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2015-07-22 08:00:00 CEST 2015-07-22 08:01:37 CEST REGLAMENTUOJAMA INFORMACIJA Kesko Oyj - Interim report (Q1 and Q3)Kesko's interim report for the period 1 January to 30 June 2015: Operating profit increased and financial position continued to strengthenKESKO CORPORATION INTERIM REPORT 22.07.2015 AT 09.00 1(32) Kesko's interim report for the period 1 January to 30 June 2015: Operating profit increased and financial position continued to strengthen Financial performance in brief: * The Group's net sales for January-June €4,310 million. Net sales performance in local currencies excluding Anttila was -0.8%. * Operating profit excluding non-recurring items increased to €102.9 million (€86.7 million). * Earnings per share excluding non-recurring items grew to €0.71 (€0.64). * Equity ratio 52.2% (52.3%). * Kesko Group's net sales for the next 12 months are expected to be lower than the level of the preceding 12 months and the operating profit excluding non- recurring items for the next 12 months is expected to exceed the level of the preceding 12 months. Key performance indicators 1-6/2015 1-6/2014 4-6/2015 4-6/2014 Net sales, € million 4,310 4,499 2,227 2,371 Operating profit excl. non-recurring items, € million 102.9 86.7 76.4 67.6 Operating profit, € million 72.2 56.3 175.8 69.4 Profit before tax, € million 68.5 57.0 172.1 71.4 Capital expenditure, € million 110.1 99.1 58.6 55.7 Earnings per share, €, diluted 0.38 0.39 1.48 0.51 Earnings per share excl. non-recurring items, €, basic 0.71 0.64 0.52 0.49 30.6.2015 30.6.2014 Equity ratio, % 52.2 52.3 Equity per share, € 21.21 21.86 President and CEO Mikko Helander:"Kesko improved its profit in the second quarter of the year despite the ongoing challenging operating environment. In the grocery trade, K-food stores' market share is estimated to have increased during the second quarter. This indicates that the changes and renewals implemented during the first months of the year have been well received by customers. We will continue our responsible approach based on both affordable price and quality in all respects. The profitability of the grocery trade remained at a good level as well. The profitability of the home improvement and speciality goods trade continued to improve and market share strengthened in the key market areas. In the car trade, Volkswagen continues as the clear market leader and Audi as number one in its class. The reduction in car tax contained in the Government's programme slowed the sales of new cars in May-June. Kesko's financial position continued to strengthen in the second quarter. This is partly attributable to the joint real estate arrangement completed in June between Kesko, Ilmarinen and AMF, in which the sale of real estate property generated a cash inflow of over €400 million. At the end of the reporting period, liquid assets were approximately €840 million. The general economic situation and the expected trend in consumer demand vary in Kesko's different operating countries. In Finland, the trading sector's performance is expected to remain weak and the tough competitive situation is expected to continue. In Sweden, Norway and the Baltic countries, the growth in demand in the trading sector is expected to continue. In Russia, the economic situation and consumers' purchasing power are estimated to remain weak. Kesko's strategy was published at the end of May. The core of the strategy is profitable growth in the grocery trade, the building and home improvement trade and the car trade. Strategy implementation has got off to a good start and practical measures are well under way, which can be seen in, for instance, the renewal of the Neste service station concept and the first K-rauta Express store to open in August. We have defined our strategy for the coming years and now we will concentrate on its systematic implementation." FINANCIAL PERFORMANCE Net sales and profit for January-June 2015 The Group's net sales for January-June 2015 were €4,310 million, which is 4.2% down on the corresponding period of the previous year (€4,499 million). Anttila excluded, net sales performance was -0.8% in local currencies. The decline in consumers' purchasing power weakened consumer demand in the reporting period in Finland and Russia. In the grocery trade, net sales performance was -2.2%. In the home improvement and speciality goods trade, net sales decreased by 8.0%, but Anttila excluded, they increased by 1.0% in local currencies. In the car and machinery trade, net sales were down 3.2%. The Group's net sales in Finland decreased by 4.4% and in the other countries by 3.3%; in local currencies, net sales abroad increased by 5.8%. The weakening of the Russian rouble impacted net sales performance in euros especially in the home improvement and speciality goods trade. International operations accounted for 18.2% (18.0%) of net sales. 1-6/2015 Net sales, € Change, % Operating profit Change, million excl. non- € million recurring items, € million Grocery trade 2,252 -2.2 78.2 -22.5 Home improvement and speciality goods trade 1,519 -8.0 18.7 +44.4 Car and machinery trade 538 -3.2 17.9 -1.2 Common operations and eliminations 0 (..) -12.0 -4.6 Total 4,310 -4.2 102.9 +16.1 (..) Change over 100% The operating profit excluding non-recurring items for January-June was €102.9 million (€86.7 million). Profitability was at a good level in the grocery trade, although the operating profit excluding non-recurring items decreased from the previous year due to a further intensification of price competition. The operating profit for the first months of the year includes a €12.7 million operating loss from Anttila, divested in March; the operating loss for the previous year was €42.7 million. Profitability strengthened especially in the building and home improvement trade in Finland and the other Nordic countries. In the car and machinery trade, profitability remained steady. Operating profit was €72.2 million (€56.3 million). The operating profit includes €-30.7 million (€-30.4 million) of non-recurring items. The most significant non-recurring items are the €75.7 million capital gain recorded on a real estate transaction completed in the second quarter of the year and the €130 million loss on the divestment of Anttila. In addition, the non-recurring items include other gains on the sale of properties in the amount of €24.3 million. The non-recurring expenses of the comparative period included a €30.0 million restructuring provision recognised on measures taken to improve Anttila's profitability. The Group's profit before tax for January-June was €68.5 million (€57.0 million). The Group's earnings per share were €0.38 (€0.39). The Group's equity per share was €21.21 (€21.86). In January-June, the K-Group's (i.e. Kesko's and the chain stores') retail and B2B sales excluding Anttila (VAT 0%) were €5,282 million, down 2.2% compared to the previous year. The K-Plussa customer loyalty programme gained 27,919 new households in January-June 2015. At the end of June, there were 2.3 million K- Plussa households and 3.6 million K-Plussa cardholders. Net sales and profit for April-June 2015 The Group's net sales for April-June 2015 were €2,227 million, which is 6.0% down on the corresponding period of the previous year (€2,371 million). Anttila excluded, net sales performance was -2.2% in local currencies. The decline in consumers' purchasing power weakened consumer demand in the reporting period in Finland and Russia. In the grocery trade, net sales performance was -4.4%, partly weakened by the timing of Easter sales in the first quarter of the year. In the home improvement and speciality goods trade, net sales decreased by 10.4%, but Anttila excluded, they were at the level of the previous year in local currencies. In the car and machinery trade, net sales were down 2.2%. The Group's net sales in Finland decreased by 7.1% and Anttila excluded, by 4.2%. In the other countries, net sales were down 1.6%, but in local currencies, up 5.6%. International operations accounted for 20.5% (19.6%) of net sales. 4-6/2015 Net sales, € Change, % Operating profit Change, million excl. non- € million recurring items, € million Grocery trade 1,149 -4.4 43.3 -12.0 Home improvement and speciality goods trade 797 -10.4 30.1 +24.3 Car and machinery trade 277 -2.2 11.0 +0.1 Common operations and eliminations 4 (..) -8.0 -3.7 Total 2,227 -6.0 76.4 +8.7 The operating profit excluding non-recurring items for April-June was €76.4 million (€67.6 million). Profitability improved clearly in the home improvement and speciality goods trade, whose profit performance strengthened especially in the building and home improvement trade in Finland and Sweden. The operating profit of the home improvement and speciality goods trade for the comparative period includes a €20.5 million operating loss from Anttila. Operating profit was €175.8 million (€69.4 million). The operating profit includes €99.4 million (€1.8 million) of non-recurring items. The most significant non-recurring item was the €75.7 million capital gain recorded on a real estate arrangement completed in June. In addition, the non-recurring items include other gains on the sale of properties in the amount of €24.0 million. The Group's profit before tax for April-June was €172.1 million (€71.4 million). The Group's earnings per share were €1.48 (€0.51). In April-June, the K-Group's (i.e. Kesko's and the chain stores') retail and B2B sales (VAT 0%) were €2,859 million, and Anttila excluded, they were down 2.0% compared to the previous year. Finance In January-June, the cash flow from operating activities was €67.5 million (€33.9 million). The cash flow from investing activities was €334.3 million (€- 92.5 million) and it included proceeds from the sale of fixed assets in the amount of €444.2 million (€6.3 million), of which the cash inflow from the real estate arrangement completed in June was €402.9 million. The Group's liquidity remained at an excellent level in January-June. At the end of the period, liquid assets totalled €843 million (€461 million). Interest- bearing liabilities were €483 million (€539 million) and interest-bearing net liabilities were €-359 million (€78 million) at the end of June. The equity ratio was 52.2 % (52.3%) at the end of the period. In January-June, the Group's net finance costs were €4.5 million (net finance income €0.6 million). The finance income for the previous year included interest income on cooperative capital from Suomen Luotto-osuuskunta in the amount of €4.9 million. In April-June, the cash flow from operating activities was €142.3 million (€128.7 million). The cash flow from investing activities was €398.7 million (€- 48.8 million) and it included proceeds from the sale of fixed assets in the amount of €460.3 million (€4.4 million). The Group's net finance costs were €4.2 million (net finance income €2.2 million) in April-June. The finance income for the previous year included interest income on cooperative capital from Suomen Luotto-osuuskunta in the amount of €4.9 million. Taxes In January-June, the Group's taxes were €26.4 million (€15.1 million). The effective tax rate was 38.5% (26.4%). In April-June, the Group's taxes were €19.4 million (€17.6 million). The effective tax rate was 11.2% (24.6%). Capital expenditure In January-June, the Group's capital expenditure totalled €110.1 million (€99.1 million), or 2.6% (2.2%) of net sales. Capital expenditure in store sites was €78.5 million (€74.4 million), in IT €8.6 million (€15.6 million) and other capital expenditure was €23.0 million (€9.1 million). Capital expenditure in foreign operations represented 43.4% (42.6%) of total capital expenditure. In April-June, the Group's capital expenditure totalled €58.6 million (€55.7 million), or 2.6% (2.3%) of net sales. Capital expenditure in store sites was €38.3 million (€46.6 million), in IT €3.9 million (€4.8 million) and other capital expenditure was €16.4 million (€4.3 million). Capital expenditure in foreign operations represented 34.7% (46.8%) of total capital expenditure. Kesko's strategy was updated Kesko's Board of Directors decided on a strategy aimed at achieving profitable growth in three strategic areas: the grocery trade, the building and home improvement trade and the car trade. Kesko operates the retailer business model or Kesko's own stores when it provides competitive advantage. Kesko differentiates from the competitors with quality and customer orientation, and by bringing the best digital services in the trading sector to the market. In the grocery trade, Kesko's strategic objective is to turn the K-Group's market share around in Finland in 2016. Capital expenditure in the K-supermarket and K-market chains will be increased significantly. The target is approximately 30 new K-supermarkets. In the K-market chain, the current network will be revised and the objective is to establish over 100 new neighbourhood stores and to test a completely new store concept. In addition, the whole K-citymarket concept will be renewed. In the online food trade, the target is a 40% market share. In Russia, increasing business operations and improving profitability in the St. Petersburg area will continue. Moreover, new growth opportunities in the Moscow area and possibly other metropolitan cities in Russia will be explored. Increasing the business operations of the grocery wholesale company Kespro is also at the centre of the grocery trade strategy. In the building and home improvement trade, Kesko's objective is to further strengthen its position in Europe. Kesko is already now the market leader in Finland and the fifth largest operator in the sector in Europe. The objective is to increase market share and achieve profitable growth in the existing markets alone, through acquisitions, or in cooperation with partners. At the same time, possibilities to expand also elsewhere in Europe will be examined. The K-rauta Express concept of fast and easy shopping will be launched for locations with large flows of customers at, for example, shopping centres and city centres. In the passenger car and van trade as well, Kesko is currently the clear market leader in Finland. In the future, the Group aims to increase its market share in Finland and the Baltic countries. In the core and support processes of the Group's different business operations, the objective is to achieve significant synergies and enhancement benefits. For this purpose, common functions that support business operations will be created and the competitiveness of business operations will be strengthened through an even closer cooperation in the core processes of business operations. Kesko Group will also immediately start planning to simplify the legal structure. In order to ensure competitiveness and improve profitability, Kesko's objective is to achieve cost savings of at least €50 million in fixed costs by the end of 2016. New segment structure The composition of Kesko's divisional structure and segment reporting has been changed as of 1 July 2015 to correspond to the new strategy. An agricultural and machinery trade unit has been established as part of the home improvement and speciality goods trade division. As of 1 July 2015, Kesko Group's reportable segments are the grocery trade, the home improvement and speciality goods trade and the car trade. Real estate arrangement completed The joint real estate investment company established by Kesko, AMF Pensionsförsäkring and Ilmarinen started operating in June. The joint venture owns, manages and develops store sites primarily used by Kesko Group. Kesko Group continues operating on the store sites under long-term leases signed in connection with their sale. Kesko sold some of its store sites in both Finland and Sweden to the established joint venture. The fair value of the store sites sold totalled €485 million and Kesko recorded a €75.7 million non-recurring gain on the store sites sold for the second quarter of 2015. The cash inflow generated by the arrangement was €403 million. Kesko's equity investment in the joint venture was €67 million. Sale of Anttila's shares was implemented On 16 March 2015, Kesko sold the department store chain Anttila Oy to the German investment fund 4K INVEST at a price of €1 million. The transaction included all assets and liabilities in Anttila Oy. Anttila Oy's approximately 1,500 employees continue in the employment of the company. The date of the transaction was 16 March 2015. Kesko recorded a €-130 million non-recurring item on the transaction for the first quarter of 2015 relating to the financing, working capital and fixed assets of Anttila. The transaction will improve Kesko's profitability and make Kesko's operations more focused. Personnel In January-June, the average number of personnel in Kesko Group was 19,065 (19,935) converted into full-time employees. In Finland, the average decrease was 1,204 people, while outside Finland, there was an increase of 334 people. At the end of June 2015, the number of personnel was 22,894 (24,493), of whom 10,774 (12,889) worked in Finland and 12,120 (11,604) outside Finland. Compared to the end of June 2014, there was a decrease of 2,115 people in Finland and an increase of 516 people outside Finland. In January-June, the Group's employee benefit expenses were €281.9 million, down 10.4% compared to the previous year. In April-June, employee benefit expenses decreased by 12.9% compared to the previous year and were €138 million. The movement is attributable to the divestment of Anttila on 16 March 2015. SEGMENTS Seasonal nature of operations The Group's operating activities are affected by seasonal fluctuations. The net sales and operating profits of the reportable segments are not earned evenly throughout the year. Instead, they vary by quarter depending on the characteristics of each segment. Grocery trade 1-6/2015 1-6/2014 4-6/2015 4-6/2014 Net sales, € million 2,252 2,304 1,149 1,202 Operating profit excl. non- recurring items, € million 78.2 100.7 43.3 55.3 Operating margin excl. non-recurring items, % 3.5 4.4 3.8 4.6 Capital expenditure, € million 70.9 50.3 33.2 30.6 Net sales, € million 1-6/2015 Change, % 4-6/2015 Change, % Sales to K-food stores 1,542 -2.7 785 -5.9 K-citymarket, non-food 267 -0.3 135 +0.6 Kespro 381 +0.3 197 -1.1 K-ruoka, Russia 50 -2.3 29 +10.4 Others 12 -39.6 4 -58.1 Total 2,252 -2.2 1,149 -4.4 January-June 2015 The net sales of the grocery trade for January-June were €2,252 million (€2,304 million), representing a change of -2.2%. In January-June, the grocery sales of K-food stores in Finland decreased by 1.3% (VAT 0%). In the grocery market in Finland, retail prices are estimated to have changed by approximately -1% 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 decreased by 1% in January-June (Kesko's own estimate). The decline in the value of the rouble reduced the sales of the food stores in Russia in euros. In terms of roubles, the sales increased by 30.6%. In January-June, the operating profit excluding non-recurring items of the grocery trade was €78.2 million (€100.7 million). Profitability remained at a good level despite the measures taken to improve competitiveness. Kespro's market share increased and profitability remained at a good level. Operating profit was €151.0 million (€98.8 million). Non-recurring items, in the amount of €72.8 million (€-2.0 million), include €72 million in gains on the sales of properties as the most significant items. The capital expenditure of the grocery trade in January-June was €70.9 million (€50.3 million), of which €64.3 million (€44.5 million) in store sites. April-June 2015 The net sales of the grocery trade for April-June were €1,149 million (€1,202 million), representing a change of -4.4%. The timing of Easter sales in the first quarter of the year impacted the net sales performance in the reporting period. The net sales of the food stores in Russia increased by 10.4% in euros and by 36.4% in roubles. In April-June, the operating profit excluding non-recurring items of the grocery trade was €43.3 million (€55.3 million). Profitability remained at a good level despite the measures taken to improve competitiveness. Kespro's market share increased and profitability remained at a good level. Operating profit was €115.8 million (€54.4 million). Non-recurring items were €72.4 million (€-0.9 million). The capital expenditure of the grocery trade in April-June was €33.2 million (€30.6 million), of which €30.1 million (€27.7 million) in store sites. In April-June 2015, two K-food stores in St. Petersburg and three new K- supermarkets, as well as three K-markets in Finland were opened. Renewals and space modifications were made in a total of 15 stores. The most significant store sites being built are the K-citymarket shopping centre in Itäkeskus, Helsinki, the new K-supermarkets in Oulu, in Niittykumpu, Espoo, in Keuruu, Lappeenranta and in Lauttasaari, Töölö and Kalasatama, Helsinki. One new food store is being built in Russia. Numbers of stores as at 30 June 2015 2014 K-citymarket 81 80 K-supermarket 220 220 K-market (incl. service station stores) 441 441 K-ruoka, Russia 8 4 Others* 160 171 * Incl. online stores In addition, several K-food stores offer e-commerce services to their customers. Home improvement and speciality goods trade 1-6/2015 1-6/2014 4-6/2015 4-6/2014 Net sales, € million 1,519 1,651 797 890 Operating profit excl. non-recurring items, € million 18.7 -25.6 30.1 5.8 Operating margin excl. non-recurring items, % 1.2 -1.6 3.8 0.6 Capital expenditure, € million 18.1 31.2 8.6 17.0 Net sales, € million 1-6/2015 Change, % 4-6/2015 Change, % Rautakesko, Finland 602 -4.1 322 -4.7 K-rauta, Sweden 104 +3.8 64 +3.7 Byggmakker, Norway 216 -2.0 119 -1.0 K-rauta, Estonia 41 +13.2 24 +9.7 K-rauta, Latvia 26 +3.9 15 -0.1 Senukai, Lithuania 144 +4.8 84 +5.5 K-rauta, Russia 94 -20.4 55 -20.0 OMA, Belarus 53 -6.4 31 -6.3 Intersport, Finland 83 +6.4 33 +3.2 Intersport, Russia 6 -22.3 3 -4.0 Indoor 87 +1.6 43 -1.3 Musta Pörssi 6 -39.8 3 -43.1 Kenkäkesko 9 -5.2 3 -6.6 Anttila 53 -63.2 - - Total 1,519 -8.0 797 -10.4 January-June 2015 The net sales of the home improvement and speciality goods trade for January- June were €1,519 million (€1,651 million), down 8.0%. Net sales excluding Anttila increased by 1.0% in local currencies. The net sales of the home improvement and speciality goods trade for January- June in Finland were €832 million (€945 million), a decrease of 11.9%. Anttila excluded, net sales decreased in Finland by 3.0%. The K-Group's sales of building and home improvement products in Finland decreased by a total of 2.8% and the total market (VAT 0%) is estimated to have fallen by approximately 4.4% (Kesko's own estimate). The K-Group's market share is estimated to have grown during the first months of the year. The retail sales of the K-maatalous chain were down by 5.1%. In January-June, the net sales from the foreign operations of the home improvement and speciality goods trade were €687 million (€707 million), a decrease of 2.8%. In local currencies, the net sales from foreign operations increased by 5.2%. In Sweden, net sales in kronas grew by 8.2% and in Norway in krones by 2.3%. In the building and home improvement trade in Russia, net sales in roubles grew by 6.3%. Market position is estimated to have strengthened in the building and home improvement trade in Sweden, the Baltic countries and Russia. Foreign operations contributed 45.2% (42.8%) to the net sales of the home improvement and speciality goods trade. In January-June, the operating profit excluding non-recurring items of the home improvement and speciality goods trade was €18.7 million (€-25.6 million), up €44.4 million compared to the previous year. The €12.7 million (€42.7 million) operating loss of Anttila, divested in March, is included in the profit of the home improvement and speciality goods trade. The operating profit of the home improvement and speciality goods trade, excluding non-recurring items and Anttila, was €31.4 million, up €14.4 million on the previous year. The clearly improved profitability is attributable to a sales increase in foreign currency terms, coupled with implemented cost savings. Profit improved especially in the building and home improvement trade in Finland and the other Nordic countries. In the building and home improvement trade in Russia, the operational result excluding foreign exchange impacts remained at the level of the previous year. The operating profit of the home improvement and speciality goods trade was €- 84.7 million (€-54.1 million). Non-recurring items include a €130 million loss on the divestment of Anttila and €27 million in gains recorded on the sales of properties. In January-June, the capital expenditure of the home improvement and speciality goods trade totalled €18.1 million (€31.2 million), of which 29.0% (70.4%) was abroad. Capital expenditure in store sites represented 63.7% of total capital expenditure. April-June 2015 The net sales of the home improvement and speciality goods trade for April-June were €797 million (€890 million), down 10.4%. Net sales excluding Anttila in local currencies were at the level of the previous year (+0.1%). The net sales of the home improvement and speciality goods trade for April-June in Finland were €400 million (€484 million), a decrease of 17.2%. Anttila excluded, net sales decreased in Finland by 4.2%. The K-Group's sales of building and home improvement products in Finland decreased by a total of 2.1% and the total market (VAT 0%) is estimated to have fallen by approximately 3.8% (Kesko's own estimate). The K-Group's market share is estimated to have grown during the first months of the year. The retail sales of the K-maatalous chain were down by 6.9%. In April-June, the net sales from the foreign operations of the home improvement and speciality goods trade were €397 million (€407 million), a decrease of 2.4%. In local currencies, the net sales from foreign operations increased by 4.5%. In Sweden, net sales in kronas grew by 7.2% and in Norway in krones by 3.2%. In the building and home improvement trade in Russia, net sales decreased by 1.1% in roubles. Market position is estimated to have strengthened in the building and home improvement trade in Sweden, the Baltic countries and Russia. Foreign operations contributed 49.8% (45.7%) to the net sales of the home improvement and speciality goods trade. In April-June, the operating profit excluding non-recurring items of the home improvement and speciality goods trade was €30.1 million (€5.8 million), up €24.3 million compared to the previous year. The comparative period includes a €20.5 million operating loss from Anttila. In addition, the profitability improvement is attributable to a sales increase in foreign currency terms, coupled with implemented cost savings. Profit improved especially in the building and home improvement trade in Sweden, Lithuania and Belarus. The operating profit of the home improvement and speciality goods trade was €57.1 million (€8.4 million). Non-recurring items include €27 million in gains recorded on the sales of properties. In the comparative period, non-recurring items were €2.7 million. In April-June, the capital expenditure of the home improvement and speciality goods trade totalled €8.6 million (€17.0 million), of which 21.1% (74.8%) was abroad. Capital expenditure in store sites represented 74.8% of total capital expenditure. In April-June, one K-rauta store was opened in Lahdesjärvi, Tampere, one building and home improvement store was closed in Norway and one Intersport store in St. Petersburg. The most significant store sites being built are the K- rauta stores in Kokkola, Lahti and Imatra. Numbers of stores as at 30 June 2015 2014 K-rauta 43 42 Rautia* 93 97 K-maatalous* 81 82 K-rauta, Sweden 20 20 Byggmakker, Norway 83 86 K-rauta, Estonia 8 8 K-rauta, Latvia 8 8 Senukai, Lithuania 19 19 K-rauta, Russia 13 13 OMA, Belarus 11 10 Intersport, Finland** 62 62 Budget Sport** 11 11 Asko and Sotka** 87 87 Musta Pörssi** 1 6 Kookenkä** 42 46 Intersport, Russia 16 18 Asko and Sotka, the Baltics** 10 10 * In 2015, 45 (46) Rautia stores also operated as K-maatalous stores ** Incl. online stores In addition, the building and home improvement stores offer e-commerce services to their customers. Car and machinery trade 1-6/2015 1-6/2014 4-6/2015 4-6/2014 Net sales, € million 538 556 277 283 Operating profit excl. non-recurring items, € million 17.9 19.1 11.0 10.9 Operating margin excl. non-recurring items, % 3.3 3.4 4.0 3.8 Capital expenditure, € million 6.9 9.4 4.0 6.5 Net sales, € million 1-6/2015 Change, % 4-6/2015 Change, % VV-Auto 393 -4.2 187 -4.7 Konekesko 145 -0.5 90 +3.4 Total 538 -3.2 277 -2.2 January-June 2015 The net sales of the car and machinery trade for January-June were €538 million (€556 million), down 3.2%. VV-Auto's net sales for January-June were €393 million (€410 million), a decrease of 4.2%. In January-June, the combined market performance of first time registered passenger cars and vans was -2.8%. In January-June, the combined market share of passenger cars and vans imported by VV-Auto was 20.0% (21.0%). Volkswagen was the market leader in passenger cars and vans. Konekesko's net sales for January-June were €145 million (€146 million), down 0.5% compared to the previous year. Net sales in Finland were €98 million, up 5.5%. The net sales from Konekesko's foreign operations were €48 million, down 11.0%. The decline in net sales was especially driven by the weak market performance of the agricultural machinery trade. In January-June, the operating profit excluding non-recurring items of the car and machinery trade was €17.9 million (€19.1 million), down €1.2 million compared to the previous year. The profitability of the car trade remained at a good level despite the weakened market situation. The operating profit for January-June was €17.9 million (€19.1 million). The capital expenditure of the car and machinery trade in January-June was €6.9 million (€9.4 million). April-June 2015 The net sales of the car and machinery trade for April-June were €277 million (€283 million), down 2.2%. VV-Auto's net sales for April-June were €187 million (€196 million), a decrease of 4.7%. In April-June, the combined market share of passenger cars and vans imported by VV-Auto was 21.2% (21.2%). Konekesko's net sales for April-June were €90 million (€87 million), up 3.4% compared to the previous year. Net sales in Finland were €60 million, up 6.0%. Net sales growth was driven by the good sales performance of Yamarin boats. The net sales from Konekesko's foreign operations were €31 million, down 1.5%. In April-June, the operating profit excluding non-recurring items of the car and machinery trade was €11.0 million (€10.9 million), up €0.1 million compared to the previous year. The profitability of the car trade remained at a good level despite the weakened market situation. Konekesko improved its profitability. The operating profit for April-June was €11.0 million (€10.9 million). The capital expenditure of the car and machinery trade in April-June was €4.0 million (€6.5 million). Numbers of stores as at 30 June 2015 2014 VV-Auto, retail trade 9 10 Konekesko 1 1 Changes in the Group composition During the reporting period, Kesko Corporation sold its subsidiary Anttila Oy. (Stock exchange release on 16 March 2015). As part of the real estate arrangement completed in June, 11 real estate companies were sold. Shares, securities market and Board authorisations At the end of June 2015, the total number of Kesko Corporation shares was 100,019,752, of which 31,737,007, or 31.7%, were A shares and 68,282,745, or 68.3%, were B shares. At 30 June 2015, Kesko Corporation held 876,054 own B shares as treasury shares. These treasury shares accounted for 1.28% of the number of B shares, 0.88% of the total number of shares, and 0.23% of votes attached to all shares of the company. The total number of votes attached to all shares was 385,652,815. Each A share carries ten (10) votes and each B share one (1) vote. The company cannot vote with own shares held by it as treasury shares and no dividend is paid on them. At the end of June 2015, Kesko Corporation's share capital was €197,282,584. The price of a Kesko A share quoted on Nasdaq Helsinki was €28.56 at the end of 2014, and €29.50 at the end of June 2015, representing an increase of 3.3%. Correspondingly, the price of a B share was €30.18 at the end of 2014, and €31.21 at the end of June 2015, representing an increase of 3.4%. In January- June, the highest A share price was €38.13 and the lowest was €28.52. The highest B share price was €41.04 and the lowest was €29.95. In January-June, the Nasdaq Helsinki All-Share index (OMX Helsinki) was up 6.8% and the weighted OMX Helsinki Cap index 7.9%. The Retail Sector Index was up 2.5%. At the end of June 2015, the market capitalisation of A shares was €936 million, while that of B shares was €2,104 million, excluding the shares held by the parent company. The combined market capitalisation of A and B shares was €3,040 million, an increase of €103 million from the end of 2014. In January-June 2015, a total of 1.5 million (1.0 million) A shares were traded on Nasdaq Helsinki, an increase of 42.1%. The exchange value of A shares was €49 million. The number of B shares traded was 32.2 million (25.3 million), an increase of 27.3%. The exchange value of B shares was €1,132 million. Nasdaq Helsinki accounted for 56% of Kesko A and B share trading in January-June 2015. Kesko shares were also traded on multilateral trading facilities, the most significant of which were BATS Chi-X with 38% and Turquoise with 6% of the trading (source: Fidessa). The Board had the authority, granted by the Annual General Meeting of 16 April 2012, to issue a total maximum of 20,000,000 new B shares, which was intended to expire on 30 June 2015. The shares could be issued against payment for subscription by shareholders in a directed issue in proportion to their existing holdings of the company shares regardless of whether they consisted of A or B shares, or, deviating from the shareholder's pre-emptive right, in a directed issue, if there had been a weighty financial reason for the company, such as using the shares to develop the company's capital structure and financing possible acquisitions, capital expenditure or other arrangements within the scope of the company's business operations. The amount paid for the shares would have been recognised in the reserve of invested non-restricted equity. The authorisation also included 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 issues. On 13 April 2015, the Annual General Meeting approved a share issue authorisation which cancels the above authority granted by the General Meeting of 16 April 2012. In consequence, the Board has the authority, granted by the Annual General Meeting of 13 April 2015 and valid until 30 June 2018, to issue a total maximum of 20,000,000 new B shares. The shares can be issued against payment to be subscribed by shareholders in a directed issue in proportion to their existing holdings of the company shares regardless of whether they hold 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, capital expenditure 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 for non-cash consideration and the right to make decisions on other matters concerning share issues. In addition, the Board has the authority, valid until 30 June 2017, to decide on the transfer of a maximum of 1,000,000 own B shares held by the company as treasury shares. On 9 February 2015, the Board decided to grant own B shares held by the company as treasury shares to persons included in the target group of the 2014 vesting period, based on the valid authority to issue treasury shares granted by the Annual General Meeting held on 8 April 2013 and the fulfilment of the vesting criteria of the 2014 vesting period of Kesko's three- year share-based compensation plan. This transfer of a total of 120,022 own B shares was announced in a stock exchange release on 1 April 2015 and 7 April 2015. Based on the 2014-2016 share-based compensation plan decided by the Board, a total maximum of 600,000 own B shares held by the company as treasury shares can be granted within a period of three years based on the fulfilment of the vesting criteria. The Board will separately decide on the vesting criteria and target group for each vesting period. The share-based compensation plan was announced in a stock exchange release on 4 February 2014. In January-June, a total of 761 shares granted based on the earlier share-based compensation plan (the 2011-2013 share-based compensation plan) was returned to the company in accordance with the terms and conditions of the share-based compensation plan. The return during the reporting period was notified in a stock exchange notification on 23 March 2015. At the end of June 2015, the number of shareholders was 39,291, which is 578 less than at the end of 2014. At the end of June, foreign ownership of all shares was 28%. At the end of June, foreign ownership of B shares was 40%. Flagging notifications Kesko Corporation did not receive flagging notifications during the reporting period. Key events during the reporting period Kesko's Board of Directors decided on the new strategy which is aimed at achieving profitable growth in three strategic areas: the grocery trade, the building and home improvement trade and the car trade. At the same time, financial targets in accordance with Kesko's new strategy were announced. The composition of Kesko's divisional structure and segment reporting has been changed as of 1 July 2015. An agricultural and machinery trade unit has been established as part of the home improvement and speciality goods trade division. (Stock exchange release on 27 May 2015) Kesko Corporation, the Swedish life insurance company AMF Pensionsförsäkring AB and Ilmarinen Mutual Pension Insurance Company set up a joint venture named Ankkurikadun Kiinteistöt Oy. The joint venture owns, manages and develops store sites acquired for it, primarily in use by Kesko Group. (Stock exchange release on 8 May 2015 and 11 June 2015) On 20 March 2015, at http://kesko2014.kesko.fi/en, Kesko published its first annual report that makes use of the <IR> integrated reporting framework. The annual report includes a business review, GRI indicators, the financial statements for 2014, the Corporate Governance Statement and the Remuneration Statement. Kesko sold the department store chain Anttila Oy to the German investment fund 4K INVEST for €1 million. The transaction includes all assets and liabilities in Anttila Oy. Anttila Oy's approximately 1,500 employees continue in the employment of the company. The date of the transaction was 16 March 2015. (Stock exchange release on 16 March 2015) M.Sc. (Econ.) Anni Ronkainen, 48, was appointed Kesko's Chief Digital Officer responsible for business development, digital business environment and marketing, and a member of the Group Management Board. (Stock exchange release on 26 January 2015) Resolutions of the 2015 Annual General Meeting and decisions of the Board's organisational meeting Kesko Corporation's Annual General Meeting, held on 13 April 2015, adopted the financial statements and the consolidated financial statements for 2014 and discharged the Board members and the Managing Director from liability. The General Meeting also resolved to distribute a dividend of €1.50 per share as proposed by the Board, or a total amount of €148,715,547.00. The dividend pay date was 22 April 2015. The General Meeting resolved to leave the number of Board members unchanged at seven. The General Meeting resolved to elect retailer, Business College Graduate Esa Kiiskinen, Master of Science in Economics, retailer Tomi Korpisaari, retailer, Secondary School Graduate Toni Pokela, eMBA Mikael Aro (new member), Master of Science in Economics Matti Kyytsönen (new member), Master of Science in Economics Anu Nissinen (new member) and Master of Laws Kaarina Ståhlberg (new member) as Board members for a three- year term expiring at the close of the 2018 Annual General Meeting in accordance with the Articles of Association. In addition, the General Meeting resolved to leave the Board members' fees and the basis for reimbursement of expenses unchanged. The General Meeting elected the firm of auditors PricewaterhouseCoopers Oy, Authorised Public Accountants, as the company's auditor, with APA Mikko Nieminen as the auditor with principal responsibility. The General Meeting also approved the Board's proposals for the Board's authorisation to issue of a total maximum of 20,000,000 new B shares until 30 June 2018, and its authorisation to decide on donations in a total maximum of €300,000 for charitable or corresponding purposes until the Annual General Meeting to be held in 2016. After the Annual General Meeting, Kesko Corporation's Board of Directors held an organisational meeting in which it elected retailer, Business College Graduate Esa Kiiskinen as its Chair and eMBA Mikael Aro as its Deputy Chair. Master of Laws Kaarina Ståhlberg (Ch.), eMBA Mikael Aro (Dep. Ch.) and Master of Science in Economics Matti Kyytsönen were elected to the Board's Audit Committee. Esa Kiiskinen (Ch.), Mikael Aro (Dep. Ch.) and Master of Science in Economics Anu Nissinen were elected to the Board's Remuneration Committee. The resolutions of Annual General Meeting and the decisions of the Board's organisational meeting were announced in more detail in stock exchange releases on 13 April 2015. Responsibility In spring 2015, the K-Group and the association Ruokatieto organised Local Food Date events (Lähiruokatreffit) in six localities in Finland. The events were aimed to provide retailers and local producers an opportunity to network and enhance the offer of local products in K-food stores. K-retailers' direct purchases from Finnish regions totalled €566.7 million in 2014. Plan, an international development organisation promoting children's rights, and Kesko presented their research cooperation at the Ratkaisun Paikka 2015 corporate responsibility event in Helsinki in May. A survey carried out in spring focused on working conditions in the production chain of the fish and shellfish industry in north-eastern Thailand and the situation of migrant workers' children in local communities. Cooperation with Plan and their knowledge of local conditions provided Kesko with an opportunity to progress beyond the first step in the production chain. At the beginning of June, Finnwatch published a follow-up report which showed that the tuna factories of Kesko's suppliers TUM and Unicord have clearly improved their working conditions over the last few years. In May, Kesko published a list of the factories in high-risk countries manufacturing Kesko's own brand clothes and shoes and those imported by the company itself on its website. Direct purchases from high-risk countries account for around 20 per cent of the total purchases of clothing. At the beginning of May, the K-job 2015 competition was launched to seek the Young K-store Employee of the Year and the Employer of the Young of the Year. K- stores and Kesko with its subsidiaries annually employ around 5,000 summer employees and around 10,000 employees under 30 years of age in Finland. The Veturi shopping centre, opened in Kouvola in 2012, became the first property in Finland to achieve an Excellent rating in the Building Management part of the BREEAM environmental assessment. In the assessment, Veturi was praised for its own energy production, for the continuous monitoring of energy use and for paying attention to user comfort for example in indoor air conditions and lighting. Risk management 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 development of the economic situation and consumer confidence especially in Finland and Russia, as well as their impact on Kesko's sales and profit. Resulting from the crisis in Greece, risks relating in particular to the euro area economy have increased. In other respects, no material change is estimated to have taken place during the first months of the year in the risks described in the Report by the Board of Directors and the financial statements for 2014 and the risks described on Kesko's website. The risks and uncertainties related to economic development are described in the section future outlook of this release. Future outlook Estimates of the future outlook for Kesko Group's net sales and operating profit excluding non-recurring items are given for the 12 months following the reporting period (7/2015-6/2016) in comparison with the 12 months preceding the reporting period (7/2014-6/2015). The general economic situation and the expected trend in consumer demand vary in Kesko's different operating countries. In Finland, the trading sector's performance is expected to remain weak and the tough competitive situation is expected to continue. In Sweden, Norway and the Baltic countries, the growth in demand in the trading sector is expected to continue. In Russia, the economic situation and consumers' purchasing power are estimated to remain weak. Kesko Group's net sales for the next 12 months are expected to be lower than the level of the preceding 12 months and the operating profit excluding non- recurring items for the next 12 months is expected to exceed the level of the preceding 12 months. Helsinki, 21 July 2015 Kesko Corporation Board of Directors The information in the interim report 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 of the media and analyst briefing on the interim report can be accessed at www.kesko.fi, at 11.00. An English-language audio conference on the interim report will be held today at 14.30 (Finnish time). The audio conference login is available on Kesko's website at www.kesko.fi. Kesko Corporation's interim report for January-September will be published on 22 October 2015. 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, Group 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 Ltd Main news media www.kesko.fi TABLES SECTION Accounting policies This interim report has been prepared in accordance with the IAS 34 standard. The interim report has been prepared in accordance with the same principles as the annual financial statements for 2014. Consolidated income statement (€ million), condensed 1-6/ 1-6/ Change, 1-12/ 2015 2014 Change, % 4-6/ 2015 4-6/ 2014 % 2014 Net sales 4,310 4,499 -4.2 2,227 2,371 -6.0 9,071 Cost of goods sold -3,748 -3,895 -3.8 -1,935 -2,046 -5.4 -7,832 Gross profit 562 604 -7.0 292 325 -10.1 1,238 Other operating income 449 351 27.8 280 186 50.2 729 Employee benefit expense -282 -314 -10.4 -138 -158 -12.9 -614 Depreciation and impairment charges -67 -77 -12.5 -33 -38 -14.5 -195 Other operating expenses -589 -507 16.1 -225 -245 -8.1 -1,007 Operating profit 72 56 28.2 176 69 (..) 151 Interest income and other finance income 4 9 -51.3 2 7 -70.1 14 Interest expense and other finance costs -7 -8 -9.1 -4 -4 4.2 -16 Exchange differences -1 0 (..) -2 -1 (..) -4 Share of results of equity accounted investments 1 0 (..) 1 0 (..) 0 Profit before tax 68 57 20.1 172 71 (..) 145 Income tax -26 -15 75.1 -19 -18 10.2 -37 Net profit for the period 42 42 0.4 153 54 (..) 108 Attributable to Owners of the parent 37 39 -4.8 147 50 (..) 96 Non- controlling interests 5 3 73.3 6 4 68.6 12 Earnings per share (€) for profit attributable to equity holders of the parent Basic 0.38 0.39 -4.7 1.48 0.51 (..) 0.97 Diluted 0.38 0.39 -4.5 1.48 0.51 (..) 0.97 Consolidated statement of comprehensive income (€ million) 1-6/ 1-6/ Change,% 4-6/ 2015 4-6/ 2014 Change, 1-12/ 2015 2014 % 2014 Net profit for the period 42 42 0.4 153 54 (..) 108 Items that will not be reclassified subsequently to profit or loss Actuarial gains/losses 14 -2 (..) -13 -10 30.0 -20 Items that may be reclassified subsequently to profit or loss Exchange differences on translating foreign operations 3 -6 (..) -3 0 (..) -28 Adjustment for hyperinflation - 3 - 1 2 -20.0 4 Cash flow hedge revaluation 0 0 (..) -1 2 (..) 1 Revaluation of available-for- sale financial assets 1 -3 (..) 0 -3 (..) -3 Other items 0 0 33.3 0 0 33.3 0 Total other comprehensive income for the period, net of tax 18 -8 (..) -15 -10 48.0 -45 Total comprehensive income for the period 60 34 73.7 138 44 (..) 63 Attributable to Owners of the parent 59 31 93.4 134 39 (..) 49 Non- controlling interests 1 4 -85.0 3 4 -22.1 14 (..) Change over 100% Consolidated statement of financial position (€ million), condensed 30.6.2015 30.6.2014 Change, % 31.12.2014 ASSETS Non-current assets Tangible assets 1,265 1,658 -23.7 1,624 Intangible assets 171 195 -12.4 178 Equity accounted investments and other financial assets 115 106 8.3 105 Loans and receivables 73 14 (..) 11 Pension assets 165 170 -2.6 147 Total 1,788 2,143 -16.6 2,066 Current assets Inventories 740 828 -10.7 776 Trade receivables 676 733 -7.9 584 Other receivables 160 160 -0.2 173 Financial assets at fair value through profit or loss 430 154 (..) 219 Available-for-sale financial assets 328 202 62.4 272 Cash and cash equivalents 84 105 -19.4 107 Total 2,418 2,182 10.8 2,131 Non-current assets held for sale 0 1 -16.7 1 Total assets 4,206 4,326 -2.8 4,198 30.6.2015 30.6.2014 Change, % 31.12.2014 EQUITY AND LIABILITIES Equity 2,103 2,164 -2.8 2,184 Non-controlling interests 76 77 -0.8 82 Total equity 2,179 2,241 -2.8 2,265 Non-current liabilities Interest-bearing liabilities 266 348 -23.5 319 Non-interest-bearing liabilities 35 8 (..) 11 Deferred tax liabilities 63 63 -0.7 67 Pension obligations 1 2 -29.3 2 Provisions 16 28 -44.7 27 Total 381 450 -15.2 426 Current liabilities Interest-bearing liabilities 217 190 13.9 180 Trade payables 918 934 -1.7 795 Other non-interest-bearing liabilities 475 465 2.1 490 Provisions 36 45 -20.7 42 Total 1,646 1,635 0.7 1,506 Total equity and liabilities 4,206 4,326 -2.8 4,198 (..) Change over 100% Consolidated statement of changes in equity (€ million) Share Res- Cur- Re- Trea- Re- Non- Total capi- erves rency valu- sury tained cont- tal trans- ation sha-res earn- rol- lation reser-ve ings ling differ- inte- ences rests Balance at 1.1.2014 197 461 -13 1 -18 1,651 73 2,352 Shares subscribed with options 2 2 Treasury shares -16 -16 Share-based payments 2 2 Dividends -138 -138 Other changes 0 0 5 0 5 Net profit for the period 39 3 42 Other comprehen- sive income Items that will not be reclassified subsequently to profit or loss Actuarial gains/losses -2 -2 Items that may be reclassified subsequently to profit or loss Exchange differences on translating foreign operations 0 -4 -2 -6 Adjustment for hyperinflation 0 3 3 Cash flow hedge revaluation 0 0 Revaluation of available-for- sale financial assets -3 -3 Others 0 0 Tax related to comprehensive income 0 0 Total other comprehensive income 0 -4 -2 -2 1 -8 Balance at 30.6.2014 197 463 -18 -1 -32 1,555 77 2,241 Balance at 1.1.2015 197 463 -38 -1 -31 1,594 82 2,265 Shares subscribed with options Treasury shares Share-based payments 4 0 4 Dividends -149 -6 -155 Other changes 0 0 5 0 5 Net profit for the period 37 5 42 Other comprehen- sive income Items that will not be reclassified subsequently to profit or loss Actuarial gains/losses 18 18 Items that may be reclassified subsequently to profit or loss Exchange differences on translating foreign operations 0 7 -4 3 Adjustment for hyperinflation Cash flow hedge revaluation 0 0 Revaluation of available-for- sale financial assets 1 1 Others 0 0 Tax related to comprehensive income 0 -4 -4 Total other comprehensive income 0 7 1 14 -4 18 Balance at 30.6.2015 197 463 -31 0 -28 1,502 76 2,179 Consolidated statement of cash flows (€ million), condensed 1-6/ 1-6/ Change,% 4-6/ 2015 4-6/ 2014 Change, % 1-12/ 2015 2014 2014 Cash flows from operating activities Profit before tax 68 57 20.1 172 71 (..) 145 Planned depreciation 67 76 -11.5 33 37 -12.4 151 Finance income and costs 4 -1 (..) 4 -2 (..) 6 Other adjustments 23 19 22.1 -103 -1 (..) 63 Change in working capital Current non-interest- bearing operating receivables, increase (-)/decrease (+) -119 -139 -14.3 69 19 (..) 32 Inventories, increase (-)/decrease (+) -31 -35 -9.9 23 13 72.5 -7 Current non-interest- bearing liabilities, increase (+)/ decrease(-) 69 85 -18.1 -54 5 (..) -21 Financial items and tax -15 -29 -48.1 -1 -14 -89.6 -65 Net cash from operating activities 68 34 99.4 142 129 10.6 304 Cash flows from investing activities Investing activities -109 -98 11.3 -60 -53 14.0 -194 Sales of fixed assets 444 6 (..) 460 4 (..) 11 Increase in non-current receivables -1 -1 22.8 -2 0 (..) 0 Net cash used in investing activities 334 -92 (..) 399 -49 (..) -182 Cash flows from financing activities Interest-bearing liabilities, increase (+)/decrease (-) -18 -12 45.1 -57 -17 (..) -46 Current interest-bearing receivables, increase (- )/ decrease (+) -1 -1 -47.4 -1 2 (..) -1 Dividends paid -149 -138 7.4 -149 -138 7.4 -143 Equity increase - 2 (..) - 1 (..) 2 Acquisition of own shares - -16 (..) - -1 (..) -16 Short-term money market investments, increase (- )/ decrease (+) -295 14 (..) -279 29 (..) -57 Other items 9 5 97.1 2 2 26.2 7 Net cash used in financing activities -454 -148 (..) -484 -122 (..) -254 Change in cash and cash equivalents -52 -206 -74.8 57 -43 (..) -131 Cash and cash equivalents and current portion of available-for- sale financial assets at 1 Jan. 313 453 -30.8 204 288 -29.1 453 Currency translation difference adjustment and revaluation 1 -1 (..) 1 0 (..) -8 Cash and cash equivalents and current portion of available-for- sale financial assets at 30 Jun. 262 246 6.8 262 246 6.8 313 (..) Change over 100% Group's performance indicators 1-6/2015 1-6/2014 Change, pp 1-12/2014 Return on capital employed, % 6.4 4.7 1.7 6.4 Return on capital employed, %, rolling 12 mo 7.3 8.7 -1.4 6.4 Return on capital employed excl. non-recurring items, % 9.2 7.3 1.9 9.9 Return on capital employed excl. non-recurring items, %, rolling 12 mo 10.9 9.9 0.9 9.9 Return on equity, % 3.8 3.7 0.1 4.7 Return on equity, %, rolling 12 mo 4.9 7.3 -2.3 4.7 Return on equity excl. non-recurring items, % 6.8 5.7 1.0 7.6 Return on equity excl. non-recurring items, %, rolling 12 mo 8.4 8.3 0.1 7.6 Equity ratio, % 52.2 52.3 -0.1 54.5 Gearing, % -16.5 3.5 -20.0 -4.4 Change, % Capital expenditure, € million 110.1 99.1 11.1 194.0 Capital expenditure, % of net sales 2.6 2.2 16.0 2.1 Earnings per share, basic, € 0.38 0.39 -4.7 0.97 Earnings per share, diluted, € 0.38 0.39 -4.5 0.97 Earnings per share excl. non-recurring items, basic, € 0.71 0.64 11.5 1.65 Cash flows from operating activities, € million 68 34 99.4 304 Cash flows from investing activities, € million 334 -92 (..) -182 Equity per share, € 21.21 21.86 -2.9 22.05 Interest-bearing net debt, € million -359 78 (..) -99 Diluted number of shares, average for the reporting period, 1,000 pcs 99,084 99,365 -0.3 99,161 Personnel, average 19,065 19,935 -4.4 19,976 (..) Change over 100% Group's 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 2015 performance 2014 2014 2014 2014 2015 indicators by quarter Net sales, € million 2,129 2,371 2,304 2,267 2,082 2,227 Change in net sales, % -1.4 -2.1 -2.9 -4.0 -2.2 -6.0 Operating profit, € million -13.0 69.4 63.4 31.7 -103.6 175.8 Operating margin, % -0.6 2.9 2.7 1.4 -5.0 7.9 Operating profit excl. non- recurring items, € million 19.1 67.6 84.0 61.9 26.5 76.4 Operating margin excl. non- recurring items, % 0.9 2.9 3.6 2.7 1.3 3.4 Finance income/costs, € million -1.6 2.2 -1.8 -5.0 -0.3 -4.2 Profit before tax, € million -14.4 71.4 61.7 26.4 -103.7 172.1 Profit before tax, % -0.7 3.0 2.7 1.2 -5.0 7.7 Return on capital employed, % -2.2 11.5 10.9 5.5 -18.1 31.9 Return on capital employed, excl. non-recurring items, % 3.2 11.2 14.4 10.7 4.6 13.9 Return on equity, % -2.0 9.4 8.1 3.7 -19.9 28.0 Return on equity, excl. non-recurring items, % 2.3 9.1 11.3 8.0 3.1 10.6 Equity ratio, % 53.2 52.3 54.2 54.5 51.5 52.2 Capital expenditure, € million 43.4 55.7 51.7 43.2 51.5 58.6 Earnings per share, diluted, € -0.11 0.51 0.41 0.17 -1.11 1.48 Equity per share, € 22.83 21.86 22.25 22.05 21.30 21.21 Segmental information Net sales by 1-6/ 1-6/ Change, % 4-6/ 2015 4-6/ 2014 Change, % 1-12/ segment 2015 2014 2014 (€ million) Grocery trade, Finland 2,203 2,253 -2.2 1,120 1,176 -4.7 4,650 Grocery trade, other countries* 50 51 -2.3 29 26 10.4 103 Grocery trade, total 2,252 2,304 -2.2 1,149 1,202 -4.4 4,754 - of which intersegment trade 10 18 -47.8 3 8 -68.1 34 Home improvement and speciality goods trade, Finland 832 945 -11.9 400 484 -17.2 1,854 Home improvement and speciality goods trade, other countries* 687 707 -2.8 397 407 -2.4 1,470 Home improvement and speciality goods trade total 1,519 1,651 -8.0 797 890 -10.4 3,324 - of which intersegment trade 1 0 (..) 0 0 (..) 0 Car and machinery trade, Finland 490 502 -2.4 246 252 -2.3 916 Car and machinery trade, other countries* 48 54 -10.6 31 31 -0.9 96 Car and machinery trade total 538 556 -3.2 277 283 -2.2 1,011 - of which intersegment trade 1 1 43.8 0 0 -58.6 1 Common operations and eliminations 0 -11 (..) 4 -5 (..) -19 Finland total 3,525 3,688 -4.4 1,770 1,906 -7.1 7,401 Other countries total* 784 812 -3.3 457 464 -1.6 1,669 Group total 4,310 4,499 -4.2 2,227 2,371 -6.0 9,071 (..) Change over 100% * Net sales in countries other than Finland Operating profit by segment 1-6/ 1-6/ 4-6/ 2015 4-6/ 2014 1-12/ (€ million) 2015 2014 Change Change 2014 Grocery trade 151.0 98.8 52.2 115.8 54.4 61.3 216.2 Home improvement and speciality goods trade -84.7 -54.1 -30.6 57.1 8.4 48.7 -52.6 Car and machinery trade 17.9 19.1 -1.2 11.0 10.9 0.1 29.4 Common operations and eliminations -12.0 -7.5 -4.5 -8.0 -4.4 -3.7 -41.6 Group total 72.2 56.3 15.9 175.8 69.4 106.4 151.4 Operating profit excl. non- recurring items by segment 1-6/ 1-6/ 4-6/ 2015 4-6/ 2014 1-12/ (€ million) 2015 2014 Change Change 2014 Grocery trade 78.2 100.7 -22.5 43.3 55.3 -12.0 223.2 Home improvement and speciality goods trade 18.7 -25.6 44.4 30.1 5.8 24.3 -0.3 Car and machinery trade 17.9 19.1 -1.2 11.0 10.9 0.1 29.6 Common operations and eliminations -12.0 -7.5 -4.6 -8.0 -4.4 -3.7 -19.9 Group total 102.9 86.7 16.1 76.4 67.6 8.7 232.6 Operating margin excl. non- recurring Rolling items by 1-6/ 1-6/ Change, Change, 1-12/ 12 mo segment, % 2015 2014 pp 4-6/ 2015 4-6/ 2014 pp 2014 6/2015 Grocery trade 3.5 4.4 -0.9 3.8 4.6 -0.8 4.7 4.3 Home improvement and speciality goods trade 1.2 -1.6 2.8 3.8 0.6 3.1 0.0 1.4 Car and machinery trade 3.3 3.4 -0.1 4.0 3.8 0.1 2.9 2.9 Group total 2.4 1.9 0.5 3.4 2.9 0.6 2.6 2.8 Capital employed by segment, cumulative Rolling average 1-6/ 1-6/ 1-12/ 12 mo (€ million) 2015 2014 Change 4-6/ 2015 4-6/ 2014 Change 2014 6/2015 Grocery trade 988 1,022 -35 975 1,034 -59 1,007 993 Home improvement and speciality goods trade 824 882 -58 804 888 -84 876 850 Car and machinery trade 160 166 -7 153 165 -12 162 156 Common operations and eliminations 272 316 -44 273 320 -48 310 290 Group total 2,243 2,387 -143 2,204 2,407 -203 2,354 2,289 Return on capital 1-6/ 1-6/ Change 4-6/ 2015 4-6/ 2014 Changepp 1-12/ employed excl. 2015 2014 pp 2014 non-recurring Rolling items 12 mo by segment, % 6/2015 Grocery trade 15.8 19.7 -3.9 17.8 21.4 -3.6 22.2 20.2 Home improvement and speciality goods trade 4.5 -5.8 10.4 15.0 2.6 12.4 0.0 5.2 Car and machinery trade 22.5 23.0 -0.5 28.7 26.4 2.3 18.3 18.2 Group total 9.2 7.3 1.9 13.9 11.2 2.6 9.9 10.9 Capital expenditure 1-6/ 1-6/ 4-6/ 2015 4-6/ 2014 1-12/ by segment (€ million) 2015 2014 Change Change 2014 Grocery trade 71 50 21 33 31 3 98 Home improvement and speciality goods trade 18 31 -13 9 17 -8 71 Car and machinery trade 7 9 -2 4 7 -3 14 Common operations and eliminations 14 8 6 13 1 11 11 Group total 110 99 11 59 56 3 194 Segmental information by quarter Net sales by segment 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ (€ million) 2014 2014 2014 2014 2015 4-6/ 2015 Grocery trade 1,102 1,202 1,190 1,260 1,103 1,149 Home improvement and speciality goods trade 761 890 877 796 722 797 Car and machinery trade 272 283 240 216 261 277 Common operations and eliminations -6 -5 -3 -5 -3 4 Group total 2,129 2,371 2,304 2,267 2,082 2,227 Operating profit by segment 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ (€ million) 2014 2014 2014 2014 2015 4-6/ 2015 Grocery trade 44.3 54.4 58.3 59.1 35.2 115.8 Home improvement and speciality goods trade -62.5 8.4 -0.5 2.0 -141.8 57.1 Car and machinery trade 8.2 10.9 8.7 1.6 7.0 11.0 Common operations and eliminations -3.1 -4.4 -3.1 -31.0 -4.0 -8.0 Group total -13.0 69.4 63.4 31.7 -103.6 175.8 Operating profit excl. non-recurring items 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ by segment (€ million) 2014 2014 2014 2014 2015 4-6/ 2015 Grocery trade 45.4 55.3 60.3 62.2 34.9 43.3 Home improvement and speciality goods trade -31.4 5.8 18.2 7.1 -11.4 30.1 Car and machinery trade 8.2 10.9 8.7 1.8 7.0 11.0 Common operations and eliminations -3.1 -4.4 -3.1 -9.3 -4.0 -8.0 Group total 19.1 67.6 84.0 61.9 26.5 76.4 Operating margin excl. non-recurring items 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ by segment, % 2014 2014 2014 2014 2015 4-6/ 2015 Grocery trade 4.1 4.6 5.1 4.9 3.2 3.8 Home improvement and speciality goods trade -4.1 0.6 2.1 0.9 -1.6 3.8 Car and machinery trade 3.0 3.8 3.6 0.8 2.7 4.0 Group total 0.9 2.9 3.6 2.7 1.3 3.4 Change in tangible and intangible assets (€ million) 30.6.2015 30.6.2014 Opening net carrying amount 1,802 1,840 Depreciation, amortisation and impairment -67 -77 Investments in tangible and intangible assets 98 106 Disposals -402 -10 Currency translation differences 4 -6 Closing net carrying amount 1,435 1,853 Related party transactions (€ million) The Group's related parties include its key management (the Board of Directors, the Managing Director and the Group Management Board) and companies controlled by them, the Group's subsidiaries, associates and joint ventures as well as Kesko Pension Fund. The following transactions were carried out with related parties: 1-6/2015 1-6/2014 Sales of goods and services 35 40 Purchases of goods and services 9 12 Other operating income 6 6 Other operating expenses 15 15 30.6.2015 30.6.2014 Receivables 62 8 Liabilities 24 21 Fair value hierarchy of financial assets and liabilities (€ million) Level 1 Level 2 Level 3 30.6.2015 Financial assets at fair value through profit or loss 216.4 214.0 430.4 Derivative financial instruments at fair value through profit or loss Derivative financial assets 9.6 9.6 Derivative financial liabilities 8.4 8.4 Available-for-sale financial assets 150.1 178.0 15.1 343.2 Fair value hierarchy of financial assets and liabilities (€ million) Level 1 Level 2 Level 3 30.6.2014 Financial assets at fair value through profit or loss 14.3 139.5 153.8 Derivative financial instruments at fair value through profit or loss Derivative financial assets 2.5 2.5 Derivative financial liabilities 17.0 17.0 Available-for-sale financial assets 61.1 141.0 13.3 215.3 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 30.6. Personnel average by segment 1-6/2015 1-6/2014 Change Grocery trade 6,374 6,151 223 Home improvement and speciality goods trade 11,007 12,103 -1,095 Car and machinery trade 1,197 1,250 -54 Common operations 488 432 56 Group total 19,065 19,935 -870 Personnel as at 30.6.* by segment 2015 2014 Change Grocery trade 9,003 8,107 896 Home improvement and speciality goods trade 12,065 14,559 -2,494 Car and machinery trade 1,260 1,323 -63 Common operations 566 504 62 Group total 22,894 24,493 -1,599 * Total number incl. part-time employees Group's commitments (€ million) 30.6.2015 30.6.2014 Change, % Own commitments 167 206 -18.9 For associates and joint ventures - 65 -100.0 For others 11 10 15.5 Lease liabilities for machinery and equipment 26 25 5.3 Lease liabilities for real estate 2,666 2,251 18.5 Liabilities arising from derivative instruments (€ million) Fair value Values of underlying instruments at 30.6. 30.6.2015 30.6.2014 30.6.2015 Interest rate derivatives Interest rate swaps 101 101 0.16 Currency derivatives Forward and future contracts 579 303 3.86 Currency swaps 50 50 3.42 Commodity derivatives Electricity derivatives 15 27 -6.24 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 for prior 12 months x Return on capital employed, %, rolling 100 / (Non-current assets + 12 months Inventories + Receivables + Other current assets - Non-interest-bearing liabilities) on average for 12 months Operating profit excl. non-recurring Return on capital employed excl. non- items x 100 / (Non-current assets + recurring items*, % Inventories + Receivables + Other current assets - Non-interest-bearing liabilities) on average for the reporting period Operating profit excl. non-recurring Return on capital employed excl. non- items for prior 12 months x 100 / recurring items, %, rolling 12 months (Non-current assets + Inventories + Receivables + Other current assets - Non-interest-bearing liabilities) on average for 12 months Return on equity*, % (Profit/loss before tax - Income tax) x 100 / Shareholders' equity Return on equity, %, rolling 12 months (Profit/loss for prior 12 months before tax - Income tax for prior 12 months) 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 (Profit/loss for prior 12 months adjusted for non-recurring items Return on equity excl. non-recurring before tax - Income tax for prior 12 items, %, rolling 12 months months adjusted for the tax effect of non-recurring items) x 100 / Shareholders' equity Equity ratio, % Shareholders' equity x 100 / (Total assets - 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.-30.6.2015 1.4.-30.6.2015 K-Group's retail and € million Change, % € million Change, % B2B sales K-Group's grocery trade K-food stores, Finland 2,218 -1.7 1,146 -1.8 K-citymarket, non-food 262 0.1 131 0.5 Kespro 379 0.4 196 -0.9 K-ruoka, Russia 50 -2.3 29 10.3 Grocery trade, total 2,908 -1.3 1,502 -1.3 K-Group's home improvement and speciality goods trade K-rauta and Rautia 474 -3.2 302 -2.6 Rautakesko B2B Service 91 -0.4 51 0.6 K-maatalous 225 -5.1 136 -6.9 Speciality goods trade, Finland 248 -1.5 117 -3.7 Finland, total 1,038 -3.0 607 -3.5 Home improvement and speciality goods trade, other Nordic countries 415 -2.0 249 -0.3 Home improvement and speciality goods trade, the Baltics 217 6.2 126 5.5 Home improvement and speciality goods trade, other countries 153 -16.1 89 -15.1 Home improvement and speciality goods trade, total 1,824 -3.1 1,071 -2.9 K-Group's car and machinery trade VV-Autotalot 194 -2.7 99 -0.4 VV-Auto, import 210 -5.7 96 -7.5 Konekesko, Finland 97 5.3 60 6.0 Finland total 501 -2.5 254 -1.8 Konekesko, other countries 48 -14.2 31 -5.0 Car and machinery trade, total 550 -3.7 286 -2.2 Finland total 4,398 -1.8 2,334 -2.1 Other countries, total 883 -3.8 525 -1.7 Retail and B2B sales, total 5,282 -2.2 2,859 -2.0 * Excl. Anttila [HUG#1940390] |
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