2012-04-26 08:00:00 CEST
2012-04-26 08:02:25 CEST
REGULATED INFORMATION
Kesko Oyj - Interim report (Q1 and Q3)
Kesko's interim report 1 Jan.-31 Mar. 2012
KESKO CORPORATION STOCK EXCHANGE RELEASE 26.04.2012 AT 09.00 1(24)
Financial performance in brief:
*The Group's net sales for January-March increased by 10.2%.
*The operating profit excluding non-recurring items was €23.6 million (€34.9
million). The operating profit excluding non-recurring items was negatively
impacted by the expansion of the store site network and the expansion of Russian
operations, and exceptional write-offs of approximately €8 million.
* The Kesko Group's net sales are expected to grow during the next twelve
months. Owing to the costs involved in the expansion of the store site network
and Russian business operations, as well as a sales decrease in the car trade,
we are prepared for the operating profit excluding non-recurring items for the
next twelve months to be lower than the operating profit excluding non-recurring
items for the preceding twelve months.
Key performance indicators
1-3/2012 1-3/2011
Net sales, € million 2,318 2,103
Operating profit excl. non-
recurring items, € million 23.6 34.9
Operating profit, € million 26.3 35.7
Profit before tax, € million 26.3 36.1
Capital expenditure, € million 104.1 64.1
Earnings/share, €, diluted 0.17 0.25
Earnings/share excl. non-
recurring items, €, basic 0.15 0.24
31.3.2012 31.3.2011
Equity ratio, % 52.7 54.4
Equity/share, € 22.42 22.04
FINANCIAL PERFORMANCE
Net sales and profit for January-March 2012
The Group's net sales in January-March 2012 were €2,318 million, which is 10.2%
up on the corresponding period of the previous year (€2,103 million). In
Finland, net sales increased by 9.1% and in other countries by 16.5%.
International operations accounted for 15.4% (14.6%) of the net sales. Net sales
grew in all divisions.
1-3/2012 Net sales, Change, % Operating profit Change,M€
M€ excl. non-
recurring items,
M€
Food trade 1,010 +6.5 34.9 -6.4
Home and
speciality goods
trade 369 +6.1 -12.9 -5.4
Building and home
improvement trade 629 +10.3 -9.0 +0.1
Car and machinery
trade 353 +26.4 15.6 +3.3
Common
operations and
eliminations -42 +0.9 -5.1 -2.9
Total 2,318 +10.2 23.6 -11.3
In January-March, the operating profit excluding non-recurring items was €23.6
million (€34.9 million), representing 1.0% (1.7%) of the net sales. The
operating profit excluding non-recurring items was negatively impacted by the
expansion of the store site network and the expansion of Russian operations, as
well as write-offs totalling approximately €8 million, the most significant of
which related to the obsolescence of inventories and credit losses on trade
receivables of the building and home improvement trade, as well as to an
unrealised valuation loss on derivatives hedging electricity purchases of the
food trade.
Operating profit was €26.3 million (€35.7 million), including a €2.8 million
amount of non-recurring gains on disposals of properties. The Group's profit
before tax for January-March was €26.3 million (€36.1 million).
The Group's earnings per share were €0.17 (€0.25). The Group's equity per share
was €22.42 (€22.04).
In January-March, the K-Group's (i.e. Kesko's and the chain stores') retail and
B2B sales (VAT 0%) were €2,779 million, up 10.4% compared to the previous year.
In January-March, the K-Group chains' sales entitling to K-Plussa points were
€1,354 million excluding tax, up 6.7% compared to the previous year. The K-
Plussa customer loyalty programme gained 22,780 new households in January-March.
At the end of March, the number of K-Plussa households was 2,168,933 and the
number of K-Plussa card holders was 3.7 million.
Finance
In January-March, the cash flow from operating activities was €-5.2 million (€-
25.3 million). The cash flow from investing activities was €-91.8 million (€-
67.7 million), including €19.5 million (€1.7 million) of proceeds from the sale
of fixed assets.
Throughout January-March, the Group's solvency remained at an excellent level
despite the ongoing capital expenditure programme. At the end of the period,
liquid assets totalled €293 million (€724 million). Interest-bearing liabilities
were €446 million (€444 million) and interest-bearing net debt €154 million (€-
279 million) at the end of March. Equity ratio was 52.7% (54.4%) at the end of
the period.
In January-March, the Group's net finance costs were €0.1 million (€0.6
million).
Taxes
The Group's taxes in January-March were €7.6 million (€11.2 million). The
effective tax rate was 29.0% (31.0%), affected by loss-making foreign
operations.
Capital expenditure
In January-March, the Group's capital expenditure totalled €104.1 million (€64.1
million), or 4.5% (3.0%) of the net sales. Capital expenditure in store sites
was €90.8 million (€52.7 million) and other capital expenditure was €13.3
million (€11.4 million). Capital expenditure in foreign operations represented
8.4% (19.6%) of total capital expenditure.
Personnel
In January-March, the average number of employees in the Kesko Group was 19,113
(18,158) converted into full-time employees. In Finland, the average increase
was 233 people, while outside Finland, it was 722.
At the end of March 2012, the total number of employees was 22,873 (21,670), of
whom 12,522 (12,140) worked in Finland and 10,351 (9,530) outside Finland.
Compared to the end of March 2011, there was an increase of 382 people in
Finland and 821 people outside Finland.
In January-March, the Group's staff cost was €151.1 million, an increase of
9.7% compared to the previous year.
SEGMENT INFORMATION
Seasonal nature of operations
The Group's operating activities are affected by seasonal fluctuations. The net
sales and operating profits of the reportable segments are not earned evenly
throughout the year. Instead, they vary by quarter depending on the
characteristics of each segment.
Food trade
1-3/2012 1-3/2011
Net sales, € million 1,010 948
Operating profit excl. non-
recurring items, € million 34.9 41.4
Operating profit as % of
net sales excl. non-
recurring items 3.5 4.4
Capital expenditure,
€ million 60.2 30.9
Net sales, € million 1-3/2012 Change, %
Sales to K-food stores 780 +6.3
Kespro 181 +10.1
Others 49 -3.0
Total 1,010 +6.5
January-March 2012
In the food trade, the net sales for January-March were €1,010 million (€948
million), up 6.5%. The sales of Pirkka products to K-food stores grew by 16.0%
(VAT 0%). During the same period, the grocery sales of K-food stores increased
by 6.8% (VAT 0%). In the grocery market, retail prices are estimated to have
changed by some 4-5% compared to the previous year (VAT 0%; Kesko's own estimate
based on the Consumer Price Index of Statistics Finland) and the total grocery
trade market (VAT 0%) is estimated to have grown by some 7.5% in January-March
compared to the previous year (Kesko's own estimate).
In January-March, the operating profit excluding non-recurring items of the food
trade was €34.9 million (€41.4 million), or €6.4 million down on the previous
year. The operating profit was impacted by costs related to launching business
operations in Russia and the expansion of the store site network. Further,
operating profit was weakened by a €1.8 million unrealised valuation loss on
derivatives hedging electricity purchasing. The operating profit was €37.6
million (€42.1 million). Non-recurring income included €2.7 million of gains on
disposals of properties.
Capital expenditure of the food trade was €60.2 million (€30.9 million), of
which capital expenditure in store sites was €56.5 million (€29.0 million).
In January-March 2012, one new K-citymarket, two new K-supermarkets and one new
K-market were opened. A total of 20 stores were renovated and extended.
The most significant store sites being built are K-citymarkets in Kauhajoki,
Kokkola, Kouvola and Valkeakoski. K-supermarkets in Lieksa, Loimaa and Mäntsälä
are being extended into K-citymarkets and K-citymarket Imatra is being extended.
New K-supermarkets are being built in Lähdekeskus and Suomenoja, Espoo, in
Kaisaniemi, Helsinki, in Joutsa, Kouvola, Lohja, Nurmijärvi, Pihtipudas, Pori
and in Hämeenkylä, Louhela and Nikinmäki, Vantaa. K-market Parila in Pälkäne is
being extended into a K-supermarket.
Home and speciality goods trade
1-3/2012 1-3/2011
Net sales, € million 369 348
Operating profit excl.
non-recurring items,
€ million -12.9 -7.4
Operating profit as %
of net sales excl.
non-recurring items -3.5 -2.1
Capital expenditure,
€ million 18.5 8.1
Net sales, € million 1-3/2012 Change, %
K-citymarket home
and speciality goods 147 +8.5
Anttila 107 -1.6
Intersport Finland 44 +7.3
Intersport Russia 8 -
Indoor 44 +6.5
Musta Pörssi 13 -20.0
Kenkäkesko 7 +21.9
Total 369 +6.1
January-March 2012
In the home and speciality goods trade, the net sales for January-March were
€369 million (€348 million), up 6.1%. K-citymarket home and speciality goods,
Asko and Sotka, Intersport and Budget Sport, as well as Kenkäkesko markedly
increased their sales from the previous year. A K-citymarket, an Anttila and an
Intersport store were opened in Willa, Hyvinkää. In addition, an Asko store was
opened in Ylivieska and a new Konebox store in Raisio. As a result of network
restructuring, there were 29 (35) Musta Pörssi stores at the end of March. A new
concept Musta Pörssi store was opened in the Sello shopping centre in early
March. The reform of the Kookenkä chain was completed at the end of March.
The operating profit excluding non-recurring items of the home and speciality
goods trade in January-March was €-12.9 million (€-7.4 million). Profitability
was weakened by costs arising from the integration and development of the
operations of K-citymarket and Anttila, the expansion of the store site network
and the loss from Russian Intersport operations. Operating profit was €-12.9
million (€-7.4 million).
Capital expenditure in the home and speciality goods trade in January-March was
€18.5 million (€8.1 million).
Building and home improvement trade
1-3/2012 1-3/2011
Net sales, € million 629 570
Operating profit
excl. non-recurring
items, € million -9.0 -9.1
Operating profit as
% of net sales excl.
non-recurring items -1.4 -1.6
Capital expenditure,
€ million 11.8 18.7
Net sales,
€ million 1-3/2012 Change, %
Rautakesko Finland 300 +7.1
K-rauta Sweden 44 +1.7
Byggmakker
Norway 145 +18.5
Rautakesko Estonia 12 +19.5
Rautakesko Latvia 10 +13.4
Senukai Lithuania 50 +13.2
Stroymaster Russia 53 +22.7
OMA Belarus 15 -17.9
Total 629 +10.3
January-March 2012
In the building and home improvement trade, the net sales for January-March were
€629 million (€570 million), up 10.3%. In most countries, sales to professional
customers increased faster than sales to private customers, which boosted
especially the sales of basic building materials.
In Finland, the net sales for January-March were €300 million (€280 million), an
increase of 7.1%. The building and home improvement product lines contributed
€212 million to the net sales in Finland, an increase of 5.8%. The agricultural
supplies trade contributed €88 million to the net sales, up 10.6%.
The retail sales of the K-rauta and Rautia chains in Finland grew by 7.1% to
€187 million (VAT 0%). The sales of Rautakesko B2B Service increased by 15.5%.
As a whole, Rautakesko chains' retail and B2B sales are estimated to have
continued exceeding the growth rate of the market in Finland. The retail sales
of the K-maatalous chain were €89 million (VAT 0%), up 11.9%.
In January-March, the net sales from foreign operations in the building and home
improvement trade were €329 million (€290 million), an increase of 13.5%. In
Russia, net sales increased by 21.3% in terms of roubles. In Norway, net sales
increased by 14.9% in terms of krones. In Sweden, net sales were up by 1.6% in
terms of kronas. Foreign operations contributed 52.3% (50.8%) to the net sales
of the building and home improvement trade.
In January-March, the operating profit excluding non-recurring items of the
building and home improvement trade was €-9.0 million (€-9.1 million),
representing the level of the previous year. The profit performance was impacted
by new store openings in Russia and Sweden and significant introduction and
development costs of the international enterprise resource planning system. In
addition, the profitability of Swedish operations was negatively impacted by
obsolete inventories written off at €3 million higher than for the comparative
period. In Finland, a credit loss amounting to €1 million was recorded on trade
receivables. Operating profit was €-9.0 million (€-9.1 million).
In January-March, capital expenditure in the building and home improvement trade
totalled €11.8 million (€18.7 million), of which 66.2% (67.3%) abroad. Capital
expenditure in store sites was 85.6% of the total capital expenditure.
During the reporting period, a new Rautia-K-maatalous store was opened in Turku
and former Rautia stores were replaced in Muhos and Sastamala. In April, a K-
rauta was opened in Ylivieska. A K-rauta is being built in Kouvola and a
significant extension of a K-rauta is underway in Mikkeli. In Sweden, a K-rauta
was opened in Uppsala and a K-rauta replacing the former store is being built in
Linköping. In Russia, a new K-rauta was opened in Moscow, where two sites have
been acquired for new K-rauta stores.
Car and machinery trade
1-3/2012 1-3/2011
Net sales, € million 353 279
Operating profit excl.
non-recurring items,
€ million 15.6 12.2
Operating profit as %
of net sales excl.
non-recurring items 4.4 4.4
Capital expenditure,
€ million 12.7 6.0
Net sales, € million 1-3/2012 Change, %
VV-Auto 289 +32.4
Konekesko 65 +5.6
Total 353 +26.4
January-March 2012
In January-March, the net sales of the car and machinery trade were €353 million
(€279 million), up 26.4%.
VV-Auto's net sales for January-March were €289 million (€218 million), an
increase of 32.4%. Sales were increased by the car tax change effective 1 April
2012, as well as market share growth. In Finland, new registrations of passenger
cars increased by 34.0% and those of vans by 47.7% compared to the previous
year. In January-March, the combined market share of passenger cars and vans
imported by VV-Auto was 19.9% (18.8%).
Konekesko's net sales for January-March were €65 million (€61 million), up 5.6%
compared to the previous year. Net sales in Finland were €50 million, up 0.7%.
The net sales from Konekesko's foreign operations were €16 million, up 21.9%.
In January-March, the operating profit excluding non-recurring items of the car
and machinery trade was €15.6 million (€12.2 million), up €3.3 million compared
to the previous year. The strong profit was attributable to excellent sales
performance. The operating profit for January-March was €15.6 million (€12.2
million).
Capital expenditure in the car and machinery trade was €12.7 million (€6.0
million) in January-March.
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 March 2012, the total number of Kesko Corporation shares was
€98,645,042, of which 31,737,007, or 32.2%, were A shares and 66,908,035, or
67.8%, were B shares. At 31 March 2012, Kesko Corporation held 700,000 own B
shares. Each A share entitles to ten (10) votes and each B share to one (1)
vote. The company cannot vote with own shares held by it and no dividend is paid
on them. At the end of March 2012, Kesko Corporation's share capital was
€197,282,584. During the reporting period, there were no changes in the share
capital or the number of shares.
The price of a Kesko A share quoted on NASDAQ OMX Helsinki was €24.82 at the end
of 2011, and €25.35 at the end of March 2012, representing an increase of 2.1%.
Correspondingly, the price of a B share was €25.96 at the end of 2011, and
€24.33 at the end of March 2012, representing a decrease of 6.3%. In January-
March, the highest A share price was €27.65 and the lowest was €24.10. For B
share, they were €27.81 and €23.59 respectively. In January-March, the Helsinki
stock exchange (OMX Helsinki) All-Share index rose by 12.7%, the weighted OMX
Helsinki CAP index by 13.1%, while the Retail Index was up by 5.0%.
At the end of March 2012, the market capitalisation of A shares was €805
million, while that of B shares was €1,611 million, excluding the shares held by
the parent company. The combined market capitalisation of A and B shares was
€2,415 million, a decrease of €91 million from the end of 2011. In January-March
2012, a total of 0.6 (0.5) million A shares were traded on the Helsinki stock
exchange, up 22.5%, at a total value of €16 million. A total of 20.6 (17.8)
million B shares were traded on the Helsinki stock exchange, up 15.7%, at a
total value of €517 million.
The company operates the 2007 stock option scheme for management and other key
personnel, under which the share subscription period of 2007A option rights runs
from 1 April 2010 to 30 April 2012, that of 2007B option rights from 1 April
2011 to 30 April 2013, and that of 2007C option rights began on 1 April 2012 and
it will end on 30 April 2014. All option rights have also been included on the
official list of the Helsinki stock exchange since the beginning of the share
subscription periods. No 2007A option rights were traded during the reporting
period. A total of 18,246 2007B option rights were traded during the reporting
period at a total value of €87,023.
The Board has the authority, granted by the Annual General Meeting of 16 April
2012 and valid until 30 June 2015, to issue a total maximum of 20,000,000 new B
shares. The shares can be issued against payment for subscription by
shareholders in a directed issue in proportion to their existing shareholdings
regardless of whether they consist of A or B shares, or, deviating from the
shareholder's pre-emptive right, in a directed issue, if there is a weighty
financial reason for the company, such as using the shares to develop the
company's capital structure, and financing possible acquisitions, investments or
other arrangements within the scope of the company's business operations. The
amount paid for the shares is recognised in the reserve of invested non-
restricted equity. The authorisation also includes the Board's authority to
decide on the share subscription price, the right to issue shares against non-
cash consideration and the right to make decisions on other matters concerning
share issuances. The corresponding authority, granted by the Annual General
Meeting of 30 March 2009, to issue a total maximum of 20,000,000 new B shares
against payment or other consideration expired on 30 March 2012. The authority
expired at the end of March had not been used. In addition, the Board has the
authority, granted by the Annual General Meeting of 4 April 2011 and valid until
30 September 2012, to decide on the acquisition of a total maximum of 1,000,000
own B shares, and the authority, 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. On 1 February 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 decided to grant a total maximum
of 93,875 company shares held by itself to the persons included in the target
group. The decision was announced in a stock exchange release on 2 February
2012. Further information on the Board's authorities is available at
www.kesko.fi.
At the end of March 2012, the number of shareholders was 43,456, which is 2,241
more than at the end of 2011. Foreign ownership of all shares was 18%, and
foreign ownership of B shares was 26% at the end of March.
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)
Main events after the reporting period
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. After the transfers, the company itself holds at least
607,249 own B shares. (Stock exchange release on 12 April 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 is 26 April 2012. The General Meeting also resolved to leave the number of
Board members unchanged at seven and elected Esa Kiiskinen, Ilpo Kokkila, Tomi
Korpisaari (new member), Maarit Näkyvä, Seppo Paatelainen, Toni Pokela (new
member) and Virpi Tuunainen (new member) 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, Kesko was included on 'The Global 100 Most Sustainable Corporations
in the World' list for the eighth time.
In February, Kesko was awarded by World Finance Magazine for 'the Best Corporate
Governance in Finland' in terms of corporate governance development and
reporting for the second time in succession.
In March, the US Ethisphere Institute listed Kesko as one of the World's Most
Ethical Companies for 2012.
In March, the K-Retailers' Association and the Finnish Association on
Intellectual and Developmental Disabilities (FAIDD) started a cooperation
project to support the employment of people with intellectual and developmental
disabilities in the K-Group stores.
Risk management
The Kesko Group has an established and comprehensive risk management process.
Risks and their management responses are regularly assessed within the Group and
reported to the Group management. Kesko's risk management and risks associated
with business operations are described in more detail on Kesko's website in the
Corporate Governance section.
The most significant near-future risks in Kesko's business operations are
associated with the general economic development, the euro zone financial market
and consumer confidence in Kesko's operating area, as well as their impact on
the Kesko Group's sales and profit performance. It is estimated that in other
respects, no material changes have taken place in the risks described in the
report by the Board of Directors and financial statements for 2011 and the risks
described on Kesko's website.
Risks and uncertainties associated with economic development are described in
the future outlook section of this release.
Future outlook
Estimates of the future outlook for the Kesko Group's net sales and operating
profit excluding non-recurring items are given for the 12 months following the
reporting period (4/2012-3/2013) in comparison with the 12 months preceding the
reporting period (4/2011-3/2012).
Resulting from the problems of European national economies, the outlook for the
general economic situation continues to be characterised by significant
uncertainty. In addition, cuts in public finances and tightening taxation
increase the uncertainty about the development of consumer demand. However, the
outlook for consumer demand as a whole has improved during the first months of
2012.
The steady growth in the grocery trade and home and speciality goods trade is
expected to continue. Growth in the building and home improvement trade in
Finland is expected to even out as the growth of building construction slows
down. In the car and machinery trade, the market is expected to turn down as a
result of the car tax change effective 1 April 2012.
The Kesko Group's net sales are expected to grow during the next twelve months.
Owing to the costs involved in the expansion of the store site network and
Russian business operations, as well as a sales decrease in the car trade, we
are prepared for the operating profit excluding non-recurring items for the next
twelve months to be lower than the operating profit excluding non-recurring
items for the preceding twelve months.
Helsinki, 25 April 2012
Kesko Corporation
Board of Directors
The information in the interim report 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 interim report can be accessed at www.kesko.fi at
11.00. An English-language web conference on the interim report will be held
today at 14.30 (Finnish time). The web conference login is available at
www.kesko.fi.
Kesko Corporation's interim report for January-June will be released on 25 July
2012. In addition, the Kesko Group's sales figures are published each month.
News releases and other company information are available on Kesko's website at
www.kesko.fi.
KESKO CORPORATION
Merja Haverinen
Senior Vice President, Corporate Communications and Responsibility
ATTACHMENTS: TABLES
Accounting policies
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated cash flow statement
Group's performance indicators
Net sales by segment
Operating profit by segment
Operating profit excl. non-recurring items by segment
Operating margin excl. non-recurring items by segment
Capital employed by segment
Return on capital employed excl. non-recurring items by segment
Capital expenditure by segment
Segment information by quarter
Personnel average and at the end of the reporting period
Group's contingent liabilities
Calculation of performance indicators
K-Group's retail and B2B sales
DISTRIBUTION
NASDAQ OMX Helsinki
Main news media
www.kesko.fi
TABLES:
Accounting policies
This interim report has been prepared in accordance with the IAS 34 standard,
applying the same accounting policies as to 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 (amendment), Financial instruments: Disclosures - Derecognition
IAS 12 (amendment), Income taxes - Deferred tax
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
1-3/ 1-3/ 1-12/
2012 2011 Change,% 2011
Net sales 2,318 2,103 10.2 9,460
Cost of goods sold -2,007 -1,814 10.6 -8,163
Gross profit 311 289 7.6 1,297
Other operating income 170 160 6.2 705
Staff cost -151 -138 9.7 -571
Depreciation and impairment charges -36 -29 22.6 -125
Other operating expenses -268 -247 8.7 -1,026
Operating profit 26 36 -26.2 281
Interest income and other finance income 5 5 3.8 22
Interest expense and other finance costs -4 -4 -16.9 -18
Exchange differences -2 -1 34.5 -3
Income from associates 0 1 -98.6 1
Profit before tax 26 36 -27.2 282
Income tax -8 -11 -31.9 -85
Profit for the period 19 25 -25.1 197
Attributable to
Owners of the parent 17 25 -31.7 182
Non-controlling interests 2 0 (..) 15
Earnings per share (€) for
profit attributable to equity
holders of the parent
Basic 0.17 0.25 -31.2 1.85
Diluted 0.17 0.25 -31.1 1.84
Consolidated statement of
comprehensive income
(€ million)
1-3/ 1-3/ Change,% 1-12/
2012 2011 2011
Net profit for the period 19 25 -25.1 197
Other comprehensive income
Exchange differences on
translating foreign operations 4 -1 (..) -17
Adjustment for hyperinflation 1 - (..) 6
Cash flow hedge revaluation -2 -5 -65.6 -15
Revaluation of available-for-
sale financial assets 0 -1 (..) 0
Other items - - - 0
Tax relating to other
comprehensive income 0 1 -72.5 4
Total other comprehensive
income for the period, net of
tax 3 -5 (..) -22
Total comprehensive
income for the period 22 19 11.6 175
Attributable to
Owners of the parent 20 22 -5.9 170
Non-controlling interests 1 -2 (..) 4
(..) Change over 100%
Consolidated statement of financial
position (€ million), condensed
31.3.2012 31.3.2011 Change,% 31.12.2011
ASSETS
Non-current assets
Tangible assets 1,555 1,295 20.0 1,490
Intangible assets 190 178 7.1 189
Investments in associates and other
financial assets 70 63 10.5 69
Loans and receivables 78 71 9.8 80
Pension assets 143 183 -21.5 200
Total 2,035 1,789 13.8 2,029
Current assets
Inventories 909 796 14.2 868
Trade receivables 804 681 18.1 700
Other receivables 289 151 91.9 218
Financial assets at fair value
through
profit or loss 75 164 -54.5 98
Available-for-sale financial assets 163 512 -68.1 186
Cash and cash equivalents 54 47 15.9 84
Total 2,294 2,351 -2.4 2,153
Non-current assets held for sale 1 1 -17.9 8
Total assets 4,331 4,141 4.6 4,190
31.3.2012 31.3.2011 Change,% 31.12.2011
EQUITY AND LIABILITIES
Equity 2,196 2,174 1.0 2,175
Non-controlling interests 60 56 6.0 58
Total equity 2,256 2,231 1.1 2,233
Non-current liabilities
Interest-bearing liabilities 205 229 -10.1 210
Non-interest-bearing liabilities 20 6 (..) 18
Deferred tax liabilities 86 84 2.6 91
Pension obligations 2 2 4.5 2
Provisions 11 12 -6.0 10
Total 324 332 -2.2 332
Current liabilities
Interest-bearing liabilities 241 216 11.6 190
Trade payables 1,001 878 14.0 886
Other non-interest-bearing liabilities 486 459 5.9 526
Provisions 23 26 -10.3 24
Total 1,751 1,579 10.9 1,625
Total equity and liabilities 4,331 4,141 4.6 4,190
(..) Change over 100%
Consolidated statement of changes in equity (€ million)
Share Issue Share Other Cur- Revalu- Re- Non- Total
capital of premi- reser- rency ation tained cont-
share um ves trans- sur- earn- rol-
capital lation plus ings ling
differ- inte-
ences rests
Balance at
1.1.2011 197 0 198 243 -3 14 1,503 59 2,210
Shares
subscribed
with options
Option cost 1 0 1
Dividends
Other changes 0 0 0
Net profit for
the period 25 0 25
Other
comprehensive
income
Exchange
differences on
translating
foreign
operations 0 1 0 -3 -1
Cash flow
hedge
revaluation -5 -5
Revaluation of
available-
for-sale
financial
assets -1 -1
Other items
Tax relating
to other
comprehensive
income 1 1
Total other
comprehensive
income 0 1 -4 0 -3 -5
Balance at
31.3.2011 197 0 198 243 -1 9 1,529 56 2,231
Balance at
1.1.2012 197 0 198 243 -3 3 1,537 58 2,233
Shares
subscribed
with options
Option cost 1 0 1
Own shares
Dividends
Other changes 0 0 0
Net profit for
the period 17 2 19
Other
comprehensive
income
Exchange
differences on
translating
foreign
operations 0 5 0 -1 4
Adjustment for
hyperinflation 0 1 1
Cash flow
hedge
revaluation -2 -2
Revaluation of
available-
for-sale
financial
assets 0 0
Other items
Tax relating
to other
comprehensive
income 0 0
Total other
comprehensive
income 0 5 -1 0 -1 3
Balance at
31.3.2012 197 0 198 243 1 1 1,555 60 2,256
Consolidated cash flow statement (€ million), condensed
1-3/ 1-3/ Change,% 1-12/
2012 2011 2011
Cash flow from operating
activities
Profit before tax 26 36 -27.2 282
Planned depreciation 36 29 22.3 125
Finance income and costs 0 1 -31.4 -1
Other adjustments 7 8 -5.9 -6
Change in working capital
Current non-interest-bearing
trade and other receivables,
increase (-)/ decrease (+) -120 -61 95.7 -89
Inventories
increase (-)/ decrease (+) -37 -40 -7.1 -119
Current non-interest-bearing
liabilities,
increase (+)/decrease (-) 100 -13 (..) 127
Financial items and tax -18 15 (..) -103
Net cash generated from
operating activities -5 -25 -79.5 216
Cash flow from investing
activities
Capital expenditure -111 -69 59.9 -449
Sales of fixed assets 20 2 (..) 8
Increase of non-current
receivables -1 0 (..) 0
Net cash used in investing
activities -92 -68 35.7 -441
Cash flow from financing
activities
Increase (+)/ decrease (-) in
interest-bearing liabilities 49 -29 (..) -58
Increase (-)/decrease (+) in
current interest-bearing
receivables -21 0 (..) -37
Dividends paid - - - -133
Equity increase - - - 0
Acquisition of own shares - - - -23
Increase (-)/ decrease (+) in
short-term money market
investments 32 86 -63.5 199
Other items -6 0 (..) 1
Net cash used in financing
activities 53 57 -5.9 -51
Change in cash and cash
equivalents -44 -36 20.5 -277
Cash and cash equivalents
and current portion of
available-for-sale financial
assets at 1 Jan. 231 509 -54.7 509
Currency translation difference
adjustment and revaluation 0 0 (..) -2
Cash and cash equivalents
and current portion of
available-for-sale financial
assets at 31 Mar. 187 473 -60.4 231
(..) Change over 100%
Group's performance indicators
1-3/2012 1-3/2011 Change, pp 1-12/2011
Return on capital employed, % 4.3 7.2 -2.9 13.2
Return on capital employed, %, moving
12 mo 12.1 16.6 -4.5 13.2
Return on capital employed excl. non-
recurring items, % 3.9 7.0 -3.2 13.1
Return on capital employed excl. non-
recurring items, %, moving 12 mo 11.9 14.6 -2.6 13.1
Return on equity, % 3.3 4.5 -1.2 8.9
Return on equity, %, moving 12 mo 8.5 10.7 -2.2 8.9
Return on equity excl. non-recurring
items, % 3.0 4.4 -1.4 8.8
Return on equity excl. non-recurring
items, %, moving 12 mo 8.4 9.3 -0.9 8.8
Equity ratio, % 52.7 54.4 -1.7 53.9
Gearing, % 6.8 -12.5 19.3 1.5
Change,%
Capital expenditure, € million 104.1 64.1 62.4 425.4
Capital expenditure, % of net sales 4.5 3.0 47.4 4.5
Earnings per share, basic, € 0.17 0.25 -31.2 1.85
Earnings per share, diluted, € 0.17 0.25 -31.1 1.84
Earnings per share excl. non-recurring
items, basic, € 0.15 0.24 -38.3 1.84
Cash flow from operating activities,
€ million -5 -25 -79.5 216
Cash flow from investing activities,
€ million -92 -68 35.7 -441
Equity/share, € 22.42 22.04 1.7 22.20
Interest-bearing net debt 153.6 -279.3 (..) 32.8
Diluted number of shares at end of
reporting period 98,413 99,332 -0.9 98,631
Personnel, average 19,113 18,158 5.3 18,960
(..) Change over 100%
Group's performance 1-3/ 4-6/ 7-9/ 10-12/ 1-3/
indicators by quarter 2011 2011 2011 2011 2012
Net sales, € million 2,103 2,472 2,404 2,481 2,318
Change in net sales, % 7.4 8.5 7.8 7.4 10.2
Operating profit, € million 35.7 83.9 88.2 72.8 26.3
Operating margin, % 1.7 3.4 3.7 2.9 1.1
Operating profit excl. non-
recurring items, € million 34.9 83.3 89.2 71.5 23.6
Operating margin excl. non-
recurring items, % 1.7 3.4 3.7 2.9 1.1
Finance income/costs,
€ million -0.6 0.3 0.3 0.8 -0.1
Profit before tax, € million 36.1 84.0 88.0 74.0 26.3
Profit before tax, % 1.7 3.4 3.7 3.0 1.0
Return on capital employed,
% 7.2 16.0 16.4 12.8 4.3
Return on capital employed
excl. non-recurring items, % 7.0 15.9 16.6 12.5 3.9
Return on equity, % 4.5 10.6 10.9 10.0 3.3
Return on equity excl. non-
recurring items, % 4.4 10.6 11.1 9.8 3.0
Equity ratio, % 54.4 52.1 54.0 53.9 52.7
Capital expenditure,
€ million 64.1 130.5 126.3 104.5 104.1
Earnings per share, diluted,
€ 0.25 0.55 0.53 0.51 0.17
Equity per share, € 22.04 21.21 21.66 22.20 22.42
Segment information
Net sales by segment 1-3/ 1-3/ Change, 1-12/
(€ million) 2012 2011 % 2011
Food trade, Finland 1,010 948 6.5 4,182
Food trade, other countries* - - -
Food trade total 1,010 948 6.5 4,182
- of which intersegment
trade 45 43 4.0 168
Home and speciality goods
trade, Finland 356 344 3.6 1,541
Home and speciality goods
trade, other countries* 13 4 (..) 23
Home and speciality
goods trade total 369 348 6.1 1,564
- of which intersegment
trade 4 3 9.8 20
Building and home
improvement trade, Finland 300 280 7.1 1,233
Building and home
improvement trade, other
countries* 329 290 13.5 1,483
Building and home
improvement trade total 629 570 10.3 2,716
- of which intersegment
trade 0 1 (..) 12
Car and machinery trade,
Finland 337 266 26.7 1,064
Car and machinery trade,
other countries* 16 13 21.9 110
Car and machinery trade
total 353 279 26.4 1,174
- of which intersegment
trade 0 0 -49.7 1
Common operations and
eliminations -42 -42 0.9 -176
Finland total 1,961 1,797 9.1 7,844
Other countries total* 357 306 16.5 1,616
Group total 2,318 2,103 10.2 9,460
* Net sales in countries other than Finland.
(..) Change over 100%
Operating profit by 1-3/ 1-3/ 1-12/
segment (€ million) 2012 2011 Change 2011
Food trade 37.6 42.1 -4.5 173.7
Home and speciality
goods trade -12.9 -7.4 -5.4 37.0
Building and home
improvement trade -9.0 -9.1 0.1 26.3
Car and machinery
trade 15.6 12.2 3.3 51.9
Common operations
and eliminations -5.1 -2.2 -2.9 -8.3
Group total 26.3 35.7 -9.3 280.6
Operating profit excl.
non-recurring items by 1-3/ 1-3/ 1-12/
segment (€ million) 2012 2011 Change 2011
Food trade 34.9 41.4 -6.4 172.2
Home and speciality
goods trade -12.9 -7.4 -5.4 36.6
Building and home
improvement trade -9.0 -9.1 0.1 26.6
Car and machinery
trade 15.6 12.2 3.3 51.8
Common operations
and eliminations -5.1 -2.2 -2.9 -8.3
Group total 23.6 34.9 -11.3 278.9
Operating margin
excl. non-recurring 1-3/ 1-3/ 1-12/ Moving 12 mo
items by segment 2012 2011 Change,pp 2011 3/2012
Food trade 3.5 4.4 -0.9 4.1 3.9
Home and speciality
goods trade -3.5 -2.1 -1.3 2.3 2.0
Building and home
improvement trade -1.4 -1.6 0.2 1.0 1.0
Car and machinery trade 4.4 4.4 0.0 4.4 4.4
Group total 1.0 1.7 -0.6 2.9 2.8
Capital employed by
segment, cumulative 1-3/ 1-3/ 1-12/
average (€ million) 2012 2011 Change 2011
Food trade 701 556 145 601
Home and speciality
goods trade 478 409 69 437
Building and home
improvement trade 752 658 94 696
Car and machinery trade 198 149 49 158
Common operations and
eliminations 311 218 94 236
Group total 2,439 1,990 449 2,129
Return on capital Moving 12 mo
employed excl. non- 1-3/ 1-3/ Change,pp 1-12/ 3/2012
recurring items by 2012 2011 2011
segment, %
Food trade 19.9 29.8 -9.8 28.6 25.9
Home and speciality
goods trade -10.8 -7.3 -3.5 8.4 6.9
Building and home
improvement trade -4.8 -5.5 0.7 3.8 3.7
Car and machinery trade 31.5 32.8 -1.3 32.8 32.7
Group total 3.9 7.0 -3.2 13.1 11.9
Capital expenditure by 1-3/ 1-3/ 1-12/
segment (€ million) 2012 2011 Change 2011
Food trade 60 31 29 221
Home and speciality
goods trade 18 8 10 62
Building and home
improvement trade 12 19 -7 110
Car and machinery trade 13 6 7 30
Common operations
and eliminations 1 0 1 2
Group total 104 64 40 425
Segment information by quarter
Net sales by segment 1-3/ 4-6/ 7-9/ 10-12/ 1-3/
(€ million) 2011 2011 2011 2011 2012
Food trade 948 1,077 1,049 1,108 1,010
Home and speciality goods
trade 348 339 376 501 369
Building and home
improvement trade 570 757 731 657 629
Car and machinery trade 279 342 290 263 353
Common operations and
eliminations -42 -43 -42 -48 -42
Group total 2,103 2,472 2 ,404 2,481 2,318
Operating profit by segment 1-3/ 4-6/ 7-9/ 10-12/ 1-3/
(€ million) 2011 2011 2011 2011 2012
Food trade 42.1 45.9 45.7 40.0 37.6
Home and speciality goods
trade -7.4 2.8 8.7 32.9 -12.9
Building and home
improvement trade -9.1 18.8 21.0 -4.5 -9.0
Car and machinery trade 12.2 19.7 13.0 7.0 15.6
Common operations and
eliminations -2.2 -3.3 -0.2 -2.6 -5.1
Group total 35.7 83.9 88.2 72.8 26.3
Operating profit excl.
non-recurring items by 1-3/ 4-6/ 7-9/ 10-12/ 1-3/
segment (€ million) 2011 2011 2011 2011 2012
Food trade 41.4 45.8 46.4 38.6 34.9
Home and speciality goods
trade -7.4 2.4 8.7 32.9 -12.9
Building and home
improvement trade -9.1 18.8 21.3 -4.4 -9.0
Car and machinery trade 12.2 19.6 13.0 7.0 15.6
Common operations and
eliminations -2.2 -3.3 -0.2 -2.6 -5.1
Group total 34.9 83.3 89.2 71.5 23.6
Operating margin excl.
non-recurring items by 1-3/ 4-6/ 7-9/ 10-12/ 1-3/
segment 2011 2011 2011 2011 2012
Food trade 4.4 4.3 4.4 3.5 3.5
Home and speciality goods
trade -2.1 0.7 2.3 6.6 -3.5
Building and home improvement trade -1.6 2.5 2.9 -0.7 -1.4
Car and machinery trade 4.4 5.7 4.5 2.6 4.4
Group total 1.7 3.4 3.7 2.9 1.0
Personnel, average and at 31 March
Personnel average by
segment 1-3/2012 1-3/2011 Change
Food trade 2,642 2,646 -3
Home and speciality goods
trade 5,983 5,363 620
Building and home
improvement trade 8,848 8,587 262
Car and machinery trade 1,210 1,162 48
Common operations 429 401 28
Group total 19,113 18,158 955
Personnel at 31 Mar.*
by segment 2012 2011 Change
Food trade 2,993 2,912 81
Home and speciality goods
trade 8,128 7,468 660
Building and home
improvement trade 9,986 9,622 364
Car and machinery trade 1,280 1,230 50
Common operations 486 438 48
Group total 22,873 21,670 1,203
* total number incl. part-time employees
Group's commitments (€ million)
31.3.2012 31.3.2011 Change,%
Own commitments 181 211 -14.0
For shareholders - - -
For others 8 7 9.5
Lease liabilities for machinery and equipment 26 23 12.4
Lease liabilities for real estate 2,265 2,306 -1.8
Own commitments do not include lease liabilities.
Liabilities arising from
derivative instruments
Fair value
Values of underlying instruments at 31 31.3.2012 31.3.2011 31.3.2012
March
Interest rate derivatives
Interest rate swaps 205 201 2.55
Currency derivatives
Forward and future contracts 334 210 -4.53
Option agreements 7 - -0.00
Currency swaps 100 100 -10.57
Commodity derivatives
Electricity derivatives 30 52 -5.20
Calculation of performance indicators
Operating profit x 100 / (Non-current
Return on capital employed*, % assets + Inventories +
Receivables + Other current assets -
Non-interest-bearing
liabilities) on average for the
reporting period
Return on capital employed, %, Operating profit for prior 12 months x
moving 12 months 100 / (Non-current assets
+ Inventories + Receivables + Other current assets - Non-
interest-bearing liabilities) on
average for 12 months
Return on capital employed Operating profit excl. non-recurring
excl. non-recurring items*, % items x 100 / (Non-current
assets + Inventories + Receivables +
Other current assets -
Non-interest-bearing liabilities) on
average for the reporting
period
Return on capital employed, Operating profit excl. non-recurring
excl. non-recurring items, %, items for prior 12 months x
moving 12 mo 100 / (Non-current assets + Inventories
+ Receivables + Other
current assets - Non-interest-bearing
liabilities) on average for
12 months
(Profit/loss before tax - income tax) x
Return on equity*, % 100 /
Shareholders' equity
Return on equity, %, moving (Profit/loss for prior 12 months before
12 months tax - income tax for prior
12 months) x 100 /Shareholders' equity
(Profit/loss adjusted for non-recurring
items before tax - income
tax adjusted for the tax effect of non-
Return on equity excl. non- recurring items) x
recurring items*, % 100 / Shareholders' equity
(Profit/loss for prior 12 months
adjusted for non-recurring items before tax - income tax for prior 12
Return on equity excl. non- months adjusted for the tax
recurring items, %, moving effect of non-recurring items) x100 /
12 months Shareholders' equity
Shareholders' equity x 100 /
Equity ratio, % (Balance sheet total - prepayments
received)
(Profit/loss - non-controlling
interests) /
Earnings/share, diluted Average number of shares adjusted for
the dilutive effect of
options
(Profit/loss - non-controlling
Earnings/share, basic interests) /
Average number of shares
Earnings/share excl. non- (Profit/loss adjusted for non-recurring
recurring items, basic items - non-controlling
interests)/Average number of shares
Equity attributable to equity holders
Equity/share of the parent /
Basic number of shares at the end of
the reporting period
Gearing, % Interest-bearing net liabilities x 100
/
Shareholders' equity
Interest-bearing net debt Interest-bearing liabilities - money
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.-31.3.2012
K-Group's retail and € million Change, %
B2B sales
K-Group's food trade
K-food stores, Finland 1,117 6.5
Kespro 179 10.5
Food trade total 1,296 7.0
K-Group's home and speciality goods
trade
Home and speciality goods stores,
Finland 400 4.3
Home and speciality goods stores,
other countries 13 (..)
Home and speciality goods trade
total 413 6.6
K-Group's building and home
improvement trade
K-rauta and Rautia 187 7.1
Rautakesko B2B Service 48 15.5
K-maatalous 89 11.9
Finland total 324 9.6
Building and home improvement
stores,
other Nordic countries 244 14.3
Building and home improvement
stores,
Baltic countries 71 13.9
Building and home improvement
stores,
other countries 69 11.4
Building and home improvement trade
total 707 11.8
K-Group's car and machinery trade
VV-Autotalot 138 41.1
VV-Auto, import 159 25.9
Konekesko, Finland 49 1.4
Finland total 346 27.0
Konekesko, Baltic countries 17 30.7
Car and machinery trade total 363 27.1
Finland total 2,366 9.4
Other countries total 413 16.7
Retail and B2B sales total 2,779 10.4
(..) Change over 100%
[HUG#1606170]
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