2014-02-04 08:00:00 CET
2014-02-04 08:02:21 CET
REGULATED INFORMATION
Kesko Oyj - Financial Statement Release
Kesko's financial statements release for the period 1 Jan. 2013 to 31 Dec. 2013
KESKO CORPORATION STOCK EXCHANGE RELEASE 04.02.2014 AT 09.00 1(34)
Kesko's financial statements release for the period 1 Jan. 2013 to 31 Dec. 2013
Financial performance in brief:
* The Group's net sales for January-December €9,315 million, change -3.8%
* Due to the implementation of enhancement measures, the operating profit
excluding non-recurring items increased to €238.8 million (€230.0 million).
* Earnings per share excluding non-recurring items €1.68 (€1.47)
* The Board proposes a dividend of €1.40 per share
* Equity ratio 54.5% (52.5%)
* 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
1-12/2013 1-12/2012 10-12/2013 10-12/2012
Net sales, € million 9,315 9,686 2,362 2,459
Operating profit excl. non-
recurring items, € million 238.8 230.0 66.8 70.9
Operating profit, € million 248.4 212.0 68.0 51.8
Profit before tax, € million 242.3 210.5 67.9 52.1
Capital expenditure, € million 171.5 378.3 46.6 103.8
Earnings per share, diluted, € 1.75 1.26 0.60 0.23
Earnings per share excl. non-
recurring items, basic, € 1.68 1.47 0.59 0.44
31.12.2013 31.12.2012
Equity ratio, % 54.5 52.5
Equity per share, € 22.96 22.48
FINANCIAL PERFORMANCE
Net sales and profit for January-December 2013
The Group's net sales for January-December 2013 were €9,315 million, which is
3.8% down on the corresponding period of the previous year (€9,686 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 6.1%. Net sales
performance in the other countries was materially impacted by exchange rate
changes and 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 17.8% (18.2%)
of net sales. Net sales grew in the food trade and declined in the other
divisions.
1-12/2013 Net sales, € Change, % Operating profit Change,
million excl. non- € million
recurring
items, € million
Food trade 4,387 +1.8 203.3 +35.8
Home and speciality
goods trade 1,457 -9.1 -8.3 -27.9
Building and home
improvement trade 2,607 -7.8 25.7 +12.4
Car and machinery
trade 1,037 -6.9 33.9 -8.0
Common operations and
eliminations -173 -2.4 -15.8 -3.5
Total 9,315 -3.8 238.8 +8.8
The operating profit excluding non-recurring items for January-December was
€238.8 million (€230.0 million). The enhancement measures of the profitability
programme had a significant positive impact on the Group's profit performance.
Operating expenses decreased by €87 million regardless of store site network
expansion and cost inflation. In the previous year, costs were reduced and the
operating profit excluding non-recurring items was improved by the €12 million
amount recognised as revenue in connection with the transfer of the pension
insurance portfolio. The operating expenses for the previous year included
write-offs of €6 million related to personnel reductions and non-recurring
expenses of €20.8 million.
Operating profit was €248.4 million (€212.0 million). The operating profit
includes €9.6 million (€-18.0 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 non-recurring items for the previous year included an
impairment of Anttila's goodwill, a reversal of the impairment of Indoor's brand
and non-recurring expenses for restructuring Musta Pörssi's business operations.
The Group's profit before tax for January-December was €242.3 million (€210.5
million).
The Group's earnings per share were €1.75 (€1.26). The Group's equity per share
was €22.96 (€22.48).
In January-December, the K-Group's (i.e. Kesko's and the chain stores') retail
and B2B sales (VAT 0%) were €11,575 million, down 4.4% compared to the previous
year. The K-Plussa customer loyalty programme gained 74,317 new households in
January-December. At the end of December, there was 2,251,311 K-Plussa
households and 3.9 (3.8) million K-Plussa cardholders.
Net sales and profit for October-December 2013
The Group's net sales for October-December 2013 were €2,362 million, which is
3.9% down on the corresponding period of the previous year (€2,459 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 3.2% and in the other countries by 7.2%.
International operations accounted for 16.5% (17.1%) of net sales.
10-12/2013 Net sales, € Change, % Operating profit Change,
million excl. non- € million
recurring
items, € million
Food trade 1,148 +1.4 48.3 +3.5
Home and speciality
goods trade 439 -9.9 21.6 -10.7
Building and home
improvement trade 596 -9.4 -1.1 +9.8
Car and machinery
trade 226 -0.4 3.3 -1.3
Common operations and
eliminations -46 -3.6 -5.4 -5.3
Total 2,362 -3.9 66.8 -4.1
The operating profit excluding non-recurring items for October-December was
€66.8 million (€70.9 million), representing 2.8% (2.9%) of net sales. In terms
of operations, profitability was better than in the previous year considering
that the operating profit excluding non-recurring items for the comparative
period included a €15 million amount recognised as revenue in connection with
the transfer of the pension insurance portfolio. The enhancement measures
implemented had a significant positive impact on profit performance. Operating
profit was €68.0 million (€51.8 million). The operating profit includes €1.2
million (€-19.1 million) of non-recurring items. The non-recurring items for the
comparative period included an impairment of Anttila's goodwill, a reversal of
the impairment of Indoor's brand and non-recurring expenses for restructuring
Musta Pörssi's business operations.
The Group's profit before tax for October-December was €67.9 million (€52.1
million).
The Group's earnings per share were €0.60 (€0.23).
In October-December, the K-Group's (i.e. Kesko's and the chain stores') retail
and B2B sales (VAT 0%) were €2,945 million, down 5.0% compared to the previous
year.
Finance
In January-December, the cash flow from operating activities was €413.8 million
(€381.7 million). The cash flow from investing activities was €-152.0 million
(€-390.7 million) including a €21.8 million (€24.5 million) amount of proceeds
from the sales of fixed assets.
The Group's liquidity remained at an excellent level in January-December. At the
end of the period, liquid assets totalled €681 million (€489 million). Interest-
bearing liabilities were €554 million (€624 million) and interest-bearing net
debt €-126 million (€135 million) at the end of December. Equity ratio was
54.5% (52.5%) at the end of the period.
In January-December, the Group's net finance costs were €5.8 million (€0.6
million). The increase in net finance costs was attributable to the low Euribor
rates which reduced the return on liquid assets.
In October-December, the cash flow from operating activities stood at €114.5
million (€175.4 million). The cash flow from investing activities was €-38.7
million (€-115.7 million) including a €5.1 million (€1.9 million) amount of
proceeds from the sales of fixed assets.
In October-December, the Group's net finance costs were €0.4 million (net
finance income €1.1 million).
Taxes
The Group's taxes for January-December were €57.7 million (€74.6 million). The
effective tax rate was 23.8% (35.5%), affected by loss-making foreign
operations. The Group's tax rate was affected by the reduction of the corporate
tax rate to 20% effective from 1 January 2014 in Finland, which is why deferred
taxes of €14 million were recognised as income. The impact of the tax rate
change in the Group's tax rate for January-December was 5.6 percentage points.
The Group's taxes for October-December were €5.3 million (€26.9 million). The
effective tax rate was 7.9% (51.7%). The impact of change in the Finnish tax
rate in the tax rate for October-December was 20.0 percentage points.
Capital expenditure
In January-December, the Group's capital expenditure totalled €171.5 million
(€378.3 million), or 1.8% (3.9%) of net sales. Capital expenditure in store
sites was €125.5 million (€310.0 million), in IT €22.9 million (€22.1 million)
and other capital expenditure was €23.2 million (€46.1 million). Capital
expenditure in foreign operations represented 41.3% (22.9%) of total capital
expenditure.
In October-December, the Group's capital expenditure totalled €46.6 million
(€103.8 million), or 2.0% (4.2%) of net sales. Capital expenditure in store
sites was €33.0 million (€71.5 million), in IT €6.8 million (€4.2 million) and
other capital expenditure was €6.8 million (€28.0 million). Capital expenditure
in foreign operations represented 37.8% (31.7%) 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, aimed 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 of a total of around €100 million was
achieved in 2013. In 2013, Kesko's operating expenses were €1,767 million,
representing a net decrease of €87 million (-4.7%) from the previous year
regardless of store site network expansion and cost inflation.
Measures for staff cost enhancement were implemented as announced previously. In
addition to terminations, reductions included reduced working hours and
retirement arrangements. Other significant savings were implemented by adjusting
especially marketing and store site expenses and by centralising ICT purchases.
In addition, special enhancement measures were 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.
Improving Anttila's profitability
In the home and speciality goods trade, the increase of online shopping and
increased competition have considerably weakened the profitability of Anttila
and the home technology trade. In order to improve profitability, plans are made
to close some rented store sites during the next two years. The closures are
expected to cause non-recurring expenses amounting toapproximately 20 to 30
million euros during the first quarter. Approximately one third of the current
Anttila department store network is planned to be closed. At the same time, the
selection of products in the NetAnttila and Musta Pörssi online stores will be
considerably expanded, and the Anttila and Kodin1 department store concepts will
be renewed.
Kesko looks into setting up a real estate fund
In 2013, Kesko reviewed the criteria on which store sites owned by it are
classified as strategic and other properties. As at 31 December 2013, according
to the new classification, 53% of store sites are strategic, compared to 78% in
the old classification.
Kesko is looking into selling some of its store sites to a fund to be set up
with Kesko as one of its major investors. Kesko Group would continue its
operations in the store sites under long-term leases signed in connection with
their sales to the fund.
Kesko's objective is to set up a fund of mainly Kesko-owned store sites and
shopping centres in Finland, Sweden and Russia with a maximum fair value of
approximately €750 - 950 million.
Launching the real estate investment fund depends, in addition to investor
interest, on whether it is possible for Kesko to achieve such terms and
conditions in the arrangement that are commercially viable for it, taking the
Group's strong financial position into account. Moreover, starting a real estate
investment fund is subject to the authorisation of the Financial Supervisory
Authority.
The possible fund is expected to be launched in the course of 2014.
Personnel
In January-December, the average number of employees in Kesko Group was 19,489
(19,747) converted into full-time employees. In Finland, the average decrease
was 426 people, while outside Finland, there was an increase of 168 people.
At the end of December 2013, the number of employees was 23,863 (24,080), of
whom 12,776 (13,278) worked in Finland and 11,087 (10,802) outside Finland.
Compared to the end of December 2012, there was a decrease of 502 people in
Finland and an increase of 285 people outside Finland.
In January-December, the Group's staff cost was €611.1 million, showing a 0.6%
increase compared to the previous year. In October-December, staff cost was
€161.8 million, up 3.8% 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
1-12/2013 1-12/2012 10-12/2013 10-12/2012
Net sales, € million 4,387 4,311 1,148 1,132
Operating profit excl. non- recurring
items, € million 203.3 167.5 48.3 44.8
Operating margin excl. non-recurring
items, % 4.6 3.9 4.2 4.0
Capital expenditure,
€ million 91.6 200.0 23.7 43.3
Net sales, € million 1-12/2013 Change, % 10-12/2013 Change, %
Sales to K-food stores 3,330 +0.1 869 -0.9
Kespro 803 +2.0 203 0.0
K-ruoka, Russia 71 - 28 -
Others 184 -5.1 48 -2.7
Total 4,387 +1.8 1,148 +1.4
January-December 2013
In the food trade, the net sales for January-December were €4,387 million
(€4,311 million), up 1.8%. 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% 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 2.5% in January-December 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-December, the operating profit excluding non-recurring items of the
food trade was €203.3 million (€167.5 million), or €35.8 million up on the
previous year. Profitability was improved by significant savings achieved from
enhanced operations and by the adjustment of capital expenditure. Excluding the
impact of expansion of Russian business operations, costs decreased by €31
million. Operating profit was €208.0 million (€170.2 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-December was €91.6 million
(€200.0 million), of which €80.5 million (€187.1 million) in stores sites.
October-December 2013
In the food trade, the net sales for October-December were €1,148 million
(€1,132 million), up 1.4%.
The operating profit excluding non-recurring items of the food trade in October-
December was €48.3 million (€44.8 million), or €3.5 million up on the previous
year. Profit performance was affected by cost savings and it was negatively
impacted by a €1.7 million unrealised loss on measurement of derivatives used
for hedging electricity purchases. Operating profit was €48.3 million (€44.8
million).
The capital expenditure of the food trade in October-December was €23.7 million
(€43.3 million).
In October-December 2013, five new K-supermarkets were opened. 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 Jakomäki,
Helsinki, and in Ikaalinen. K-market Fortuna in Helsinki is being extended into
a K-supermarket and K-supermarket Reimari in Parainen is being extended.
In December 2013, the fourth K-ruoka store was opened in St. Petersburg. Kesko
Food's objective is to open three new food stores in the St. Petersburg area in
2014.
Numbers of stores as at 31 Dec. 2013 2012
K-citymarket 80 80
K-supermarket 218 210
K-market (incl. service station stores) 442 452
K-ruoka, Russia 4 1
Others* 176 194
* incl. online food store
Home and speciality goods trade
1-12/2013 1-12/2012 10-12/2013 10-12/2012
Net sales, € million 1,457 1,603 439 487
Operating profit excl. non-recurring
items, € million -8.3 19.6 21.6 32.3
Operating margin excl. non-recurring
items, % -0.6 1.2 4.9 6.6
Capital expenditure,
€ million 23.1 61.1 6.3 13.4
Net sales, € million 1-12/2013 Change, % 10-12/2013 Change, %
K-citymarket, home and speciality
goods 628 -5.4 194 -5.6
Anttila 391 -16.5 131 -14.0
Intersport, Finland 190 +5.0 54 -2.5
Intersport, Russia 18 -36.2 4 -50.3
Indoor 182 -1.2 46 +1.7
Musta Pörssi 29 -48.8 7 -56.6
Kenkäkesko 21 -8.7 4 -17.1
Total 1,457 -9.1 439 -9.9
January-December 2013
In the home and speciality goods trade, the net sales for January-December were
€1,457 million (€1,603 million), down 9.1%. 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 ending of Musta Pörssi's
retailer business and the closing of unprofitable stores of Intersport Russia.
The profitability of K-citymarket home and speciality goods, Intersport Finland
and Asko and Sotka remained at a good level.
The operating profit excluding non-recurring items of the home and speciality
goods trade for January-December was €-8.3 million (€19.6 million), down €27.9
million compared to the previous year. The performance was affected by the
increased losses caused by the decreased sales of Anttila. The operating profit
excluding non-recurring items of the comparative period was improved by the €9
million amount recognised as revenue in connection with the transfer of the
pension insurance portfolio. Cost savings from the implementation of the
profitability programme as planned were €31 million.Operating profit was €-2.1
million (€0.0 million). Non-recurring items include gains on the disposals of
properties in the amount of €4.1 million. In the previous year, non-recurring
items (€-19.5 million) included the non-recurring costs related to the
reorganisation of the Musta Pörssi business.
The capital expenditure of the home and speciality goods trade was €23.1 million
(€61.1 million) in January-December.
October-December 2013
In the home and speciality goods trade, the net sales for October-December were
€439 million (€487 million), down 9.9%. Net sales performance was impacted by
the decrease in the sales of the department store trade and the significant
adjustment of the store site networks of Musta Pörssi and Intersport Russia. The
sales of sports equipment and clothes were negatively impacted by a delayed
winter season compared to the comparative year.
The operating profit excluding non-recurring items of the home and speciality
goods trade for October-December was €21.6 million (€32.3 million).
Profitability was negatively impacted by the weakened profit of the department
store trade. The operating profit excluding non-recurring items of the
comparative period was improved by the €9 million amount recognised as revenue
in connection with the transfer of the pension insurance portfolio. Operating
profit was €23.3 million (€12.8 million).
The capital expenditure of the home and speciality goods trade was €6.3 million
(€13.4 million).
The most significant new store openings in October-December 2013 were an Asko
store in Kokkola, the Intersport Ruka store in Kuusamo and an Intersport store
in the Grand Canyon shopping centre in St. Petersburg.
Numbers of stores as at 31 Dec. 2013 2012
K-citymarket, home and speciality goods* 81 81
Anttila department stores* 31 32
Kodin1 department stores for home goods and interior decoration* 13 13
Intersport, Finland 63 62
Budget Sport* 11 10
Asko and Sotka 85 83
Musta Pörssi* 6 32
Kookenkä* 46 49
Anttila, Baltics* 3 3
Intersport, Russia 21 28
Asko and Sotka, Baltics* 10 10
* incl. online stores
Building and home improvement trade
1-12/2013 1-12/2012 10-12/2013 10-12/2012
Net sales, € million 2,607 2,827 596 657
Operating profit excl. non-recurring
items, € million 25.7 13.3 -1.1 -10.8
Operating margin excl. non-recurring
items, % 1.0 0.5 -0.2 -1.6
Capital expenditure,
€ million 37.8 63.1 11.4 20.7
Net sales,
€ million 1-12/2013 Change, % 10-12/2013 Change, %
Rautakesko, Finland 1,173 -4.6 257 -5.9
K-rauta, Sweden 205 -4.0 45 -2.4
Byggmakker, Norway 470 -26.0 100 -30.7
K-rauta, Estonia 69 +8.1 17 +11.7
K-rauta, Latvia 52 +1.1 13 -1.4
Senukai, Lithuania 263 -1.1 72 -1.2
K-rauta, Russia 272 -4.2 66 -5.6
OMA, Belarus 106 +22.7 27 +14.8
Total 2,607 -7.8 596 -9.4
January-December 2013
In the building and home improvement trade, the net sales for January-December
were €2,607 million (€2,827 million), down 7.8%. Excluding the impact of
retailer changes in Norway, net sales performance in terms of local currencies
was -0.5%. The trend in construction activity still remained weak in
Rautakesko's operating area. Sales decrease was most significant in basic
building materials.
In Finland, the net sales for January-December were €1,173 million (€1,229
million), a decrease of 4.6%. The building and home improvement products
contributed €794 million to the net sales in Finland, a decrease of 6.4%. The
agricultural supplies trade contributed €379 million to net sales, down 0.5%.
The retail sales of the K-rauta and Rautia chains in Finland decreased by 4.6%
to €1,025 million (VAT 0%). The sales of Rautakesko B2B Service were down
10.7%. The retail sales of the K-maatalous chain were €460 million (VAT 0%) at
the previous year's level.
In January-December, the net sales from the foreign operations of the building
and home improvement trade were €1,435 million (€1,598 million), a decrease of
10.2%. In terms of local currencies and excluding the impact of retailer changes
in Norway, the increase in the net sales from foreign operations was 2.8%. In
Sweden, net sales in terms of kronas were down 4.6%. In Norway, net sales in
terms of krones decreased by 22.7%, which was affected by the changes that took
place in the Byggmakker chain last year. New chain agreements for the retailer
business in Norway came into force on 1 January 2014 and the company
restructuring was completed in January 2014. In Russia, net sales in terms of
roubles increased by 1.6%. Foreign operations contributed 55.0% (56.5%) 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 €25.7 million (€13.3 million), up
€12.4 million compared to the previous year. Due to enhancement measures, profit
performance was clearly positive regardless of the decline in sales. Costs
decreased by €21 million. Operating profit was €24.8 million (€11.6 million).
In January-December, the capital expenditure of the building and home
improvement trade totalled €37.8 million (€63.1 million), of which 44.1% (51.4%)
abroad. Capital expenditure in store sites represented 88.0% of total capital
expenditure.
October-December 2013
In the building and home improvement trade, the net sales for October-December
were €596 million (€657 million), down 9.4%. Taking into account the impact of
retailer changes in Norway, net sales was at the previous year's level in terms
of local currencies.
In Finland, net sales were €257 million (€273 million), a decrease of 5.9%. The
building and home improvement products contributed €170 million to the net sales
in Finland, an increase of 0.1%. The agricultural supplies trade contributed €86
million to net sales, down 15.8%.
The retail sales of the K-rauta and Rautia chains in Finland decreased by 4.8%
to €235 million (VAT 0%) in October-December. The sales of Rautakesko B2B
Service were down 3.8%. The retail sales of the K-maatalous chain were €109
million (VAT 0%), down 18.0%.
The net sales from the foreign operations of the building and home improvement
trade were €339 million (€385 million), a decrease of 11.8%. In terms of local
currencies and excluding the impact of retailer changes in Norway, the net sales
performance of foreign operations was +4.3%. In Sweden, net sales in terms of
kronas were up 0.9%. In Norway, net sales in terms of krones decreased by
21.4%, which was affected by the changes that took place in the Byggmakker chain
last year. In Russia, net sales in terms of roubles increased by 4.0%. Foreign
operations contributed 56.9% (58.5%) 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 €-1.1 million (€-10.8 million), up
€9.8 million compared to the previous year. Due to enhancement measures,
operating expenses were lower than in the previous year. Operating profit was €-
1.0 million (€-10.8 million).
The capital expenditure of the building and home improvement trade totalled
€11.4 million (€20.7 million), of which 41.4% (50.4%) abroad.
Numbers of stores as at 31 Dec. 2013 2012
K-rauta* 42 42
Rautia* 99 99
K-maatalous* 83 83
K-rauta, Sweden 21 21
Byggmakker, Norway 91 106
K-rauta, Estonia 8 8
K-rauta, Latvia 8 8
Senukai, Lithuania 18 17
K-rauta, Russia 13 14
OMA, Belarus 9 9
* In 2013, 47 Rautia stores also operated as K-maatalous stores.
In 2012, 1 K-rauta store and 48 Rautia stores also operated as K-maatalous
stores.
Car and machinery trade
1-12/2013 1-12/2012 10-12/2013 10-12/2012
Net sales, € million 1,037 1,114 226 227
Operating profit excl.
non-recurring items,
€ million 33.9 41.9 3.3 4.7
Operating margin excl. non-recurring
items, % 3.3 3.8 1.5 2.1
Capital expenditure, € million 15.1 26.6 3.3 3.2
Net sales, € million 1-12/2013 Change, % 10-12/2013 Change, %
VV-Auto 745 -5.7 176 +5.0
Konekesko 293 -9.9 50 -15.7
Total 1,037 -6.9 226 -0.4
January-December 2013
In January-December, the net sales of the car and machinery trade were €1,037
million (€1,114 million), down 6.9%.
VV-Auto's net sales for January-December were €745 million (€790 million), a
decrease of 5.7%. In January-December, the combined market performance of first
time registered passenger cars and vans was -7.2%.
In January-December, the combined market share of passenger cars and vans
imported by VV-Auto was 20.6% (20.2%). Volkswagen was the market leader in both
passenger cars and vans.
Konekesko's net sales for January-December were €293 million (€325 million),
down 9.9% compared to the previous year. Net sales in Finland were €178 million,
down 15.7%. The net sales from Konekesko's foreign operations were €116 million,
up 0.2%.
In January-December, the operating profit excluding non-recurring items of the
car and machinery trade was €33.9 million (€41.9 million), down €8.0 million
compared to the previous year. Due to enhancement measures, profitability
remained at a good level regardless of the decline in sales.
The operating profit for January-December was €33.9 million (€41.9 million).
The capital expenditure of the car and machinery trade for January-December was
€15.1 million (€26.6 million).
October-December 2013
The net sales of the car and machinery trade for October-December were €226
million (€227 million), down 0.4%.
VV-Auto's net sales for October-December were €176 million (€168 million), an
increase of 5.0%. In October-December, the combined market share of passenger
cars and vans imported by VV-Auto was 21.1% (19.8%).
Konekesko's net sales for October-December were €50 million (€59 million), down
15.7% compared to the previous year.
In October-December, the operating profit excluding non-recurring items of the
car and machinery trade was €3.3 million (€4.7 million), down €1.3 million
compared to the previous year.
The capital expenditure of the car and machinery trade for October-December was
€3.3 million (€3.2 million).
Numbers of stores as at 31 Dec. 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 December 2013, the total number of Kesko Corporation shares was
99,832,693, of which 31,737,007, or 31.8%, were A shares and 68,095,686, or
68.2%, were B shares. At 31 December 2013, Kesko Corporation held 548,984 own B
shares as treasury shares. These treasury shares accounted for 0.81% 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 385,465,756. Each A share carries ten (10) votes and each B share one
(1) vote. The company cannot vote with own shares held as treasury shares and no
dividend is paid on them. At the end of December 2013, Kesko Corporation's share
capital was €197,282,584. During the reporting period, the number of B shares
was increased eight 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), 30 September 2013 (68,461 B shares),
30 October 2013 (6,100 B shares), 28 November 2013 (56,779 B shares) and on 27
December 2013 (69,160 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, 1 October 2013, 31 October
2013, 29 November 2013 and 30 December 2013. The subscription price of
€19,554,663.12 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 €26.80 at the end of December 2013, representing an increase of
9.9%. Correspondingly, the price of a B share was €24.77 at the end of 2012, and
€26.80 at the end of December 2013, representing an increase of 8.2%. In
January-December, the highest A share price was €27.55 and the lowest was
€22.48. For B share, they were €27.80 and €20.96 respectively. In January-
December, the Helsinki stock exchange (OMX Helsinki) All-Share index was up
26.5% and the weighted OMX Helsinki CAP index was up 26.0%. Correspondingly, the
Retail Index was down 0.6%.
At the end of December 2013, the market capitalisation of A shares was €851
million, while that of B shares was €1,810 million, excluding the shares held by
the parent company. The combined market capitalisation of A and B shares was
€2,661 million, an increase of €243 million from the end of 2012. In January-
December 2013, a total of 1.1 million (2.3 million) A shares was traded on the
Helsinki stock exchange, down 50.3%. The exchange value of A shares was €28
million. The total number of B shares traded was 51.3 million (68.5 million),
down 25.0%. The exchange value of B shares was €1,238 million. In terms of
volumes, the Helsinki stock exchange accounted for 68% of Kesko A and B share
trading in 2013. Kesko shares were also traded on multilateral trading
facilities, the most significant of which were BATS Chi-X with 22% and Turquoise
with 9% of the trades (source: Fidessa).
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 401,466 2007C share options were traded at a total
value of €4,751,525. 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, departing 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 6,724
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, 20 August 2013, 9 October 2013 and 20 December 2013. Further
information on the Board's authorisations is available at www.kesko.fi.
At the end of December 2013, the number of shareholders was 42,809, which was
1,745 less than at the end of 2012. At the end of December, foreign ownership of
all shares was 25%. At the end of December, foreign ownership of B shares was
36%.
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 Group 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 Group 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)
Kesko announced that it was looking into selling some of the store sites it owns
to a fund to be set up with Kesko as one of its significant investors. Kesko
Group would continue its operations in the store sites under long-term leases
signed in connection with their sales to the fund. The possible fund is expected
to be launched in the course of 2014. (Stock exchange release on 29 November
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 October, Kesko scored highest in its sector in CDP's Nordic Climate
Disclosure Leadership index rating. Kesko is featured at the top of the index
for a third consecutive time and improved its previous score by 10 points
(98/100).
Matti Kalervo, Master of Science in Technology, was appointed Vice President
responsible for Kesko's responsibility and product safety starting from 1
November 2013.
In November, Kesko's Corporate Responsibility Report 2012 was chosen as
Finland's best in the 2013 Sustainability Reporting Award Finland Competition.
Kesko's report was ranked the best also by the media and non-governmental
organisations.
Kesko and K-stores were the national partner of Salvation Army's Christmas
Kettle collection.
In December, K-stores, the Association for Finnish Work, food manufacturers and
the home and speciality goods industry launched a cooperation campaign for
Finnish work running throughout 2014.
Risk management
Risk management in Kesko Group is guided by the risk management policy confirmed
by Kesko's Board of Directors. The policy defines the objectives and principles,organisation, responsibilities and practices of risk management in 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.
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 Group's risk map is considered by the Kesko Board's Audit Committee in
connection with the quarterly interim reports and the financial statements. The
Audit Committee Chair reports on risk management to the Board as part of the
Audit Committee report. The Kesko Board considers 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
Slow economic growth, 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 and may cause a long-term
decline in the level of demand. This would negatively impact on the home and
speciality goods trade, the building and home improvement trade and the car and
machinery trade in particular. In the food trade, price becomes increasingly
important.
E-services and e-commerce 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 often made based on online
information. The achievement of business objectives requires an active approach
and solid competencies in the development of attractive e-services and retail
websites, the 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.
Economic development in Russia has slowed. Key for the profitability and
expansion of operations is to succeed in the acquisition and building of well-
located store sites, the development of the existing network and store concepts,
purchasing and logistics operations, as well as the recruitment of 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 expansion and make business operations
more difficult.
The implementation of changes in business operations requires efficient
management and control systems and information systems to support them.
Increasing Kesko Food's market share in Finland, implementing changes in
Rautakesko's business operations and expanding in Russia and the integration of
K-citymarket home and speciality goods and Anttila, with related changes in
business operations and concepts, are long-term projects. Failures in choosing
competitive advantages, in change management, technological choices and in the
adoption of new operating models and systems would delay the implementation of
changes in business operations.
Kesko's chain operations are, contrary to most competitors, based on a retailer
business model to a significant extent. The competitive advantages of the
retailer business model include the retailer's knowledge of local customers and
the ability to rapidly respond to changes in customer needs or competitivesituations. Decision-making concerning the development of the chains' operations
and the implementation of changes in business operations can, however, be
outpaced by competitors.
Effective from the beginning of 2014, the Finnish competition legislation was
amended to the effect that, unlike in the rest of the EU area, the prohibition
of abuse of dominant market position can be applied on companies whose national
market share in the groceries retail markets exceeds 30 percent. According to
the new law, Kesko Food is in a dominant market position. Special obligations
have been imposed on a company in a dominant market position which can weaken
the trading sector's possibilities to serve customers and operate efficiently.
The implications of dominant market position are partly open to interpretation.
An erroneous interpretation may result in monetary penalties, liability for
damages and weakened reputation.
The trading sector is characterised by increasingly complicated and long supply
chains and a higher 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. While the share of e-commerce grows or the market situation changes,
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.
The implementation of strategies and achievement of objectives require competentand motivated personnel. There is the risk that the trading sector does not
attract the most competent people. A growing need for special competencies
increases the dependency on individual expertise and the key person risk.
In divisions strongly dependent on individual principals and suppliers, such as
the car and machinery trade, ownership arrangements and changes in a principal's
or supplier's strategy concerning product selections, pricing and distribution
channel solutions can mean weakened competitiveness, decreased sales, or loss of
business.
Crimes are increasingly committed through data networks and crime is becoming
more international and 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 supply
chain, fair and equal treatment of employees and environmental protection are
increasingly important for customers. Possible failures of responsibility would
result in negative publicity for Kesko. Kesko's challenges in responsibility
work include communicating its responsibility policies to customers, suppliers
and retailers, 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 could 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 (1/2014-12/2014) in comparison with the 12 months preceding the
reporting period (1/2013-12/2013).
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 still 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.
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.
Proposal for profit distribution
The parent's distributable profits are €1,218,801,719.88, of which the profit
for the financial year is €174,655,403.71.
The Board of Directors proposes to the Annual General Meeting to be held on 7
April 2014 that a dividend of €1.40 per share be paid on shares held outside the
company at the date of dividend distribution. No dividend is paid on own shares
held by the company as treasury shares at the record date of dividend
distribution.
At the date of the proposal for distributions of profits, 3 February 2014, a
total of 99,283,709 shares were held outside the Company, amounting to a total
dividend of €138,997,192.60.
Annual General Meeting
The Board of Directors decided to convene the Annual General Meeting at
Messukeskus Helsinki, Expo and Convention Centre, on 7 April 2014 at 13.00.
Kesko Corporation will publish a notice of the General Meeting at a later date.
Annual Report 2013 and Corporate Governance Statement
Kesko will publish the 2013 Annual Report, which contains the report by Kesko's
Board of Directors and the financial statements for 2013, and a separate
Corporate Governance Statement on week 10 on its website at www.kesko.fi.
Helsinki, 3 February 2014
Kesko Corporation
Board of Directors
The information in the financial statements 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,
Group Controller, telephone +358 105 322 338. 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 published on 24
April 2014. In addition, 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
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 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
1-12/ 1-12/ Change% 10-12/ 10-12/ Change%
2013 2012 2013 2012
Net sales 9,315 9,686 -3.8 2,362 2,459 -3.9
Cost of goods sold -8,034 -8,367 -4.0 -2,014 -2,108 -4.5
Gross profit 1,281 1,319 -2.9 348 351 -0.7
Other operating income 734 747 -1.7 185 197 -5.7
Staff cost -611 -608 0.6 -162 -156 3.8
Depreciation and impairment
charges -153 -158 -3.4 -39 -45 -12.9
Other operating expenses -1,003 -1,088 -7.8 -265 -295 -10.1
Operating profit 248 212 17.2 68 52 31.3
Interest income and other finance
income 20 21 -3.7 6 8 -24.6
Interest expense and other finance
costs -20 -18 14.9 -5 -6 -26.4
Exchange differences -6 -4 43.9 -2 -1 (..)
Income from associates 0 -1 -60.7 0 -1 (..)
Profit before tax 242 210 15.1 68 52 30.2
Income tax -58 -75 -22.8 -5 -27 -80.2
Net profit for the period 185 136 35.9 63 25 (..)
Attributable to
Owners of the parent 173 124 39.1 59 23 (..)
Non-controlling interests 12 11 1.4 3 2 39.5
Earnings per share (€)
for profit attributable to
equity holders of the parent
Basic 1.75 1.27 38.1 0.60 0.23 (..)
Diluted 1.75 1.26 38.2 0.60 0.23 (..)
Consolidated statement
of comprehensive
income (€ million)
1-12/ 1-2/ Change% 10-12/ 10-12/ Change%
2013 2012 2013 2012
Net profit for the period 185 136 35.9 63 25 (..)
Items that will not be
reclassified subsequently to
profit or loss
Actuarial gains and losses 12 1 (..) 7 -6 (..)
Items that may be subsequently
reclassified to profit or loss
Exchange differences on
translating foreign operations -14 0 (..) -5 -3 (..)
Adjustment for hyperinflation 3 4 -26.2 2 1 78.7
Cash flow hedge revaluation -4 -2 96.3 -3 -1 (..)
Revaluation of available-for- sale
financial assets -5 9 (..) -1 0 (..)
Other items 0 0 12.5 0 0 -
Total other comprehensive income
for the period,
net of tax -8 11 (..) -1 -9 -83.5
Total comprehensive income for the
period 177 147 20.3 61 16 (..)
Attributable to
Owners of the parent 166 133 24.5 58 14 (..)
Non-controlling
interests 11 14 -20.4 3 3 4.3
(..) Change over 100%
Consolidated statement of financial position (€
million), condensed
31.12.2013 31.12.2012 Change %
ASSETS
Non-current assets
Tangible assets 1,651 1,678 -1.6
Intangible assets 189 192 -1.6
Investments in associates and other
financial assets 104 105 -0.9
Loans and receivables 15 91 -83.0
Pension assets 170 154 10.7
Total 2,131 2,220 -4.0
Current assets
Inventories 797 814 -2.1
Trade receivables 617 703 -12.3
Other receivables 136 153 -11.4Financial assets at fair value
through profit or loss 171 137 24.4
Available-for-sale financial assets 398 249 60.0
Cash and cash equivalents 112 103 8.6
Total 2,231 2,160 3.3
Non-current assets held for sale 1 2 -76.3
Total assets 4,362 4,382 -0.5
31.12.2013 31.12.2012 Change %
EQUITY AND LIABILITIES
Equity 2,279 2,206 3.3
Non-controlling interests 73 67 9.8
Total equity 2,352 2,272 3.5
Non-current liabilities
Interest-bearing liabilities 355 450 -21.1
Non-interest-bearing liabilities 10 10 -3.8
Deferred tax liabilities 68 81 -15.7
Pension obligations 2 2 9.1
Provisions 17 21 -15.1
Total 452 564 -19.7
Current liabilities
Interest-bearing liabilities 199 174 14.4
Trade payables 825 804 2.7
Other non-interest-bearing liabilities 494 529 -6.5
Provisions 38 40 -4.7
Total 1,557 1,546 0.7
Total equity and liabilities 4,362 4,382 -0.5
(..) Change over 100%
Consolidated statement of changes in equity (€ million)
Cur-
rency Non-
trans- Re- cont-
Share lation tained rolling
capi- Re- differ- Revaluation Treasury earn- inter- Total
tal serves ences reserve shares ings ests
Balance at
1.1.2012 197 441 -3 3 -22 1,567 58 2,241
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 124 11 136
Other
comprehensive
income
Items that will
not be
reclassified
subsequently to
profit or loss
Actuarial
gains/losses 1 1
Items that may
be reclassified
subsequently to
profit or loss
Exchange
differences on
translating
foreign
operations 0 1 -1 0
Adjustment for
hyperinflation 0 3 4
Cash flow hedge
revaluation -3 -3
Revaluation of
available-for-
sale financial
assets 9 9
Tax relating to
other
comprehensive
income 1 0 0
Total other
comprehensive
income 0 1 7 1 2 11
Balance at
31.12.2012 197 442 -2 10 -19 1,578 67 2,272
Balance at
1.1.2013 197 442 -2 10 -19 1,578 67 2,272
Shares
subscribed with
options 20 20
Share-based
payments 2 2
Dividends -118 -5 -122
Other
changes 0 0 5 0 5
Net profit for
the period 173 12 185
Other
comprehensive
income
Items that will
not be
reclassified
subsequently to
profit or loss
Actuarial
gains/losses 15 15
Items that may
be reclassified
subsequently to
profit or loss
Exchange
differences on
translating
foreign
operations 0 -11 -3 -14
Adjustment for
hyperinflation 0 3 3
Cash flow hedge
revaluation -5 -5
Revaluation of
available-for-
sale financial
assets -5 -5
Other items 0 0
Tax relating to
other
comprehensive
income 1 -2 -2
Total other
comprehensive
income 0 -11 -9 12 -1 -8
Balance at
31.12.2013 197 461 -13 1 -18 1,651 73 2,352
Consolidated statement of cash flows (€ million), condensed
1-12/ 1-12/ Change% 10-12/ 10-12/ Change%
2013 2012 2013 2012
Cash flows from operating activities
Profit before tax 242 210 15.1 68 52 30.2
Planned depreciation 152 155 -2.0 39 43 -8.6
Finance income and costs 6 1 (..) 0 -1 (..)
Other adjustments 8 103 -92.1 11 91 -88.4
Change in working capital
Current non-interest-bearing
operating receivables,
increase (-)/decrease (+) 89 5 (..) 94 61 52.8
Inventories,
increase (-)/decrease (+) 3 57 -94.9 -26 22 (..)
Current non-interest-bearing
liabilities,
increase (+)/decrease (-) -1 -70 -98.2 -48 -75 -36.1
Financial items and tax -85 -79 7.6 -24 -18 32.1
Net cash from operating activities 414 382 8.4 115 175 -34.7
Cash flows from investing activities
Investing activities -174 -411 -57.7 -44 -118 -62.6
Sales of fixed assets 22 24 -11,0 5 2 (..)
Increase in non-current receivables 0 -4 (..) 0 0 (..)
Net cash used in investing activities -152 -391 -61.1 -39 -116 -66.5
Cash flows from financing activities
Interest-bearing liabilities, increase
(+)/decrease (-) -47 230 (..) -11 -8 41.2
Current interest-bearing
receivables,
increase (-)/decrease (+) 78 37 (..) 77 86 -10.2
Dividends paid -122 -123 -0.5 - -1 -100.0
Equity increase 20 1 (..) 2 1 81.1
Short-term money market investments,
increase (-)/ decrease (+) -91 -2 (..) -29 -39 -26.8
Other items 5 -14 (..) 1 -3 (..)
Net cash used in financing activities -159 130 (..) 40 36 11.5
Change in cash and cash equivalents 103 121 -14.9 116 96 21.2
Cash and cash equivalents and current
portion of available-for-sale
financial assets at 1 Jan. 352 231 52.5 338 258 31.2
Currency translation difference
adjustment and revaluation -2 0 (..) -1 0 (..)
Cash and cash equivalents and current
portion of available-for-sale
financial assets at 31 Dec. 453 352 28.7 453 352 28.7
(..) Change over 100%
Group's performance indicators
1-12/2013 1-12/2012 Change, pp
Return on capital employed, % 10.2 8.3 1.9
Return on capital employed
excl. non-recurring items, % 9.8 9.0 0.8
Return on equity, % 8.0 6.0 2.0
Return on equity
excl. non-recurring items, % 7.7 6.9 0.8
Equity ratio, % 54.5 52.5 2.0
Gearing, % -5.4 6.0 -11.3
Change %
Capital expenditure, € million 171.5 378.3 -54.7
Capital expenditure, % of net
sales 1.8 3.9 -52.9
Earnings per share, basic, € 1.75 1.27 38.1
Earnings per share, diluted, € 1.75 1.26 38.2
Earnings per share
excl. non-recurring items, basic,
€ 1.68 1.47 14.7
Cash flow from operating
activities,
€ million 414 382 8.4
Cash flow from investing
activities,
€ million -152 -391 -61.1
Equity per share, € 22.96 22.48 2,1
Interest-bearing net debt -126 135 (..)
Diluted number of shares,
average for the reporting period 99,136 98,472 0,7
Personnel, average 19,489 19,747 -1.3
(..) 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 2012 2012 2012 2012 2013 2013 2013 2013
Net sales, € million 2,318 2,460 2,449 2,459 2,159 2,420 2,374 2,362
Change in net sales, % 10.2 -0.5 1.9 -0.9 -6.9 -1.6 -3.1 -3.9
Operating profit, € million 25.1 57.7 77.4 51.8 19.2 77.0 84.1 68.0
Operating margin, % 1.1 2.3 3.2 2.1 0.9 3.2 3.5 2.9
Operating profit excl. non-
recurring items, € million 22.3 59.4 77.4 70.9 18.6 69.8 83.6 66.8
Operating margin excl.
non-recurring items, % 1.0 2.4 3.2 2.9 0.9 2.9 3.5 2.8
Finance income/costs,
€ million -0.1 -0.3 -1.3 1.1 -3.3 0.4 -2.6 -0.4
Profit before tax,
€ million 25.0 57.3 76.1 52.1 15.8 77.2 81.5 67.9
Profit before tax, % 1.1 2.3 3.1 2.1 0.7 3.2 3.4 2.9
Return on capital employed,
% 4.1 8.9 11.9 8.0 3.1 12.3 14.2 11.5
Return on capital employed
excl. non-recurring items, % 3.6 9.2 11.9 10.9 3.0 11.1 14.1 11.3
Return on equity, % 3.1 7.0 9.6 4.4 1.9 9.5 10.2 10.8
Return on equity excl.
non-recurring items, % 2.8 7.3 9.6 8.0 1.8 8.6 10.1 10.6
Equity ratio, % 52.8 51.2 51.3 52.5 51.7 50.5 52.9 54.5
Capital expenditure,
€ million 104.1 67.8 102.6 103.8 41.5 48.1 35.4 46.6
Earnings per share,
diluted, € 0.16 0.37 0.50 0.23 0.11 0.50 0.53 0.60
Equity per share, € 22.56 21.72 22.33 22.48 22.62 21.79 22.39 22.96
Segment information
Net sales by segment 1-12/ 1-12/ Change 10-12/ 10-12/ Change
(€ million) 2013 2012 % 2013 2012 %
Food trade, Finland 4,316 4,308 0.2 1,120 1,129 -0.8
Food trade, other countries* 71 3 (..) 28 3 (..)
Food trade total 4,387 4,311 1.8 1,148 1,132 1.4
- of which intersegment trade 172 172 -0.2 45 43 3.7
Home and speciality goods trade, Finland 1,424 1,557 -8.6 430 474 -9.2
Home and speciality goods trade, other
countries* 33 45 -27.6 8 13 -35.3
Home and speciality goods trade total 1,457 1,603 -9.1 439 487 -9.9
- of which intersegment trade 17 18 -5.5 5 6 -10.8
Building and home improvement trade,
Finland 1,173 1,229 -4.6 257 273 -5.9
Building and home improvement trade,
other countries* 1,435 1,598 -10.2 339 385 -11.8
Building and home improvement trade
total 2,607 2,827 -7.8 596 657 -9.4
- of which intersegment trade -1.0 0 (..) 0 0 50.0
Car and machinery trade, Finland 921 998 -7.7 212 207 2.1
Car and machinery trade, other
countries* 116 116 0.3 14 20 -27.1
Car and machinery trade
total 1,037 1,114 -6.9 226 227 -0.4
- of which intersegment trade 1 1 0.9 0 0 6.4
Common operations and eliminations -173 -169 2.4 -46 -45 3.6
Finland total 7,661 7,924 -3.3 1,972 2,038 -3.2
Other countries total* 1,654 1,762 -6.1 390 420 -7.2
Group total 9,315 9,686 -3.8 2,362 2,459 -3.9
* net sales in countries other than Finland
(..) Change over 100%
Operating profit by segment (€ million) 1-12/ 1-12/ 10-12/ 10-12/
2013 2012 Change 2013 2012 Change
Food trade 208.0 170.2 37.8 48.3 44.8 3.5
Home and speciality goods trade -2.1 0.0 -2.1 23.3 12.8 10.5
Building and home improvement trade 24.8 11.6 13.3 -1.0 -10.8 9.8
Car and machinery trade 33.9 41.9 -8.0 3.3 4.7 -1.3
Common operations and eliminations -16.3 -11.8 -4.5 -5.9 0.3 -6.2
Group total 248.4 212.0 36.4 68.0 51.8 16.2
Operating profit excl.
non-recurring items 1-12/ 1-12/ 10-12/ 10-12/
by segment (€ million) 2013 2012 Change 2013 2012 Change
Food trade 203.3 167.5 35.8 48.3 44.8 3.5
Home and speciality goods trade -8.3 19.6 -27.9 21.6 32.3 -10.7
Building and home improvement trade 25.7 13.3 12.4 -1.1 -10.8 9.8
Car and machinery trade 33.9 41.9 -8.0 3.3 4.7 -1.3
Common operations and eliminations -15.8 -12.2 -3.5 -5.4 -0.1 -5.3
Group total 238.8 230.0 8.8 66.8 70.9 -4.1
Operating margin
excl. non-recurring 1-12/ 1-12/ 10-12/ 10-12/
items by segment, % 2013 2012 Change, pp 2013 2012 Change, pp
Food trade 4.6 3.9 0.7 4.2 4.0 0.2
Home and speciality goods trade -0.6 1.2 -1.8 4.9 6.6 -1.7
Building and home improvement
trade 1.0 0.5 0.5 -0.2 -1.6 1.5
Car and machinery trade 3.3 3.8 -0.5 1.5 2.1 -0.6
Group total 2.6 2.4 0.2 2.8 2.9 -0.1
Capital employed by
segment, cumulative 1-12/ 1-12/ 10-12/ 10-12/
average (€ million) 2013 2012 Change 2013 2012 Change
Food trade 821 763 58 790 814 -24
Home and speciality goods trade 445 514 -68 403 528 -125
Building and home improvement trade 732 760 -27 692 746 -54
Car and machinery trade 161 188 -27 172 184 -12
Common operations and eliminations 278 327 -49 312 329 -17
Group total 2,438 2,552 -114 2,370 2,602 -232
Return on capital
employed excl. non- 1-12/ 1-12/ 10-12/ 10-12/
recurring items by segment, % 2013 2012 Change, pp 2013 2012 Change, pp
Food trade 24.8 21.9 2.8 24.4 22.0 2.4
Home and speciality goods trade -1.9 3.8 -5.7 21.4 24.5 -3.1
Building and home improvement
trade 3.5 1.7 1.8 -0.6 -5.8 5.2
Car and machinery trade 21.1 22.3 -1.2 7.8 10.2 -2.4
Group total 9.8 9.0 0.8 11.3 10.9 0.4
Capital expenditure by segment (€ 1-12/ 1-12/ 10-12/ 10-12/
million) 2013 2012 Change 2013 2012 Change
Food trade 92 200 -108 24 43 -20
Home and speciality goods trade 23 61 -38 6 13 -7
Building and home improvement trade 38 63 -25 11 21 -9
Car and machinery trade 15 27 -11 3 3 0
Common operations and eliminations 4 28 -23 2 23 -21
Group total 171 378 -207 47 104 -57
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) 2012 2012 2012 2012 2013 2013 2013 2013
Food trade 1,010 1,091 1,078 1,132 1,045 1,099 1,095 1,148
Home and speciality
goods trade 369 352 395 487 345 322 351 439
Building and home
improvement trade 629 782 759 657 562 740 710 596
Car and machinery trade 353 274 259 227 249 301 260 226
Common operations and
eliminations -42 -41 -41 -45 -42 -41 -43 -46
Group total 2,318 2,460 2,449 2,459 2,159 2,420 2,374 2,362
Operating profit by segment 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
(€ million) 2012 2012 2012 2012 2013 2013 2013 2013
Food trade 37.4 38.6 49.4 44.8 48.2 55.1 56.5 48.3
Home and speciality goods trade -12.9 -0.7 0.9 12.8 -17.7 -5.6 -2.1 23.3
Building and home improvement
trade -9.0 13.5 17.9 -10.8 -16.1 18.0 23.9 -1.0
Car and machinery trade 15.5 10.3 11.4 4.7 7.8 13.0 9.8 3.3
Common operations and eliminations -5.9 -4.0 -2.2 0.3 -3.0 -3.4 -4.0 -5.9
Group total 25.1 57.7 77.4 51.8 19.2 77.0 84.1 68.0
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) 2012 2012 2012 2012 2013 2013 2013 2013
Food trade 34.7 38.6 49.4 44.8 48.2 50.8 56.0 48.3
Home and speciality goods trade -12.9 -0.7 0.9 32.3 -17.8 -10.0 -2.2 21.6
Building and home improvement
trade -9.0 15.2 17.9 -10.8 -16.6 19.5 23.9 -1.1
Car and machinery trade 15.5 10.3 11.4 4.7 7.8 13.0 9.8 3.3
Common operations and
eliminations -5.9 -4.0 -2.2 -0.1 -3.0 -3.4 -4.0 -5.4
Group total 22.3 59.4 77.4 70.9 18.6 69.8 83.6 66.8
Operating margin
excl. non-recurring 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
items by segment, % 2012 2012 2012 2012 2013 2013 2013 2013
Food trade 3.4 3.5 4.6 4.0 4.6 4.6 5.1 4.2
Home and speciality goods trade -3.5 -0.2 0.2 6.6 -5.2 -3.1 -0.6 4.9
Building and home improvement trade -1.4 1.9 2.4 -1.6 -3.0 2.6 3.4 -0.2
Car and machinery trade 4.4 3.7 4.4 2.1 3.1 4.3 3.8 1.5
Group total 1.0 2.4 3.2 2.9 0.9 2.9 3.5 2.8
Change in tangible and intangible assets (€ million)
31.12.2013 31.12.2012
Opening net carrying amount 1,870 1,680
Depreciation, amortisation and impairment -153 -158
Investments in tangible and intangible assets 174 361
Disposals -10 -25
Currency translation differences -41 12
Closing net carrying amount 1,840 1,870
Related party transactions (€ million)
The Group's related parties include its key management (the Board of Directors,
the President and CEO and the Group Management Board) and companies controlled
by them, subsidiaries, associates and Kesko Pension Fund.
The following transactions were carried out with related parties:
1-12/2013 1-12/2012
Sales of goods and services 92 85
Purchases of goods and services 19 15
Other operating income 1 0
Other operating expenses 30 24
Finance income and costs 0 0
31.12.2013 31.12.2012
Receivables 8 6
Liabilities 19 24
Fair value hierarchy of financial assets and liabilities (€ million)
Level 1 Level 2 Level 3 31.12.2013
Financial assets at fair value through profit
or loss 14 157 171
Derivative financial instruments at fair
value through profit or loss
Derivative financial assets 3 3
Derivative financial liabilities 22 22
Available-for-sale financial assets 57 341 17 415
Fair value hierarchy of financial assets and liabilities (€ million)
Level 1 Level 2 Level 3 31.12.2012
Financial assets at fair value through profit
or loss 137 137
Derivative financial instruments at fair
value through profit or loss
Derivative financial assets 1 1
Derivative financial liabilities 17 17
0 249 22 271
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 as at 31 Dec.
Personnel average by
segment 1-12/2013 1-12/2012 Change
Food trade 3,143 2,799 344
Home and speciality goods trade 5,751 6,139 -388
Building and home improvement trade 8,910 9,105 -195
Car and machinery trade 1,252 1,254 -2
Common operations 433 450 -17
Group total 19,489 19,747 -258
Personnel as at 31 Dec.*
by segment 2013 2012 Change
Food trade 3,570 3,163 407
Home and speciality goods trade 8,483 8,950 -467
Building and home improvement trade 10,066 10,204 -138
Car and machinery trade 1,261 1,259 2
Common operations 483 504 -21
Group total 23,863 24,080 -217
* Total number incl. part-time employees
Group's commitments (€ million
31.12.2013 31.12.2012 Change %
Own commitments 198 177 11.7
For associates 65 65 0.0
For others 10 10 7.4
Lease liabilities for machinery and equipment 25 26 -3.4
Lease liabilities for real estate 2,368 2,302 2.9
Liabilities arising from derivative instruments
Fair value
Values of underlying instruments at 31 Dec. 31.12.2013 31.12.2012 31.12.2013
Interest rate derivatives
Interest rate swaps 201 203 -0.20
Currency derivatives
Forward and future contracts 308 245 1.29
Option agreements 3 11 -0.00
Currency swaps 100 100 -13.41
Commodity derivatives
Electricity derivatives 31 41 -6.80
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 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 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.-31.12.2013 1.10.-31.12.2013
K-Group's retail and € million Change, % € million Change, %
B2B sales
K-Group's food trade
K-food stores, Finland 4,712 -0.4 1,216 -0.8
Kespro 795 2.0 201 0.1
K-ruoka stores, Russia 70 (..) 28 (..)
Food trade total 5,578 1.1 1,446 1.1
K-Group's home and
speciality goods trade
Home and speciality goods stores,
Finland 1,544 -9.4 459 -10.2
Home and speciality goods stores, other
countries 31 -32.6 8 -39.6
Home and speciality
goods trade total 1,574 -10.0 467 -10.9
K-Group's building and home improvement
trade
K-rauta and Rautia 1,025 -4.6 235 -4.8
Rautakesko B2B Service 187 -10.7 47 -3.8
K-maatalous 460 -0.6 109 -18.0
Finland total 1,672 -4.3 390 -8.8
Building and home improvement stores,
other Nordic countries 927 -22.9 214 -27.0
Building and home improvement stores,
Baltic countries 386 0.9 103 1.2
Building and home improvement stores,
other countries 378 2.2 93 -0.4
Building and home improvement trade
total 3,363 -9.1 800 -12.7
K-Group's car and
machinery trade
VV-Autotalot 381 -7.3 94 2.5
VV-Auto, import 382 -3.6 88 10.8
Konekesko, Finland 177 -15.8 36 -10.5
Finland total 940 -7.6 218 3.2
Konekesko, other countries 119 -0.8 14 -25.6
Car and machinery trade
total 1,059 -6.9 232 0.7
Finland total 9,663 -3.2 2,485 -3.6
Other countries total 1,912 -10.0 460 -12.1
Retail and B2B sales
total 11,575 -4.4 2,945 -5.0
[HUG#1758949]
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