2011-10-26 08:00:00 CEST
2011-10-26 08:00:39 CEST
REGULATED INFORMATION
Kesko Oyj - Interim report (Q1 and Q3)
Kesko's interim report for 1 January - 30 September 2011
KESKO CORPORATION STOCK EXCHANGE RELEASE 26.10.2011 AT 09.00 1(29)
Financial performance in brief:
*The Group's net sales for January-September increased by 7.9%.
*The operating profit excluding non-recurring items for January-September was
€207.4 million, up €19.8 million on the previous year (€187.6 million).
* The Kesko Group's net sales are expected to grow during the next twelve
months. During the next twelve months, the operating profit excluding non-
recurring items is expected to remain at the achieved good level despite
significant costs involved in the expansion of the store site network and
business operations in Russia. The Group has changed its future outlook for
profitability. Previously, the operating profit excluding non-recurring items
was expected to increase during the next twelve months.
Key performance indicators
1-9/2011 1-9/2010 7-9/2011 7-9/2010
Net sales, € million 6,979 6,467 2,404 2,231
Operating profit excl. non-recurring
items, € million 207.4 187.6 89.2 88.7
Operating profit, € million 207.8 223.9 88.2 123.9
Profit before tax, € million 208.1 225.1 88.0 124.5
Capital expenditure, € million 320.9 123.6 126.3 35.9
Earnings/share, €, diluted 1.33 1.48 0.53 0.81
Earnings/share excl. non-recurring items,
€, basic 1.34 1.21 0.54 0.55
30.9.2011 30.9.2010
Equity ratio, % 54.0 53.4
Equity/share, € 21.66 21.11
FINANCIAL PERFORMANCE
Net sales and profit for January-September 2011
The Group's net sales in January-September 2011 were €6,979 million, which is
7.9% up on the corresponding period of the previous year (€6,467 million). In
Finland, net sales increased by 7.3% and in other countries by 11.0%.
International operations accounted for 17.6% (17.1%) of the net sales. The
steady net sales growth continued in the food trade and in the car and machinery
trade.
1-9/2011 Net sales, M€ Change, % Operating profit Change, M€
excl. non-recurring
items, M€
Food trade 3,074 +6.9 133.6 +10.3
Home and speciality
goods trade 1,063 -0.4 3.7 -16.6
Building and home
improvement trade 2,059 +8.7 31.1 +6.9
Car and machinery trade 911 +21.2 44.8 +15.6
Common operations and
eliminations -128 +5.9 -5.7 +3.6
Total 6,979 +7.9 207.4 +19.8
The operating profit excluding non-recurring items for January-September was
€207.4 million (€187.6 million), representing 3.0% (2.9%) of the net sales.
Profitability improved in the car and machinery trade, in the food trade and in
the building and home improvement trade. The operating profit excluding non-
recurring items for January-September 2010 was improved by the €8 million amount
recognised as revenue in connection with the transfer of the pension insurance
portfolio. At the beginning of the year, the principle for allocating surplus
amounts related to the additional defined benefit obligation of the Kesko
Pension Fund to divisions was changed to correspond to the breakdown of defined
benefit obligations. For January-September 2011, the change contributed €-1.3
million to the operating profit excluding non-recurring items in the food trade,
and €-3.0 million in the home and speciality goods trade.
Operating profit was €207.8 million (€223.9 million). The operating profit
includes €0.4 million of non-recurring items. The comparative period includes a
net total of €36.3 million of non-recurring gains on the disposal of real
estate, and provisions related to the reorganisation of the service station
grocery store business of Pikoil Oy, a Kesko Food subsidiary. The Group's profit
before tax for January-September was €208.1 million (€225.1 million).
The Group's earnings per share were €1.33 (€1.48). The Group's equity per share
was €21.66 (€21.11).
In January-September, the K-Group's (i.e. Kesko's and the chain stores') retail
and B2B sales (VAT 0%) were €8,675 million, up 7.6% compared to the previous
year. During the same period, K-food stores' grocery sales grew by 6.2% (VAT
0%). In January-September, the K-Group chains' sales entitling to K-Plussa
points were €4,162 million excluding tax, up 5.2% compared to the previous year.
In January-September, the K-Plussa customer loyalty programme gained 64,318 new
households. At the end of September, there was 2,139,257 K-Plussa households and
3,705,284 K-Plussa cardholders.
Net sales and profit for July-September 2011
The Group's net sales in July-September 2011 were €2,404 million, which is 7.8%
up on the corresponding period of the previous year (€2,231 million). In
Finland, net sales increased by 7.4% and in other countries by 9.3%.
International operations accounted for 19.4% (19.1%) of the net sales. In the
food trade, the increase in net sales is attributable to the good grocery sales
performance of the K-food stores. Growth in the car and machinery trade was
boosted by the growth of the market and the market share.
7-9/2011 Net sales, M€ Change, % Operating profit Change, M€
excl. non-recurring
items, M€
Food trade 1,049 +6.4 46.4 -3.1
Home and speciality
goods trade 376 -0.5 8.7 -4.5
Building and home
improvement trade 731 +6.4 21.3 +1.3
Car and machinery trade 290 +33.0 13.0 +4.3
Common operations and
eliminations -42 +8.5 -0.2 +2.6
Total 2,404 +7.8 89.2 +0.5
The operating profit excluding non-recurring items for July-September was €89.2
million (€88.7 million), representing 3.7% (4.0%) of the net sales.
Profitability improved in the car and machinery trade and in the building and
home improvement trade. The operating profit excluding non-recurring items for
July-September 2010 was improved by an €8 million amount recognised as revenue
in connection with the transfer of the pension insurance portfolio.
Operating profit was €88.2 million (€123.9 million). The operating profit
includes €-1.0 million of non-recurring items. In July-September of the previous
year, the non-recurring items included a net total of €35.3 million of gains on
the disposal of real estate, and provisions related to the reorganisation of the
service station grocery store business of Pikoil Oy, a Kesko Food subsidiary.
The Group's profit before tax for July-September was €88.0 million (€124.5
million).
The Group's earnings per share were €0.53 (€0.81). The Group's equity per share
was €21.66 (€21.11).
In July-September, the K-Group's (i.e. Kesko's and the chain stores') retail and
B2B sales (VAT 0%) were €3,065 million, up 8.4% compared to the previous year.
During the same period, K-food stores' grocery sales grew by 6.6% (VAT 0%). In
July-September, the K-Group chains' sales entitling to K-Plussa points were
€1,440 million excluding tax, up 5.7% compared to the previous year.
Finance
In January-September, the cash flow from operating activities was €169.1 million
(€268.8 million). The cash flow from operating activities was positively
impacted by the increase in non-interest-bearing liabilities in the comparative
period. The cash flow from investing activities was €-330.9 million (€-46.8
million). It included €6.2 million (€115.5 million) of proceeds from the sales
of fixed assets.
Throughout January-September, the Group's liquidity and solvency remained at an
excellent level. At the end of the period, liquid assets totalled €488 million
(€850 million). Interest-bearing liabilities were €424 million (€456 million)
and interest-bearing net debt €-64 million (€-394 million) at the end of
September. Equity ratio was 54.0% (53.4%) at the end of the period.
In January-September, the Group's net finance costs were €0.0 million (net
finance income €1.4 million).
In July-September, the cash flow from operating activities was €125.7 million
(€133.4 million). The cash flow from investing activities was €-136.7 million
(€38.9 million). It included €2.4 million (€110.9 million) of proceeds from the
sales of fixed assets.
In July-September, the Group's net finance income was €0.3 million (€0.8
million).
Taxes
The Group's taxes in January-September were €66.5 million (€72.0 million). The
effective tax rate was 32.0% (32.0%), affected by loss-making foreign
operations.
The Group's taxes in July-September were €29.3 million (€40.4 million). The
effective tax rate was 33.2% (32.4%).
Capital expenditure
In January-September, the Group's capital expenditure totalled €320.9 million
(€123.6 million), or 4.6% (1.9%) of the net sales. Capital expenditure in store
sites was €276.7 million (€93.7 million), in acquisitions €21.1 million and
other capital expenditure was €23.0 million (€29.9 million). Capital expenditure
in foreign operations represented 36.0% (24.0%) of total capital expenditure.
In July-September, the Group's capital expenditure totalled €126.3 million
(€35.9 million), or 5.3% (1.6%) of the net sales. Capital expenditure in store
sites was €101.1 million (€30.3 million), in acquisitions €21.1 million and
other capital expenditure was €4.0 million (€5.6 million). Capital expenditure
in foreign operations represented 34.8% (9.9%) of total capital expenditure.
Personnel
In January-September, the average number of employees in the Kesko Group was
18,855 (18,173) converted into full-time employees. In Finland, the average
increase was 133 people, while outside Finland, it was 549.
At the end of September 2011, the total number of employees was 22,579 (21,700),
of whom 12,321 (12,222) worked in Finland and 10,258 (9,478) outside Finland.
Compared to the end of September 2010, there was an increase of 99 people in
Finland and 780 people outside Finland.
In January-September, the Group's staff cost was €414.2 million and increased by
10.3% compared to the previous year. In July-September, the staff cost increased
by 13.2% compared to the previous year and was €131.1 million. The staff cost
for the comparative period was decreased by the €8 million amount recognised as
revenue in connection with the transfer of pension insurance portfolio.
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
1-9/2011 1-9/2010 7-9/2011 7-9/2010
Net sales, € million 3,074 2,874 1,049 986
Operating profit excl. non-recurring
items, € million 133.6 123.3 46.4 49.5
Operating profit as % of net sales excl.
non-recurring items 4.3 4.3 4.4 5.0
Capital expenditure,
€ million 159.2 59.8 64.8 21.9
Net sales, € million 1-9/2011 Change, % 7-9/2011 Change, %
Sales to K-food stores 2,380 +8.1 808 +8.1
Kespro 552 +6.9 195 +6.4
Others 142 -9.5 47 -16.8
Total 3,074 +6.9 1,049 +6.4
January-September 2011
In the food trade, the net sales for January-September were €3,074 million
(€2,874 million), up 6.9%. The sales of Pirkka products to K-food stores were
excellent, with sales growth standing at 37.7% (VAT 0%). During the same period,
the grocery sales of K-food stores increased by 6.2% (VAT 0%). Good sales
performance was achieved especially by the K-citymarket and K-supermarket
chains. In January-September, the growth rate of the total grocery trade market
in Finland is estimated at 5.5 - 6.0% (VAT 0%) compared to the previous year
(Kesko's own estimate). The price change in the grocery market is estimated to
have stood at some 4.5% compared to the previous year (VAT 0%, Kesko's own
estimate).
In January-September, the operating profit excluding non-recurring items of the
food trade was €133.6 million (€123.3 million), or €10.3 million up on the
previous year. The profitability improvement is attributable to K-food stores'
good sales performance and cost management. Operating profit was €133.7 million
(€121.2 million).
In January-September, capital expenditure in the food trade was €159.2 million
(€59.8 million), of which capital expenditure in store sites was €153.8 million
(€48.5 million).
July-September 2011
In the food trade, the net sales for July-September were €1,049 million (€986
million), up 6.4%. During the same period, the grocery sales of K-food stores
increased by 6.6% (VAT 0%).
In July-September, the operating profit excluding non-recurring items of the
food trade was €46.4 million (€49.5 million), or €3.1 million down on the
previous year. The operating profit excluding non-recurring items for July-
September 2010 was improved by a €6 million amount recognised as revenue in
connection with the transfer of pension insurance portfolio. Operating profit
was €45.7 million (€47.3 million).
In July-September, capital expenditure in the food trade was €64.8 million
(€21.9 million), of which capital expenditure in store sites was €63.9 million
(€20.3 million).
In July-September 2011, one new K-citymarket and one new K-supermarket were
opened. Renovations and extensions were made in a total of 15 stores.
The most significant store sites being built are the new K-citymarkets in
Karisto, Lahti, in Äänekoski, Hyvinkää, Kauhajoki, Kouvola and Valkeakoski. K-
supermarkets in Mäntsälä, Lieksa and Loimaa are being extended into K-
citymarkets and K-citymarket Kolmisoppi in Kuopio is being extended. New K-
supermarkets are being built in Vihti, in Myllypuro, Helsinki, in Hattula,
Tampere, Vaasa, Järvenpää, in Louhela, Vantaa, in Lahti, Kiiminki, Pori,
Pihtipudas, Nurmijärvi, in Kaisaniemi, Helsinki and in Hämeenkylä, Vantaa.
Home and speciality goods trade
1-9/2011 1-9/2010 7-9/2011 7-9/2010
Net sales, € million 1,063 1,068 376 378
Operating profit excl. non-recurring
items, € million 3.7 20.3 8.7 13.2
Operating profit as % of net sales excl.
non-recurring items 0.3 1.9 2.3 3.5
Capital expenditure, € million 50.5 16.9 32.4 4.2
Net sales, € million 1-9/2011 Change, % 7-9/2011 Change, %K-citymarket home and speciality goods 435 +3.1 153 +4.5
Anttila 311 -5.8 106 -8.8
Intersport 118 -0.4 43 +2.0
Indoor 132 +15.4 49 +14.3
Musta Pörssi 51 -23.9 19 -21.9
Kenkäkesko 18 +5.8 8 +9.0
Total 1,063 -0.4 376 -0.5
January-September 2011
In the home and speciality goods trade, the net sales for January-September were
€1,063 million (€1,068 million), down 0.4%. K-citymarket home and speciality
goods, as well as Asko and Sotka increased their sales. At the beginning of
February, the Anttila department store in Tikkurila was closed because its lease
term expired. The Anttila department store in Hämeenlinna was converted into a
K-citymarket, which was opened in September 2011. In April, a K-citymarket was
opened in Tammisto, Vantaa and in Palokka, Jyväskylä. In May, a K-citymarket was
opened in Päivölä, Seinäjoki. As a result of network restructuring, the number
of Musta Pörssi stores decreased from the previous year's 49 to 32.
The operating profit excluding non-recurring items of the home and speciality
goods trade for January-September was €3.7 million (€20.3 million), showing a
€16.6 million year-on-year decrease. In addition to a decrease in Anttila's
sales, profitability performance was impacted by the launch of Anttila's new
logistics centre and the revision of K-citymarket's and Anttila's selections.
Operating profit was €4.1 million (€57.7 million). The operating profit for the
comparative period included €37.4 million of gains on the disposal of real
estate.
Capital expenditure in the home and speciality goods trade in January-September
was €50.5 million (€16.9 million).
July-September 2011
In the home and speciality goods trade, the net sales for July-September were
€376 million (€378 million), down 0.5%. K-citymarket home and speciality goods,
Intersport and Budget Sport, as well as Asko and Sotka increased their sales.
The increase in the net sales of K-citymarket home and speciality goods is
attributable to successful marketing, product selection and new stores.
The operating profit excluding non-recurring items of the home and speciality
goods trade for July-September was €8.7 million (€13.2 million), showing a €4.5
million year-on-year decrease. Profitability performance was impacted by
Anttila's sales decrease, the revision of K-citymarket's and Anttila's
selections and the launch of Intersport operations in Russia. Operating profit
was €8.7 million (€50.6 million). The operating profit for the comparative
period included €37.4 million of gains on the disposal of real estate.
Capital expenditure in the home and speciality goods trade in July-September was
€32.4 million (€4.2 million).
In September, K-citymarket Hämeensaari was opened in Hämeenlinna.
The acquisition of Intersport operations in Russia was concluded on 24 August
2011.
Kesko established a subsidiary for Intersport operations in Russia, in which
Kesko Corporation's ownership interest is 80% and Melovest Ltd's 20%. By 30
September 2011, 34 stores had transferred to the Kesko subsidiary and the aim is
to increase the number of sports stores to 36 by the end of this year. In the
future, the objective is to at least double the Intersport store site network in
Russia by the end of 2015.
Anttila's new automated logistics centre was inaugurated on 31 August 2011. The
logistics centre will significantly improve the space and energy efficiency of
logistics, and as the changeover progresses, it will also enable the upgrading
of deliveries. The old distribution centre in Hämeenkylä will be disposed of by
the end of 2011.
The Kookenkä chain, born from the present K-kenkä and Andiamo store types,
opened its first store in Tampere on 1 September 2011. The reform of the other
chain stores will begin towards the end of this year and the whole chain will be
launched in spring 2012. The plan is to open a total of some 50 stores.
Building and home improvement trade
1-9/2011 1-9/2010 7-9/2011 7-9/2010
Net sales, € million 2,059 1,894 731 687
Operating profit excl. non-recurring
items, € million
31.1 24.2 21.3 20.0
Operating profit as % of net sales excl.
non-recurring items 1.5 1.3 2.9 2.9
Capital expenditure, € million 89.3 33.3 23.2 4.8
Net sales, € million 1-9/2011 Change, % 7-9/2011 Change, %
Rautakesko Finland 936 +6.3 311 +6.4
K-rauta Sweden 166 +4.3 58 -4.3
Byggmakker Norway 449 +8.6 163 +7.3
Rautakesko Estonia 44 +13.2 18 +15.3
Rautakesko Latvia 39 +9.3 17 +16.0
Senukai Lithuania 181 +10.2 73 +6.8
Stroymaster Russia 176 +16.9 69 +14.8
OMA Belarus 69 +32.8 22 -6.4
Total 2,059 +8.7 731 +6.4
January-September 2011
In the building and home improvement trade, the net sales for January-September
were €2,059 million (€1,894 million), up 8.7%. Sales performance and structure
vary between countries and customer groups. Sales performance in Sweden turned
down and the growth in Lithuania decelerated in the summer. The weakening of the
Russian rouble lowers sales performance in terms of euros, whereas in terms of
roubles, sales performance has been good.
In January-September, net sales in Finland were €936 million, an increase of
6.3%. The building and home improvement product lines contributed €689 million
to the net sales in Finland, an increase of 5.7%. The agricultural supplies
trade contributed €247 million to the net sales, up 8.0%.
In January-September, the net sales from foreign operations in the building and
home improvement trade were €1,122 million (€1,013 million), an increase of
10.8%. The net sales from foreign operations increased by 12.5% in terms of
local currencies. In Sweden, net sales were down by 2.6% in terms of kronas. In
Norway, net sales increased by 6.1% in terms of krones. In Russia, net sales
increased by 19.0% in terms of roubles. In Belarus, net sales were up by 99.9%
in terms of roubles. The growth is attributable to price increases resulting
from the high inflation in Belarus. Foreign operations contributed 54.5% 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 €31.1 million (€24.2 million), up €6.9
million compared to the previous year. The profit performance was impacted by
the fact that sales growth was mainly derived from basic building materials with
low margins, that sales growth slackened during the summer in some operating
countries, and by the costs related to the development of the international
enterprise resource planning system. Operating profit was €30.8 million (€24.0
million).
In January-September, capital expenditure in the building and home improvement
trade totalled €89.3 million (€33.3 million), of which 85.8% (88.9%) abroad and
92.7% in store sites.
The retail sales of the K-rauta and Rautia chains in Finland grew by 6.6% to
€818 million (VAT 0%). The sales of Rautakesko B2B Service increased by 14.2%.
As a whole, the growth rate of Rautakesko's building materials sales is
estimated to have continued exceeding that of the market in Finland. The retail
sales of the K-maatalous chain were €301 million (VAT 0%), up 12.8%.
July-September 2011
In the building and home improvement trade, the net sales for July-September
were €731 million (€687 million), up 6.4%.
In July-September, net sales in Finland were €311 million, an increase of 6.4%.
The building and home improvement product lines contributed €231 million to the
net sales in Finland, an increase of 4.3%. The agricultural supplies trade
contributed €80 million to the net sales, up 13.1%.
In July-September, the net sales from foreign operations in the building and
home improvement trade were €420 million (€395 million), an increase of 6.4%.
The net sales from foreign operations increased by 12.0% in terms of local
currencies. In Sweden, net sales decreased by 7.1% in terms of kronas. In
Norway, net sales increased by 4.7% in terms of krones. In Russia, net sales
increased by 19.0% in terms of roubles, and in Belarus, by 99.3% in terms of
roubles as a result of high inflation. 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 €21.3 million (€20.0 million), up €1.3
million. Operating profit was €21.0 million (€19.9 million).
In July-September, capital expenditure in the building and home improvement
trade totalled €23.2 million (€4.8 million), of which 86.9% (73.5%) abroad.
Capital expenditure in store sites represented 93.3% of the total capital
expenditure.
The retail sales of the K-rauta and Rautia chains in Finland grew by 9.6% to
€322 million (VAT 0%) in July-September. The sales of Rautakesko B2B Service
increased by 8.7%. The retail sales of the K-maatalous chain were €101 million
(VAT 0%), up 22.6%.
In Finland, new K-rauta stores are being built in Kuopio and Kouvola. In Sweden,
a K-rauta store was opened in Haparanda in July, and another is being built in
Uppsala. Two K-rauta stores are being built in Moscow, Russia. A new Rautia-K-
maatalous store is being built in Turku.
Car and machinery trade
1-9/2011 1-9/2010 7-9/2011 7-9/2010
Net sales, € million 911 752 290 218
Operating profit excl. non-recurring
items, € million 44.8 29.2 13.0 8.7
Operating profit as % of net sales excl.
non-recurring items 4.9 3.9 4.5 4.0
Capital expenditure, € million 20.5 13.1 6.6 5.0
Net sales, € million 1-9/2011 Change, % 7-9/2011 Change, %
VV-Auto 646 +24.9 199 +32.3
Konekesko 266 +12.9 91 +34.6
Total 911 +21.2 290 +33.0
January-September 2011
In January-September, the net sales of the car and machinery trade were €911
million (€752 million), up 21.2%. The comparable net sales of the car and
machinery trade grew by 25.0%. The discontinued Baltic grain and agricultural
inputs trade has been eliminated from the comparable net sales.
VV-Auto's net sales for January-September were €646 million (€517 million), an
increase of 24.9%. In Finland, new registrations of passenger cars increased by
13.7% and those of vans by 29.4% compared to the previous year. In January-
September, the combined market share of passenger cars and vans imported by VV-
Auto was 20.5% (19.6%). In January-September, Volkswagen was the best selling
passenger car and van brand in Finland.
Konekesko's net sales for January-September were €266 million (€235 million), up
12.9% compared to the previous year. Konekesko's comparable net sales grew by
25.2%, from which the discontinuation of the Baltic grain and agricultural
inputs trade has been eliminated. Net sales in Finland were €174 million, up
12.9%. The net sales from Konekesko's foreign operations were €94 million, up
13.2%. Konekesko's comparable net sales growth is attributable to the good
performance of the agricultural machinery trade in the Baltic countries.
In January-September, the operating profit excluding non-recurring items of the
car and machinery trade was €44.8 million (€29.2 million), up €15.6 million
compared to the previous year. The strong profit is the result of good sales
performance and cost management. The operating profit for January-September was
€44.9 million (€30.0 million).
Capital expenditure in the car and machinery trade was €20.5 million (€13.1
million) in January-September.
July-September 2011
In July-September, the net sales of the car and machinery trade were €290
million (€218 million), up 33.0%.
VV-Auto's net sales for July-September were €199 million (€150 million), an
increase of 32.3%. The net sales growth is attributable to market growth and an
increase in the combined market share of passenger cars and vans imported by VV-
Auto. In July-September, VV-Auto's market share was 21.2% (17.9%).
Konekesko's net sales for July-September were €91 million (€68 million), up
34.6% compared to the previous year.
In July-September, the operating profit excluding non-recurring items of the car
and machinery trade was €13.0 million (€8.7 million), up €4.3 million compared
to the previous year. The strong profit is attributable to excellent sales
performance and cost management. The operating profit for July-September was
€13.0 million (€8.6 million).
Capital expenditure in the car and machinery trade was €6.6 million (€5.0
million) in July-September.
Changes in the Group composition
Kesko established a new company in Russia for Intersport operations in Russia,
in which Kesko Corporation's and Melovest Ltd's ownership interests are 80% and
20% respectively. On 24 August, 2011, the acquisition of Intersport operations
in Russia was concluded. By 30 September 2011, 34 stores had been transferred to
the Kesko subsidiary.
Shares, securities market and Board authorisations
At the end of September 2011, the total number of Kesko Corporation shares was
€98,645,042, of which 31,737,007, or 32.2%, were A shares and 66,908,035, or
67.8%, were B shares. At 30 September 2011, Kesko Corporation held 700,000 own B
shares. Each A share entitles to ten (10) votes and each B share to one (1)
vote. The company cannot vote with own shares held by it. At the end of
September 2011, Kesko Corporation's share capital was €197,282,584. During the
reporting period, the number of B shares was increased twice to correspond to
share subscriptions with the option rights of the 2007 option scheme. The
increases were made on 31 May 2011 (2,750 B shares) and on 1 August 2011 (1,000
B shares) and announced in a stock exchange notification on the same days. The
subscribed shares were listed for public trading on NASDAQ OMX Helsinki (the
Helsinki stock exchange) with the old B shares on 1 June 2011 and 2 August
2011. The combined share subscription price of €87,637.50 received by the
company was recorded in the reserve of invested non-restricted equity.
The price of a Kesko A share quoted on NASDAQ OMX Helsinki was €34.70 at the end
of 2010, and €23.48 at the end of September 2011, representing a decrease of
32.3%. Correspondingly, the price of a B share was €34.93 at the end of 2010,
and €23.14 at the end of September 2011, representing a decrease of 33.8%. In
January-September, the highest A share price was €36.00 and the lowest was
€22.35. For B share, they were €35.97 and €22.21 respectively. In January-
September, the Helsinki stock exchange (OMX Helsinki) All-Share index fell by
31.2%, the weighted OMX Helsinki CAP index by 29.9%, while the Consumer Staples
Index was down by 30.0%.
At the end of September 2011, the market capitalisation of A shares was €745
million, while that of B shares was €1,532 million, excluding the shares held by
the parent company. The combined market capitalisation of A and B shares was
€2,277 million, a decrease of €1,161 million from the end of 2010. In January-
September 2011, a total of 1.6 million A shares were traded on the Helsinki
stock exchange at a total value of €50 million, while 51.4 million B shares were
traded at a total value of €1,561 million.
The company operates the 2007 stock option scheme for management and other key
personnel, under which the share subscription period of 2007A option rights runs
from 1 April 2010 to 30 April 2012, that of 2007B option rights from 1 April
2011 to 30 April 2013, and that of 2007C option rights will begin on 1 April
2012 and end on 30 April 2014. The 2007A and 2007B option rights have also been
included on the official list of the Helsinki stock exchange since the beginning
of the share subscription periods. A total of 221,662 2007A option rights were
traded during the reporting period at a total value of €184,113. A total of
101,250 2007B option rights were traded during the reporting period at a total
value of €1,074,816.
The Board of Directors was authorised by the Annual General Meeting of 4 April
2011 to acquire a total maximum of 1,000,000 own B shares. The authorisation is
valid until 30 September 2012. The Annual General Meeting also authorised the
Board to decide on the issuance of a maximum of 1,000,000 own B shares held by
the company itself. The authorisation is valid until 30 June 2014. The prior
authorisation 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 until 30 March
2012 remains in force. By virtue of the share acquisition authorisation, a total
of 700,000 own B shares were acquired from the Helsinki stock exchange during
the reporting period. The beginning of acquisition was announced on a stock
exchange release on 28 April 2011. Each subsequent acquisition was announced in
a stock exchange notification on the same day. No company shares have been
issued by virtue of the share issue authorisations. Further information on the
Board's authorisations is available at www.kesko.fi.
At the end of September 2011, the number of shareholders was 40,215, which is
1,957 more than at the end of 2010. At the end of September 2011, foreign
ownership of all shares was 20%, and foreign ownership of B shares was 30%.
Flagging notifications
Kesko Corporation did not receive flagging notifications during the reporting
period.
Main events during the reporting period
Merja Haverinen, M.Soc.Sc., was appointed Kesko Corporation's Senior Vice
President for Corporate Communications and Responsibility starting from 1 April
2011. Paavo Moilanen, Senior Vice President for Corporate Communications and
Responsibility, retired on 1 April 2011 in accordance with his service contract.
(Stock exchange release on 4 February 2011).
Kesko's Annual General Meeting was held on 4 April 2011. President and CEO Matti
Halmesmäki announced in his review that Kesko Food will open four large-scale
grocery stores in Russia in 2012-2013. Kesko Food's objective is to achieve €500
million in net sales and a positive operating result in Russia by 2015. The
capital expenditure is estimated at €300 million in 2011-2015. At the same time
with new construction, Kesko Food will continue to explore business acquisition
opportunities in both St. Petersburg and Moscow. (Stock exchange release on 4
April 2011).
On 4 April 2011, Kesko's Board of Directors decided to introduce a new share-
based compensation plan for some 150 Kesko management personnel and other named
key personnel, in which a maximum of 600,000 own B shares held by the company
can be granted to people in the target group within a period of three years. The
purpose of the plan is to promote Kesko's business operations and to increase
the company's value by combining the objectives of the shareholders and the
management personnel. The plan encourages its participants to commit to the
Kesko Group and provides them with the opportunity to receive company shares, if
the targets set in the share-based compensation plan are achieved. The share-
based compensation plan includes three vesting periods, namely the calendar
years 2011, 2012 and 2013. A commitment period of three calendar years following
each vesting period is attached to the shares issued in compensation, during
which shares must not be transferred. (Stock exchange release on 4 April 2011).
Kesko Corporation's Board of Directors agreed to extend the term of Kesko
Corporation's Managing Director and Kesko Group's President and CEO Matti
Halmesmäki until the end of May 2015, when Mr. Halmesmäki will be 63. According
to the previous agreement, Mr. Halmesmäki's term would have expired in May
2012. (Stock exchange release on 25 May 2011).
Kesko signed agreements on the transfer of the Intersport licence in Russia to
Kesko with Intersport International and Intersport CIS. According to the letter
of intent signed on the same occasion, Kesko established a new company for
Intersport operations in Russia together with Melovest, the owner of Intersport
CIS. Melovest holds a 20% ownership interest in the new company. The completion
of the arrangement was subject to a final agreement on all of its terms and
conditions, the approval by the Russian competition authority and the fulfilment
of the other completion terms and conditions. (Stock exchange release on 3 June
2011).
Jari Lind, Rautakesko Ltd's President and a member of Kesko's Corporate
Management Board, resigned on 9 June 2011. During the recruitment process of a
new president, Antti Ollila, Vice President for Rautakesko Commerce, will be in
charge ad interim of the duties of the Rautakesko President. In consequence of
Lind's resignation, his membership of Kesko's Corporate Management Board ended.
(Stock exchange release on 9 June 2011).
The acquisition of Intersport operations in Russia was concluded and the
subsidiary established for the purpose started its operations. The company
operates in the St. Petersburg and Moscow regions and intends to increase the
number of sports stores to 36 by the end of this year. (Stock exchange release
on 24 August 2011).Resolutions of the 2011 Annual General Meeting and decisions of the Board's
organisational meeting
Kesko Corporation's Annual General Meeting, held on 4 April 2011, adopted the
financial statements for 2010 and discharged the Board members and the Managing
Director from liability. The General Meeting also resolved to distribute €1.30
per share as dividends, or a total of €128,233,679.60, as proposed by the Board
of Directors. The dividend pay date was 14 April 2011. The General Meeting also
resolved to leave the number of Board members unchanged at seven, elected
PricewaterhouseCoopers Oy as the company's auditor, with APA Johan Kronberg as
the auditor with principal responsibility, and approved the Board's proposals to
authorise the Board to acquire a total maximum of 1,000,000 own B shares, and to
issue a total maximum of 1,000,000 own B shares held by the company itself. The
General Meeting also approved the Board's proposal to decide in 2011 on the
donation of a total maximum of €300,000 for charitable or corresponding
purposes.
The organisational meeting of Kesko Corporation's Board of Directors, held after
the Annual General Meeting, decided to maintain the compositions of the Board's
Audit Committee and Remuneration Committee unchanged.
More detailed information on the resolutions of the 2011 Annual General Meeting
and on the decisions of the Board's organisational meeting was given in stock
exchange releases on 4 April 2011.
Responsibility
Representatives of agricultural producers, food industry and the trading sector
discussed about Finnish food at a seminar organised by Kesko, Atria and Valio in
Lapua on 5 August 2011.
Anttila's and Kodin Ykkönen's logistics centre in Kerava was inaugurated on 31
August 2011. The consumption of heating energy of the new logistics centre is
only about one third compared to the old warehouse in Hämeenkylä, Vantaa.
In celebration of Pirkka products' 25th anniversary, a campaign dubbed 'Let's
Eat Together' was organised. The main event day gathered more than 36,000 people
on 10 September 2011.
In September, K-food stores' transportation started testing a new kind of
double-decker lorry trailer which will help reduce the carbon dioxide emissions
from transportation by one third.
In September, Kesko was included in the Dow Jones sustainability indexes DJSI
World and DJSI Europe for the ninth time. Kesko was given the highest scores in
the sector for Customer Relationship Management and for Codes of
Conduct/Compliance/Corruption&Bribery.
In September, Kesko was, for the third time, included as a member in the highly
valued FTSE4Good index focusing on responsible investment. Kesko's work for
curbing climate change was given 5 points on a scale 0-5.
Risk management and significant risks and uncertainties in the near future
The Kesko Group has an established and comprehensive risk management process.
Risks and their management are regularly assessed within the Group and reported
to the Group's management. Kesko's risk management and risks related to business
operations are described in more detail in the corporate governance section of
Kesko's website.
The most significant risks for Kesko's operating activities in the near future
are involved in the financial market falling into crisis, the general economic
development and consumer confidence in Kesko's operating area. An intensive
expansion of business operations in Russia improves Kesko's business
opportunities, but at the same time, the importance of country risk management
is emphasized. In other respects, no material changes are estimated to have
taken place in the risks presented in the Report by the Board of Directors in
Kesko's 2010 Annual Report and financial statements, and those presented on the
Kesko's website during the first part of the year.
Uncertainties regarding the economic development are described in more detail 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 (10/2011-9/2012) in comparison with the 12 months preceding the
reporting period (10/2010-9/2011).
The outlook for trends in consumer demand has weakened as a result of lowered
consumer confidence regardless of continuously low interest rate levels.
Significant uncertainties are associated with economic development, especially
with respect to the evolution of total production and the ramifications of
disturbances in the financial market. In addition, cuts in public finances and
tightening taxation may have a negative impact on the trend in consumer demand.
The steady development in the grocery trade is expected to continue. The home
and speciality goods trade is expected to develop in line with the trend in
private consumption. The growth of the building and home improvement market is
expected to even out. In the car and machinery trade, the market is expected to
turn down slightly.
The Kesko Group's net sales are expected to grow during the next twelve months.
During the next twelve months, the operating profit excluding non-recurring
items is expected to remain at the achieved good level despite significant costs
involved in the expansion of the store site network and business operations in
Russia.
Helsinki, 25 October 2011
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 10 53 22113, and Eva Kaukinen, Vice President, Corporate
Controller, telephone +358 10 53 22338. A Finnish-language webcast from the
media and analyst briefing on the interim report can be accessed at www.kesko.fi
at 11.00. An English-language web conference on the interim report will be held
today at 14.30 (Finnish time). The web conference login is available at
www.kesko.fi.
Kesko Corporation's financial statements release will be released on 2 February
2012. In addition, the Kesko Group's sales figures are published each month.
News releases and other company information are available on Kesko's website at:
www.kesko.fi.
KESKO CORPORATION
Merja Haverinen
Senior Vice President, Corporate Communications and Responsibility
ATTACHMENTS
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
Operating profit excl. non-recurring items by segment
Operating margins excl. non-recurring items by segment
Capital employed by segment
Return on capital employed excl. non-recurring items by segment
Capital expenditure by segment
Segment information by quarter
Personnel average and at 30 September
Group's contingent liabilities
Calculation of performance indicators
K-Group's retail and B2B sales
DISTRIBUTION
NASDAQ OMX Helsinki
Main news media
www.kesko.fi
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 2010, with the exception of the following
changes due to the adoption of new and revised IFRS standards and IFRIC
interpretations.
IAS 24 (revised), Related Party Disclosures
IAS 32 (amendment), Financial Instruments: Presentation - Classification of
Rights Issues
IFRIC 14 (amendment), Prepayments of a Minimum Funding Requirement
IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments
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.
Excise taxes have been reclassified from other operating costs to cost of goods
sold.
The comparative figures have been restated accordingly.
The Group accounts for real estate company acquisitions as acquisitions of
tangible assets. Previously, real estate company acquisitions were accounted for
as business combinations in accordance with IFRS 3. Adjustments related to
acquisitions have been recognised retrospectively.
Consolidated income
statement (€ million),
condensed
1-9/ 1-9/ Change,% 7-9/ 7-9/ Change,% 1-12/
2011 2010 2011 2010 2010
Net sales 6,979 6,467 7.9 2,404 2,231 7.8 8,777
Cost of goods sold -6,037 -5,583 8.1 -2,086 -1,922 8.6 -7,547
Gross profit 942 885 6.5 318 309 2.8 1,230
Other operating income 517 519 -0.5 173 207 -16.2 699
Staff cost -414 -376 10.3 -131 -116 13.2 -521
Depreciation and impairment
charges -90 -89 1.7 -31 -32 -3.7 -121
Other operating expenses -746 -716 4.3 -241 -244 -1.3 -981
Operating profit 208 224 -7.2 88 124 -28.8 307
Interest income and other
finance income 15 15 -0.4 5 5 -8.6 23
Interest expense and other
finance costs -13 -12 5.4 -4 -4 8.4 -15
Exchange differences -3 -2 36.0 0 -1 -60.9 -1
Income from associates 0 0 (..) 0 0 (..) 0
Profit before tax 208 225 -7.5 88 125 -29.3 312
Income tax -66 -72 -7.7 -29 -40 -27.5 -97
Profit for the period 142 153 -7.5 59 84 -30.2 216
Attributable to
Owners of the parent 131 146 -9.9 52 80 -34.5 205
Non-controlling interests 10 7 41.3 6 4 52.3 11
Earnings per share (€) for
profit attributable to
equity
holders of the parent
Basic 1.34 1.48 -10.0 0.53 0.81 -34.6 2.08
Diluted 1.33 1.48 -10.3 0.53 0.81 -34.8 2.06
Consolidated statement of
comprehensive income
(€ million)
1-9/ 1-9/ Change,% 7-9/ 7-9/ Change,% 1-12/
2011 2010 2011 2010 2010
Net profit for the period 142 153 -7.5 59 84 -30.2 216
Other comprehensive income
Exchange differences on
translating foreign
operations -19 3 (..) -9 -4 (..) 5
Cash flow hedge revaluation -12 8 (..) -2 1 (..) 21
Revaluation of available-
for-sale financial assets 0 1 (..) 0 0 (..) 1
Other items 0 -1 -83.5 - - - -1
Tax relating to other
comprehensive income 3 -3 (..) 0 0 (..) -6
Total other comprehensive
income for the period, net
of tax -28 9 (..) -10 -3 (..) 20
Total comprehensive income
for the period 114 163 -30.1 49 81 -39.7 236
Attributable to
Owners of the parent 119 155 -23.6 48 79 -39.3 224
Non-controlling interests -5 7 (..) 1 2 -54.3 12
(..) Change over 100%
Consolidated statement of financial
position (€ million), condensed
30.9.2011 30.9.2010 Change, % 31.12.2010
ASSETS
Non-current assets
Tangible assets 1,459 1,097 33.1 1,261
Intangible assets 184 177 4.1 180
Interests in associates and other
financial assets 67 57 18.1 61
Loans and receivables 73 68 7.7 72
Pension assets 177 308 -42.7 186
Total 1,960 1,707 14.9 1,759
Current assets
Inventories 793 688 15.2 757
Trade receivables 677 642 5.5 620
Other receivables 138 140 -1.3 183
Financial assets at fair value through
profit or loss 122 225 -46.0 242
Available-for-sale financial assets 299 553 -45.9 549
Cash and cash equivalents 67 72 -6.7 56
Total 2,096 2,320 -9.6 2,406
Non-current assets held for sale 1 3 -67.5 1
Total assets 4,058 4,029 0.7 4,167
30.9.2011 30.9.2010 Change, % 31.12.2010
EQUITY AND LIABILITIES
Equity 2,122 2,082 1.9 2,152
Non-controlling interests 50 54 -7.5 59
Total equity 2,172 2,136 1.7 2,210
Non-current liabilities
Interest-bearing liabilities 213 227 -6.1 235
Non-interest-bearing liabilities 14 4 (..) 5
Deferred tax liabilities 85 114 -25.5 87
Pension obligations 2 2 -6.0 2
Provisions 10 13 -22.9 12
Total 324 360 -10.0 340
Current liabilities
Interest-bearing liabilities 211 229 -7.9 242
Trade payables 893 822 8.6 838
Other non-interest-bearing liabilities 434 450 -3.6 507
Provisions 24 32 -24.7 29
Total 1,562 1,533 1.9 1,616
Total equity and liabilities 4,058 4,029 0.7 4,167
(..) Change over 100%
Consolidated statement of changes in equity (€ million)
Share Issue Share Other Cur- Revalu- Re- Non- Total
capital of premi- reser- rency ation tained cont-
share um ves trans- sur- earn- rol-
capital lation plus ings ling
differ- inte-
ences rests
Balance at
1.1.2010 197 0 194 243 -7 -3 1,381 64 2,070
Shares
subscribed
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
comprehensive
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
Other items -1 -1
Tax relating to
other
comprehensive
income -3 -3
Total other
comprehensive
income 0 3 7 -1 0 9
Balance at
30.9.2010 197 0 198 243 -4 5 1,444 54 2,136
Balance at
1.1.2011 197 0 198 243 -3 14 1,503 59 2,210
Shares
subscribed
with options 0 0
Option cost 2 0 2
Own shares -23 0 -23
Dividends -128 -4 -132
Other changes 0 1 0 1
Net profit for
the period 131 10 142
Other
comprehensive
income
Exchange
differences on
translating
foreign
operations 0 -4 -15 -19
Cash flow hedge
revaluation -12 -12
Revaluation of
available-for-
sale financial
assets 0 0
Other items 0 0
Tax relating to
other
comprehensive
income 3 3
Total other
comprehensive
income 0 -4 -9 0 -15 -28
Balance at
30.9.2011 197 0 198 243 -7 5 1,486 50 2,172
Consolidated cash flow statement (€ million), condensed
1-9/ 1-9/ Change,% 7-9/ 7-9/ Change,% 1-12/
2011 2010 2011 2010 2010
Cash flow from operating
activities
Profit before tax 208 225 -7.5 88 125 -29.3 312
Planned depreciation 90 86 5.2 31 29 5.9 116
Finance income and costs 0 -1 (..) 0 -1 -62.8 -6
Other adjustments 22 -19 (..) 7 -7 (..) 97
Change in working capital
Current non-interest-bearing
trade and other receivables,
increase (-)/ decrease (+) -47 -33 45.9 94 85 11.0 -15
Inventories
increase (-)/ decrease (+) -47 -16 (..) -13 -14 -3.3 -82
Current non-interest-bearing
liabilities,
increase (+)/decrease (-) 18 101 -82.4 -69 -73 -4.8 153
Financial items and tax -74 -74 0.2 -11 -10 10.0 -136
Net cash generated from
operating activities 169 269 -37.1 126 133 -5.8 438
Cash flow from investing
activities
Capital expenditure -337 -164 (..) -139 -72 92.6 -367
Sales of fixed assets 6 115 -94.6 2 111 -97.8 124
Increase of non-current
receivables -1 - (..) 0 - (..) -
Decrease of non-current
receivables - 2 (..) - 0 (..) 4
Net cash used in investing
activities -331 -47 (..) -137 39 (..) -240
Cash flow from financing
activities
Increase (+)/ decrease (-) in
interest-bearing liabilities -39 15 (..) -44 -29 49.8 39
Increase (-)/decrease (+) in
current interest-bearing
receivables 1 10 -86.1 0 0 (..) 11
Dividends paid -132 -106 24.3 0 -1 -97.1 -106
Equity increase 0 4 -97.9 - - - 4
Acquisition of own shares -24 - (..) -1 - (..) -
Increase (-)/ decrease (+) in short-
term money market
investments 163 -98 (..) 37 20 86.5 -114
Other items 0 -12 (..) 2 -5 (..) -15
Net cash used in financing
activities -29 -187 -84.4 -5 -15 -65.6 -181
Change in cash and cash equivalents -191 35 (..) -16 157 (..) 18
Cash and cash equivalents
and current portion of
available-for-sale financial
assets at 1 Jan. 509 491 3.7 334 371 -9.9 491
Currency translation difference
adjustment and revaluation -3 0 (..) -2 -1 (..) 0
Cash and cash equivalents
and current portion of
available-for-sale financial
assets at 30 Sep. 315 527 -40.2 315 527 -40.2 509
(..) Change over 100%
Group's performance indicators
1-9/2011 1-9/2010 Change, pp 1-12/2010
Return on capital employed, % 13.4 15.6 -2.2 16.0
Return on capital employed, %,
moving 12 mo 14.3 17.4 -3.1 16.0
Return on capital employed excl. non-
recurring items, % 13.3 13.0 0.3 14.0
Return on capital employed excl. non-
recurring items, %, moving 12 mo 14.2 13.0 1.1 14.0
Return on equity, % 8.6 9.7 -1.1 10.1
Return on equity, %, moving 12 mo 9.5 11.0 -1.6 10.1
Return on equity excl. non-recurring
items, % 8.6 8.0 0.6 8.7
Return on equity excl. non-recurring
items, %, moving 12 mo 9.4 8.0 1.4 8.7
Equity ratio, % 54.0 53.4 0.6 53.5
Gearing, % -2.9 -18.4 15.5 -16.8
Change, %
Capital expenditure, € million 320.9 123.6 (..) 325.3
Capital expenditure, % of net sales 4.6 1.9 (..) 3.7
Earnings per share, basic, € 1.34 1.48 -10.0 2.08
Earnings per share, diluted, € 1.33 1.48 -10.3 2.06
Earnings per share excl. non-recurring
items, basic, € 1.34 1.21 10.6 1.78
Cash flow from operating activities,
€ million 169 269 -37.1 438
Cash flow from investing activities,
€ million -331 -47 (..) -240
Equity/share, € 21.66 21.11 2.6 21.81
Personnel, average 18,855 18,173 3.8 18,215
(..) Change over 100%
Group's performance 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/
indicators by quarter 2010 2010 2010 2010 2011 2011 2011
Net sales, € million 1,958 2,279 2,231 2,310 2,103 2,472 2,404
Change in net sales, % -3.0 6.4 4.6 7.3 7.4 8.5 7.8
Operating profit, € million 20.9 79.0 123.9 82.8 35.7 83.9 88.2
Operating margin, % 1.1 3.5 5.6 3.6 1.7 3.4 3.7
Operating profit excl. non-recurring
items, € million 20.9 78.1 88.7 80.5 34.9 83.3 89.2
Operating margin excl. non-recurring
items, % 1.1 3.4 4.0 3.5 1.7 3.4 3.7
Finance income/costs,
€ million 0.8 -0.2 0.8 4.6 -0.6 0.3 0.3
Profit before tax, € million 21.9 78.7 124.5 87.3 36.1 84.0 88.0
Profit before tax, % 1.1 3.5 5.6 3.8 1.7 3.4 3.7
Return on capital employed, % 4.4 16.1 26.4 17.5 7.2 16.0 16.4
Return on capital employed excl. non-
recurring items, % 4.4 15.9 18.9 17.0 7.0 15.9 16.6
Return on equity, % 2.9 10.6 16.1 11.5 4.5 10.6 10.9
Return on equity excl. non-recurring
items, % 2.9 10.5 11.1 11.2 4.4 10.6 11.1
Equity ratio, % 51.3 51.4 53.4 53.5 54.4 52.1 54.0
Capital expenditure,
€ million 42.0 45.7 35.9 201.6 64.1 130.5 126.3
Earnings per share, diluted, € 0.15 0.51 0.81 0.59 0.25 0.55 0.53
Equity per share, € 19.69 20.30 21.11 21.81 22.04 21.21 21.66
Segment information
Net sales by segment 1-9/ 1-9/ Change, 7-9/ 7-9/ Change, 1-12/
(€ million) 2011 2010 % 2011 2010 % 2010
Food trade, Finland 3,074 2,874 6.9 1,049 986 6.4 3,896
Food trade, other countries* - - - - - - -
Food trade total 3,074 2,874 6.9 1,049 986 6.4 3,896
- of which intersegment trade 124 122 2.1 41 40 4.2 162
Home and speciality goods trade,
Finland 1,051 1,056 -0.5 371 374 -0.8 1,553
Home and speciality goods trade,
other countries* 12 11 7.1 5 4 27.2 15
Home and speciality goods trade
total 1,063 1,068 -0.4 376 378 -0.5 1,569
- of which intersegment trade 13 16 -19.8 4 5 -14.0 23
Building and home improvement
trade, Finland 936 881 6.3 311 293 6.4 1,163
Building and home improvement
trade, other countries* 1,122 1,013 10.8 420 395 6.4 1,357
Building and home improvement
trade total 2,059 1,894 8.7 731 687 6.4 2,519
- of which intersegment trade 9 0 (..) 3 0 (..) 0
Car and machinery trade, Finland 817 669 22.1 248 190 30.8 859
Car and machinery trade, other
countries* 94 83 13.6 42 28 48.0 96
Car and machinery trade total 911 752 21.2 290 218 33.0 955
- of which intersegment trade 1 0 (..) 0 0 48.2 0
Common operations and eliminations -128 -120 5.9 -42 -39 8.5 -162
Finland total 5,751 5,360 7.3 1,937 1,804 7.4 7,309
Other countries total* 1,229 1,107 11.0 467 427 9.3 1,468
Group total 6,979 6,467 7.9 2,404 2,231 7.8 8,777
* Net sales in countries other than Finland.
(..) Change over 100%
Operating profit by 1-9/ 1-9/ 7-9/ 7-9/ 1-12/
segment (€ million) 2011 2010 Change 2011 2010 Change 2010
Food trade 133.7 121.2 12.6 45.7 47.3 -1.6 158.4
Home and speciality goods trade 4.1 57.7 -53.7 8.7 50.6 -41.9 103.4
Building and home improvement trade 30.8 24.0 6.7 21.0 19.9 1.1 23.9
Car and machinery trade 44.9 30.0 14.9 13.0 8.6 4.3 33.9
Common operations and eliminations -5.7 -9.1 3.4 -0.2 -2.5 2.3 -12.8
Group total 207.8 223.9 -16.1 88.2 123.9 -35.7 306.7
Operating profit excl.
non-recurring items by 1-9/ 1-9/ 7-9/ 7-9/ 1-12/
segment (€ million) 2011 2010 Change 2011 2010 Change 2010
Food trade 133.6 123.3 10.3 46.4 49.5 -3.1 160.1
Home and speciality goods trade 3.7 20.3 -16.6 8.7 13.2 -4.5 66.0
Building and home improvement trade 31.1 24.2 6.9 21.3 20.0 1.3 24.0
Car and machinery trade 44.8 29.2 15.6 13.0 8.7 4.3 33.1
Common operations and eliminations -5.7 -9.4 3.6 -0.2 -2.8 2.6 -15.0
Group total 207.4 187.6 19.8 89.2 88.7 0.5 268.1
Operating margins
excl. non-recurring 1-9/ 1-9/ 7-9/ 7-9/ 1-12/ Moving 12 mo
items by segment 2011 2010 Changepp 2011 2010 Changepp 2010 9/2011
Food trade 4.3 4.3 0.1 4.4 5.0 -0.6 4.1 4.2
Home and speciality
goods trade 0.3 1.9 -1.6 2.3 3.5 -1.2 4.2 3.2
Building and home
improvement trade 1.5 1.3 0.2 2.9 2.9 0.0 1.0 1.2
Car and machinery trade 4.9 3.9 1.0 4.5 4.0 0.5 3.5 4.4
Group total 3.0 2.9 0.1 3.7 4.0 -0.3 3.1 3.1
Capital employed by
segment, cumulative 1-9/ 1-9/ 7-9/ 7-9/ 1-12/
average (€ million) 2011 2010 Change 2011 2010 Change 2010
Food trade 581 604 -23 610 579 31 590
Home and speciality goods trade 425 432 -7 438 421 17 431
Building and home improvement trade 692 632 60 711 619 92 627
Car and machinery trade 148 172 -24 146 141 5 168
Common operations and eliminations 228 80 148 240 118 122 101
Group total 2,074 1,920 154 2,144 1,878 266 1,918
Return on capital
employed excl. non-
recurring items by 1-9/ 1-9/ 7-9/ 7-9/ 1-12/ Moving
segment, % 2011 2010 Change pp 2011 2010 Changepp 2010 12 mo 9/2011
Food trade 30.7 27.2 3.5 30.4 34.2 -3.8 27.1 29.8
Home and speciality
goods trade 1.2 6.3 -5.1 7.9 12.6 -4.6 15.3 11.6
Building and home
improvement trade 6.0 5.1 0.9 12.0 12.9 -0.9 3.8 4.6
Car and machinery
trade 40.5 22.6 17.8 35.6 24.7 10.9 19.6 32.8
Group total 13.3 13.0 0.3 16.6 18.9 -2.2 14.0 14.2
Capital expenditure by 1-9/ 1-9/ 7-9/ 7-9/ 1-12/
segment (€ million) 2011 2010 Change 2011 2010 Change 2010
Food trade 159 60 99 65 22 43 117
Home and speciality goods trade 51 17 34 32 4 28 45
Building and home improvement trade 89 33 56 23 5 18 78
Car and machinery trade 21 13 7 7 5 2 18
Common operations and eliminations 1 0 1 -1 0 -1 67
Group total 321 124 197 126 36 90 325
Segment information by quarter
Net sales by segment 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/
(€ million) 2010 2010 2010 2010 2011 2011 2011
Food trade 912 976 986 1,022 948 1,077 1,049
Home and speciality goods trade 355 334 378 501 348 339 376
Building and home improvement trade 495 712 687 625 570 757 731
Car and machinery trade 236 298 218 203 279 342 290
Common operations and eliminations -40 -41 -39 -42 -42 -43 -42
Group total 1,958 2,279 2,231 2,310 2,103 2,472 2,404
Operating profit by 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/
segment (€ million) 2010 2010 2010 2010 2011 2011 2011
Food trade 31.7 42.2 47.3 37.2 42.1 45.9 45.7
Home and speciality goods trade 0.1 7.0 50.6 45.6 -7.4 2.8 8.7
Building and home improvement trade -13.8 17.9 19.9 -0.2 -9.1 18.8 21.0
Car and machinery trade 6.4 15.0 8.6 3.9 12.2 19.7 13.0
Common operations and eliminations -3.4 -3.2 -2.5 -3.7 -2.2 -3.3 -0.2
Group total 20.9 79.0 123.9 82.8 35.7 83.9 88.2
Operating profit excl.
non-recurring items by 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/
segment (€ million) 2010 2010 2010 2010 2011 2011 2011
Food trade 31.7 42.1 49.5 36.8 41.4 45.8 46.4
Home and speciality goods trade 0.1 7.0 13.2 45.7 -7.4 2.4 8.7
Building and home improvement trade -13.8 17.9 20.0 -0.2 -9.1 18.8 21.3
Car and machinery trade 6.4 14.1 8.7 3.9 12.2 19.6 13.0
Common operations and eliminations -3.4 -3.1 -2.8 -5.7 -2.2 -3.3 -0.2
Group total 20.9 78.1 88.7 80.5 34.9 83.3 89.2
Operating margin excl.
non-recurring items by 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/
segment 2010 2010 2010 2010 2011 2011 2011
Food trade 3.5 4.3 5.0 3.6 4.4 4.3 4.4
Home and speciality goods trade 0.0 2.1 3.5 9.1 -2.1 0.7 2.3
Building and home improvement trade -2.8 2.5 2.9 0.0 -1.6 2.5 2.9
Car and machinery trade 2.7 4.7 4.0 1.9 4.4 5.7 4.5
Group total 1.1 3.4 4.0 3.5 1.7 3.4 3.7
Personnel average and at 30 September
Personnel average by
segment 1-9/2011 1-9/2010 Change
Food trade 2,733 2,923 -190
Home and speciality goods trade 5,638 5,401 237
Building and home improvement trade 8,857 8,317 540
Car and machinery trade 1,206 1,133 73
Common operations 421 399 22
Group total 18,855 18,173 682
Personnel at 30 September*
by segment 2011 2010 Change
Food trade 2,930 3,165 -235
Home and speciality goods trade 7,967 7,349 618
Building and home improvement trade 9,944 9,558 386
Car and machinery trade 1,263 1,199 64
Common operations 475 429 46
Group total 22,579 21,700 879
* total number incl. part-time employees
Acquisitions
On 3 June 2011, Kesko Corporation signed an agreement on the transfer of the
Intersport licence in Russia to Kesko with Intersport International Corporation
and OOO Intersport CIS. Kesko established a new company in Russia for
Intersport operations in Russia, in which Kesko Corporation's and Melovest Ltd's
ownership interests are 80% and 20% respectively. On 24 August, 2011, the
acquisition of Intersport operations in Russia was concluded and by 30 September
2011, 34 sports stores had been transferred to OOO Johaston. The aggregate cost
of acquisition was €21.1 million.
The result of Intersport operations in Russia included in the Kesko Group's
consolidated income statement for the period 1 July-30 September 2011 is
insignificant. The management assesses that the contribution of Intersport
operations in Russia to the Kesko Group's net sales or profit recognised in the
income statement for the period 1 January-30 September 2011 would have been
insignificant, if the acquisition had occurred on 1 January 2011.
The acquisition has been accounted for in accordance with the revised IFRS 3
standard effective 1 July 2009. The acquisition has been recognised
provisionally as permitted by the revised IFRS 3 standard. The final cost will
be determined when all of the sports stores included in the acquisition have
been transferred to the company's ownership.
€ million
Cash consideration 21.1
Fair value of net assets acquired 21.1
Analysis of net assets acquired
€ million Fair value Vendor's carrying amount
Intangible rights 7.2 -
Property, plant and equipment 10.9 -
Inventories 4.3 3.8
Deferred tax -1.3 -
Net assets acquired 21.1
Cash consideration 21.1
Remaining consideration 4.1
Cash outflow from acquisition 17.0
Group's commitments
30.9.2011 30.9.2010 Change, %
Own commitments 169 196 -13.7
For shareholders 0 0 0.0
For others 9 6 47.2
Lease liabilities for machinery and equipment 24 21 12.7
Lease liabilities for real estate 2,252 2,304 -2.3
Own commitments do not include lease liabilities.
The comparative year's figures have been adjusted
accordingly.
Liabilities arising from
derivative instruments
Fair value
Values of underlying instruments at 30 September 30.9.2011 30.9.2010 30.9.2011
Interest rate derivatives
Forward and future contracts 297 3 -0.26
Interest rate swaps 205 206 4.45
Currency derivatives
Forward and future contracts 262 308 3.83
Currency swaps 100 100 -11.55
Commodity derivatives
Electricity derivatives 41 44 -0.09
Calculation of performance indicators
Operating profit x 100 / (Non-current
Return on capital employed*, % assets + Inventories + Receivables +
Other current assets - Non-interest-
bearing liabilities) on average for the
reporting period
Return on capital employed, %, moving Operating profit for prior 12 months x
12 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
Return on capital employed, excl. non- Operating profit excl. non-recurring
recurring items, %, moving 12 mo items for prior 12 months x 100 / (Non-
current assets + Inventories +
Receivables + Other current assets - Non-
interest-bearing liabilities) on average
for 12 months
(Profit/loss before tax - income tax) x
Return on equity*, % 100 /
Shareholders' equity
(Profit/loss for prior 12 months before
Return on equity, %, moving 12 months tax - income tax for prior 12 months) x
100 /Shareholders' equity
(Profit/loss adjusted for non-recurring
items before tax - income tax adjusted
for the tax effect of non-recurring
Return on equity excl. 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
Return on equity excl. non-recurring for the tax effect of non-recurring
items, %, moving 12 months items) x100 / Shareholders' equity
Shareholders' equity x 100 /
Equity ratio, % (Balance sheet total - prepayments
received)
(Profit/loss - non-controlling interests)
Earnings/share, diluted /
Average number of shares adjusted for the
dilutive effect of options
(Profit/loss - non-controlling interests)
Earnings/share, basic /
Average number of shares
Earnings/share excl. non-recurring (Profit/loss adjusted for non-recurring
items, basic items - non-controlling
interests)/Average number of shares
Equity attributable to equity holders of
Equity/share the parent /
Basic number of shares at balance sheet
date
Gearing, % Interest-bearing net liabilities x 100 /
Shareholders' equity
* Indicators for return on capital have been annualised.
K-Group's retail and B2B sales, VAT 0% (preliminary data):
1.1.-30.9.2011 1.7.-30.9.2011
K-Group's retail and B2B € million Change, % € million Change, %
sales
K-Group food trade
K-food stores, Finland 3,374 5.8 1,158 6.1
Kespro 547 6.8 193 6.4
Food trade total 3,921 5.9 1,351 6.2
K-Group home and speciality goods trade
Home and speciality goods stores,
Finland 1,159 -0.1 402 -0.4
Home and speciality goods stores, Baltic
countries 12 1.3 4 9.3
Home and speciality goods trade total 1,171 -0.1 406 -0.3
K-Group building and home improvement
trade
K-rauta and Rautia 818 6.6 322 9.6
Rautakesko B2B Service 163 14.2 60 8.7
K-maatalous 301 12.8 101 22.6
Finland total 1,283 9.0 483 12.0
Building and home improvement stores,
other Nordic countries 860 7.7 329 5.7
Building and home improvement stores,
Baltic countries 266 10.9 109 9.8
Building and home improvement stores,
other countries 244 21.1 92 9.2
Building and home improvement trade
total 2,653 9.7 1,013 9.4
K-Group car and machinery trade
VV-Autotalot 314 23.0 105 29.7
VV-Auto, import 346 25.9 97 35.3
Konekesko, Finland 173 11.8 49 24.9
Finland total 833 21.6 252 30.8
Konekesko, Baltic countries 97 15.9 43 50.7
Car and machinery trade total 930 21.0 295 33.4
Finland total 7,195 7.0 2,488 8.2
Other countries total 1,479 10.8 577 9.5
Retail and B2B sales total 8,675 7.6 3,065 8.4
[HUG#1557915]
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