
Konekesko's net sales for July-September were €88 million (€92 million), down
3.6% compared to the previous year.
In July-September, the operating profit excluding non-recurring items of the car
and machinery trade was €9.8 million (€11.4 million), down €1.6 million compared
to the previous year. The operating profit for July-September was €9.8 million
(€11.4 million).
The capital expenditure of the car and machinery trade for July-September was
€3.0 million (€4.7 million).
Numbers of stores at 30 Sep. 2013 2012
VV-Auto, retail trade 10 10
Konekesko 1 1
Changes in the Group composition
No significant changes took place in the Group composition during the reporting
period.
Shares, securities market and Board authorisations
At the end of September 2013, the total number of Kesko Corporation shares was
99,700,654, of which 31,737,007, or 31.8%, were A shares and 67,963,647, or
68.2%, were B shares. At 30 September 2013, Kesko Corporation held 546,025 own B
shares as treasury shares. These treasury shares accounted for 0.80% of the
number of B shares and 0.55% of the total number of shares, and 0.14% of votes
carried by all shares of the company. The total number of votes carried by all
shares was 385,333,717. Each A share entitles to ten (10) votes and each B share
to one (1) vote. The company cannot vote with treasury shares and no dividend is
paid on them. At the end of September 2013, Kesko Corporation's share capital
was €197,282,584. During the reporting period, the number of B shares was
increased five times to account for the shares subscribed for with the options
based on the 2007 option scheme. The increases were made on 11 February 2013
(74,600 B shares), 2 May 2013 (135,861 B shares), 5 June 2013 (592,619 B
shares), 30 July 2013 (116,773 B shares) and 30 September 2013 (68,461 B shares)
and announced in a stock exchange notification on the same days. The shares
subscribed for were listed for public trading on NASDAQ OMX Helsinki (Helsinki
Stock Exchange) with the old B shares on 12 February 2013, 3 May 2013, 6 June
2013, 31 July 2013 and 1 October 2013. The subscription price of €17,938,505.76
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 €24.39 at the end
of 2012, and €23.40 at the end of September 2013, representing a decrease of
4.1%. Correspondingly, the price of a B share was €24.77 at the end of 2012, and
€22.18 at the end of September 2013, representing a decrease of 10.5%. In
January-September, the highest A share price was €26.85 and the lowest was
€22.48. For B share, they were €25.87 and €20.96 respectively. In January-
September, the Helsinki stock exchange (OMX Helsinki) All-Share index was up
18.3% and the weighted OMX Helsinki CAP index 18.3%. Correspondingly, the Retail
Index was down 9.3%.
At the end of September 2013, the market capitalisation of A shares was €743
million, while that of B shares was €1,495 million, excluding the shares held by
the parent company. The combined market capitalisation of A and B shares was
€2,238 million, a decrease of €180 million from the end of 2012. In January-
September 2013, a total of 0.8 million (1.3 million) A shares was traded on the
Helsinki stock exchange, down 40%. The exchange value of A shares was €19
million. The total number of B shares traded was 31.4 million (56.8 million),
down 45%. The exchange value of B shares was €739 million.
The company operates the 2007 option scheme for management and other key
personnel, under which the share subscription period of 2007B share options ran
from 1 April 2011 to 30 April 2013 (subscription period has expired), and that
of 2007C share options runs from 1 April 2012 to 30 April 2014. The share
options have been included on the official list of the Helsinki stock exchange
since the beginning of the share subscription periods. During the reporting
period, a total of 381,332 2007B share options were traded at a total value of
€923,801, and a total of 263,497 2007C share options were traded at a total
value of €2,960,236. The share subscription period of 2007A share options under
the option scheme expired and their trading on the official list ended in 2012.
The Board has the authority, granted by the Annual General Meeting of 16 April
2012 and valid until 30 June 2015, to issue a total maximum of 20,000,000 new B
shares. The shares can be issued against payment for subscription by
shareholders in a directed issue in proportion to their existing shareholdings
regardless of whether they consist of A or B shares, or, deviating from the
shareholder's pre-emptive right, in a directed issue, if there is a weighty
financial reason for the company, such as using the shares to develop the
company's capital structure, and financing possible acquisitions, investments or
other arrangements within the scope of the company's business operations. The
amount paid for the shares is recognised in the reserve of invested non-
restricted equity. The authorisation also includes the Board's authority to
decide on the share subscription price, the right to issue shares against non-
cash consideration and the right to make decisions on other matters concerning
share issuances.
In addition, the Board has the authority, granted by the Annual General Meeting
of 8 April 2013 and valid until 30 September 2014, to decide on the acquisition
of a maximum of 500,000 own B shares, and the authority, valid until 30 June
2017, to decide on the issuance of a maximum of 1,000,000 own B shares held as
treasury shares by the company.
On 4 February 2013, based on the authority to issue own shares valid prior to
the Annual General Meeting of 8 April 2013 and the fulfilment of the vesting
criteria of the 2012 vesting period of Kesko's three-year share-based
compensation plan, the Board decided to grant own B shares held as treasury
shares by the company to people included in the target group of the 2012 vesting
period. The issuance of the total of 66,331 own B shares, referred to above, was
announced in a stock exchange release on 5 February 2013 and on 5 April 2013.
The latter release also announced that 866 own B shares had been returned to the
company without consideration. During the reporting period, a total of 3,765
shares granted based on the fulfilment of the vesting criteria of the 2011 and
2012 vesting periods were returned to the company in accordance with the terms
and conditions of the share-based compensation plan. The shares returned during
the reporting period were announced in the stock exchange release referred to
above and in stock exchange notifications on 8 May 2013, 20 May 2013, 18 June
2013, 19 July 2013 and 20 August 2013. Further information on the Board's
authorisations is available at www.kesko.fi.
At the end of September 2013, the number of shareholders was 43,500, which was
1,054 less than at the end of 2012. At the end of September, foreign ownership
of all shares was 23%. At the end of September, foreign ownership of B shares
was 33%.
Flagging notifications
Kesko Corporation did not receive flagging notifications during the reporting
period.
Key events during the reporting period
Changes, effective 5 February 2013, took place in Kesko's Corporate Management
Board. Arja Talma, M.Sc. (Econ.), eMBA, 50, was appointed Senior Vice President
responsible for the Kesko Group's store sites and investments. Terho
Kalliokoski, M.Sc. (Econ.), 51, was appointed Rautakesko Ltd's President. Jorma
Rauhala, M.Sc. (Econ.), 47, was appointed Kesko Food Ltd's President. Starting
from 5 February 2013, Kesko's Corporate Management Board is composed of Matti
Halmesmäki, Chair; Jorma Rauhala, food trade; Minna Kurunsaari, home and
speciality goods trade and Kesko's customer information and e-commerce projects;
Terho Kalliokoski, building and home improvement trade; Pekka Lahti, car and
machinery trade; Arja Talma, store sites and investments; Jukka Erlund, CFO,
accounting, finance and IT management; and Matti Mettälä, human resources and
stakeholder relations. (Stock exchange release on 5 February 2013)
On 5 April 2013, Kesko transferred a total of 66,331 own B shares (KESBV) held
by the company as treasury shares to the about 150 Kesko management employees
and other named key persons included in the target group of the 2012 vesting
period of Kesko's three-year share-based compensation plan. In the same context,
866 B shares, originally transferred to a person included in the target group of
the 2011 vesting period of the share-based compensation plan, were returned to
Kesko without consideration. After the transfer and return of shares, Kesko held
543,126 own B shares as treasury shares. (Stock exchange release on 5 April
2013)
With effect from 1 January 2013, the Kesko Group adopted the revised IAS 19
Employee benefits standard. The amendment had an impact on the Kesko Group's
pension costs and profit, as well as the pension assets and equity on the
balance sheet. Resulting from the amendment, Kesko's consolidated income
statement, consolidated statement of financial position and segment information
for 2012 were updated in compliance with the requirements prescribed in the
revised standard. (Stock exchange release on 11 April 2013)
Events after the reporting period
A total of 921 B shares (KESBV), initially transferred to a person included in
the target groups of the 2011 - 2012 vesting periods of Kesko's three-year
share-based compensation plan, have been returned to Kesko without
consideration. After the return of the shares, Kesko holds 546,946 own B shares
as treasury shares. (Stock exchange release on 9 October 2013)
Resolutions of the 2013 Annual General Meeting and decisions of the Board's
organisational meeting
Kesko Corporation's Annual General Meeting, held on 8 April 2013, adopted the
financial statements for 2012 and discharged the Board members and the Managing
Director from liability. The General Meeting also resolved, as proposed by the
Board, to distribute €1.20 per share, or a total of €117,892,576.80 as
dividends. The dividend pay date was 18 April 2013. The General Meeting resolved
that the number of Board members is 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
for amending Article 9 of the Articles of Association concerning the delivery of
the notice of a General Meeting, for authorising the Board to acquire a maximum
of 500,000 own B shares and to issue a maximum of 1,000,000 own B shares held as
treasury shares by the company. The General Meeting also approved the Board's
proposal that it be authorised to decide on the donations in a total maximum of
€300,000 for charitable or corresponding purposes until the Annual General
Meeting to be held in 2014.
The organisational meeting of the company's Board of Directors, held after the
Annual General Meeting, kept the compositions of the Audit Committee and the
Remuneration Committee unchanged.
The resolutions of the Annual General Meeting and the decisions of the Board's
organisational meeting were announced in more detail in stock exchange releases
on 8 April 2013.
Responsibility
In September, Kesko was included in the Dow Jones Sustainability Indices DJSI
World and DJSI Europe for the 11th time. Kesko's total score increased from the
previous year and Kesko received the highest score in its sector in economic
dimension.
Kesko was selected for the new UN Global Compact 100 stock index composed of
100 companies selected based on a responsibility evaluation from among the
Global Compact signatories.
Shopping centre Veturi in Kouvola achieved a BREEAM Very Good Certificate.
Shopping centre Veturi reached an especially high score in the energy category
of the assessment. Veturi, opened in autumn 2012, is one of Kesko's biggest
shopping centre projects ever.
Risk management
The Kesko Group has an established and comprehensive risk management process.
Risks and their management are assessed in the Group regularly and they are
reported to the Group's management. Kesko's risk management and risks associated
with business operations are described in more detail on Kesko's website in the
section Corporate Governance.
The most significant near-future risks in Kesko's business operations are
related to the general economic development, the financial market situation in
the euro zone and the trend of consumer confidence as well as their impact on
Kesko's sales and profit performance. In 2013, no material changes are estimated
to have taken place in the risks described in the 2012 report by Kesko's Board
of Directors and the financial statements, or in the risks described on Kesko's
website.
The risks and uncertainties related to financial performance are described in
the section future outlook of this release.
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
reporting period (10/2013-9/2014) in comparison with the 12 months preceding the
reporting period (10/2012-9/2013).
Resulting from the problems of European national economies, the future prospects
for the general economic situation and consumer demand continue to be
characterised by significant uncertainty. In consequence of weakened employment
and consumers' purchasing power, the growth prospects for the trading sector
remain weak.
In the Finnish grocery trade, the market is expected to remain stable. As a
result of the weakened economic situation, the demand in the home and speciality
goods trade, the building and home improvement trade and the car and machinery
trade is expected to remain weak.
The Kesko Group's net sales and the operating profit excluding non-recurring
items for the next twelve months are expected to remain at the level of the
preceding twelve months, unless the overall consumer demand weakens
significantly.
Helsinki, 23 October 2013
Kesko Corporation
Board of Directors
The information in the interim report release is unaudited.
Further information is available from Jukka Erlund, Senior Vice President, Chief
Financial Officer, telephone +358 105 322 113, and Eva Kaukinen, Vice President,
Corporate Controller, telephone +358 105 322 338. A Finnish-language webcast
from the media and analyst briefing on the interim report can be accessed at
www.kesko.fi at 11.00. An English-language web conference on the interim report
will be held today at 14.30 (Finnish time). The web conference login is
available on Kesko's website at www.kesko.fi.
Kesko Corporation's financial statements release will be published on 4 February
2014. 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
Vice President, Corporate Communications
ATTACHMENTS: TABLES SECTION
Accounting policies
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
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
Change in tangible and intangible assets
Related party transactions
Fair value hierarchy of financial assets and liabilities
Personnel average and at the end of the reporting period
Group's commitments
Calculation of performance indicators
K-Group's retail and B2B sales
DISTRIBUTION
NASDAQ OMX Helsinki
Main news media
www.kesko.fi
TABLES SECTION
Accounting policies
This interim report has been prepared in accordance with the IAS 34 standard.
The interim report has been prepared in accordance with the same accounting
principles as the annual financial statements for 2012, with the exception of
the following changes due to the adoption of new and revised IFRS standards and
IFRIC interpretations:
The amendment to the IAS 19 Employee benefits standard changes the determination
of the return on defined benefit pension plan assets. According to the revised
standard, the rate used to discount the retirement benefit obligation is used as
the return on assets in place of the expected long-term return on the assets
used previously. Due to the amendment, the net return on defined benefit pension
plans recognised in the consolidated income statement decreases. In addition,
the amendment to the IAS 19 Employee benefits standard eliminates the
possibility to apply the so-called "corridor approach" to the calculation of
retirement benefits classified as defined benefit pension plans, which follows
that the changes in the calculation assumptions used for measuring the pension
obligation and the covering assets are recognised in pension assets and equity
in the balance sheet. The impact of the amendment was announced in a separate
stock exchange release on 11 April 2013.
In addition, the Group has adopted the following standards and amendments to
standards issued for application:
-IAS 1 Presentation of financial statements (amendment)
-IFRS 13 Fair value measurement
-IFRS 7 Financial instruments: Disclosures (amendment).
Consolidated income
statement (€ million),
condensed
1-9/ 1-9/ Change,% 7-9/ 7-9/ Change,% 1-12/
2013 2012 2013 2012 2012
Net sales 6,953 7,227 -3.8 2,374 2,449 -3.1 9,686
Cost of goods sold -6,020 -6,259 -3.8 -2,055 -2,121 -3.1 -8,367
Gross profit 933 968 -3.6 318 328 -3.1 1,319
Other operating income 549 551 -0.3 182 183 -0.3 747
Staff cost -449 -452 -0.5 -139 -141 -1.7 -608
Depreciation and
impairment charges -114 -113 0.4 -37 -37 0.7 -158
Other operating
expenses -739 -794 -6.9 -240 -255 -6.0 -1,088
Operating profit 180 160 12.6 84 77 8.7 212
Interest income and
other finance income 14 13 9.5 4 3 37.0 21
Interest expense and
other finance costs -16 -12 36.9 -5 -3 57.6 -17
Exchange differences -4 -3 20.2 -1 -1 47.8 -5
Income from associates -1 0 (..) 0 0 (..) -1
Profit before tax 174 158 10.1 81 76 7.1 210
Income tax -52 -48 9.7 -24 -22 6.7 -75
Net profit for the
period 122 111 10.4 57 54 7.2 136
Attributable to
Owners of the parent 114 101 12.0 53 50 5.9 124
Non-controlling
interests 8 9 -7.6 5 4 24.0 11
Earnings per share (€)
for profit attributable
to
equity holders of the
parent
Basic 1.15 1.03 11.4 0.53 0.51 5.3 1.27
Diluted 1.15 1.03 11.3 0.53 0.50 5.3 1.26
Consolidated statement
of comprehensive
income (€ million)
1-9/ 1-9/ Change,% 7-9/ 7-9/ Change,% 1-12/
2013 2012 2013 2012 2012
Net profit for the
period 122 111 10.4 57 54 7.2 136
Items that will not be
reclassified to profit
or loss
Actuarial gains and
losses 7 9 -20.5 7 0 - 1
Actuarial gains and
losses,
tax -2 -2 -20.5 -2 0 - 0
Items that may be
reclassified
subsequently to profit
or loss
Exchange differences on
translating foreign
operations -8 2 (..) -2 -1 24.5 0
Adjustment for
hyperinflation 1 3 -64.2 -1 2 (..) 4
Cash flow hedge
revaluation -1 -1 -17.5 2 0 (..) -3
Revaluation of
available-for- sale
financial assets -3 12 (..) 1 13 -94.7 9
Other items 0 0 12.5 0 0 -100.0 0
Tax relating to
components of other
comprehensive income 0 -3 (..) -1 -3 -77.1 1
Total other
comprehensive income
for the period,
net of tax -6 20 (..) 6 10 -45.7 11
Total comprehensive
income for the period 116 131 -11.5 63 64 -1.3 147
Attributable to
Owners of the parent 108 120 -10.2 59 60 -0.5 133
Non-controlling
interests 8 11 -26.0 4 4 -12.6 14
(..) Change over 100%
Consolidated statement of financial
position (€ million), condensed
30.9.2013 30.9.2012 Change, % 31.12.2012
ASSETS
Non-current assets
Tangible assets 1,661 1,647 0.8 1,678
Intangible assets 187 193 -3.1 192
Investments in associates and other
financial assets 105 86 22.5 105
Loans and receivables 83 85 -2.2 91
Pension assets 163 165 -0.8 154
Total 2,198 2,174 1.1 2,220
Current assets
Inventories 776 838 -7.3 814
Trade receivables 700 763 -8.3 703
Other receivables 160 309 -48.2 153
Financial assets at fair value
through profit or loss 174 98 77.8 137
Available-for-sale financial assets 260 176 47.9 249
Cash and cash equivalents 103 82 25.7 103
Total 2,173 2,266 -4.1 2,160
Non-current assets held for sale 1 1 -49.7 2
Total assets 4,372 4,441 -1.6 4,382
30.9.2013 30.9.2012 Change, % 31.12.2012
EQUITY AND LIABILITIES
Equity 2,218 2,190 1.3 2,206
Non-controlling interests 70 65 8.2 67
Total equity 2,289 2,255 1.5 2,272
Non-current liabilities
Interest-bearing liabilities 358 457 -21.7 450
Non-interest-bearing liabilities 9 10 -10.7 10
Deferred tax liabilities 84 95 -11.6 81
Pension obligations 2 2 -7.3 2
Provisions 20 10 96.9 21
Total 472 574 -17.7 564
Current liabilities
Interest-bearing liabilities 210 183 15.2 174
Trade payables 911 951 -4.2 804
Other non-interest-bearing liabilities 454 452 0.4 529
Provisions 35 26 33.7 40
Total 1,611 1,612 -0.1 1,546
Total equity and liabilities 4,372 4,441 -1.6 4,382
Consolidated statement of changes in equity (€ million)
Cur-
rency Non-
trans- Re- cont-
Share lation tained rolling
capi- Re- differ- Revaluation Treasury earn- inter-
tal serves ences reserve shares ings ests Total
Balance at
1.1.2012 197 441 -3 3 -22 1,567 58 2,241
Shares
subscribed with
options 0 0
Share-based
payments 2 0 3
Dividends -118 -4 -122
Other changes 0 2 2
Net profit for
the period 101 9 111
Other
comprehen-sive
income
Items not
classified to
profit or loss
Actuarial
gains/losses 9 9
Actuarial
gains/losses,
tax -2 -2
Items that may
be reclassified
subsequently to
profit or loss
Exchange
differences on
translating
foreign
operations 0 3 0 0 2
Adjustment for
hyperinflation 0 3 3
Cash flow hedge
revaluation -1 -1
Revaluation of
available-for-
sale financial
assets 12 12
Tax relating to
other
comprehen-sive
income -3 -3
Total other
comprehen-sive
income 0 3 9 7 2 20
Balance at
30.9.2012 197 441 -1 11 -20 1,561 65 2,255
Balance at
1.1.2013 197 442 -2 10 -19 1,578 67 2,272
Shares
subscribed with
options 18 18
Share-based
payments 2 0 2
Dividend -118 -5 -122
Other
changes 0 3 3
Net profit for
the period 114 8 122
Other
comprehen-sive
income
Items not
classified to
profit or loss
Actuarial
gains/losses 7 7
Actuarial
gains/losses,
tax -2 -2
Items that may
be reclassified
subsequently to
profit or loss
Exchange
differences on
translating
foreign
operations 0 -7 -1 -8
Adjustment for
hyperinflation 0 1 1
Cash flow hedge
revaluation -1 -1
Revaluation of
available-for-
sale financial
assets -3 -3
Other items 0 0
Tax relating to
other
comprehen-sive
income 0 0
Total other
comprehensive
income 0 -7 -4 6 0 -6
Balance at
30.9.2013 197 460 -10 6 -18 1,583 70 2,289
Consolidated statement of cash flows (€ million), condensed
1-9/ 1-9/ Change,% 7-9/ 7-9/ Change,% 1-12/
2013 2012 2013 2012 2012
Cash flows from operating activities
Profit before tax 174 158 10.1 81 76 7.1 210
Planned depreciation 112 112 0.6 37 37 0.8 155
Finance income and costs 5 2 (..) 3 1 93.3 1
Other adjustments -2 12 (..) 2 3 -13.8 103
Change in working capital
Current non-interest-bearing
operating receivables,
increase (-)/decrease (+) -5 -57 -91.3 112 67 66.0 5
Inventories,
increase (-)/decrease (+) 29 35 -18.7 29 35 -18.1 57
Current non-interest-bearing
liabilities,
increase (+)/decrease (-) 47 5 (..) -123 -50 (..) -70
Financial items and tax -61 -61 0.3 -28 -19 41.9 -79
Net cash from operating activities 299 206 45.0 114 150 -24.5 382
Cash flows from investing activities
Investing activities -130 -294 -55.7 -36 -103 -64.8 -411
Sales of fixed assets 17 23 -26.2 3 1 78.9 24
Increase in non-current receivables 0 -4 (..) 0 -2 (..) -4
Net cash used in investing
activities -113 -275 -58.8 -33 -104 -67.9 -391
Cash flows from financing activities
Interest-bearing liabilities,
increase (+)/decrease (-) -36 238 (..) -17 76 (..) 230
Current interest-bearing
receivables,
increase (-)/decrease (+) 0 -49 (..) -2 -14 -88.2 37
Dividends paid -122 -122 0.3 -5 -4 3.4 -123
Equity increase 18 0 (..) 2 - - 1
Short-term money market investments,
increase (-)/ decrease (+) -62 38 (..) -62 -47 32.3 -2
Other items 3 -11 (..) 4 -3 (..) -14
Net cash used in financing
activities -199 94 (..) -78 9 (..) 130
Change in cash and cash equivalents -13 26 (..) 2 55 -96.5 121
Cash and cash equivalents and
current portion of available-for-
sale financial assets at 1 Jan. 352 231 52.5 337 202 66.4 231
Currency translation difference
adjustment and revaluation -1 0 (..) 0 0 (..) 0
Cash and cash equivalents and
current portion of available-for-
sale financial assets at 30 Sep. 338 258 31.2 338 258 31.2 352
(..) Change over 100%
Group's performance indicators
1-9/2013 1-9/2012 Change, pp 1-12/2012
Return on capital employed, % 9.8 8.4 1.4 8.3
Return on capital employed, %,
moving 12 mo 9.3 9.4 -0.1 8.3
Return on capital employed excl.
non-recurring items, % 9.3 8.4 1.0 9.0
Return on capital employed excl.
non-recurring items, %, moving 12
mo 9.7 9.3 0.4 9.0
Return on equity, % 7.1 6.6 0.6 6.0
Return on equity, %, moving 12 mo 6.5 7.5 -1.0 6.0
Return on equity excl. non-
recurring items, % 6.8 6.5 0.3 6.9
Return on equity excl. non-
recurring items, %, moving 12 mo 7.0 7.4 -0.3 6.9
Equity ratio, % 52.9 51.3 1.6 52.5
Gearing, % 1.4 12.6 -11.2 6.0
Change, %
Capital expenditure, € million 124.9 274.5 -54.5 378.3
Capital expenditure, % of net sales 1.8 3.8 -52.7 3.9
Earnings per share, basic, € 1.15 1.03 11.4 1.27
Earnings per share, diluted, € 1.15 1.03 11.3 1.26
Earnings per share excl. non-
recurring items, basic, € 1.09 1.03 6.2 1.47
Cash flow from operating
activities,
€ million 299 206 45.0 382
Cash flow from investing
activities,
€ million -113 -275 -58.8 -391
Equity per share, € 22.39 22.33 0.2 22.48
Interest-bearing net debt 31 284 -89.1 135
Diluted number of shares,
average for the reporting period 99,013 98,449 0.6 98,472
Personnel, average 19,478 19,740 -1.3 19,741
Group's performance 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/
indicators by quarter 2012 2012 2012 2012 2013 2013 2013
Net sales, € million 2,318 2,460 2,449 2,459 2,159 2,420 2,374
Change in net sales, % 10.2 -0.5 1.9 -0.9 -6.9 -1.6 -3.1
Operating profit, €
million 25.1 57.7 77.4 51.8 19.2 77.0 84.1
Operating margin, % 1.1 2.3 3.2 2.1 0.9 3.2 3.5
Operating profit excl.
non- recurring items,
€ million 22.3 59.4 77.4 70.9 18.6 69.8 83.6
Operating margin excl.
non-recurring items, % 1.0 2.4 3.2 2.9 0.9 2.9 3.5
Finance income/costs,
€ million -0.1 -0.3 -1.3 1.1 -3.3 0.4 -2,6
Profit before tax,
€ million 25.0 57.3 76.1 52.1 15.8 77.2 81.5
Profit before tax, % 1.1 2.3 3.1 2.1 0.7 3.2 3.4
Return on capital
employed, % 4.1 8.9 11.9 8.0 3.1 12.3 14.2
Return on capital
employed excl. non-
recurring items, % 3.6 9.2 11.9 10.9 3.0 11.1 14.1
Return on equity, % 3.1 7.0 9.6 4.4 1.9 9.5 10.2
Return on equity excl.
non-recurring items, % 2.8 7.3 9.6 8.0 1.8 8.6 10.1
Equity ratio, % 52.8 51.2 51.3 52.5 51.7 50.5 52.9
Capital expenditure,
€ million 104.1 67.8 102.6 103.8 41.5 48.1 35.4
Earnings per share,
diluted, € 0.16 0.37 0.50 0.23 0.11 0.50 0.53
Equity per share, € 22.56 21.72 22.33 22.48 22.62 21.79 22.39
Segment information
Net sales by segment 1-9/ 1-9/ Change, 7-9/ 7-9/ Change, 1-12/
(€ million) 2013 2012 % 2013 2012 % 2012
Food trade, Finland 3,197 3,179 0.6 1,076 1,078 -0.2 4,308
Food trade, other countries* 42 - - 20 - - 3
Food trade total 3,239 3,179 1.9 1,095 1,078 1.6 4,311
- of which intersegment trade 127 129 -1.5 44 43 1.3 172
Home and speciality goods trade,
Finland 993 1,083 -8.3 344 384 -10.4 1,557
Home and speciality goods trade,
other countries* 25 33 -24.7 7 11 -30.4 45
Home and speciality goods trade
total 1,018 1,116 -8.8 351 395 -10.9 1,603
- of which intersegment trade 12 12 -2.9 4 4 6.3 18
Building and home improvement
trade, Finland 916 956 -4.2 301 309 -2.5 1,229
Building and home improvement
trade, other countries* 1,095 1,213 -9.7 409 450 -9.1 1,598
Building and home improvement
trade total 2,012 2,170 -7.3 710 759 -6.4 2,827
- of which intersegment trade 0 1 (..) 0 0 (..) 0
Car and machinery trade, Finland 709 791 -10.3 218 219 -0.4 998
Car and machinery trade, other
countries* 102 96 6.0 43 41 4.3 116
Car and machinery trade
total 811 887 -8.5 260 259 0.3 1,114
- of which intersegment trade 1 1 0.0 0 0 (..) 1
Common operations and eliminations -126 -124 1.9 -43 -41 4.6 -169
Finland total 5,689 5,885 -3.3 1,895 1,948 -2.7 7,924
Other countries total* 1,264 1,342 -5.8 479 502 -4.5 1,762
Group total 6,953 7,227 -3.8 2,374 2,449 -3.1 9,686
* net sales in countries other than Finland
(..) Change over 100%
Operating profit by segment (€ 1-9/ 1-9/ 7-9/ 7-9/ 1-12/
million) 2013 2012 Change 2013 2012 Change 2012
Food trade 159.7 125.4 34.4 56.5 49.4 7.1 170.2
Home and speciality goods trade -25.5 -12.8 -12.7 -2.1 0.9 -3.0 0.0
Building and home improvement trade 25.9 22.4 3.5 23.9 17.9 6.0 11.6
Car and machinery trade 30.6 37.3 -6.7 9.8 11.4 -1.6 41.9
Common operations and eliminations -10.4 -12.1 1.7 -4.0 -2.2 -1.7 -11.8
Group total 180.4 160.2 20.2 84.1 77.4 6.7 212.0
Operating profit excl.
non-recurring items 1-9/ 1-9/ 7-9/ 7-9/ 1-12/
by segment (€ million) 2013 2012 Change 2013 2012 Change 2012
Food trade 155.0 122.7 32.3 56.0 49.4 6.7 167.5
Home and speciality goods trade -29.9 -12.8 -17.2 -2.2 0.9 -3.0 19.6
Building and home improvement trade 26.8 24.1 2.7 23.9 17.9 6.0 13.3
Car and machinery trade 30.6 37.3 -6.7 9.8 11.4 -1.6 41.9
Common operations and eliminations -10.4 -12.2 1.8 -4.0 -2.2 -1.7 -12.2
Group total 172.0 159.1 12.9 83.6 77.4 6.3 230.0
Operating margin
excl. non-recurring 1-9/ 1-9/ 7-9/ 7-9/ 1-12/ Moving 12 mo
items by segment, % 2013 2012 Change pp 2013 2012 Change pp 2012 9/2013
Food trade 4.8 3.9 0.9 5.1 4.6 0.5 3.9 4.6
Home and speciality
goods trade -2.9 -1.1 -1.8 -0.6 0.2 -0.8 1.2 0.2
Building and home
improvement trade 1.3 1.1 0.2 3.4 2.4 1.0 0.5 0.6
Car and machinery
trade 3.8 4.2 -0.4 3.8 4.4 -0.6 3.8 3.4
Group total 2.5 2.2 0.3 3.5 3.2 0.4 2.4 2.6
Capital employed by
segment, cumulative 1-9/ 1-9/ 7-9/ 7-9/ 1-12/
average (€ million) 2013 2012 Change 2013 2012 Change 2012
Food trade 833 745 87 811 774 36 763
Home and speciality goods trade 459 510 -52 424 529 -105 514
Building and home improvement trade 745 764 -19 712 757 -47 760
Car and machinery trade 157 190 -33 144 177 -33 188
Common operations and eliminations 268 330 -63 284 351 -67 327
Group total 2,461 2,540 -79 2,374 2,590 -217 2,552
Return on capital
employed excl. non-
recurring items by 1-9/ 1-9/ 7-9/ 7-9/ 1-12/ Moving
segment, % 2013 2012 Change pp 2013 2012 Change pp 2012 12 mo 9/2013
Food trade 24.8 21.9 2.9 27.7 25.5 2.1 21.9 24.2
Home and speciality
goods trade -8.7 -3.3 -5.4 -2.0 0.7 -2.7 3.8 0.5
Building and home
improvement trade 4.8 4.2 0.6 13.4 9.4 4.0 1.7 2.1
Car and machinery
trade 26.0 26.2 -0.2 27.2 25.8 1.4 22.3 21.6
Group total 9.3 8.4 1.0 14.1 11.9 2.1 9.0 9.7
Capital expenditure by segment (€ 1-9/ 1-9/ 7-9/ 7-9/ 1-12/
million) 2013 2012 Change 2013 2012 Change 2012
Food trade 68 157 -89 24 61 -37 200
Home and speciality goods trade 17 48 -31 3 18 -15 61
Building and home improvement trade 26 42 -16 5 17 -12 63
Car and machinery trade 12 23 -12 3 5 -2 27
Common operations and eliminations 2 4 -2 1 2 -2 27
Group total 125 274 -150 35 103 -67 378
Segment information by quarter
Net sales by segment 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/
(€ million) 2012 2012 2012 2012 2013 2013 2013
Food trade 1,010 1,091 1,078 1,132 1,045 1,099 1,095
Home and speciality goods trade 369 352 395 487 345 322 351
Building and home improvement trade 629 782 759 657 562 740 710
Car and machinery trade 353 274 259 227 249 301 260
Common operations and eliminations -42 -41 -41 -45 -42 -41 -43
Group total 2,318 2,460 2,449 2,459 2,159 2,420 2,374
Operating profit by segment 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/
(€ million) 2012 2012 2012 2012 2013 2013 2013
Food trade 37.4 38.6 49.4 44.8 48.2 55.1 56.5
Home and speciality goods trade -12.9 -0.7 0.9 12.8 -17.7 -5.6 -2.1
Building and home improvement trade -9.0 13.5 17.9 -10.8 -16.1 18.0 23.9
Car and machinery trade 15.5 10.3 11.4 4.7 7.8 13.0 9.8
Common operations and eliminations -5.9 -4.0 -2.2 0.3 -3.0 -3.4 -4.0
Group total 25.1 57.7 77.4 51.8 19.2 77.0 84.1
Operating profit excl. non-recurring 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/
items by segment (€ million) 2012 2012 2012 2012 2013 2013 2013
Food trade 34.7 38.6 49.4 44.8 48.2 50.8 56.0
Home and speciality goods trade -12.9 -0.7 0.9 32.3 -17.8 -10.0 -2.2
Building and home improvement trade -9.0 15.2 17.9 -10.8 -16.6 19.5 23.9
Car and machinery trade 15.5 10.3 11.4 4.7 7.8 13.0 9.8
Common operations and eliminations -5.9 -4.0 -2.2 -0.1 -3.0 -3.4 -4.0
Group total 22.3 59.4 77.4 70.9 18.6 69.8 83.6
Operating margin
excl. non-recurring 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/
items by segment, % 2012 2012 2012 2012 2013 2013 2013
Food trade 3.4 3.5 4.6 4.0 4.6 4.6 5.1
Home and speciality goods trade -3.5 -0.2 0.2 6.6 -5.2 -3.1 -0.6
Building and home improvement trade -1.4 1.9 2.4 -1.6 -3.0 2.6 3.4
Car and machinery trade 4.4 3.7 4.4 2.1 3.1 4.3 3.8
Group total 1.0 2.4 3.2 2.9 0.9 2.9 3.5
Change in tangible and intangible assets (€ million)
30.9.2013 30.9.2012
Opening net carrying amount 1,870 1,680
Depreciation, amortisation and impairment -114 -113
Investments in tangible and intangible assets 127 279
Disposals -7 -21
Currency translation differences -28 15
Closing net carrying amount 1,847 1,839
Related party transactions (€ million)
The Group's related parties include its key management (the Board of Directors,
the President and CEO and the Corporate Management Board), subsidiaries,
associates and the Kesko Pension Fund.
The following transactions were carried out with related parties:
1-9/2013 1-9/2012
Sales of goods and services 63 59
Purchases of goods and services 15 10
Other operating income 1 0
Other operating expenses 20 18
Finance costs 0 0
30.9.2013 30.9.2012
Receivables 10 8
Liabilities 19 34
Fair value hierarchy of financial assets and liabilities (€ million)
Level Level 2 Level 3 30.09.2013
1
Financial assets at fair value through profit
or loss 14.1 160.0 174.1
Derivative financial instruments at fair value
through profit or loss
Derivative financial assets 3.8 3.8
Derivative financial liabilities 16.3 16.3
Available-for-sale financial assets 24.9 235.0 6.4 266.2
Fair value hierarchy of financial assets and liabilities (€ million)
Level Level 2 Level 3 30.09.2013
1
Financial assets at fair value through profit
or loss 153.9 153.9
Derivative financial instruments at fair value
through profit or loss
Derivative financial assets 3.3 3.3
Derivative financial liabilities 19.4 19.4
119.8 6.5 126.3
Available-for-sale financial assets
Level 1 instruments are traded in active markets and their fair values are
directly based on quoted market prices. The fair values of level 2 instruments
are derived from market data. The fair values of level 3 instruments are not
based on observable market data.
Personnel, average and at 30.9.
Personnel average by
segment 1-9/2013 1-9/2012 Change
Food trade 3,118 2,804 314
Home and speciality goods trade 5,771 6,145 -374
Building and home improvement trade 8,893 9,081 -188
Car and machinery trade 1,257 1,260 -3
Common operations 439 451 -12
Group total 19,478 19,740 -263
Personnel at 30.9.*
by segment 2013 2012 Change
Food trade 3,505 3,016 489
Home and speciality goods trade 7,812 8,443 -631
Building and home improvement trade 10,115 10,402 -287
Car and machinery trade 1,280 1,293 -13
Common operations 488 512 -24
Group total 23,200 23,666 -466
* total number incl. part-time employees
Group's commitments (€ million)
30.9.2013 30.9.2012 Change %
Own commitments 191 180 6.2
For associates 65 - -
For others 11 8 45.3
Lease liabilities for machinery and equipment 25 26 -6.2
Lease liabilities for real estate 2,372 2,317 2.3
Liabilities arising from derivative instruments
Fair value
Values of underlying instruments at 30.9. 30.9.2013 30.9.2012 30.9.2013
Interest rate derivatives
Interest rate swaps 202 205 0.17
Currency derivatives
Forward and future contracts 245 406 1.24
Option agreements 3 33 -0.01
Currency swaps 100 100 -11.56
Commodity derivatives
Electricity derivatives 41 31 -2.27
Calculation of performance indicators
Operating profit x 100 / (Non-
current assets + Inventories +
Return on capital employed*, % Receivables + Other current assets -
Non-interest-bearing liabilities) on
average for the reporting period
Operating profit for prior 12 months
x 100 / (Non-current assets +
Return on capital employed, %, moving Inventories + Receivables + Other
12 mo current assets - Non-interest-
bearing liabilities) on average for
12 months
Operating profit excl. non-recurring
items x 100 / (Non-current assets +
Return on capital employed excl. non- Inventories + Receivables + Other
recurring items*, % current assets - Non-interest-
bearing liabilities) on average for
the reporting period
Operating profit excl. non-recurring
items for prior 12 months x 100 /
Return on capital employed excl. non- (Non-current assets + Inventories +
recurring items, %, moving 12 months Receivables + Other current assets -
Non-interest-bearing liabilities) on
average for 12 months
(Profit/loss before tax - income
Return on equity*, % tax) x 100 /
Shareholders' equity
(Profit/loss for prior 12 months
Return on equity, %, moving 12 months before tax - income tax
for prior 12 months) x100 /
Shareholders' equity
(Profit/loss adjusted for non-
Return on equity excl. non-recurring recurring items before tax - income
items*, % tax adjusted for the tax effect of
non-recurring items) x 100 /
Shareholders' equity
(Profit/loss for prior 12 months adjusted for non-recurring items
Return on equity excl. non-recurring before tax - income tax for prior
items, %, moving 12 months 12 months adjusted for the tax
effect of non-recurring items) x
100 / Shareholders' equity
Shareholders' equity x 100 /
Equity ratio, % (Balance sheet total - prepayments
received)
(Profit/loss - non-controlling
Earnings/share, diluted interests) /
Average diluted number of shares
(Profit/loss - non-controlling
Earnings/share, basic interests) /
Average number of shares
Earnings/share excl. (Profit/loss adjusted for non-
non-recurring items, recurring items - non-controlling
basic interests) / Average number of
shares
Equity attributable to equity
Equity/share holders of the parent /
Basic number of shares at the
balance sheet date
Interest-bearing net liabilities x
Gearing, % 100 /
Shareholders' equity
Interest-bearing liabilities - money
Interest-bearing net debt market investments - cash and cash
equivalents
* Indicators for return on capital have been annualised.
K-Group's retail and B2B sales (VAT 0%) (preliminary data):
1.1.-30.9.2013 1.7.-30.9.2013
K-Group's retail and € million Change, % € million Change, %
B2B sales
K-Group's food trade
K-food stores, Finland 3,495 -0.3 1,180 -0.9
Kespro 594 2.7 206 1.8
K-ruoka stores, Russia 42 - 20 -
Food trade total 4,131 1.1 1,406 0.9
K-Group's home and
speciality goods trade
Home and speciality goods stores,
Finland 1,084 -9.1 366 -11.3
Home and speciality goods stores, other
countries 23 -29.9 7 -34.3
Home and speciality
goods trade total 1,107 -9.7 373 -11.9
K-Group's building and home improvement
trade
K-rauta and Rautia 790 -4.5 309 -2.5
Rautakesko B2B Service 140 -12.8 52 -7.0
K-maatalous 352 6.5 115 5.7
Finland total 1,282 -2.8 476 -1.2
Building and home improvement stores,
other Nordic countries 713 -21.6 270 -19.6
Building and home improvement stores,
Baltic countries 283 0.8 114 2.5
Building and home improvement stores,
other countries 286 3.1 108 -2.7
Building and home improvement trade
total 2,563 -8.0 967 -6.9
K-Group's car and
machinery trade
VV-Autotalot 288 -10.1 92 -3.2
VV-Auto, import 293 -7.2 82 7.9
Konekesko, Finland 141 -17.0 46 -10.5
Finland total 722 -10.4 220 -1.1
Konekesko, other countries 105 4.0 44 3.7
Car and machinery trade
total 827 -8.8 265 -0.3
Finland total 7,177 -3.0 2,449 -2.5
Other countries total 1,452 -9.3 562 -7.9
Retail and B2B sales
total 8,629 -4.2 3,011 -3.5
[HUG#1737843]
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