2013-02-05 08:00:00 CET
2013-02-05 08:01:33 CET
REGULATED INFORMATION
Kesko Oyj - Financial Statement Release
Kesko's financial statements release for the period 1 Jan. 2012 to 31 Dec. 2012
KESKO CORPORATION STOCK EXCHANGE RELEASE 05.02.2013 AT 09.00 1(32)
Financial performance in brief:
*The Group's net sales for January-December increased by 2.4%.
* The retail and B2B sales (excl. VAT) of the K-Group (i.e. Kesko and chain
stores) for January-December increased by 2.9%
*The operating profit excluding non-recurring items was €234.7 million (€278.9
million).
*The Board proposes a dividend of €1.20 per share.
*The future outlook has been changed. The Kesko Group's net sales for 2013 are
expected to match the level of the previous year. As a result of measures taken
to enhance business operations and cost savings, the operating profit excluding
non-recurring items for 2013 is expected to exceed the operating profit
excluding non-recurring items for 2012, unless the overall consumer demand
significantly weakens. The capital expenditure for 2013 is expected to be lower
compared to the capital expenditure for the previous year.
Key performance indicators
1-12/2012 1-12/2011 10-12/2012 10-12/2011
Net sales, € million 9,686 9,460 2,459 2,481
Operating profit excl. non-
recurring items, € million 234.7 278.9 71.8 71.5
Operating profit, € million 216.7 280.6 52.7 72.8
Profit before tax, € million 215.2 282.1 53.0 74.0
Capital expenditure, € million 378.3 425.4 103.8 104.5
Earnings per share, diluted, € 1.30 1.84 0.24 0.51
Earnings per share excl. non-
recurring items, basic, € 1.50 1.84 0.45 0.50
31.12.2012 31.12.2011
Equity ratio, % 52.5 53.9
Equity per share, € 22.43 22.20
FINANCIAL PERFORMANCE
Net sales and profit for January-December 2012
The Group's net sales in January-December 2012 were €9,686 million, which is
2.4% up on the corresponding period of the previous year (€9,460 million). In
Finland, net sales increased by 1.0% and in other countries by 9.0%.
International operations accounted for 18.2% (17.1%) of the net sales. Net sales
grew in the food trade, the home and speciality goods trade and the building and
home improvement trade.
1-12/2012 Net sales, € Change, % Operating profit Change, €
million excl. non- million
recurring
items, € million
Food trade 4,311 +3.1 168.4 -3.8
Home and speciality
goods trade 1,603 +2.5 19.8 -16.8
Building and home
improvement trade 2,827 +4.1 13.6 -13.0
Car and machinery
trade 1,114 -5.1 42.1 -9.7
Common operations
and eliminations -169 -3.9 -9.3 -0.9
Total 9,686 +2.4 234.7 -44.2
The operating profit excluding non-recurring items for January-December was
€234.7 million (€278.9 million), representing 2.4% (2.9%) of net sales. The
profit performance was affected by several new store openings, higher level of
costs and the expansion of Russian business operations. In addition,
profitability was negatively impacted by a total write-off of €6 million related
to personnel reductions. The operating profit excluding non-recurring items
includes a €12 million amount recognised as revenue in connection with the
transfer of the pension insurance portfolio.
Operating profit was €216.7 million (€280.6 million). The operating profit
includes a €-18.0 million (€1.7 million) net amount of non-recurring items. The
non-recurring items include an impairment charge of €-23.4 million on Anttila's
goodwill and a €21.3 million reversal of the impairment of Indoor's brands. In
addition, non-recurring expenses in a total of €-16.8 million were recognised
for restructuring Musta Pörssi's business operations. The Group's profit before
tax for January-December was €215.2 million (€282.1 million).
The Group's earnings per share were €1.30 (€1.84). The Group's equity per share
was €22.43 (€22.20).
In January-December, the K-Group's (i.e. Kesko's and the chain stores') retail
and B2B sales (VAT 0%) were €12,107 million, up 2.9% compared to the previous
year. In January-December, the K-Group chains' sales entitling to K-Plussa
points were €5,876 million excluding tax, up 3.2% compared to the previous year.
The K-Plussa customer loyalty programme gained 93,285 new households in January-
December. At the end of December, there was 2,219,516 K-Plussa households and
over 3.8 million K-Plussa cardholders.
Net sales and profit for October-December 2012
The Group's net sales in October-December were €2,459 million, which is 0.9%
down on the corresponding period of the previous year (€2,481 million). Net
sales decreased by 2.6% in Finland and increased by 8.4% in the other countries.
International operations accounted for 17.1% (15.6%) of the net sales. In the
fourth quarter, net sales growth rate fell due to a decrease in the car trade
net sales after the car tax change, a decrease in the net sales of the home and
speciality goods trade, and a fall in the growth rate of the building and home
improvement trade and the food trade.
10-12/2012 Net sales, € Change, % Operating profit Change, €
million excl. non- million
recurring
items, € million
Food trade 1,132 +2.2 45.0 6.4
Home and speciality
goods trade 487 -2.8 32.4 -0.6
Building and home
improvement trade 657 +0.1 -10.8 -6.3
Car and machinery
trade 227 -13.7 4.7 -2.2
Common operations
and eliminations -45 -6.8 0.5 3.1
Total 2,459 -0.9 71.8 0.3
The operating profit excluding non-recurring items for October-December was
€71.8 million (€71.5 million), representing 2.9% of net sales (2.9%). The
operating profit excluding non-recurring items was negatively impacted by a fall
in the growth rate of sales, the expansion of the store site network and Russian
business operations, in addition to the €6 million write-off related to
personnel reductions. The operating profit excluding non-recurring items
includes a €15 million amount recognised as revenue in connection with the
transfer of the pension insurance portfolio.
Operating profit was €52.7 million (€72.8 million). The operating profit
includes a €-19.1 million net amount of non-recurring items. The operating
profit of the comparative period included €1.3 million of non-recurring items.
The Group's profit before tax for October-December was €53.0 million (€74.0
million).
The Group's earnings per share were €0.24 (€0.51).
In October-December, the K-Group's (i.e. Kesko's and the chain stores') retail
and B2B sales (VAT 0%) were €3,100 million, up 0.3% compared to the previous
year. In October-December, the K-Group chains' sales entitling to K-Plussa
points were €1,553 million excluding tax, up 0.8% compared to the previous year.
Finance
In January-December, the cash flow from operating activities was an excellent
€381.7 million (€215.7 million). The cash flow from investing activities was €-
390.7 million
(€-441.1 million). It included a €24.5 million (€8.2 million) amount of proceeds
from the sale of fixed assets.
The Group's liquidity remained at a strong level. In September, a €250 million
bond was issued to finance the Group's capital expenditure and to extend the
debt financing structure. At the end of the period, liquid assets totalled €489
million (€367 million). Interest-bearing liabilities were €624 million (€400
million) and interest-bearing net debt €135 million (€33 million) at the end of
December. Equity ratio was 52.5% (53.9%) at the end of the period.
In January-December, the Group's net finance costs were €0.6 million (net
finance income €0.8 million).
In October-December, the cash flow from operating activities was €174.0 million
(€46.6 million). The cash flow from investing activities was €-115.7 million (€-
110.1 million). It included a €1.9 million (€2.0 million) amount of proceeds
from the sale of fixed assets.
In October-December, the Group's net finance income was €1.1 million (net
finance income €0.8 million), which included a €3.8 million amount of interest
in cooperative capital from Suomen Luotto-osuuskunta.
Taxes
The Group's taxes for January-December were €75.8 million (€85.2 million). The
effective tax rate was 35.2% (30.2%), affected by loss-making foreign
operations.
The Group's taxes for October-December were €27.1 million (€18.7 million). The
effective tax rate was 51.2% (25.3%).
Capital expenditure
In January-December, the Group's capital expenditure totalled €378.3 million
(€425.4 million), or 3.9% (4.5%) of net sales. Capital expenditure in store
sites was €310.0 million (€361.4 million), in IT €21.7 million (€20.4 million)
and other capital expenditure was €46.6 million (€21.8 million). Capital
expenditure in foreign operations represented 22.9% (31.7%) of total capital
expenditure.
In October-December, the Group's capital expenditure totalled €103.8 million
(€104.5 million), or 4.2% (4.2%) of net sales. Capital expenditure in store
sites was €71.2 million (€88.6 million) and other capital expenditure was €32.6
million (€15.2 million). Capital expenditure in foreign operations represented
31.7% (18.5%) 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 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 expenditures.
The Group level cost saving target is a total of around €100 million. Cost
savings will be implemented in all divisions and in all operating countries.
Most of the cost savings are expected to be achieved in 2013. The measures for
staff cost enhancement have been implemented as announced previously, and the
reduction of labour in the whole Group is 885 person-years, of which 486 in
Finland. In addition to terminations, the reductions include reduced working
hours and retirement arrangements. Other significant savings will be implemented
by adjusting especially marketing and store site expenses and by centralising
ICT purchases. In addition, special enhancement measures will be targeted at
operations with poor profitability. The number of personnel in Rautakesko's
foreign operations will be adjusted by some 400 person-years, Anttila's chain
concepts will be reformed and costs will be adjusted, an e-commerce based
operating model will be implemented for Musta Pörssi and its store site network
will be strongly adjusted. The chain concept of Intersport's business operations
in Russia will be reformed and unprofitable store sites will be closed.
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-December, the average number of employees in the Kesko Group was
19,741 (18,960) converted into full-time employees. In Finland, the average
increase was 170 people, while outside Finland, it was 611.
At the end of December 2012, the total number of employees was 24,031 (23,375),
of whom 13,229 (13,124) worked in Finland and 10,802 (10,251) outside Finland.
Compared to the end of December 2011, there was an increase of 105 people in
Finland and 551 people outside Finland.
In January-December, the Group's staff cost was €602.9 million, an increase of
5.7% compared to the previous year. The staff cost for October-December
decreased by 0.8% compared to the previous year and was €155.0 million. The
staff cost for the last quarter was reduced by a €15 million amount recognised
as revenue in connection with the transfer of the pension insurance portfolio.
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
1-12/2012 1-12/2011 10-12/2012 10-12/2011
Net sales, € million 4,311 4,182 1,132 1,108
Operating profit excl. non-
recurring items, € million 168.4 172.2 45.0 38.6
Operating profit as % of net sales
excl. non-recurring items 3.9 4.1 4.0 3.5
Capital expenditure,
€ million 200.0 221.5 43.3 62.3
Net sales, € million 1-12/2012 Change, % 10-12/2012 Change, %
Sales to K-food stores 3,327 +2.4 877 +0.6
Kespro 787 +6.3 203 +7.9
Others 197 +3.3 53 +7.9
Total 4,311 +3.1 1,132 +2.2
January-December 2012
In the food trade, the net sales for January-December were €4,311 million
(€4,182 million), up 3.1%. During the same period, the grocery sales of K-food
stores increased by 3.9% (VAT 0%). The sales of Pirkka products grew by 11.8%
(VAT 0%). In the grocery market, retail prices are estimated to have changed by
some 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 5% in January-December compared to the previous
year (Kesko's own estimate).
In January-December, the operating profit excluding non-recurring items of the
food trade was €168.4 million (€172.2 million), or €3.8 million down on the
previous year. The operating profit performance was impacted by the expansion of
the store site network and costs related to launching business operations in
Russia. Profitability improved towards the end of the year as a result of
enhanced operations and cost adjustments. Operating profit was €171.1 million
(€173.7 million). Non-recurring income included €2.7 million of gains on
disposals of properties.
The capital expenditure of the food trade was €200.0 million (€221.5 million).
October-December 2012
In the food trade, the net sales for October-December were €1,132 million
(€1,108 million), up 2.2%. The last quarter had one less delivery days than in
the previous year. During the same period, the grocery sales of K-food stores
increased by 2.6% (VAT 0%).
In October-December, the operating profit excluding non-recurring items of the
food trade was €45.0 million (€38.6 million), or €6.4 million up on the previous
year. Profitability improved towards the end of the year as a result of enhanced
operations and cost adjustments. The costs for the reporting period were
increased by the launch of business operations in Russia and costs related to
personnel reductions. Operating profit was €45.0 million (€40.0 million).
The capital expenditure of the food trade for October-December was €43.3 million
(€62.3 million).
In October-December 2012, the most significant new store openings included
Kesko's first food store in Russia, opened in St. Petersburg, and one new K-
citymarket and three K-supermarkets opened in Finland.
The most significant store sites being built in Finland are the new K-
citymarkets in Kokkola and in the Puuvilla shopping centre in Pori. The
objective in Russia is to open three new food stores in 2013.
Numbers of stores 2012 2011
K-citymarket 80 75
K-supermarket 210 205
K-market (incl. service station stores) 452 453
K-ruoka, Russia 1 -
Others 194 231
Home and speciality goods trade
1-12/2012 1-12/2011 10-12/2012 10-12/2011
Net sales, € million 1,603 1,564 487 501
Operating profit excl. non-recurring
items, € million 19.8 36.6 32.4 32.9
Operating profit as % of net sales
excl. non-recurring items 1.2 2.3 6.7 6.6
Capital expenditure,
€ million 61.1 61.8 13.4 11.3
Net sales, € million 1-12/2012 Change, % 10-12/2012 Change, %
K-citymarket home and speciality
goods 664 +3.4 206 -0.5
Anttila 468 -1.3 152 -6.5
Intersport, Finland 181 +6.9 55 +4.5
Intersport, Russia 28 - 8 +28.5
Indoor 184 +3.4 46 -1.8
Musta Pörssi 57 -22.3 16 -28.2
Kenkäkesko 23 +3.6 4 -2.1
Total 1,603 +2.5 487 -2.8
January-December 2012
In the home and speciality goods trade, the net sales for January-December were
€1,603 million (€1,564 million), up 2.5%. The sales of K-citymarket home and
speciality goods, Intersport Finland, Budget Sport, as well as Asko and Sotka
grew from the previous year. In addition, the sales performances of all online
stores were positive. The sales of Anttila and Musta Pörssi decreased from the
previous year.
The operating profit excluding non-recurring items of the home and speciality
goods trade for January-December was €19.8 million (€36.6 million). Intersport
Finland, Budget Sport, Asko and Sotka achieved positive profit performances.
Profit was negatively impacted by a decrease in Anttila's sales and
profitability, and the loss from Intersport's business operations in Russia. The
operating profit excluding non-recurring items was positively impacted by a €8.7
million amount recognised as revenue in connection with the transfer of the
pension insurance portfolio.
Operating profit was €0.3 million (€37.0 million). Non-recurring items include
an impairment charge of €-23.4 million on Anttila's goodwill and a €21.3 million
reversal of the impairment of Indoor's brands. In addition, a non-recurring
expense of €-16.8 million was recognised for a significant adjustment of Musta
Pörssi's store network. An online store has been established as Musta Pörssi's
primary customer channel, supported by a limited network of stores operating in
shopping centres.
The capital expenditure of the home and speciality goods trade for January-
December was €61.1 million (€61.8 million).
October-December 2012
In the home and speciality goods trade, the net sales for October-December were
€487 million (€501 million), down 2.8%. Intersport Finland, Budget Sport and
Intersport in Russia increased their sales. E-commerce sales also increased. The
sales of Anttila and Musta Pörssi decreased from the previous year.
The operating profit excluding non-recurring items of the home and speciality
goods trade for October-December was €32.4 million (€32.9 million), or €0.6
million down on the previous year. The operating profit excluding non-recurring
items was positively impacted by a €8.7 million amount recognised as revenue in
connection with the transfer of the pension insurance portfolio. Profit was
negatively impacted by a decrease in Anttila's sales and the loss-making
Intersport operations in Russia, partly attributable to restructuring costs
recognised for the adjustment of the store site network. Operating profit was
€12.9 million (€32.9 million).
The capital expenditure of the home and speciality goods trade was €13.4 million
(€11.3 million).
In October-December 2012, the most significant new store openings included one
Kodin1 department store and one K-citymarket, as well as the citymarket.fi,
mustaporssi.fi and kookenka.fi online stores.
Numbers of stores* 2012 2011
K-citymarket, home and speciality goods 81 75
Anttila department stores 32 31
Kodin1 department stores for home goods and interior decoration 13 11
Intersport 62 56
Budget Sport 10 8
Asko and Sotka 83 81
Musta Pörssi 32 35
Kookenkä 45 37
Anttila, Baltics (NetAnttila) 3 3
Intersport, Russia 29 36
Asko and Sotka, Baltics 10 9
*incl. online stores
Building and home improvement trade
1-12/2012 1-12/2011 10-12/2012 10-12/2011
Net sales, € million 2,827 2,716 657 657
Operating profit excl. non-recurring
items, € million 13.6 26.6 -10.8 -4.4
Operating profit as % of net sales
excl.
non-recurring items 0.5 1.0 -1.6 -0.7
Capital expenditure, € million 63.1 109.8 20.7 20.6
Net sales, € million 1-12/2012 Change, % 10-12/2012 Change, %
Rautakesko, Finland 1,229 -0.3 273 -8.1
K-rauta, Sweden 214 -0.5 46 -5.9
Byggmakker, Norway 636 +7.4 145 +1.3
Rautakesko, Estonia 64 +7.0 16 +3.0
Rautakesko, Latvia 51 -2.9 13 -2.5
Senukai, Lithuania 266 +6.7 73 +7.3
Stroymaster, Russia 284 +19.6 70 +13.2
OMA, Belarus 87 +7.7 23 (..)
Total 2,827 +4.1 657 +0.1
January-December 2012
In the building and home improvement trade, the net sales for January-December
were €2,827 million (€2,716 million), up 4.1%. The sales of the building and
home improvement trade increased especially in Russia, which was attributable to
market growth, as well as a new store opened in Moscow during the year. The
market growth rate of the building and home improvement trade fell during the
last quarter in the other operating countries, especially in the Nordic
countries.
In Finland, the net sales for January-December were €1,229 million (€1,233
million), a decrease of 0.3%. The building and home improvement product lines
contributed €851 million to the net sales in Finland, a decrease of 4.6%. The
agricultural supplies trade contributed €378 million to the net sales, up 10.8%.
The retail sales of the K-rauta and Rautia chains in Finland matched the
previous year's level at €1,073 million (VAT 0%). The sales of Rautakesko B2B
Service, mainly deriving from basic building materials, decreased by 7.5%. As a
whole, the Rautakesko chains' retail and B2B sales performance is estimated to
have exceeded that of the Finnish market. The retail sales of the K-maatalous
chain were €463 million (VAT 0%), up 11.1%.
In January-December, the net sales from the foreign operations of the building
and home improvement trade were €1,598 million (€1,483 million), an increase of
7.8%. In Sweden, net sales were down by 4.1% in terms of kronas. In Norway, net
sales increased by 3.0% in terms of krones. In Russia, net sales increased by
16.8% and in Belarus, by 67.5% in terms of roubles. Foreign operations
contributed 56.5% (54.6%) 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-December was €13.6 million (€26.6 million). In
addition to contracted sales towards the year end, profit performance was
impacted by new store openings in Sweden and Russia, and write-offs on
inventories, trade receivables and raised import duties. Operating profit was
€11.9 million (€26.3 million).
In January-December, the capital expenditure of the building and home
improvement trade totalled €63.1 million (€109.8 million), of which 51.4%
(85.8%) abroad.
October-December 2012
In the building and home improvement trade, the net sales for October-December
were €657 million (€657 million), up 0.1%. During the last quarter, the growth
rate of building and home improvement market fell especially in the Nordic
countries and Latvia. In Russia, sales growth continued, in St. Petersburg, the
growth rate fell.
In Finland, net sales were €273 million (€297 million), a decrease of 8.1%. The
building and home improvement product lines contributed €172 million to the net
sales in Finland, a decrease of 15.0%. The agricultural supplies trade
contributed €100 million to the net sales, up 6.7%.
In October-December, the retail sales of the K-rauta and Rautia chains in
Finland decreased by 4.0% to €247 million (VAT 0%). The sales of Rautakesko B2B
Service decreased by 23.2%. The retail sales of the K-maatalous chain were €133
million (VAT 0%), up 15.0%.
The net sales from foreign operations in the building and home improvement trade
were €385 million (€360 million), an increase of 6.8%. The net sales from
foreign operations grew by 1.8% in terms of local currencies. In Sweden, net
sales were down by 11.0% in terms of kronas. In Norway, net sales decreased by
4.0% in terms of krones. In Norway, the chain agreements of two retailers
expired at the end of 2012. Their contribution to Byggmakker's net sales
slightly exceeded 20%. In Russia, net sales increased by 9.1% in terms of
roubles and in Belarus, net sales increased by 61.5% in terms of roubles
compared to 2011 due to high price increases. Foreign operations contributed
58.5% (54.9%) 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 October-December was €-10.8 million (€-4.4 million). In
addition to contracted sales towards the year end, profit performance was
impacted by new store openings in Sweden and Russia, and write-offs on
inventories, trade receivables, raised import duties and personnel reductions.
Operating profit was €-10.8 million (€-4.5 million).
The capital expenditure of the building and home improvement trade totalled
€20.7 million (€20.6 million), of which 50.4% (85.8%) abroad.
In October-December, two building and home improvement stores were opened in
Belarus. In December, a K-rauta was closed in Helsingborg, Sweden and a K-rauta
in Tallinn, Estonia. A replacement K-rauta is being built in Turku and a K-rauta
in Moscow.
Numbers of stores 2012 2011
K-rauta* 42 41
Rautia* 99 106
K-maatalous* 83 88
K-rauta, Sweden 21 21
Byggmakker, Norway 106 110
K-rauta, Estonia 8 9
K-rauta, Latvia 8 8
Senukai, Lithuania 17 17
K-rauta, Russia 14 14
OMA, Belarus 9 6
*in 2012, 1 K-rauta store and 48 Rautia stores also operated as K-maatalous
stores,
in 2011, 1 K-rauta store and 49 Rautia stores also operated as K-maatalous
stores
Car and machinery trade
1-12/2012 1-12/2011 10-12/2012 10-12/2011
Net sales, € million 1,114 1,174 227 263
Operating profit excl.
non-recurring items,
€ million 42.1 51.8 4.7 7.0
Operating profit as %
of net sales excl.
non-recurring items 3.8 4.4 2.1 2.6
Capital expenditure, € million 26.6 29.9 3.2 9.4
Net sales, € million 1-12/2012 Change, % 10-12/2012 Change, %
VV-Auto 790 -6.9 168 -17.3
Konekesko 325 -0.5 59 -2.4
Total 1,114 -5.1 227 -13.7
January-December 2012
In January-December, the net sales of the car and machinery trade were €1,114
million (€1,174 million), down 5.1%.
VV-Auto's net sales for January-December were €790 million (€849 million), a
decrease of 6.9% compared to the previous year, as a result of a decrease of the
total market. In Finland, new registrations of passenger cars decreased by
11.8% and those of vans by 20.9% compared to the previous year. In January-
December, the combined market share of passenger cars and vans imported by VV-
Auto was 20.2% (20.7%). Volkswagen was the best selling passenger car and van
brand in Finland in 2012.
Konekesko's net sales for January-December were €325 million (€326 million),
down 0.5% compared to the previous year. Net sales in Finland were €211 million,
down 3.6%. The net sales from Konekesko's foreign operations were €116 million,
up 4.9%.
In January-December, the operating profit excluding non-recurring items of the
car and machinery trade was €42.1 million (€51.8 million), down €9.7 million.
Regardless of the sales decrease, profitability remained at a good level. The
operating profit for January-December was €42.1 million (€51.9 million).
The capital expenditure of the car and machinery trade for January-December was
€26.6 million (€29.9 million).
October-December 2012
In October-December, the net sales of the car and machinery trade were €227
million (€263 million), down 13.7%.
VV-Auto's net sales for October-December were €168 million (€203 million), a
decrease of 17.3%. The sales decrease of the car trade was attributable to more
difficult conditions in the market for passenger cars and vans. In October-
December, the combined market share of passenger cars and vans imported by VV-
Auto was 19.8% (21.6%).
Konekesko's net sales for October-December were €59 million (€61 million), down
2.4% compared to the previous year.
In October-December, the operating profit excluding non-recurring items of the
car and machinery trade was €4.7 million (€7.0 million), down €2.2 million
compared to the previous year. Profitability was weakened by the sales decrease
of the car trade. The operating profit for October-December was €4.7 million
(€7.0 million).
The capital expenditure of the car and machinery trade in October-December was
€3.2 million (€9.4 million).
Numbers of stores 2012 2011
VV-Auto, retail trade 10 9
Konekesko 1 2
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 December 2012, the total number of Kesko Corporation shares was
98,712,340, of which 31,737,007, or 32.2%, were A shares and 66,975,333, or
67.8%, were B shares. At 31 December 2012, Kesko Corporation held 608,591 own B
shares as treasury shares, the subsidiaries do not hold Kesko Corporation
shares. Treasury shares account for 0.91% of the number of B shares and 0.62% of
the total number of shares, and 0.16% of votes carried by all shares of the
company. 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 December 2012, 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 5 June 2012 (4,500 B shares),
31 July 2012 (600 B shares), 30 October 2012 (26,038 B shares), 28 November
2012 (17,550 B shares) and 27 December 2012 (18,610 B shares) and announced in
stock exchange notifications 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 6 June 2012, 1 August 2012, 31 October 2012, 29 November
2012 and 28 December 2012. The combined subscription price of €962,365.02
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 €24.82 at the end
of 2011, and €24.39 at the end of December 2012, representing a decrease of
1.7%. Correspondingly, the price of a B share was €25.96 at the end of 2011, and
€24.77 at the end of December 2012, representing a decrease of 4.6%. In January-
December, the highest A share price was €27.65 and the lowest was €19.99. For B
share, they were €27.81 and €18.08 respectively. In January-December, the
Helsinki stock exchange (OMX Helsinki) All-Share index was up by 8.3% and the
weighted OMX Helsinki CAP index by 9.6%. The Retail Index was down by 0.8%.
At the end of December 2012, the market capitalisation of A shares was €774
million, while that of B shares was €1,644 million, excluding the shares held by
the parent company. The combined market capitalisation of A and B shares was
€2,418 million, a decrease of €89 million from the end of 2011. In 2012, a total
of 2.3 (2.1) million A shares were traded on the Helsinki stock exchange, up
8.3%. The exchange value of A shares was €57 million. The total number of B
shares traded was 68.5 (63.3) million, up 8.2%. The exchange value of B shares
was €1,560 million. The Helsinki stock exchange accounted for 76% of all trading
in Kesko shares in 2012. In addition, Kesko shares were traded on multilateral
trading facilities, the most significant of which were BATS Chi-X with 20% and
Turquoise with 4% (source: Fidessa).
The company operates the 2007 option scheme for management and other key
personnel, under which the share subscription period of 2007A share options has
expired, that of 2007B share options runs from 1 April 2011 to 30 April 2013,
and that of 2007C share options runs from 1 April 2012 to 30 April 2014. The
2007B and 2007C share options are included on the official list of the Helsinki
stock exchange. During the reporting period, a total of 501,899 2007B share
options were traded at a total value of €1,198,991, and correspondingly, a total
of 250,729 2007C share options were traded at a total value of €2,435,669.
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. In addition, the Board has the authority, granted by the Annual General
Meeting of 4 April 2011 and valid until 30 June 2014, to decide on the issuance
of a total maximum of 1,000,000 own B shares held by the company itself. The
authority granted by the Annual General Meeting of 4 April 2011 to acquire a
total maximum of 1,000,000 own B shares expired on 30 September 2012. Based on
the authority to issue own shares and the fulfilment of the vesting criteria of
the 2011 vesting period of Kesko's three-year share-based compensation plan, the
Board granted a total of 92,751 company shares held by the company itself to the
persons included in the target group. The matter was announced in a stock
exchange release on 12 April 2012. After the vesting period, a total of 1,342
shares already transferred have been returned to the company in accordance with
the terms of the share-based compensation plan. The returns were announced in
stock exchange notifications on 20 July 2012 and 9 November 2012. Further
information on the Board's authorities is available at www.kesko.fi.
At the end of December 2012, the number of shareholders was 44,554, which is
3,339 more than at the end of 2011. At the end of December, foreign ownership of
all shares was 18%. At the end of December, foreign ownership of B shares was
27%.
Flagging notifications
Kesko Corporation did not receive flagging notifications during the reporting
period.
Main events during the reporting period
The second phase of the transfer of the Kesko Group companies' statutory pension
insurance liability portfolio, agreed between the Kesko Pension Fund and
Ilmarinen Mutual Pension Insurance Company, was carried out with effect from 1
January 2012. (Stock exchange release on 15 February 2012)
On 12 April 2012, Kesko transferred a total of 90,889 own B shares held by the
company itself to the about 150 Kesko management employees and other named key
persons included in the target group of the 2011 vesting period of Kesko's
three-year share-based compensation plan. In addition, on the same basis, Kesko
transferred a total of 1,862 own B shares held by the company itself in May.
After the transfers, the company itself held 607,249 own B shares.
(Stock exchange release on 12 April 2012)
On 11 September 2012, Kesko Corporation issued a €250 million unsecured bond.
The six-year bond will mature on 11 September 2018 and it carries a fixed annual
interest at the rate of 2.75 percent. NASDAQ OMX Helsinki admitted the bond to
public trading as from 12 September 2012. (Stock exchange release on 4 and 11
September 2012)
Matti Mettälä, 49, Master of Laws, was appointed Senior Vice President and
member of Kesko's Corporate Management Board responsible for human resources and
stakeholder relations starting from 1 October 2012. Starting from 1 October
2012, Kesko's Corporate Management Board is composed of Matti Halmesmäki, Chair;
Terho Kalliokoski, responsible for the food trade; Minna Kurunsaari, responsible
for the home and speciality goods trade and Kesko's electronic marketing and
services projects; Arja Talma, responsible for the building and home improvement
trade; Pekka Lahti, responsible for the car and machinery trade; Jukka Erlund,
responsible for finance, treasury and IT management; and Matti Mettälä,
responsible for human resources and stakeholder relations. (Stock exchange
release on 21 September 2012)
Kesko's profitability programme is progressing. The objective is to achieve cost
savings of €100 million. Most of the savings are expected to be achieved in
2013. The profitability programme covers all of Kesko's divisions. The aim is to
reduce especially marketing, personnel, rent and information system expenses.
(Stock exchange release on 24 September 2012)
The Financial Supervisory Authority gave its permission to the Kesko Pension
Fund to return the surplus assets accumulated in its department B, which managed
the pension fund's statutory pension insurance provision, to the Kesko Group
companies. The surplus returned from the pension fund to the Group companies
generated a cash inflow of approximately €71 million. (Stock exchange release on
14 December 2012)
Resolutions of the 2012 Annual General Meeting and decisions of the Board's
organisational meeting
Kesko Corporation's Annual General Meeting, held on 16 April 2012, adopted the
financial statements for 2011 and discharged the Board members and the Managing
Director from liability. The General Meeting also resolved to distribute €1.20
per share as dividends on 98,035,931 shares held outside the company at the date
of dividend distribution, or a total amount of €117,643,117.20. The dividend pay
date was 26 April 2012. The General Meeting resolved to leave the number of
Board members unchanged at seven and elected Esa Kiiskinen, Ilpo Kokkila, Tomi
Korpisaari, Maarit Näkyvä, Seppo Paatelainen, Toni Pokela and Virpi Tuunainen as
Board members for a three-year term of office as stated in the Articles of
Association. The General Meeting elected PricewaterhouseCoopers Oy as the
company's auditor, with Johan Kronberg, APA, as the company's auditor with
principal responsibility. The General Meeting also approved the Board's proposal
to issue a total maximum of 20,000,000 new B shares until 30 June 2015, and the
Board's proposal that it be authorised until the 2013 Annual General Meeting to
decide on the donation of a total maximum of €300,000 for charitable or
corresponding purposes.
The organisational meeting of Kesko Corporation's Board of Directors, held after
the Annual General Meeting, elected Esa Kiiskinen as its Chair and Seppo
Paatelainen as its Deputy Chair. The Board elected Maarit Näkyvä as the Chair,
Seppo Paatelainen as the Deputy Chair and Virpi Tuunainen as a member of the
Audit Committee, and Esa Kiiskinen as the Chair, Seppo Paatelainen as the Deputy
Chair and Ilpo Kokkila as a member of the Remuneration Committee. The Board
elects the Board Chair and Deputy Chair for the whole three-year term of a Board
member, and the Committee Chairs, Deputy Chairs and members for one year at a
time.
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 16 April 2012.
Responsibility
In January 2012, Kesko was included on 'The Global 100 Most Sustainable
Corporations in the World' list for the eighth time.
In February, World Finance Magazine recognised Kesko for the best corporate
governance in Finland in terms of development and reporting for a second
successive year.
In March, the US Ethisphere Institute listed Kesko as one of the World's Most
Ethical Companies for 2012.
Kesko's Board of Directors granted scholarships in a total of €41,000 to
talented young athletes and art students.
For the tenth time, Kesko was included in the Dow Jones sustainability indexes
DJSI World and DJSI Europe. Kesko's total score increased from the previous year
and Kesko was given the highest scores in four areas in its sector.
Kesko was again included in the FTSE4Good index. Kesko's overall rating for
2012 was 96 out of 100, which is four points up from the previous year. The
score given to Kesko's work for curbing climate change was 5 on the scale of
0-5.
Kesko was included in the STOXX Global ESG Leaders index for the second time
Kesko is also one of the 100 companies on SSP Fonder's list of the world's 100
most responsible companies.
In October, Kesko was awarded the highest score in the Consumer Staples sector
in the assessment by the Nordic Carbon Disclosure Leadership climate index.
Kesko was included in the index for a second successive year.
Risk management
Kesko's risk management is proactive and an integral part of its management and
day-to-day activities. The objective of risk management is to ensure the
delivery of customer promises, profit performance, dividend payment capacity,
shareholder value, the implementation of responsible operating practices and the
continuity of operations in the Kesko Group.
Risk management in the Kesko Group is guided by the risk management policy
confirmed by the Board of Directors. The policy defines the objectives and
principles, organisation, responsibilities and practices of risk management in
the Kesko Group. The management of financial risks is based on the Group's
finance policy, which is confirmed by Kesko's Board of Directors. The business
division and Group managements are responsible for the execution of risk
management.
The Kesko Group applies a business-oriented and comprehensive approach to risk
assessment and management. This means that key risks are systematically
identified, assessed, managed, monitored and reported at the Group, division,
company and unit levels in all operating countries.
Kesko has a uniform risk assessment and reporting system. Risk identification is
based on business objectives and opportunities and the defined risk appetite.
Risks are prioritised on the basis of their significance by assessing the impact
and probability of their materialisation and the level of risk management. When
assessing the impact of materialisation, the impacts on reputation, people's
wellbeing and the environment are considered in addition to financial impacts.
In connection with the strategy process, the divisions assess the risks and
opportunities concerning each strategic period. Near-future risks are identified
and assessed in accordance with the rolling planning framework. Risk assessment
also covers the risks concerning each division's subsidiaries and significant
projects.
A division's risk assessment, which includes risk management responses,
responsible persons and schedules, is considered by the division's management
board or the division parent company's Board quarterly prior to the disclosure
of the interim report. The Group functions also assess the risks concerning
their responsibility areas.
Risks and management responses are reported in accordance with Kesko's reporting
responsibilities. The divisions report on risks and changes in risks to the
Group's risk management function on a quarterly basis. Risks are discussed by
the risk reporting team including representatives of the divisions and the Group
functions. On that basis, the Group's risk management function prepares the
Group's risk map, which presents the most significant risks and uncertainties
and their management.
The Group's risk map is considered by the Kesko Board's Audit Committee in
connection with considering the quarterly interim reports and the financial
statements. The Chair of the Audit Committee reports on risk management to the
Board as part of the Audit Committee's report. The Kesko Board considers the
Kesko Group's most significant risks and uncertainties and their management
responses, and assesses the efficiency and performance of risk management at
least once a year. The most significant risks and uncertainties are reported to
the market by the Board in the financial statements, and any material changes in
them in the interim reports.
The following describes the risks and uncertainties assessed as significant.
Significant risks and uncertainties
A possible further weakening of economic development, increases in taxes and
public payments resulting from the indebtedness of the public sector, coupled
with increasing unemployment will weaken purchasing power and consumer
confidence, in addition to negatively impacting especially the home and
speciality goods trade, the building and home improvement trade and the car and
machinery trade. In the food trade, the impacts can be seen in consumption
moving towards more affordable alternatives.
E-commerce and e-services are becoming increasingly popular in the retail trade.
International e-commerce increases consumers' alternatives at the same time when
buying and marketing of products and services become more personalised and
increasingly take place online. Buying decisions are increasingly often made
based on online information. The achievement of objectives requires attractive
e-services and retail websites, utilisation of a multi-channel approach and
electronic customer communications to support it. The risk is that the progress
of our e-commerce and e-service development projects is outpaced by competitors,
or that competing online stores and e-services are more attractive to customers.
As part of capital expenditure prioritisation, Kesko has specified its expansion
plans in Russia for the food trade, the building and home improvement trade and
the sports trade. The key in expansion is to succeed in the acquisition and
building of well located store sites, the development of store concepts,
purchasing operations and logistics, as well as the recruitment of key
personnel. The country risks in Russia, such as corruption, unpredictability of
officials and rapid changes in laws and their application, coupled with
unexpected changes in the operating environment can delay the expansion and make
business operations more difficult.
The implementation of changes in business operations requires increasingly
sophisticated management and control systems and information systems supporting
them. Rautakesko's expansion abroad, for example, and the adoption of a uniform
selection management, and the integration of K-citymarket home and speciality
goods and Anttila with related changes in business operations are long-term
projects. Failures in change management, technological choices and the adoption
of new operating models and systems would delay the implementation of changes in
business operations.
The regulations on the food trade are tightening. Public discussion about food
prices and the position of operators in the supply chain has increased.
Increasing regulations restricting competitive trading conditions are being
imposed in Finland and also by the European Union. Such a development can weaken
the trading sector's possibilities to serve customers and operate efficiently.
Kesko's chain operations are, contrary to most competitors, based on a retailer
business model to a significant extent. The benefits of the retailer business
model include the retailer's knowledge of local customers and ability to rapidly
respond to changes in customer needs or competitive situations. Decision-making
concerning the development of the chains' operations and the implementation of
changes in business operations can, however, be outpaced by competitors.
The trading sector is characterised by increasingly complicated and long supply
chains and a dependency on information systems, data communications and external
service providers. Failures in information and payment systems, or in other
parts of the supply chain can cause significant losses in sales and weaken
customer satisfaction.
For the purpose of increasing market share, good store sites are a key
competitive factor. The acquisition of store sites can be delayed by zoning and
permit procedures and the availability and pricing of sites. Considerable
amounts of capital or lease liabilities are tied up in store properties for
years. Resulting from changes in the market situation, or an increase in the
share of e-commerce, there is a risk that a store site becomes unprofitable and
operations are discontinued while long-term liabilities remain.
A failure in product safety control or in the quality assurance of the supply
chain can result in financial losses, the loss of customer confidence or, in the
worst case, a health hazard to customers.
In lines of business strongly dependent on individual principals and suppliers,
such as the car and machinery trade, ownership arrangements and changes in a
principal's or supplier's strategy concerning product selections, pricing and
distribution channel solutions can mean weakened competitiveness, decreased
sales, or loss of business.
Crimes are increasingly committed through data networks and crime is becoming
more professional. A failure especially in the protection of payment
transactions and personal information can cause losses, claims for damages and
endanger reputation. There is a risk that controls against such crime are not
sufficient.
Different aspects of responsibility, such as ethicality of production and
sourcing, fair and equal treatment of employees and environmental protection are
increasingly important for customers and other stakeholders. Possible failures
of responsibility would result in negative publicity for Kesko. Kesko's
challenges in responsibility work include communicating its responsibility
policies to suppliers, retailers and customers, and ensuring responsibility in
the supply chain.
Compliance with laws and agreements is an important part of Kesko's
responsibility. Non-compliance can result in fines, compensations for damages
and other financial losses, and a loss of confidence and reputation.
Kesko's objective is to produce and publish reliable and timely information. If
some information published by Kesko proved to be incorrect, or communications
failed to meet regulations in other respects, it can result in losing investor
and other stakeholder confidence and in possible sanctions.
Accidents, natural phenomena and epidemics can cause damages or business
interruptions which cannot be prevented. There is also the risk that insurances
do not cover all unexpected accidents and damages.
Other risks and uncertainties related 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
reporting period (1/2013-12/2013) in comparison with the 12 months preceding the
reporting period (1/2012-12/2012).
Resulting from the problems of European national economies, the outlook for the
general economic situation and consumer demand are characterised by significant
uncertainty. In addition, tightening taxation and cuts in public finances are
expected to weaken the growth in the trading sector.
In the Finnish grocery trade, the market is expected to remain steady. As a
result of the weakened economic situation, the markets for the home and
speciality goods trade, the building and home improvement trade and the car and
machinery trade in Finland are expected to fall. In Russia, the market
development in both the building and home improvement trade and the grocery
trade is expected to be positive.
The Kesko Group's net sales for 2013 are expected to match the level of the
previous year. As a result of measures taken to enhance business operations and
cost savings, the operating profit excluding non-recurring items for 2013 is
expected to exceed the operating profit excluding non-recurring items for 2012,
unless the overall consumer demand significantly weakens. The capital
expenditure for 2013 is expected to be lower compared to the capital expenditure
for the previous year.
Proposal for profit distribution
The parent's distributable profits are €1,141,220,145.13, of which the profit
for the financial year is €154,424,274.87.
The Board of Directors proposes to the Annual General Meeting to be held on 8
April 2013 that a dividend of €1.20 per share be paid on shares held outside the
company at the date of dividend distribution. No dividend is paid on treasury
shares held by the company at the record date of dividend distribution.
At the date of the proposal for distributions of profits, 4 February 2013, a
total of 98,103,749 shares were held outside the Company, amounting to a total
dividend of €117,724,498.80.
Annual General Meeting
The Board of Directors decided to convene the Annual General Meeting at the
Helsinki Fair Centre on 8 April 2013 at 13.00. Kesko Corporation will publish a
notice of the Annual General Meeting at a later date.
Annual Report 2012 and Corporate Governance Statement
Kesko will publish the 2012 Annual Report, which contains the report by Kesko's
Board of Directors and the financial statements for 2012, and a separate
Corporate Governance Statement on week 10 on its website at www.kesko.fi.
Helsinki, 4 February 2013
Kesko Corporation
Board of Directors
The information in the financial statements release is unaudited.
Further information is available from Jukka Erlund, Senior Vice President, CFO,
telephone +358 1053 22113, and Eva Kaukinen, Vice President, Corporate
Controller, telephone +358 1053 22338. A Finnish-language webcast from the media
and analyst briefing on the financial statements can be accessed at www.kesko.fi
at 11.00. An English-language web conference on the financial statements will be
held today at 14.30 (Finnish time). The web conference login is available on
Kesko's website at www.kesko.fi.
Kesko Corporation's interim report for January-March will be released on 25
April 2013. 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:
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
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
ATTACHMENTS:
Accounting policies
This financial statements release has been prepared in accordance with the IAS
34 standard. The financial statements release has been prepared in accordance
with the same principles as the annual financial statements for 2011, with the
exception of the following changes due to the adoption of new and revised IFRS
standards and IFRIC interpretations.
IFRS 7 Financial instruments: Disclosures - Derecognition (Amendment)
IAS 12 Income taxes - Deferred tax (Amendment)
Annual amendments to the IFRS (Annual Improvements)
The above amendments to standards and interpretations do not have a material
impact on the reported income statement, statement of financial position or
notes.
Consolidated income statement
(€ million), condensed
1-12/ 1-12/ Change,% 10-12/ 10-12/ Change,%
2012 2011 2012 2011
Net sales 9,686 9,460 2.4 2,459 2,481 -0.9
Cost of goods sold -8,367 -8,163 2.5 -2,108 -2,126 -0.8
Gross profit 1,319 1,297 1.7 351 356 -1.3
Other operating income 747 705 6.0 197 188 4.5
Staff cost -603 -571 5.7 -155 -156 -0.8
Depreciation and impairment
charges -158 -125 27.1 -45 -35 30.0
Other operating expenses -1,088 -1,026 6.0 -295 -280 5.3
Operating profit 217 281 -22.8 53 73 -27.6
Interest income and other
finance income 21 22 -5.2 8 6 32.5
Interest expense and other
finance costs -17 -18 -4.3 -6 -5 24.4
Exchange differences -5 -3 31.3 -1 -1 81.8
Income from associates -1 1 (..) -1 0 (..)
Profit before tax 215 282 -23.7 53 74 -28.4
Income tax -76 -85 -11.1 -27 -19 44.8
Net profit for the period 139 197 -29.2 26 55 -53.2
Attributable to
Owners of the parent 128 182 -29.5 24 50 -52.8
Non-controlling
interests 11 15 -25.9 2 5 -57.0
Earnings per share (€)
for profit attributable to
equity holders of the parent
Basic 1.31 1.85 -29.4 0.24 0.51 -52.7
Diluted 1.30 1.84 -29.2 0.24 0.51 -52.6
Consolidated statement
of comprehensive
income (€ million)
1-12/ 1-12/ Change,% 10-12/ 10-12/ Change,%
2012 2011 2012 2011
Net profit for the period 139 197 -29.2 26 55 -53.2
Other comprehensive income
Exchange differences on
translating foreign operations 0 -17 (..) -3 2 (..)
Adjustment for hyperinflation 4 6 -37.8 1 6 36.2
Cash flow hedge revaluation -3 -15 -82.8 -1 -3 -56.8
Revaluation of available-for-
sale financial assets 9 0 (..) -3 0 (..)
Other items 0 0 54.2 0 0 -
Tax relating to other
comprehensive income 1 4 -81.9 3 1 (..)
Total other comprehensive
income for the period,
net of tax 10 -22 (..) -3 6 (..)
Total comprehensive income for
the period 150 175 -14.3 23 61 -62.3
Attributable to
Owners of the parent 136 170 -20.2 20 52 -60.4
Non-controlling
interests 14 4 (..) 3 9 -72.7
(..) Change over 100%
Consolidated statement of financial position
(€ million), condensed
31.12.2012 31.12.2011 Change, %
ASSETS
Non-current assets
Tangible assets 1,678 1,490 12.6
Intangible assets 192 189 1.4
Investments in associates and other
financial assets 105 69 53.4
Loans and receivables 91 80 10.6
Pension assets 147 200 -26.6
Total 2,213 2,029 9.0
Current assets
Inventories 814 868 -6.2
Trade receivables 703 700 0.4
Other receivables 153 218 -29.8
Financial assets at fair value
through profit or loss 137 98 40.4
Available-for-sale financial assets 249 186 34.2
Cash and cash equivalents 103 84 22.5
Total 2,160 2,153 0.3
Non-current assets held for sale 2 8 -71.2
Total assets 4,375 4,190 4.4
31.12.2012 31.12.2011 Change, %
EQUITY AND LIABILITIES
Equity 2,200 2,175 1.2
Non-controlling interests 67 58 14.4
Total equity 2,267 2,233 1.5
Non-current liabilities
Interest-bearing liabilities 450 210 (..)
Non-interest-bearing liabilities 10 18 -44.1
Deferred tax liabilities 79 91 -15.9
Pension obligations 2 2 -4.7
Provisions 21 10 98.0
Total 562 332 68.5
Current liabilities
Interest-bearing liabilities 174 190 -8.2
Trade payables 808 886 -8.7
Other non-interest-bearing liabilities 524 526 -0.3
Provisions 40 24 66.1
Total 1,546 1,625 -4.8
Total equity and liabilities 4,375 4,190 4.4
(..) Change over 100%
Consolidated statement of changes in equity (€ million)
Cur-
rency Non-
trans- Re- cont-
Share lation Revalu- tained rolling
capi- Reser- differ- ation Treasury earn- inte-
tal ves ences reserve shares ings rests Total
Balance at
1 Jan. 2011 197 441 -3 14 0 1,503 59 2,210
Shares
subscribed
with options 0 0
Treasury shares -23 -23
Share-based
payments 1 2 0 3
Dividends -128 -4 -133
Other
changes 0 0 0 0 0
Net profit for
the period 182 15 197
Other
comprehensive
income
Exchange
differences on
translating
foreign
operations 0 -1 -17 -17
Adjustment for
hyperinflation 1 6 6
Cash flow hedge
revaluation -15 -15
Revaluation of
available-for-
sale financial
assets 0 0
Other items 0 0
Tax relating to
other
comprehensive
income 4 4
Total other
comprehensive
income -1 -11 0 -11 -22
Balance at
31 Dec. 2011 197 441 -3 3 -22 1,559 58 2,233
Balance at
1 Jan. 2012 197 441 -3 3 -22 1,559 58 2,233
Shares
subscribed
with options 1 1
Share-based
payments 3 0 0 3
Dividends -118 -5 -123
Other
changes 1 0 3 0 3
Net profit for
the period 128 11 139
Other
comprehensive
income
Exchange
differences on
translating
foreign
operations 0 1 -1 0
Adjustment for
hyperinflation 0 3 4
Cash flow hedge
revaluation -3 -3
Change in
revaluation
reserve 9 9
Other items 0 0
Tax relating to
other
comprehensive
income 1 1
Total other
comprehensive
income 0 1 7 0 2 10
Balance at
31 Dec. 2012 197 442 -2 10 -19 1,573 67 2,267
Consolidated statement of cash flows (€ million), condensed
1-12/ 1-12/ Change,% 10-12/ 10-12/ Change,%
2012 2011 2012 2011
Cash flows from operating
activities
Profit before tax 215 282 -23.7 53 74 -28.4
Planned depreciation 155 125 23.9 43 35 23.9
Finance income and costs 1 -1 (..) -2 -1 (..)
Other adjustments 98 -6 (..) 91 -28 (..)
Change in working capital
Current non-interest-bearing
operating receivables,
increase (-)/decrease (+) 5 -89 (..) 61 -42 (..)
Inventories,
increase (-)/decrease (+) 57 -119 (..) 22 -72 (..)
Current non-interest-bearing
liabilities,
increase (+)/decrease (-) -70 127 (..) -75 109 (..)
Financial items and tax -79 -103 -23.5 -18 -29 -37.9
Net cash from operating activities 382 216 77.0 174 47 (..)
Cash flows from investing
activities
Capital expenditure -411 -449 -8.4 -118 -112 4.7
Sales of fixed assets 24 8 (..) 2 2 -5.1
Increase in non-current
receivables -4 0 (..) 0 0 (..)
Net cash used in investing
activities -391 -441 -11.4 116 -110 5.1
Cash flows from financing
activities
Interest-bearing liabilities,
increase (+)/decrease (-) 230 -58 (..) -8 -20 -59.7
Current interest-bearing
receivables,
increase (-)/decrease (+) 37 -37 (..) 86 -39 (..)
Dividends paid -123 -133 -7.5 -1 -1 14.2
Equity increase 1 0 (..) 1 0 (..)
Acquisition of own shares - -23 (..) - 1 (..)
Short-term money market
investments, increase (-)/
decrease (+) -2 199 (..) -39 36 (..)
Other items -14 1 (..) -3 0 (..)
Net cash used in financing
activities 130 -51 (..) 36 -22 (..)
Change in cash and cash
equivalents 121 -277 (..) 94 -86 (..)
Cash and cash equivalents and
current portion of available-for-
sale financial assets at 1 Jan. 231 509 -54.7 258 315 -18.3
Currency translation difference
adjustment and revaluation 0 -2 -93.8 0 1 (..)
Cash and cash equivalents and
current portion of available-for-
sale financial assets at 31 Dec. 352 231 52.5 352 231 52.5
(..) Change over 100%
Group's performance indicators
1-12/2012 1-12/2011 Change, pp
Return on capital employed, % 8.5 13.2 -4.6
Return on capital employed excl. non-recurring
items, % 9.3 13.1 -3.9
Return on equity, % 6.2 8.9 -2.7
Return on equity excl. non-recurring items, % 7.1 8.8 -1.8
Equity ratio, % 52.5 53.9 -1.4
Gearing, % 6.0 1.5 4.5
Change, %
Capital expenditure, € million 378.3 425.4 -11.1
Capital expenditure, % of net sales 3.9 4.5 -13.3
Earnings per share, basic, € 1.31 1.85 -29.4
Earnings per share, diluted, € 1.30 1.84 -29.2
Earnings per share excl. non-recurring items,
basic, € 1.50 1.84 -18.2
Cash flow from operating activities,
€ million 382 216 77.0
Cash flow from investing activities,
€ million -391 -441 -11.4
Equity per share, € 22.43 22.20 1.0
Interest-bearing net debt 135 33 (..)
Diluted number of
shares, average for
reporting period 98,472 98,919 -447
Personnel, average 19,741 18,960 781
(..) Change over 100%
Group's performance 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
indicators by quarter 2011 2011 2011 2011 2012 2012 2012 2012
Net sales, € million 2,103 2,472 2,404 2,481 2,318 2,460 2,449 2,459
Change in net sales, % 7.4 8.5 7.8 7.4 10.2 -0.5 1.9 -0.9
Operating profit, € million 35.7 83.9 88.2 72.8 26.3 59.0 78.6 52.7
Operating margin, % 1.7 3.4 3.7 2.9 1.1 2.4 3.2 2.1
Operating profit excl. non-
recurring items, € million 34.9 83.3 89.2 71.5 23.6 60.7 78.6 71.8
Operating margin excl.
non-recurring items, % 1.7 3.4 3.7 2.9 1.0 2.5 3.2 2.9
Finance income/costs,
€ million -0.6 0.3 0.3 0.8 -0.1 -0.3 -1.3 1.1
Profit before tax,
€ million 36.1 84.0 88.0 74.0 26.3 58.5 77.3 53.0
Profit before tax, % 1.7 3.4 3.7 3.0 1.1 2.4 3.2 2.2
Return on capital employed,
% 7.2 16.0 16.4 12.8 4.3 9.2 12.2 8.1
Return on capital employed
excl. non-recurring items, % 7.0 15.9 16.6 12.5 3.9 9.5 12.2 11.1
Return on equity, % 4.5 10.6 10.9 10.0 3.3 7.3 9.9 4.6
Return on equity excl.
non-recurring items, % 4.4 10.6 11.1 9.8 3.0 7.5 9.9 8.2
Equity ratio, % 54.4 52.1 54.0 53.9 52.7 51.1 51.2 52.5
Capital expenditure, €
million 64.1 130.5 126.3 104.5 104.1 67.8 102.6 103.8
Earnings per share, diluted,
€ 0.25 0.55 0.53 0.51 0.17 0.38 0.51 0.24
Equity per share, € 22.04 21.21 21.66 22.20 22.42 21.59 22.21 22.43
Segment information
Net sales by segment 1-12/ 1-12/ Change, 10-12/ 10-12/ Change,
(€ million) 2012 2011 % 2012 2011 %
Food trade total 4,311 4,182 3.1 1,132 1,108 2.2
- of which intersegment trade 172 168 2.3 43 44 -1.7
Home and speciality goods trade,
Finland 1,557 1,541 1.0 474 490 -3.3
Home and speciality goods trade,
other countries* 45 23 95.7 13 11 15.5
Home and speciality goods trade
total 1,603 1,564 2.5 487 501 -2.8
- of which intersegment trade 18 20 -8.3 6 7 -9.3
Building and home improvement trade,
Finland 1,229 1,233 -0.3 273 297 -8.1
Building and home improvement trade,
other countries* 1,598 1,483 7.8 385 360 6.8
Building and home improvement trade
total 2,827 2,716 4.1 657 657 0.1
- of which intersegment trade 0 12 -96.8 0 3 (..)
Car and machinery trade, Finland 998 1,064 -6.2 207 247 -16.0
Car and machinery trade, other
countries* 116 110 4.7 20 16 19.6
Car and machinery trade
total 1,114 1,174 -5.1 227 263 -13.7
- of which intersegment trade 1 1 -3.7 0 0 72.1
Common operations and
eliminations -169 -176 -3.9 -45 -48 -6.8
Finland total 7,924 7,844 1.0 2,038 2,094 -2.6
Other countries total* 1,762 1,616 9.0 420 388 8.4
Group total 9,686 9,460 2.4 2,459 2,481 -0.9
* Net sales in countries other than Finland.
(..) Change over 100%
Operating profit by segment (€ 1-12/ 1-12/ 10-12/ 10-12/
million) 2012 2011 Change 2012 2011 Change
Food trade 171.1 173.7 -2.6 45.0 40.0 5.0
Home and speciality goods trade 0.3 37.0 -36.7 12.9 32.9 -20.1
Building and home improvement trade 11.9 26.3 -14.4 -10.8 -4.5 -6.3
Car and machinery trade 42.1 51.9 -9.8 4.7 7.0 -2.3
Common operations and eliminations -8.8 -8.3 0.5 0.9 -2.6 3.5
Group total 216.7 280.6 -63.9 52.7 72.8 -20.1
Operating profit excl.
non-recurring items 1-12/ 1-12/ 10-12/ 10-12/
by segment (€ million) 2012 2011 Change 2012 2011 Change
Food trade 168.4 172.2 -3.8 45.0 38.6 6.4
Home and speciality goods trade 19.8 36.6 -16.8 32.4 32.9 -0.6
Building and home improvement trade 13.6 26.6 -13.0 -10.8 -4.4 -6.3
Car and machinery trade 42.1 51.8 -9.7 4.7 7.0 -2.2
Common operations and eliminations -9.3 -8.3 -0.9 0.5 -2.6 3.1
Group total 234.7 278.9 -44.2 71.8 71.5 0.3
Operating margin
excl. non-recurring 1-12/ 1-12/ 10-12/ 10-12/
items by segment 2012 2011 Change, pp 2012 2011 Change, pp
Food trade 3.9 4.1 -0.2 4.0 3.5 0.5
Home and speciality goods
trade 1.2 2.3 -1.1 6.7 6.6 0.1
Building and home improvement
trade 0.5 1.0 -0.5 -1.6 -0.7 -1.0
Car and machinery trade 3.8 4.4 -0.6 2.1 2.6 -0.6
Group total 2.4 2.9 -0.5 2.9 2.9 0.0
Capital employed by
segment, cumulative 1-12/ 1-12/ 10-12/ 10-12/
average (€ million) 2012 2011 Change 2012 2011 Change
Food trade 758 601 157 810 661 149
Home and speciality goods trade 512 437 75 526 472 54
Building and home improvement trade 758 696 62 744 709 35
Car and machinery trade 187 158 30 184 184 0
Common operations and eliminations 321 236 85 324 256 68
Group total 2,536 2,129 408 2,588 2,282 306
Return on capital
employed excl. non- 1-12/ 1-12/ 10-12/ 10-12/
recurring items by segment, % 2012 2011 Change, pp 2012 2011 Change, pp
Food trade 22.2 28.6 -6.4 22.2 23.4 -1.2
Home and speciality goods
trade 3.9 8.4 -4.5 24.6 27.9 -3.3
Building and home improvement
trade 1.8 3.8 -2.0 -5.8 -2.5 -3.3
Car and machinery trade 22.5 32.8 -10.4 10.3 15.2 -4.9
Group total 9.3 13.1 -3.8 11.1 12.5 -1.4
Capital expenditure 1-12/ 1-12/ 10-12/ 10-12/
by segment (€ million) 2012 2011 Change 2012 2011 Change
Food trade 200 221 -21 43 62 -19
Home and speciality goods trade 61 62 -1 13 11 2
Building and home improvement trade 63 110 -47 21 21 0
Car and machinery trade 27 30 -3 3 9 -6
Common operations and eliminations 28 2 25 23 1 22
Group total 378 425 -47 103 105 -1
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) 2011 2011 2011 2011 2012 2012 2012 2012
Food trade 948 1,077 1,049 1,108 1,010 1,091 1,078 1,132
Home and speciality goods
trade 348 339 376 501 369 352 395 487
Building and home
improvement trade 570 757 731 657 629 782 759 657
Car and machinery trade 279 342 290 263 353 274 259 227
Common operations and
eliminations -42 -43 -42 -48 -42 -41 -41 -45
Group total 2,103 2,472 2,404 2,481 2,318 2,460 2,449 2,459
Operating profit by segment (€ 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
million) 2011 2011 2011 2011 2012 2012 2012 2012
Food trade 42.1 45.9 45.7 40.0 37.6 38.9 49.6 45.0
Home and speciality goods trade -7.4 2.8 8.7 32.9 -12.9 -0.6 0.9 12.9
Building and home improvement
trade -9.1 18.8 21.0 -4.5 -9.0 13.6 18.0 -10.8
Car and machinery trade 12.2 19.7 13.0 7.0 15.6 10.3 11.5 4.7
Common operations and
eliminations -2.2 -3.3 -0.2 -2.6 -5.1 -3.2 -1.4 0.9
Group total 35.7 83.9 88.2 72.8 26.3 59.0 78.6 52.7
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) 2011 2011 2011 2011 2012 2012 2012 2012
Food trade 41.4 45.8 46.4 38.6 34.9 38.9 49.6 45.0
Home and speciality goods trade -7.4 2.4 8.7 32.9 -12.9 -0.6 0.9 32.4
Building and home improvement
trade -9.1 18.8 21.3 -4.4 -9.0 15.3 18.0 -10.8
Car and machinery trade 12.2 19.6 13.0 7.0 15.6 10.3 11.5 4.7
Common operations and
eliminations -2.2 -3.3 -0.2 -2.6 -5.1 -3.2 -1.4 0.5
Group total 34.9 83.3 89.2 71.5 23.6 60.7 78.6 71.8
Operating margin
excl. non-recurring 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
items by segment 2011 2011 2011 2011 2012 2012 2012 2012
Food trade 4.4 4.3 4.4 3.5 3.5 3.6 4.6 4.0
Home and speciality goods trade -2.1 0.7 2.3 6.6 -3.5 -0.2 0.2 6.7
Building and home improvement
trade -1.6 2.5 2.9 -0.7 -1.4 2.0 2.4 -1.6
Car and machinery trade 4.4 5.7 4.5 2.6 4.4 3.8 4.4 2.1
Group total 1.7 3.4 3.7 2.9 1.0 2.5 3.2 2.9
Personnel, average and at 31 Dec.
Personnel average by
segment 1-12/2012 1-12/2011 Change
Food trade 2,794 2,706 88
Home and speciality goods trade 6,139 5,754 385
Building and home improvement trade 9,105 8,874 231
Car and machinery trade 1,254 1,206 48
Common operations 450 420 29
Group total 19,741 18,960 781
Personnel at 31.12.*
by segment 2012 2011 Change
Food trade 3,114 2,984 130
Home and speciality goods trade 8,950 8,765 185
Building and home improvement trade 10,204 9,895 309
Car and machinery trade 1,259 1,250 9
Common operations 504 481 23
Group total 24,031 23,375 656
* total number incl. part-time employees
Group's commitments (€ million)
31.12.2012 31.12.2011 Change, %
Own commitments 176 182 -3.1
For associates 65 -
For others 10 8 21.8
Lease liabilities for machinery and equipment 26 26 0.1
Lease liabilities for real estate 2,302 2,303 -0.0
Liabilities arising from derivative
instruments
Fair value
Values of underlying instruments at 31 Dec. 31.12.2012 31.12.2011 31.12.2012
Interest rate derivatives
Interest rate swaps 203 208 0.75
Currency derivatives
Forward and future contracts 245 358 -3.34
Option agreements 11 - 0.03
Currency swaps 100 100 -9.47
Commodity derivatives
Electricity derivatives 41 32 -3.63
Calculation of performance indicators
Operating profit x 100 / (Non-current
assets + Inventories + Receivables +
Return on capital employed*, % Other current assets - Non-interest-
bearing liabilities) on average for
the reporting period
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
(Profit/loss before tax - income tax)
Return on equity*, % x 100 /
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
Shareholders' equity x 100 /
Equity ratio, % (Balance sheet total - prepayments
received)
(Profit/loss - non-controlling
Earnings/share, diluted interests) /
Average number of shares adjusted for
the dilutive effect of options
(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 holders
Equity/share 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.-31.12.2012 1.10.-31.12.2012
K-Group's retail and € million Change, % € million Change, %
B2B sales
K-Group's food trade
K-food stores 4,738 3.4 1,230 1.9
Kespro 779 6.4 201 8.0
Food trade total 5,517 3.8 1,431 2.7
K-Group's home and
speciality goods trade
Home and speciality goods stores,
Finland 1,705 1.9 512 -0.6
Home and speciality goods stores,
other countries 45 94.8 13 15.0
Home and speciality
goods trade total 1,750 3.1 524 -0.3
K-Group's building and home
improvement trade
K-rauta and Rautia 1,073 0.0 246 -4.2
Rautakesko B2B Service 209 -7.5 48 -23.2
K-maatalous 463 11.1 133 15.0
Finland total 1,746 1.7 427 -1.9
Building and home improvement stores,
other Nordic countries 1,203 3.9 293 -1.8
Building and home improvement stores,
Baltic countries 383 5.4 102 5.3
Building and home improvement stores,
other countries 370 16.7 93 27.8
Building and home improvement trade
total 3,701 4.1 915 1.3
K-Group's car and
machinery trade
VV-Autotalot 412 -2.4 91 -15.2
VV-Auto, import 396 -11.4 80 -20.9
Konekesko, Finland 210 -3.2 40 -10.5
Finland total 1,017 -6.3 211 -16.7
Konekesko, other countries 120 5.5 19 15.5
Car and machinery trade
total 1,138 -5.2 230 -14.7
Finland total 9,982 2,0 2,577 -0.7
Other countries total 2,125 7.6 523 5.5
Retail and B2B sales
total 12,107 2.9 3,100 0.3[HUG#1675434]
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