Kesko Oyj - Interim report (Q1 and Q3)

Kesko's interim report 1 Jan. - 31 March 2024: A good result in a challenging market

FINANCIAL PERFORMANCE IN BRIEF:

1-3/2024

  · Group net sales in January-March totalled €2,759.5 million (€2,828.0
million); reported net sales were down by 2.4%, comparable net sales by 5.5%
  · Comparable operating profit totalled €99.5 million (€125.9 million)
  · Operating profit totalled €97.2 million (€122.6 million)
  · Cash flow from operating activities totalled €112.6 million (€27.0 million)
  · Comparable earnings per share €0.16 (€0.22); reported earnings per share
€0.15 (€0.21)

KEY PERFORMANCE INDICATORS

                                                1-3/2024  1-3/2023  1-12/2023
Net sales, € million                             2,759.5   2,828.0   11,783.8
Operating profit, comparable, € million             99.5     125.9      712.0
Operating margin, comparable, %                      3.6       4.5        6.0
Operating profit, € million                         97.2     122.6      695.4
Profit before tax, comparable, € million            77.1     108.0      630.4
Profit before tax, € million                        74.9     104.7      613.5
Cash flow from operating activities, € million     112.6      27.0    1,049.5
Capital expenditure, € million                     329.0     231.8      678.9

Earnings per share, €, basic and diluted            0.15      0.21       1.25
Earnings per share, comparable, €, basic            0.16      0.22       1.28

                               1-3/2024  1-3/2023  1-12/2023
Return on capital employed,        12.5      16.1       13.4
comparable, %, rolling 12
months
Return on equity, comparable,      20.5      23.8       18.5
%, rolling 12 months

In this interim report, the comparable change % in net sales has been calculated
in local currencies and excluding the impact of acquisitions and divestments
completed in 2023 and 2024. The comparable operating profit has been calculated
by deducting items affecting comparability from the reported operating profit.

OUTLOOK AND GUIDANCE FOR 2024 (SPECIFIED)

Kesko Group's profit guidance is given for the year 2024, in comparison with the
year 2023. Kesko's operating environment is estimated to remain challenging in
2024. Kesko's net sales and operating profit are estimated to remain at a good
level in 2024 despite the challenges in the company's operating environment.
Kesko estimates that its comparable operating profit in 2024 will amount to
€620-700 million. Previously, the comparable operating profit was estimated to
amount to €620-720 million. The operating profit guidance adjustment is related
to the weaker-than-anticipated outlook for construction in 2024.

The profit guidance is based on an estimate of a relatively short recession in
Kesko's operating countries. Key uncertainties impacting Kesko's outlook are
developments in inflation and interest rate levels, and geopolitical crises and
tensions.

In grocery trade, B2C trade and the foodservice market are expected to remain
stable despite tightened price competition, and inflation is expected to slow
down in 2024. Profitability in grocery trade is estimated to remain good also in
2024.

In building and technical trade, the market is expected to continue to decline
in 2024. The economic cycle will have the biggest impact on new residential
building, while the decline in other building construction, renovation building
and infrastructure construction is expected to be smaller. The cycle is expected
to turn in 2025. Profitability in building and technical trade is estimated to
fall short of the 2023 level, but to still remain at a reasonably good level in
2024.

In car trade, new car sales are expected to fall short of the 2023 level. Sales
of used cars and services are expected to grow. Profitability in car trade is
estimated to still remain good in 2024, but to fall short of the 2023 level.

PRESIDENT AND CEO JORMA RAUHALA:

Kesko's first quarter of 2024 was in line with expectations, and the result was
good considering the challenging market. Our net sales totalled €2,759.5
million, which represented a decrease of 2.4% year-on-year, or 5.5% in
comparable terms. Our comparable operating profit amounted to €99.5 million.
Kesko's cost efficiency remained good, and our cash flow from operating
activities was strong at €112.6 million. At the end of January, we completed the
acquisition of one of Denmark's leading building and home improvement trade
operators Davidsen Koncernen A/S, thus expanding our operations to Denmark and
gaining a solid foothold on the Danish building and home improvement trade
market.

In the grocery trade division, net sales grew and operating profit was at a good
level despite our actions towards favourable price levels. Net sales totalled
€1,515.1 million, and the comparable operating profit amounted to €82.5 million.
K Group's grocery sales grew by 3.3%. Online grocery sales grew by 19.9%, and
accounted for some 4.1% of K Group's grocery sales. Sales for the foodservice
business grew by 0.7%, outpacing the market. Price inflation for groceries
slowed down markedly in Finland, and stood at 0.6%. Consumption has become more
polarised: on the one hand, price continues to be an important criterion, but on
the other, consumers also emphasise quality and convenience. Our customer flows
continued to grow thanks to campaigns.

In the building and technical trade division, operating profit declined as
expected due to the weak cycle in construction in all our operating countries.
Net sales totalled €963.6 million and the comparable operating profit amounted
to €6.8 million. Overall, the development in net sales and operating profit was
in line with expectations. In addition to the weak construction cycle, sales
were impacted by the lower number of delivery days year-on-year, due to the
timing of Easter, which had a negative impact of over €3 million on operating
profit. The sales and profit of solar power products in particular fell short of
the exceptional levels seen in the comparison period as a result of the energy
crisis. The integration of Elektroskandia, acquired in Norway a year ago, has
proceeded according to plans and will be completed this spring. In Sweden, the
conversion of K-Rauta stores into K-Bygg stores is proceeding as planned, and
will be completed by the end of the year. In Denmark, Davidsen has been part of
Kesko since 1 February 2024. Kesko's objective is to be among the leading sector
operators not only in Finland and Norway, but also in Sweden and Denmark.

In the car trade division, net sales and profit were at a good level in the
first quarter. Net sales totalled €286.2 million and the comparable operating
profit amounted to €16.4 million. The order book for new cars grew from the end
of 2023. Used car sales grew and our market share in used cars continued to
strengthen. Development in service sales was also positive, and strong growth
continued in our K-Lataus EV charging business.

Kesko's net sales and operating profit are estimated to remain at a good level
in 2024 despite the challenges in the company's operating environment. We
specify our profit guidance for the year, and now estimate that Kesko's
comparable operating profit in 2024 will be €620-700 million. The operating
profit guidance adjustment is related to the weaker-than-anticipated outlook for
construction in 2024.

FURTHER INFORMATION, AUDIOCONFERENCE AND WEBCAST

Further information is available from Jukka Erlund, Executive Vice President,
Chief Financial Officer, tel. +358 105 322 113, Hanna Jaakkola, Vice President,
Investor Relations, tel. +358 105 323 540, and Eva Kaukinen, Vice President,
Group Controller, tel. +358 105 322 338. An English-language audio conference on
the results briefing will be held on 25 April 2024 at 9.00 am (EEST). The audio
conference login is available on Kesko's website at www.kesko.fi. A Finnish
-language webcast of the interim report briefing can be viewed at 11.30 am
(EEST) at www.kesko.fi.

Kesko's half-year financial report for January-June 2024 will be published on 23
July 2024. In addition, Kesko Group's sales figures are published monthly. News
releases and other company information are available on Kesko's website at
www.kesko.fi.

This is a summary of Kesko Corporation's January-March 2024 Interim report. The
complete report is attached to this release and also available
at www.kesko.fi/en/investor/ (https://www.kesko.fi/en/investor/reports-and
-presentations/#event57284)

Attachments:

Kesko Q1 2024 Interim Report pdf.pdf