2010-10-26 08:00:00 CEST
2010-10-26 08:01:01 CEST
REGULATED INFORMATION
Kesko Oyj - Interim report (Q1 and Q3)
Interim report for 1 January - 30 September 2010
KESKO CORPORATION STOCK EXCHANGE RELEASE 26.10.2010 AT 09.00 1(30)
Financial performance in brief:
*In January-September, the Group's net sales increased by 2.8%. In July-
September, the growth rate stood at 4.6%
*Operating profit excluding non-recurring items was €187.6 million in January-
September, which was €100.3 million more than in the previous year (€87.4
million). In July-September, the operating profit excluding non-recurring items
was €88.7 million (€47.5 million). Profitability improved in all divisions
*Net sales are expected to grow and the operating profit excluding non-recurring
items is expected to remain at the achieved level during the next twelve months
Key performance indicators
1-9/2010 1-9/2009 7-9/2010 7-9/2009
Net sales, € million 6,467 6,294 2,231 2,133
Operating profit excl. non-
recurring items, € million 187.6 87.4 88.7 47.5
Operating profit, € million 223.9 114.3 123.9 48.3
Profit before tax, € million 225.1 100.3 124.5 43.8
Investments, € million 123.6 156.5 35.9 49.2
Earnings/share, €, diluted 1.48 0.55 0.81 0.24
Earnings/share excl. non-
recurring items, €, basic 1.21 0.35 0.55 0.23
30.9.2010 30.9.2009
Equity ratio, % 53.3 52.3
Equity/share, € 21.10 19.60
FINANCIAL PERFORMANCE
Net sales and profit in January-September 2010
The Group's net sales in January-September 2010 were €6,467 million, which is
2.8% up on the corresponding period of the previous year (€6,294 million). The
trend in net sales was positive in all divisions. Net sales increased by 3.0% in
Finland and by 1.5% in other countries. International operations accounted for
17.1% (17.3%) of net sales. In the food trade, net sales continued to grow
steadily. The net sales growth recorded in the building and home improvement
trade in the spring continued in the third quarter.
1-9/2010 Net sales, M€ Change, % Operating profit excl. Change, M€
non-recurring items,
M€
Food trade 2,874 +1.7 123.3 +23.9
Home and
speciality goods trade 1,068 +0.9 20.3 +30.5
Building and home
improvement trade 1,894 +6.0 24.2 +10.2
Car and machinery
trade 752 +1.2 29.2 +31.6
Common
operations and
eliminations -120 -0.3 -9.4 +4.1
Total 6,467 +2.8 187.6 +100.3
Non-recurring items excluded, the operating profit was €187.6 million (€87.4
million) in January-September, representing 2.9% (1.4%) of net sales. The
positive trend in profitability continued in the third quarter. The operating
profit excluding non-recurring items includes an €8 million amount recognised as
revenue in connection with the transfer of the pension insurance portfolio. In
the comparative period, the operating profit excluding non-recurring items was
negatively impacted by the €9 million amount of impairments and expense
provisions recognised on the Baltic agricultural supplies business. Improved
management of inventory processes and cost reductions significantly contributed
to the improvement of the Group's profitability. All divisions recorded higher
year-on-year operating profits excluding non-recurring items.
The operating profit was €223.9 million (€114.3 million). The operating profit
includes a net total of €36.3 million of non-recurring gains on the disposals of
real estate, and provisions related to the reorganisation of the service station
grocery store business of Pikoil Oy, a Kesko Food subsidiary. The non-recurring
items in the comparative period included a net total of €26.9 million of gains
on the disposals of real estate and real estate impairment charges. The Group's
profit before tax for January-September was €225.1 million (€100.3 million).
The Group's earnings per share were €1.48 (€0.55). The Group's equity per share
was €21.10 (€19.60).
In January-September, the K-Group's (i.e. Kesko's and the chain stores') retail
and B2B sales (VAT 0%) were €8,056 million, up 3.0% compared to the previous
year. During the same period, K-food stores' grocery sales grew by 3.5% (VAT
0%). In January-September, the K-Group chains' sales entitling to K-Plussa
points were €4,622 million (incl. VAT), up 2.3% compared to the previous year.
In January-September, the K-Plussa customer loyalty programme gained 66,273 new
households. At the end of September, there was 2,080,058 K-Plussa households.
Net sales and profit in July-September 2010
The Group's net sales in July-September 2010 were €2,231 million, which is 4.6%
up on the corresponding period of the previous year (€2,133 million). Net sales
increased by 3.6% in Finland. The growth strengthened especially in the building
and home improvement trade and the car and machinery trade. In other countries,
net sales increased by 8.8%. International operations accounted for 19.1%
(18.4%) of net sales.
7-9/2010 Net sales, M€ Change, % Operating profit Change, M€
excl. non-
recurring items,
M€
Food trade 986 +2.1 49.5 +14.1
Home and 378 -0.6 13.2 +6.7
speciality goods
trade
Building and home 687 +11.9 20.0 +11.7
improvement trade
Car and machinery
trade 218 +2.2 8.7 +7.0
Common
operations and
eliminations -39 -3.9 -2.8 +1.6
Total 2,231 +4.6 88.7 +41.1
The positive trend in profitability continued in the third quarter. The
operating profit excluding non-recurring items was €88.7 million (€47.5
million), representing 4.0% of net sales (2.2%). The operating profit excluding
non-recurring items includes an €8 million amount recognised as revenue in
connection with the transfer of the pension insurance portfolio. In addition to
sales growth, profitability in the third quarter was improved by efficient
inventory management and cost adjustments. The operating profit excluding non-
recurring items exceeded the level of the previous year, especially in the food
trade and the building and home improvement trade.
The operating profit was €123.9 million (€48.3 million). The operating profit
includes a net total of €35.3 million of non-recurring gains on the disposals of
real estate, and provisions related to the reorganisation of the service station
grocery store business of Pikoil Oy, a Kesko Food subsidiary. The non-recurring
income in July-September in the previous year included a total of €0.8 million
of gains on the disposals of real estate. The Group's profit before tax for
July-September was €124.5 million (€43.8 million).
The Group's earnings per share were €0.81 (€0.24). The Group's equity per share
was €21.10 (€19.60).
In July-September, the K-Group's (i.e. Kesko's and the chain stores') retail and
B2B sales (VAT 0%) were €2,825 million, up 4.3% compared to the previous year.
The K-Group chains' sales entitling to K-Plussa points were €1,601 million
(incl. VAT), up 2.2% compared to the previous year.
Finance
In January-September, the cash flow from operating activities was €268.8 million
(€255.6 million). The cash flow from investing activities was €-46.8 million (€-
65.4 million). The cash flow from investing activities included €115.5 million
(€94.3 million) of proceeds from the sale of fixed assets.
In January-September, the Group's liquidity and solvency remained at an
excellent level. At the end of the period, liquid assets totalled €850 million
(€536 million). Interest-bearing liabilities were €456 million (€484 million)
and interest-bearing net liabilities €-394 million (€-52 million) at the end of
September. Equity ratio was 53.3% (52.3%) at the end of the period.
In January-September, the Group's net finance income was €1.4 million (net
finance costs €14.2 million). The hedging costs of the Baltic and Russian
currency exposures, which had increased the net finance costs in the previous
year, normalised and were €1.6 million (€15.2 million).
In July-September, the cash flow from operating activities was €133.4 million
(€119.4 million). The net cash from investing activities was €38.9 million (€-
45.9 million). The cash flow from investing activities included €110.9 million
(€4.7 million) of proceeds from the sale of fixed assets.
In July-September, the Group's net finance income was €0.8 million (net finance
costs €4.7 million).
Taxes
The Group's taxes in January-September were €72.0 million (€40.6 million). The
effective tax rate was 32.0% (40.5%), affected by loss-making foreign
operations.
The Group's taxes in July-September were €40.4 million (€18.3 million). The
effective tax rate was 32.4% (41.8%).
Investments
In January-September, the Group's investments totalled €123.6 million (€156.5
million), or 1.9% (2.5%) of net sales. Investments in store sites were €93.7
million (€131.2 million) and other investments €29.9 million (€25.3 million).
Investments in foreign operations represented 24.0% (34.3%) of total
investments.
In July-September, the Group's investments totalled €35.9 million (€49.2
million), or 1.6% (2.3%) of net sales. Investments in store sites were €30.3
million (€42.8 million) and other investments €5.6 million (€6.4 million).
Investments in foreign operations represented 9.9% (35.4%) of total investments.
Personnel
In January-September, the average number of employees in the Kesko Group was
18,173 (19,541) converted into full-time employees. In Finland, the average
decrease was 485 people, while outside Finland, it was 883.
At the end of September 2010, the total number of employees was 21,700 (22,086),
of whom 12,222 (12,477) worked in Finland and 9,478 (9,609) outside Finland.
Compared to the end of September 2009, there was a decrease of 255 people in
Finland and 131 outside Finland.
In January-September, the Group's staff cost decreased by €22.8 million, or by
5.7%, compared to the previous year. In July-September, the staff cost decreased
by €10.0 million, or by 8.0%, compared to the previous year.
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.
Food trade
1-9/2010 1-9/2009 7-9/2010 7-9/2009
Net sales, € million 2,874 2,827 986 966
Operating profit excl. non-
recurring items, € million 123.3 99.4 49.5 35.5
Operating profit as % of
net sales excl. non-
recurring items 4.3 3.5 5.0 3.7
Investments, € million 59.8 59.5 21.9 19.3
Net sales, € million 1-9/2010 Change, % 7-9/2010 Change, %
Sales to K-food stores 2,199 +2.5 747 +2.2
Kespro 517 +1.8 183 +2.9
Others 159 -9.2 56 -2.5
Total 2,874 +1.7 986 +2.1
January-September 2010
In the food trade, the net sales in January-September were €2,874 million
(€2,827 million), up 1.7%. During the same period, the grocery sales of K-food
stores increased by 3.5% (VAT 0%). Good sales performance was achieved
especially by K-citymarkets and K-supermarkets. In January-September, the growth
rate of the total grocery trade market in Finland is estimated at some 1.5% -
2.0% (VAT 0%) compared to the previous year (Kesko's own estimate). The prices
are estimated to have changed by -1 - 0% (VAT 0%) compared to the previous year.
K-food stores' market share strengthened.
In January-September, the operating profit excluding non-recurring items of the
food trade was €123.3 million (€99.4 million), or €23.9 million up on the
previous year. Profitability improved due to good retail sales performance. The
operating profit was €121.2 million (€111.9 million). Non-recurring items
totalled €-2.1 million, the most significant items included are gains on the
disposals of real estate and the provisions for the reorganisation of the
service station grocery store business of Pikoil Oy, a Kesko Food subsidiary.
In January-September, investments in the food trade were €59.8 million (€59.5
million), of which investments in store sites were €48.5 million (€49.9
million).
July-September 2010
In the food trade, the net sales in July-September were €986 million (€966
million), up 2.1%. During the same period, the grocery sales of K-food stores
increased by 3.8% (VAT 0%).
In July-September, the operating profit excluding non-recurring items of the
food trade was €49.5 million (€35.5 million). In addition to retail sales
growth, the improved profit is attributable to the amount of some €6 million
recognised as income in connection with the transfer of the pension insurance
portfolio.
The operating profit was €47.3 million (€35.8 million). Non-recurring items
totalled
€-2.3 million, the most significant items of which include gains on real estate
disposals and the provisions for the reorganisation of the service station
grocery store business of Pikoil Oy, a Kesko Food subsidiary.
In July-September, investments in the food trade were €21.9 million (€19.3
million), of which investments in store sites were €20.3 million (€15.7
million).
In July-September 2010, one new K-supermarket and two new K-markets were opened.
In addition, renovations and extensions were carried out in 17 stores.
The most significant store sites being built are the new K-citymarkets in
Hyvinkää, in Palokka, Jyväskylä, in Kouvola, in the Karisma shopping centre in
Karisto, Lahti, in Päivölä, Seinäjoki and in Iisalmi where also the existing K-
citymarket is being converted into a K-supermarket. K-supermarket Kankaanpää is
being extended into a K-citymarket. New K-supermarkets are being built in
Paloheinä, Helsinki, in Jalasjärvi, in Veikkola, Kirkkonummi, in Mäntyharju, in
Savonlinna and Sodankylä. K-supermarkets in Kiiminki, Nilsiä and Raisio are
being extended, and K-markets in Piikkiö, Kaarina, in Joutjärvi, Lahti and in
Suonenjoki are being extended into K-supermarkets.
Home and speciality goods trade
1-9/2010 1-9/2009 7-9/2010 7-9/2009
Net sales, € million 1,068 1,058 378 381
Operating profit excl. 20.3 -10.2 13.2 6.5
non-recurring items,
€ million
Operating profit as % 1.9 -1.0 3.5 1.7
of net sales excl.
non-recurring items
Investments, € million 16.9 22.8 4.2 5.9
Net sales, € million 1-9/2010 Change, % 7-9/2010 Change, %
Anttila 331 -0.9 116 -0.9
K-citymarket Home 422 +6.2 146 +4.3
and Speciality Goods
Intersport 118 -0.1 42 -5.0
Indoor 114 -2.2 43 -1.5
Musta Pörssi 67 -7.2 24 -9.6
Kenkäkesko 17 -15.0 7 -19.1
Total 1,068 +0.9 378 -0.6
January-September 2010
In the home and speciality goods trade, the net sales in January-September were
€1,068 million (€1,058 million), up 0.9%. K-citymarket's net sales performance
was good especially in clothing and household goods. The net sales were also
increased by the stores opened in the previous year. As the housing market
picked up, the home decoration products of the Asko and Kodin Ykkönen stores
sold better than in the comparative period. As for Intersport Finland,
especially Budget Sport's sales were up on the previous year. Sunday opening had
a clearly positive impact on the sales performance in January-April and in
September.
The operating profit of the home and speciality goods trade excluding non-
recurring items in January-September was €20.3 million, a €30.5 million year-on-
year increase attributable to increased sales, improved productivity and more
efficient purchasing operations. The operating profit for January-September was
€57.7 million (€0.1 million). The non-recurring items include gains on real
estate disposals, which totalled €37.4 million.
Investments in the home and speciality goods trade in January-September were
€16.9 million (€22.8 million).
At the beginning of the year, Kodin Ykkönen in Kaisaniemi, Helsinki was closed
down due to the termination of the lease. The K-citymarket in downtown Pori was
converted into a K-supermarket early this year. The Anttila department store in
Jyväskylä was relocated to a new site in March 2010. Indoor disposed of its
operating activities in Latvia in March. A new Kodin Ykkönen was opened in
Lappeenranta at the end of May.
July-September 2010
In the home and speciality goods trade, the net sales in July-September were
€378 million (€381 million), down 0.6%. The July sales performance was lowered
by smaller than usual sale volumes. After the summer sale, home decoration
products achieved a positive sales performance. Especially Indoor's Sotka and
Anttila's Kodin Ykkönen department stores increased their sales over the
previous year.
The operating profit excluding non-recurring items of the home and speciality
goods trade in July-September was €13.2 million, a €6.7 million year-on-year
increase. The operating profit excluding non-recurring items was positively
impacted by improved productivity and a higher level of margin, due to healthy
stocks during the sale period. The operating profit in July-September was €50.6
million (€7.0 million). The non-recurring items include gains on real estate
disposals, which totalled €37.4 million.
Investments in the home and speciality goods trade in July-September were €4.2
million (€5.9 million).
Anttila's automated logistics centre is being built in Kerava. When completed,
it will also make e-commerce logistics materially more efficient.
Building and home improvement trade
1-9/2010 1-9/2009 7-9/2010 7-9/2009
Net sales, € million 1,894 1,787 687 614
Operating profit excl.
non-recurring items,
€ million 24.2 14.0 20.0 8.4
Operating profit as %
of net sales excl.
non-recurring items 1.3 0.8 2.9 1.4
Investments, € million 33.3 65.3 4.8 19.0
Net sales, € million 1-9/2010 Change, % 7-9/2010 Change, %
Rautakesko Finland 881 +6.4 293 +9.2
K-rauta AB 159 +10.2 61 +9.4
Byggmakker 413 +15.9 152 +17.9
Rautakesko Estonia 39 -21.6 16 -17.2
Rautakesko Latvia 36 -4.1 14 +4.0
Senukai 165 -19.0 69 -0.6
Rautakesko Russia 150 +18.3 60 +32.3
OMA 52 +28.2 24 +60.2
Total 1,894 +6.0 687 +11.9
January-September 2010
In the building and home improvement trade, the net sales in January-September
were €1,894 million (€1,787 million), up 6.0%. The building and home improvement
market increased in January-September by some 7% in Finland, some 4% in Norway
and some 6% in Sweden. The market decreased by some 10-20% in the Baltic
countries (Rautakesko's estimate). The Russian building and home improvement
market is estimated to have returned to growth.
In January-September, the net sales in Finland were €881 million, an increase of
6.4%. The building and home improvement product lines contributed €652 million
to the net sales in Finland, an increase of 11.9%. The agricultural supplies
trade contributed €229 million to the net sales, down 6.8%.
The net sales from foreign operations in the building and home improvement trade
were €1,013 million (€959 million), an increase of 5.7%. The sales performance
of foreign operations was impacted by the strengthening of the Swedish krona,
the Norwegian krone and the Russian ruble, as well as new store openings. The
net sales from foreign operations dropped by 1.5% in terms of the local
currencies. In Sweden, the net sales of K-rauta AB decreased by 0.7% in terms of
kronas. In Norway, Byggmakker's net sales increased by 4.7% in terms of krones.
In Russia, the net sales of the building and home improvement trade increased by
6.1% in terms of rubles, and the net sales of the Belarusian OMA were up by
30.9% in terms of rubles. Foreign operations contributed 53.5% to the net sales
of the building and home improvement trade.
In January-September, the operating profit excluding non-recurring items of the
building and home improvement trade was €24.2 million (€14.0 million). The
operating profit increased especially in Finland and Lithuania, but decreased in
Russia, owing to new store openings. In January-September, the operating profit
was €24.0 million (€18.0 million).
In January-September, investments in the building and home improvement trade
were €33.3 million (€65.3 million), of which 88.9% (82.0%) abroad.
In January-September, new K-rauta stores were opened in Palokka, Jyväskylä, in
Stockholm, Sweden and in Kaluga and Tula, Russia. OMA, a subsidiary of
Rautakesko's Lithuanian subsidiary Senukai, opened a new DIY store in Minsk,
Belarus.
The retail sales of the K-rauta and Rautia chains in Finland increased by 5.5%
to €771 million (VAT 0%), in January-September. The sales of Rautakesko B2B
Service increased by 18.8%. The retail sales of the K-maatalous chain were €261
million (VAT 0%), down 10.3%.
July-September 2010
In the building and home improvement trade, the net sales in July-September were
€687 million (€614 million), up 11.9%.
In July-September, the net sales in Finland were €293 million, an increase of
9.2%. The building and home improvement product lines contributed €222 million
to the net sales in Finland, an increase of 13.6%. The net sales of the
agricultural supplies trade were €71 million, a decrease of 2.9%.
The net sales from foreign operations in the building and home improvement trade
were €395 million (€346 million), an increase of 14.1%. The net sales from
foreign operations increased by 6.2% in terms of the local currencies. In
Sweden, the net sales of K-rauta AB decreased by 1.6% in terms of kronas. In
Norway, Byggmakker's net sales increased by 7.3% in terms of krones. In Russia,
the net sales of the building and home improvement trade increased by 17.0% in
terms of rubles, and the net sales of the Belarusian OMA were up by 55.4% in
terms of rubles. Foreign operations contributed 57.4% to the net sales of the
building and home improvement trade.
In July-September, the operating profit excluding non-recurring items of the
building and home improvement trade was €20.0 million, up €11.7 million. The
operating profit performance grew especially in Finland and Lithuania. The
operating profit in July-September was €19.9 million (€8.5 million).
In July-September, investments in the building and home improvement trade were
€4.8 million (€19.0 million).
In July-September, new stores were not opened. A new K-rauta store is being
built in Kouvola, Uppsala, Haaparanta, St. Petersburg, and two in Moscow.
The retail sales of the K-rauta and Rautia chains in Finland increased by 1.2%
to €294 million (VAT 0%), in July-September. The sales of Rautakesko B2B Service
increased by 28.8%. The retail sales of the K-maatalous chain were €80 million,
(VAT 0%), down 11.2%.
Car and machinery trade
1-9/2010 1-9/2009 7-9/2010 7-9/2009
Net sales, € million 752 743 218 213
Operating profit excl.
non-recurring items,
€ million 29.2 -2.4 8.7 1.7
Operating profit as %
of net sales excl.
non-recurring items 3.9 -0.3 4.0 0.8
Investments, € million 13.1 8.5 5.0 5.0
Net sales, € million 1-9/2010 Change, % 7-9/2010 Change, %
VV-Auto 517 +9.4 150 +17.7
Konekesko 235 -13.0 68 -21.0
Total 752 +1.2 218 +2.2
January-September 2010
In January-September, the net sales of the car and machinery trade were €752
million (€743 million), up 1.2%. The comparable net sales of the car and
machinery trade grew by 14%. The impact of the car tax change (effective 1 April
2009) and the discontinued Baltic grain and agricultural inputs trade have been
eliminated from the comparable net sales.
VV-Auto's net sales in January-September were €517 million (€473 million), an
increase of 9.4%. In the first part of the year, the net sales performance was
lowered by the car tax change effective 1 April 2009, causing the car tax to be
excluded from the net sales. VV-Auto's comparable net sales growth was 18.7%.
During the first part of the year in Finland, new registrations of passenger
cars increased by 21.3% and those of vans by 13.9% compared to the previous
year. In January-September, the combined market share of passenger cars imported
by VV-Auto rose to 19.2% (18.3%) and that of vans to 21.6% (19.6%).
Konekesko's net sales in January-September were €235 million (€270 million),
down 13.0% compared to the previous year, as a result of the planned
discontinuation of the Baltic grain and agricultural inputs trade. The net sales
of Konekesko's machinery trade grew by 4.1%. Net sales in Finland were €154
million, matching the level of the previous year. The net sales from Konekesko's
foreign operations were €83 million, down 29.9%. In line with its strategy,
Konekesko concentrates on the machinery trade also in the Baltic countries.
In January-September, the operating profit excluding non-recurring items of the
car and machinery trade was €29.2 million, which was €31.6 million higher than
in the previous year. The profit performance was affected by VV-Auto's strong
sales growth, cost reduction implemented in the division, as well as the €9
million impairment charges and expense provisions recognised by Konekesko on the
Baltic agricultural supplies business for the first quarter of 2009. The
operating profit in January-September was €30.0 million (€-2.4 million).
Investments in the car and machinery trade were €13.1 million (€8.5 million) in
January-September.
July-September 2010
In July-September, the net sales of the car and machinery trade were €218
million (€213 million), up 2.2%. The comparable net sales of the car and
machinery trade grew by 11.7%. The discontinued Baltic grain and agricultural
inputs trade has been eliminated from the comparable net sales.
VV-Auto's net sales in July-September were €150 million (€128 million), an
increase of 17.7%. The net sales were increased by a positive general market
trend. At the end of September, order books were still fuller than in the
previous year.
Konekesko's net sales in July-September were €68 million (€86 million), down
21.0%. The net sales from Konekesko's machinery trade matched the level of the
previous year.
In July-September, the operating profit excluding non-recurring items of the car
and machinery trade was €8.7 million, which was €7.0 million higher than in the
previous year. The profit performance was especially affected by sales growth in
the car trade coupled with cost savings achieved in the machinery trade. The
operating profit in July-September was €8.6 million (€1.7 million).
Investments in the car and machinery trade were €5.0 million (€5.0 million) in
July-September.
Changes in the Group composition
There were no significant changes in the Group composition during the reporting
period.
Resolutions of the Annual General Meeting 2010 and decisions of the Board's
organisational meeting
Kesko Corporation's Annual General Meeting held on 29 March 2010 adopted the
financial statements for 2009 and discharged the Board of Directors' members and
the Managing Director from liability. The Annual General Meeting also resolved
to distribute a dividend of €0.90 per share, or a total amount of
€88,547,166.90, as proposed by the Board. The dividend pay date was 12 April
2010. The Annual General Meeting also resolved to leave the number of members of
the Board of Directors unchanged at seven, elected PricewaterhouseCoopers Oy as
the company's auditor, with APA Johan Kronberg as the auditor with principal
responsibility, and approved the Board's proposal to amend the Article of
Association providing for the convocation period so that the notice of a General
Meeting shall be given not later than three weeks before the General Meeting,
but in any case at least nine days before the record date of the General
Meeting, referred to in Chapter 4, Article 2, Subsection 2 of the Companies Act.
The resolutions of the Annual General Meeting were announced in more detail in a
stock exchange release on 29 March 2010.
The organisational meeting of Kesko Corporation's Board of Directors, held after
the Annual General Meeting, decided to leave the compositions of the Board's
Audit Committee and Remuneration Committee unchanged. The decisions of the
Board's organisational meeting were announced in a stock exchange release on 29
March 2010.
Shares, securities market and Board authorisations
At the end of September 2010, Kesko Corporation's share capital totalled
€197,282,584. Of all shares 31,737,007, or 32.2%, were A shares and 66,904,285,
or 67.8%, were B shares. The aggregate number of shares was 98,641,292. Each A
share entitles to ten (10) votes and each B share to one (1) vote. In January-
September, the share capital was increased three times as a result of the share
subscriptions with the options of the 2003 stock option scheme. The increases
were made on 11 February 2010 (€128,424), 3 May 2010 (€422,754) and 3 June 2010
(€88,348) and announced in stock exchange notifications on the same days. The
subscribed shares were included on the main list of Nasdaq OMX Helsinki for
public trading with the old B shares on 12 February 2010, 4 May 2010 and 4 June
2010.
The price of a Kesko A share quoted on Nasdaq OMX Helsinki (the Helsinki stock
exchange) was €23.60 at the end of 2009, and €33.50 at the end of September
2010, representing an increase of 41.9%. Correspondingly, the price of a B share
was €23.08 at the end of 2009, and €34.42 at the end of September 2010,
representing an increase of 49.1%. In January-September, the highest A share
price was €33.50 and the lowest was €23.16. For B shares, they were €34.54 and
€22.40 respectively. In January-September, the Helsinki stock exchange (OMX
Helsinki) All-Share index rose by 9.9%, the weighted OMX Helsinki CAP index by
15.5%, while the Consumer Staples Index was up 31.5% during the same period.
At the end of September 2010, the market capitalisation of A shares was €1,063
million, while that of B shares was €2,303 million. Their combined market
capitalisation was €3,366 million, an increase of €1,080 million on the end of
2009. In January-September 2010, 3,772,299 A shares were traded on the Helsinki
stock exchange at a total value of €112 million, while 39.7 million B shares
were traded at a total value of €1,111 million.
The number of 2003F stock options of the 2003 scheme traded during the reporting
period was 273,212 at a total value of about €3.4 million. The 2003 option
scheme expired on 30 April 2010.
In addition, the company operates the 2007 stock option scheme for management
and key personnel which comprises 2007A options, whose exercise period began on
1 April 2010, and 2007B and 2007C options, whose exercise periods will begin at
the beginning of April in 2011 and 2012 respectively. The 2007A options were
also included on the official list of the Helsinki stock exchange on 1 April
2010, and 6,000 options were traded during the reporting period at a total value
of €6,350.
The Board of Directors was authorised by the Annual General Meeting of 30 March
2009 to issue a maximum of 20,000,000 new B shares against payment or other
consideration. The authorisation also includes a rights issue. The authorisation
has not been used. Further information on Board authorisations is available at
www.kesko.fi.
At the end of September 2010, the number of shareholders was 37,677, which was
1,211 less than at the end of 2009. At the end of September 2010, foreign
ownership of all shares was 25%, and foreign ownership of B shares was 37%.
Flagging notifications
The Kesko Pension Fund sold such a number of Kesko A shares owned by it to
Kruunuvuoren Satama Oy that its holding of Kesko shares, as a percentage of
votes carried by all Kesko shares, fell below 5%, and respectively, the number
of votes carried by shares held by Kruunuvuoren Satama Oy exceeded 5% of votes
carried by all Kesko shares. The matter was announced in a stock exchange
notification on 27 July 2010.
Main events during the reporting period
On 1 July 2010, Kesko sold ten properties to Ilmarinen Mutual Pension Insurance
Company and Kruunuvuoren Satama Oy, a joint venture established by Ilmarinen,
the Kesko Pension Fund and Kesko Corporation. The debt-free selling price of the
properties totalled €107.5 million. The €47.4 million gain on the sale of the
properties is treated as a non-recurring item in Kesko's operating profit for
the third quarter of the year, with the exception of a non-recurring €2.3
million gain on the sale, which will be recognised for the fourth quarter. In
the same connection, the Kesko Pension Fund sold seven retail store properties
owned by it to Kruunuvuoren Satama Oy. The Kesko Group companies leased the
properties for the Kesko Group companies' use, mainly on 15-year leases with
extension options. In consequence, the Kesko Group's lease liabilities rose by
about €120 million. Kesko Corporation has made an equity investment of
approximately €33 million in the joint venture. Its ownership interest and
voting rights in Kruunuvuoren Satama Oy are 49%. The company is included in the
Kesko Group's financial reporting as an associate starting from 1 July 2010
(stock exchange releases on 1 July 2010).
On 1 September 2010, the management of the statutory pension provision and the
related insurance portfolio of some 3,100 people employed by the Kesko Group
were transferred from the Kesko Pension Fund to Ilmarinen Mutual Pension
Insurance Company. As a result, Kesko will recognise an €8 million actuarial
gain in the latter part of the year which will not be treated as a non-recurring
item. The fair value of the Kesko Pension Fund's investment assets exceeds the
amount of its pension liabilities. The difference is recognised as pension
assets in Kesko's balance sheet. Pension assets are planned to be returned and
the returned pension assets are expected to have a positive cash flow effect
totalling about €160 million. The matter was announced in a stock exchange
release on 1 September 2010.
Responsibility
For the eighth year in succession, Kesko was selected for the Dow Jones
sustainability indexes DJSI World and DJSI Europe. In the annual review 2010,
Kesko gained the subsector's best scores for its environmental reporting, risk
management, and the corporate code of conduct for preventing corruption and
bribery.
Kesko Food has, in cooperation with Suominen Flexible Packaging Ltd, developed
Pirkka recycled plastic bags made of protective plastic wrappings used in Kesko
Food's central warehouses and terminals. The new Pirkka recycled plastic bags
were available in K-food stores in September.
In September, Asko launched a new sofa, Puro, designed in cooperation with the
Finnish Allergy and Asthma Federation and Insofa Ltd, Asko's own sofa factory.
Insofa became the first sofa manufacturer in Finland to have the right to use
the allergy label.
In September, Intersport and Halti launched a jacket recycling campaign in which
€5 for each new jacket bought during the campaign are donated to Plan Finland's
'Because I am a girl' campaign.
In October, K-food stores participate in the Cancer Society of Finland's Pink
Ribbon campaign by selling Pirkka Pink Ribbon rose bunches in K-food stores and
Pink Ribbon campaign bags in K-citymarkets.
In Sweden, K-rauta AB participates in the Save the Children campaign until March
2011. The K-rauta stores in Sweden display collection boxes and sell campaign
products from which the revenue will be donated to Save the Children's Emergency
Fund.
Kesko participated in the Energy Saving Week from 11 to 17 October. K-
supermarket Torpparinmäki, opened in Helsinki in October, is the first store in
the world with the energy efficient LED lighting system throughout the premises.
The LED lighting of the store consumes over 35 percent less energy than
traditional fluorescent tubes.
K-food stores will also continue adding lids and doors to their existing
freezers. By October 2010, the annual energy savings achieved by this amounted
to 11.6 million kilowatt hours (kWh), which correspond the total annual
electricity consumption of nearly 600 one-family houses. The K-Group has signed
the trading sector energy agreement and made a commitment to save over 65
million kilowatt hours (kWh) by the end of 2016.
Risk management
The Kesko Group has established a risk management process according to which
divisions regularly assess risks and their management and report on them to the
Group's management. Kesko's risk management and risks involved in its operating
activities are described in more detail in the Corporate Governance section on
Kesko's website. During the current year, no material changes have taken place
in the risk factors presented in Kesko's 2009 Annual Report and financial
statements.
The most significant risks for Kesko's operating activities in the near future
are involved in the general economic development in Kesko's operating area and
its impacts on the Kesko Group's sales and profit performance. Country-specific
differences in the economic revival will affect the developments in demand
especially in the building and home improvement trade and in the machinery
trade. In the prevailing market situation, efficient management of costs,
inventories, trade receivables and investment assets, as well as risk management
responses to the prevention of malpractice are emphasized.
The risks and uncertainties related to profit performance have been 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 (10/2010-9/2011) in comparison with the 12-month period
preceding the reporting period (10/2009-9/2010).
The outlook for trends in consumer demand has remained steady, especially as a
result of higher consumer confidence and continuously low interest rate levels.
Nevertheless, the trend in economic development continues to involve significant
uncertainties relating to the evolution of total production, tightening taxation
and ramifications of possible disturbances in the financial market.
The trend in the grocery trade is expected to continue steadily. In the home and
speciality goods trade, the market recovery is expected to continue as a result
of higher consumer confidence. As house building activity increases, the
building and home improvement market is expected to continue strengthening in
the Nordic countries, and the decline is expected to ease in the other operating
countries. In the car and machinery trade, new car sales are expected to
increase, and the market situation in the machinery trade is expected to recover
gradually.
The Kesko Group's net sales are expected to grow during the next twelve months.
Kesko's operating profit excluding non-recurring items has more than doubled
during the past twelve months. During the next twelve months, the operating
profit excluding non-recurring items is expected to remain at the achieved
level, despite a significant expansion of the store site network.
Helsinki, 25 October 2010
Kesko Corporation
Board of Directors
The information in this interim report is unaudited.
Further information is available from Arja Talma, Senior Vice President, CFO,
telephone +358 1053 22113. 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
Paavo Moilanen
Senior Vice President, Corporate Communications and Responsibility
ATTACHMENTS
Accounting policies
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated cash flow statement
Group performance indicators
Net sales by segment
Operating profit by segment
Segments' operating profits excl. non-recurring items
Segment's operating margins excl. non-recurring items
Capital employed by segment
Return on capital employed by segment
Investments by segment
Segment information by quarter
Personnel average and at 30 September
Group contingent liabilities
Calculation of performance indicators
K-Group's retail and B2B sales
Kesko Corporation's financial statements will be released on 3 February 2011. 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.
DISTRIBUTION
NASDAQ OMX Helsinki
Main news media
www.kesko.fi
ATTACHMENTS:
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 2009, with the exception of the following
changes due to the adoption of new and revised IFRS standards and IFRIC
interpretations.
-IFRS 3 (revised), Business combinations
-IAS 27 (revised), Consolidated and Separate Financial Statements
-IAS 39 (amendment), Financial Instruments: Recognition and Measurement -
Eligible hedged items
-IFRS 5 (amendment), Non-current assets held for sale and discontinued
operations
-IFRS 2 (amendment), Share-based Payment - Group cash-settled transactions
-IFRIC 9 and IAS 39, (Amendments) Reassessment of Embedded Derivatives on
Reclassification
-IFRIC 17, Distributions of Non-cash Assets to Owners
- Annual amendments to the IFRSs (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.
The net sales from operations in Finland presented in the interim report are
inclusive of the export sales of the Finnish companies (previously exports were
included in the net sales of other countries). The comparative figures have been
restated accordingly.
Consolidated income
statement
(€ million)
1-9/ 1-9/ Change% 7-9/ 7-9/ Change% 1-12/
2010 2009 2010 2009 2009
Net sales 6,467 6,294 2.8 2,231 2,133 4.6 8,447
Cost of sales -5,559 -5,466 1.7 -1,912 -1,853 3.2 -7,298
Gross profit 908 828 9.6 319 280 13.8 1,149
Other operating income 519 478 8.6 207 152 36.2 710
Staff cost -376 -398 -5.7 -116 -126 -8.0 -535
Depreciation and impairment
charges -89 -88 0.9 -32 -30 8.0 -131
Other operating expenses -739 -706 4.7 -254 -228 11.3 -961
Operating profit 224 114 96.0 124 48 (..) 232
Interest income 15 17 -11.8 5 4 31.4 21
Interest expenses -11 -16 -27.5 -4 -5 -28.6 -20
Exchange differences and
other financial items -2 -15 -87.7 -1 -4 -78.8 -17
Income from associates 0 0 (..) 0 0 (..) 0
Profit before tax 225 100 (..) 125 44 (..) 217
Income tax -72 -41 77.4 -40 -18 (..) -82
Profit for the period 153 60 (..) 84 25 (..) 134
Attributable to
Owners of the parent 146 54 (..) 80 23 (..) 125
Non-controlling
interests 7 6 25.6 4 2 89.5 9
Earnings per share (€) for
profit attributable to
equity
holders of the parent
Basic 1.48 0.55 (..) 0.81 0.24 (..) 1.28
Diluted 1.48 0.55 (..) 0.81 0.24 (..) 1.27
Consolidated statement of
comprehensive income
(€ million)
1-9/ 1-9/ Change% 7-9/ 7-9/ Change% 1-12/
2010 2009 2010 2009 2009
Net profit for the period 153 60 (..) 84 25 (..) 134
Other comprehensive income
Exchange differences on
translating foreign
operations 3 -3 (..) -4 1 (..) -3
Cash flow hedge revaluation 8 -10 (..) 1 -3 (..) -4
Revaluation of available-
for-
sale financial assets 1 0 (..) 0 1 -71.1 -2
Tax relating to other
comprehensive income -3 3 (..) 0 1 (..) 2
Total other comprehensive
income for the period, net
of
tax 9 -10 (..) -3 -1 (..) -7
Total comprehensive income
for the period 163 49 (..) 81 24 (..) 127
Attributable to
Owners of the parent 155 48 (..) 79 22 (..) 123
Non-controlling interests 7 2 (..) 2 2 19.1 4
(..) Change over 100%
Consolidated statement of financial
position
(€ million), condensed
30.9.2010 30.9.2009 Change % 31.12.2009
ASSETS
Non-current assets
Intangible assets 187 181 3.4 185
Tangible assets 1,097 1,208 -9.2 1,111
Interests in associates and other
financial assets 57 37 54.2 36
Loans and receivables 68 61 12.5 71
Pension assets 308 311 -1.1 315
Total 1,717 1,797 -4.5 1,717
Current assets
Inventories 688 705 -2.3 665
Trade receivables 642 633 1.4 594
Other receivables 140 144 -2.6 150
Financial assets at fair value through
profit or loss 225 92 (..) 213
Available-for-sale financial assets 553 365 51.7 428
Cash and cash equivalents 72 79 -9.5 74
Total 2,320 2,017 15.0 2,124
Non-current assets held for sale 3 1 (..) 1
Total assets 4,039 3,815 5.9 3,842
30.9.2010 30.9.2009 Change % 31.12.2009
EQUITY AND LIABILITIES
Equity 2,082 1,925 8.1 2,005
Non-controlling interests 54 62 -13.0 64
Total equity 2,136 1,987 7.5 2,069
Non-current liabilities
Pension obligations 2 2 -7.9 2
Interest-bearing liabilities 227 262 -13.3 262
Non-interest-bearing liabilities 4 9 -50.0 6
Deferred tax liabilities 124 129 -3.4 128
Provisions 13 18 -29.4 14
Total 370 420 -11.7 412
Current liabilities
Interest-bearing liabilities 229 222 3.2 194
Trade payables 822 791 3.9 704
Other non-interest-bearing liabilities 450 375 20.1 434
Provisions 32 20 58.4 29
Total 1,533 1,408 8.9 1,361
Total equity and liabilities 4,039 3,815 5.9 3,842
(..) Change over 100%
Consolidated statement of changes in equity (€ million)
Share Issue Share Other Cur- Revalu- Re- Non Total
cap of pre reser- rency ation tained cont
ital share mi- ves trans surplus ear- rol-
cap um lation nings ling-
ital differ- inte-
ences rests
Balance at
1.1.2009 196 0 191 243 -10 2 1,344 61 2,026
Shares
subscribed
for with
options 1 0 2 3
Option cost 6 0 6
Dividends -98 0 -98
Other changes 0 1 0 1
Net profit for
the period 54 6 60
Other
comprehensi
ve income
Exchange
differences
on translating
foreign
operations 0 2 0 -4 -3
Cash flow
hedge
revaluation -10 -10
Revaluation
of available
for-sale
financial
assets 0 0
Tax relating
to other
comprehens
ve income 3 3
Total other
comprehens
ve income 0 2 -8 0 -4 -10
Balance at
30.9.2009 196 0 193 243 -8 -6 1,307 62 1,987
Balance at
1.1.2010 197 0 194 243 -7 -3 1,381 64 2,069
Shares
subscribed
for with
options 1 4 4
Option cost 4 0 4
Dividends -89 -18 -106
Other
changes 1 0 1
Net profit for
the period 146 7 153
Other
comprehens
ve income
Exchange
differences
on translating
foreign
operations 0 3 0 0 3
Cash flow
hedge
revaluation 8 8
Revaluation
of available
for-sale
financial
assets 1 1
Tax relating
to other
comprehens
ve income -3 -3
Total other
comprehens
ve income 0 3 7 -1 0 9
Balance at
30.9.2010 197 0 198 243 -4 5 1,443 54 2,136
Consolidated cash flow statement (€ million), condensed
1-9/ 1-9/ Change% 7-9/ 7-9/ Change% 1-12/
2010 2009 2010 2009 2009
Cash flow from operating
activities
Profit before tax 225 100 (..) 125 44 (..) 217
Planned depreciation 86 86 -0.1 29 30 -1.8 117
Finance income and
costs -1 14 (..) -1 5 (..) 16
Other adjustments -19 -24 -17.6 -7 5 (..) -74
Working capital
Current non-interest-bearing
trade and other receivables,
increase (-)/ decrease (+) -33 -4 (..) 85 63 34.3 39
Inventories
increase (-)/ decrease (+) -16 167 (..) -14 37 (..) 207
Current non-interest-bearing
liabilities,
increase (+)/decrease (-) 101 -37 (..) -73 -51 42.3 -84
Financial items and tax -74 -47 57.4 -10 -12 -18.8 -59
Net cash from operating
activities 269 256 5.2 133 119 11.8 379
Cash flow from investing
activities
Investments -164 -162 1.4 -72 -52 39.2 -223
Sales of fixed assets 115 94 22.5 111 5 (..) 252
Increase of non-current
receivables 0 0 (..) 0 0 (..) 0
Decrease of non-current
receivables 2 2 -17.9 0 1 -77.5 2
Net cash used in investing
activities -47 -65 -28.4 39 -46 (..) 31
Cash flow from financing
activities
Increase (+)/ decrease (-) in
interest-bearing liabilities 15 -6 (..) -29 -44 -34.5 -33
Increase (-)/decrease (+) in
current interest-bearing
receivables 10 -1 (..) 0 0 (..) -14
Dividends paid -106 -98 7.9 -1 0 (..) -98
Equity increase 4 3 36.9 0 0 (..) 5
Short-term money market
investments -98 -19 (..) 20 -78 (..) -98
Other items -12 7 (..) -5 0 (..) 4
Net cash used in financing
activities -187 -115 62.0 -15 -123 -87.7 -234
Change in cash and cash
equivalents 35 75 -52.9 157 -49 (..) 175
Cash and cash equivalents
and current portion of
available-for-sale financial
assets at 1 Jan. 491 319 53.9 371 440 -15.9 319
Translation difference and
revaluation 0 -3 (..) -1 0 (..) -3
Cash and cash equivalents
and current portion of
available-for-sale financial
assets at 30 Sep. 527 391 34.8 527 391 34.8 491
(..) Change over 100%
Group performance indicators
1-9/2010 1-9/2009 Change, pp
Return on capital employed, % 15.5 7.2 8.3
Return on capital employed, %,
moving 12 mo 17.4 5.7 11.7
Return on capital employed excl. non-
recurring items, % 13.0 5.5 7.5
Return on capital employed excl. non-
recurring items, %, moving 12 mo 13.0 5.3 7.6
Return on equity, % 9.7 4.0 5.7
Return on equity, %, moving 12 mo 11.0 3.1 7.9
Return on equity excl. non-recurring items, % 8.0 2.6 5.4
Return on equity excl. non-recurring
items, %, moving 12 mo 8.0 3.1 4.9
Equity ratio, % 53.3 52.3 1.0
Gearing, % -18.4 -2.6 -15.8 Change, %
Investments, € million 123.6 156.5 -21.0
Investments, % of net sales 1.9 2.5 -23.1
Earnings per share, basic, € 1.48 0.55 (..)
Earnings per share, diluted, € 1.48 0.55 (..)
Earnings per share excl. non-recurring
items, basic, € 1.21 0.35 (..)
Cash flow from operating activities,
€ million 269 256 5.2
Cash flow from investing activities,
€ million -47 -65 -28.4
Equity/share, € 21.10 19.60 7.6
Personnel, average 18,173 19,541 -7.0
(..) Change over 100%
Group performance 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/
indicators by quarter 2009 2009 2009 2009 2010 2010 2010
Net sales, € million 2,018 2,143 2,133 2,153 1,958 2,279 2,231
Change in net sales, % -11.4 -15.9 -12.4 -7.7 -3.0 6.4 4.6
Operating profit, € million 23.2 42.7 48.3 118.1 20.9 79.0 123.9
Operating margin, % 1.1 2.0 2.3 5.5 1.1 3.5 5.6
Operating profit excl. non-
recurring items, € million 3.4 36.4 47.5 68.0 20.9 78.1 88.7
Operating margin excl. non-
recurring items, % 0.2 1.7 2.2 3.2 1.1 3.4 4.0
Finance income/costs,
€ million -5.1 -4.4 -4.7 -1.8 0.8 -0.2 0.8
Profit before tax, € million 18.2 38.2 43.8 116.3 21.9 78.7 124.5
Profit before tax, % 0.9 1.8 2.1 5.4 1.1 3.5 5.6
Return on capital employed, % 4.2 8.0 9.4 22.9 4.4 16.0 26.2
Return on capital employed
excl. non-recurring items, % 0.6 6.8 9.2 13.2 4.3 15.8 18.8
Return on equity, % 2.4 4.6 5.2 14.7 2.9 10.6 16.1
Return on equity excl. non-
recurring items, % -0.6 3.7 5.0 7.7 2.9 10.5 11.1
Equity ratio, % 49.8 51.0 52.3 54.1 51.1 51.2 53.3
Investments, € million 51.5 55.8 49.2 41.5 42.0 45.7 35.9
Earnings per share, diluted, € 0.12 0.19 0.24 0.73 0.15 0.51 0.81
Equity per share, € 19.16 19.36 19.60 20.39 19.69 20.30 21.10
Segment information
Net sales by segment, 1-9/ 1-9/ Change 7-9/ 7-9/ Change
(€ million) 2010 2009 % 2010 2009 %
Food trade, Finland 2,874 2,827 1.7 986 966 2.1
Food trade, other countries* - - - - - -
Food trade total 2,874 2,827 1.7 986 966 2.1
- of which intersegment trade 122 118 2.9 40 39 0.7
Home and speciality goods
trade, Finland 1,056 1,042 1.4 374 375 -0.2
Home and speciality goods
trade, other countries* 11 16 -27.9 4 5 -23.5
Home and speciality
goods trade total 1,068 1,058 0.9 378 381 -0.6
- of which intersegment trade 16 16 -0.2 5 6 -19.8
Building and home
improvement trade, Finland 881 828 6.4 293 268 9.2
Building and home
improvement trade, other
countries* 1,013 959 5.7 395 346 14.1
Building and home
improvement trade total 1,894 1,787 6.0 687 614 11.9
- of which intersegment trade 0 1 -66.3 0 0 -62.7
Car and machinery trade,
Finland 669 626 6.9 190 172 10.2
Car and machinery trade,
other countries* 83 117 -29.2 28 41 -31.3
Car and machinery trade
total 752 743 1.2 218 213 2.2
- of which intersegment trade 0 0 -87.5 0 0 (..)
Common operations and
eliminations -120 -121 -0.3 -39 -41 -3.9
Finland total 5,360 5,202 3.0 1,804 1,741 3.6
Other countries total* 1,107 1,091 1.5 427 392 8.8
Group total 6,467 6,294 2.8 2,231 2,133 4.6
* Net sales in countries other than Finland.
Operating profit by 1-9/ 1-9/ 7-9/ 7-9/
segment (€ million) 2010 2009 Change 2010 2009 Change
Food trade 121.2 111.9 9.3 47.3 35.8 11.5
Home and speciality
goods trade 57.7 0.1 57.7 50.6 7.0 43.7
Building and home
improvement trade 24.0 18.0 6.0 19.9 8.5 11.4
Car and machinery trade 30.0 -2.4 32.4 8.6 1.7 7.0
Common operations and eliminations -9.1 -13.3 4.3 -2.5 -4.5 2.0
Total 223.9 114.3 109.6 123.9 48.3 75.6
Operating profit excl.
non-recurring items by 1-9/ 1-9/ 7-9/ 7-9/
segment (€ million) 2010 2009 Change 2010 2009 Change
Food trade 123.3 99.4 23.9 49.5 35.5 14.1
Home and speciality
goods trade 20.3 -10.2 30.5 13.2 6.5 6.7
Building and home
improvement trade 24.2 14.0 10.2 20.0 8.4 11.7
Car and machinery trade 29.2 -2.4 31.6 8.7 1.7 7.0
Common operations and
eliminations -9.4 -13.4 4.1 -2.8 -4.5 1.6
Group total 187.6 87.4 100.3 88.7 47.5 41.1
Segments' 1-9/ 1-9/ Changepp 7-9/ 7-9/ Changepp
operating 2010, 2009 2010, 2009,
margins excl. % of net % of net % of net % of net
non- sales sales sales sales
recurring
items
Food trade 4.3 3.5 0.8 5.0 3.7 1.4
Home and
speciality
goods trade 1.9 -1.0 2.9 3.5 1.7 1.8
Building and home
improvement trade 1.3 0.8 0.5 2.9 1.4 1.6
Car and machinery
trade 3.9 -0.3 4.2 4.0 0.8 3.2
Group total 2.9 1.4 1.5 4.0 2.2 1.7
Capital employed by
segment, cumulative 1-9/ 1-9/ 7-9/ 7-9/
average (€ million) 2010 2009 Change 2010 2009 Change
Food trade 606 633 -27 581 624 -43
Home and speciality
goods trade 432 516 -84 421 504 -83
Building and home
improvement trade 639 650 -11 626 631 -5
Car and machinery trade 172 250 -78 141 216 -74
Common operations and
eliminations 80 81 -1 118 87 31
Group total 1,930 2,129 -200 1,888 2,062 -173
Return on capital 1-9/ 1-9/ Change pp 7-9/ 7-9/ Change pp Moving
employed excl. non- 2010 2009 2010 2009 12 mo 9/2010
recurring items by
segment, %
Food trade 27.1 20.9 6.2 34.1 22.7 11.3 25.4
Home and speciality goods
trade 6.3 -2.6 8.9 12.6 5.2 7.4 13.3
Building and home
improvement trade 5.0 2.9 2.2 12.8 5.3 7.5 3.5
Car and machinery trade 22.6 -1.3 23.9 24.6 3.1 21.5 17.3
Group total 13.0 5.5 7.5 18.8 9.2 9.6 13.0
Investments by segment (€ million) 1-9/ 1-9/ 7-9/ 7-9/
2010 2009 Change 2010 2009 Change
Food trade 60 59 0 22 19 3
Home and speciality
goods trade 17 23 -6 4 6 -2
Building and home
improvement trade 33 65 -32 5 19 -14
Car and machinery trade 13 9 5 5 5 0
Group total 124 156 -33 36 49 -13
Segment information by quarter
Net sales by segment 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/
(€ million) 2009 2009 2009 2009 2010 2010 2010
Food trade 888 974 966 970 912 976 986
Home and speciality goods trade 346 331 381 500 355 334 378
Building and home
improvement trade 529 643 614 525 495 712 687
Car and machinery trade 296 233 213 205 236 298 218
Common operations and
eliminations -41 -39 -41 -47 -40 -41 -39
Group total 2,018 2,143 2,133 2,153 1,958 2,279 2,231
Operating profit by segment (€ million) 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/
2009 2009 2009 2009 2010 2010 2010
Food trade 42.3 33.8 35.8 58.7 31.7 42.2 47.3
Home and speciality goods trade -3.3 -3.6 7.0 66.5 0.1 7.0 50.6
Building and home
improvement trade -5.2 14.8 8.5 1.6 -13.8 17.9 19.9
Car and machinery trade -6.0 1.9 1.7 -2.7 6.4 15.0 8.6
Common operations and eliminations -4.6 -4.3 -4.5 -5.9 -3.4 -3.2 -2.5
Group total 23.2 42.7 48.3 118.1 20.9 79.0 123.9
Operating profit excl. non-recurring 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/
items by segment (€ million) 2009 2009 2009 2009 2010 2010 2010
Food trade 33.8 30.1 35.5 33.7 31.7 42.1 49.5
Home and speciality goods trade -10.7 -6.0 6.5 39.7 0.1 7.0 13.2
Building and home
improvement trade -9.1 14.8 8.4 -2.1 -13.8 17.9 20.0
Car and machinery trade -6.0 1.9 1.7 2.7 6.4 14.1 8.7
Common operations and eliminations -4.6 -4.4 -4.5 -6.0 -3.4 -3.1 -2.8
Group total 3.4 36.4 47.5 68.0 20.9 78.1 88.7
Segments' operating
margins excl. non-recurring items 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/
(€ million) 2009 2009 2009 2009 2010 2010 2010
Food trade 3.8 3.1 3.7 3.5 3.5 4.3 5.0
Home and speciality goods trade -3.1 -1.8 1.7 7.9 0.0 2.1 3.5
Building and home
improvement trade -1.7 2.3 1.4 -0.4 -2.8 2.5 2.9
Car and machinery trade -2.0 0.8 0.8 1.3 2.7 4.7 4.0
Group total 0.2 1.7 2.2 3.2 1.1 3.4 4.0
Personnel average and at 30.9.
Personnel, average by segment
1-9/2010 1-9/2009 Change
Food trade 2,923 3,110 -187
Home and speciality goods trade 5,401 5,698 -297
Building and home improvement trade 8,317 8,994 -677
Car and machinery trade 1,133 1,328 -195
Common operations 399 411 -12
Group total 18,173 19,541 -1,368
Personnel at 30.9.*
by segment 2010 2009 Change
Food trade 3,165 3,336 -171
Home and speciality goods trade 7,349 7,544 -195
Building and home improvement trade 9,558 9,525 33
Car and machinery trade 1,199 1,255 -56
Common operations 429 426 3
Group total 21,700 22,086 -386
* total number incl. part-time employees
Group contingent liabilities (€ million)
30.9.2010 30.9.2009 Change%
For own commitments 264 228 16.0
For shareholders 0 0 0.0
For others 6 9 -37.2
Lease liabilities for machinery and fixtures 21 23 -8.0
Lease liabilities for real estate 2,304 2,106 9.4
Contingent liabilities arising from
derivative financial instruments
Fair value
Values of underlying instruments at 30.9. 30.9.2010 30.9.2009 30.9.2010
Interest rate derivatives
Forward and future contracts 3 23 2.50
Interest rate swap contracts 206 204 3.74
Currency derivatives
Forward and future contracts 308 409 -6.61
Foreign exchange contracts 100 100 -12.49
Commodity derivatives
Electricity derivatives 44 38 0.42
Grain derivatives - 0 -
Calculation of performance indicators
Return on capital employed*, % Operating profit x 100 / (Non-current
assets + Inventories + Receivables +
Other current assets - Non-interest-
bearing liabilities) on average for
the reporting period
Return on capital employed, %, moving 12 Operating profit for prior 12 months x
months 100 / (Non-current assets +
Inventories + Receivables + Other
current assets - Non-interest-bearing
liabilities) on average for 12 months
Return on capital employed, excl. non- Operating profit excl. non-recurring
recurring items*, % items x 100 / (Non-current assets +
Inventories + Receivables + Other
current assets - Non-interest-bearing
liabilities) on average for the
reporting period
Operating profit excl. non-recurring
items for prior 12 months x 100 / (Non-current assets + Inventories +
Return on capital employed excl. non- Receivables + Other current assets -
recurring items, %, Non-interest-bearing liabilities) on
moving 12 months average for 12 months
(Profit/loss before tax - income tax)
Return on equity*, % x 100 /
Shareholders' equity
Return on equity, %, moving 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-
recurring items before tax - income
tax adjusted for the tax effect of
Return on equity excl. non-recurring non-recurring items) x
items*, % 100 / Shareholders' equity
(Profit/loss for prior 12 months
adjusted for non-recurring items
before tax - income tax for prior 12
months adjusted for the tax effect of
Return on equity excl. non-recurring non-recurring items) x
items, %, moving 12 months 100 / Shareholders' equity
Shareholders' equity x 100 /
Equity ratio, % (Balance sheet total - prepayments
received)
(Profit - non-controlling interests) /
Earnings/share, diluted Average number of shares adjusted for
the dilutive effect of options
Earnings/share, basic (Profit - non-controlling interests) /
Average number of shares
(Profit adjusted for non-recurring
Earnings/share excl. non-recurring items, items - non-controlling interests)/
basic Average number of shares
Equity attributable to equity holders
Equity/share of the parent /
Basic number of shares at balance
sheet date
Gearing, % Interest-bearing net liabilities x
100 /
Shareholders' equity
*Capital return ratios have been annualised
K-Group's retail and B2B sales in euros, VAT 0% (preliminary data):
1.1.-30.9.2010 1.7.-30.9.2010
K-Group retail and B2B sales € million Change, % € million Change, %
K-Group food trade
K-food stores, Finland 3,189 3.1 1,092 3.6
Kespro 512 -0.6 181 0.4
Food trade total 3,700 2.6 1,273 3.1
K-Group home and speciality goods trade
Home and speciality goods
stores, Finland 1,161 2.2 404 1.2
Home and speciality goods
stores, Baltic countries 11 -27.8 4 -23.0
Home and speciality
goods trade total 1,172 1.7 408 0.9
K-Group building and
home improvement trade
K-rauta and Rautia 771 5.5 294 1.2
Rautakesko B2B Service 143 18.8 55 28.8
K-maatalous 261 -10.3 80 -11.2
Finland total 1,175 2.8 429 1.4
Building and home
improvement stores, other
Nordic countries 799 13.9 312 15.8
Building and home
improvement stores, Baltic
countries 240 -17.8 99 -2.8
Building and home
improvement stores, other
countries 202 20.5 84 39.1
Building and home
improvement trade total 2,415 4.9 923 8.1
K-Group car and machinery trade
VV-Autotalot 252 5.6 80 14.0
VV-Auto, import 278 12.9 73 18.4
Konekesko, Finland 154 -0.5 40 -11.9
Finland total 685 6.9 193 8.9
Konekesko, Baltic countries 84 -27.5 29 -28.1
Car and machinery trade total 769 1.7 221 2.1
Finland total 6,721 3.0 2,298 2.9
Other countries total 1,336 3.4 527 10.7
Retail and B2B sales total 8,056 3.0 2,825 4.3
[HUG#1455188]
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