2007-10-17 10:00:00 CEST
2007-10-17 10:00:00 CEST
REGULATED INFORMATION
Kesko Oyj - Quarterly report
Interim financial report for the period 1 Jan.-30 Sept. 2007
KESKO CORPORATION STOCK EXCHANGE RELEASE 17.10.2007
Interim financial report for the period 1 Jan.-30 Sept. 2007
The Group's net sales in July-September 2007 were €2,421 million,
up 10.2% on the corresponding period of the previous year (€2,196
million). In July-September, the operating profit excluding non-
recurring items was €94.0 million (€82.4 million). The pre-tax
profit was €98.3 million (€84.4 million). The consolidated
earnings per share were €0.70 (€0.67). The Group's net sales in
January-September were €7,079 million, up 9.8% on the
corresponding period of the previous year (€6,445 million). In
January-September, the operating profit excluding non-recurring
items was €250.6 million (€208.4 million). The pre-tax profit was
€300.4 million (€326.5 million). The consolidated earnings per
share were €2.48 (€2.21) in January-September.
Net sales and profit, continuing operations
Net sales and profit in July-September
The Group's net sales in July-September 2007 were €2,421 million,
which is 10.2% up on the corresponding period of the previous year
(€2,196 million). The Group's net sales increased by 6.2% in
Finland and by 24.5% abroad. Excluding acquisitions and business
disposals, the Group's net sales increase was 9.8%. Exports and
foreign operations accounted for 24.8% (22.0%) of net sales.
In July-September, the K-Group's (i.e. Kesko's and the chain
stores') retail sales were €3,028.1 million, an increase of 9.8%
on the corresponding period of the previous year.
The Group's profit before taxes for July-September was €98.3
million (€84.4 million). The operating profit excluding non-
recurring items was €94.0 million (€82.4 million), representing
3.9% of net sales (3.7%). Especially Kesko Food improved its
profit excluding non-recurring items. The operating profit was
€95.4 million (€82.6 million). The operating profit was increased
by a net total of €1.4 million (€0.2 million) in non-recurring
gains and losses from disposal of fixed assets and operations, and
impairment charges.
The consolidated earnings per share from continuing operations
were €0.70 (€0.67). Equity per share was €19.08 (€16.46).
Net sales and profit in January-September
The Group's net sales in January-September 2007 were €7,079
million, which is 9.8% up on the corresponding period of the
previous year (€6,445 million). The Group's net sales increased by
6.5% in Finland and by 23.2% abroad. Excluding acquisitions and
business disposals, the Group's net sales increase was 9.9%.
Exports and foreign operations accounted for 22.7% (20.2%) of net
sales.
In January-September, the K-Group's (i.e. Kesko's and the chain
stores') retail sales were €8,449.6million, an increase of 10.2%
on the corresponding period of the previous year.
The Group's profit before taxes for January-September was €300.4
million (€326.5 million). The Group's profit before taxes included
€37.1 million in non-recurring gains on the disposal of SATO
Corporation shares. The operating profit excluding non-recurring
items was €250.6 million (€208.4 million), up €42.2 million on the
previous year, due especially to Kesko Food's and Rautakesko's
good profit performances. The operating profit excluding non-
recurring items represented 3.5% (3.2%) of net sales.
The Group's operating profit was €261.0 million (€325.0 million).
The operating profit included a net total of €10.4 million (€116.6
million) in non-recurring gains and losses from disposal of fixed
assets and operations, and impairment charges. In 2006, the gains
from disposal of fixed assets included €99.3 million received by
Kesko for selling its retail store properties to Niam Retail
Holding Finland AB.
The consolidated earnings per share from continuing operations
were €2.20 (€2.24). Equity per share was €19.08 (€16.46).
Investments
The Group's investments in July-September totalled €49.6 million
(€45.8 million), which is 2.0% (2.1%) of net sales. Investments in
retail store sites amounted to €41.6 million (€33.6 million).
Investments in acquisitions represented €2.8 million (€0.3
million) of total investments. The Group's other investments were
€5.2 million. Investments in foreign operating activities
represented 25.6% of total investments.
The Group's investments in January-September totalled €164.0
million (€162.5 million), which is 2.3% (2.5%) of net sales.
Investments in retail store sites amounted to €126.9 million
(€117.7 million). Investments in acquisitions represented €5.0
million (€9.4 million) of total investments. The Group's other
investments were €32.1 million. Investments in foreign operating
activities represented 24.1% of total investments.
Finance
In July-September, the cash flow from operating activities was
€81.2 million (€84.6 million) and the cash flow from investing
activities was €-10.2 million (€-44.7 million). The latter
included €4 million in proceeds received on the disposal of fixed
assets.
In January-September, the cash flow from operating activities was
€178.2 million (€209.4 million) and the total cash flow from
investing activities was €-13.7 million (€55.8 million). The
latter was increased by €50 million received on the disposal of
food store properties in the Baltic countries, and by €46 million
for selling SATO Corporation shares. The comparable cash flow from
investing activities was increased by the over €200 million
received in March for selling real estate.
At the end of the period, liquid funds totalled €353 million (€112
million). In addition to the disposal of food store properties in
the Baltic countries and the disposal of SATO Corporation shares
mentioned above, the amount was affected by the €190 million
received in December 2006 for selling Rimi Baltic AB shares.
Interest-bearing net debt was €266 million (€535 million). At the
end of the period, the equity ratio was 47.4% (43.8%) and gearing
13.9% (32.8%).
In July-September, the Group's net financial income was €2.8
million (€1.5 million). In January-September, the Group's net
financial income was €38.9 million (€0.4 million). The increase
was caused by the €37.1 million non-recurring gain on SATO shares
and interest income from liquid funds.
Taxes
In July-September, the Group's taxes were €22.9 million (€14.9
million). The effective tax rate was 23.3%. In January-September,
the Group's income taxes were €68.7 million (€98.7 million). The
year 2006 taxes included taxes from prior periods to the amount of
€24.5 million. The taxes have been calculated based on the
anticipated effective tax rate of 22.9% for the whole year.
Discontinued operations
The sale to Rimi Baltic AB of food store properties that had been
leased to it was concluded in January. The gain on the disposal
was €28.2 million.
Seasonal nature of operations
The Group's operating activities are affected by seasonal
fluctuations. The net sales and operating profits of its business
segments are not earned evenly throughout the year. Instead they
vary by quarter depending on the characteristics of each business
segment.
Personnel
In July-September, the average number of personnel in the Kesko
Group was 20,996 (24,716) converted into full-time employees.
There was a decrease of 3,720 employees compared with the
corresponding period of the previous year. In Finland, the average
decrease was 293 employees, while outside Finland it was 3,427.
In January-September, the average number of personnel in the Kesko
Group was 20,534 (23,848) converted into full-time employees.
There was a decrease of 3,314 employees compared with the
corresponding period of the previous year. In Finland, the average
decrease was 312 employees, while outside Finland it was 3,002.
The number of personnel mainly decreased as a result of the
disposal of the joint venture Rimi Baltic AB in December 2006.
At the end of September 2007, the total number of personnel was
23,881 (27,874), of whom 13,578 (13,769) worked in Finland and
10,303 (14,105) in other countries. Compared with the end of
September 2006, there was a decrease of 191 employees in Finland,
and a decrease of 3,802 in other countries.
Market review
According to Statistics Finland, the Finnish economy grew by 5.0%
in 2006, accelerated by a brisk growth in exports, private
consumption and investments. In 2007, the growth rate of the
Finnish economy is expected to decelerate slightly compared with
2006. It is forecast that private consumption will increase by
slightly less than 3% and investments by 4.5%. The increase in
consumer prices is forecast to reach 2.4%. The increase in housing
production is expected to end this year (ETLA, The Research
Institute of the Finnish Economy).
According to the preliminary data of Statistics Finland, in
January-August 2007, the volume of Finnish retail trade increased
by 7.8% compared with the corresponding period of the previous
year. The increase in the wholesale trade volume was 7.3% in the
same period. The volumes of Finnish retail and wholesale trade are
expected to continue to grow also during the rest of the year. The
growth is expected to decelerate slightly as a result of household
indebtedness and the increase in interest rates.
According to Statistics Finland's consumer survey of August,
consumers were very confident about their own finances, but their
expectations concerning the Finnish economy had weakened.
Consumers' views of unemployment and saving were bright.
The Estonian economy is forecast to grow by 7.7%, the Latvian
economy by 10.0% and the Lithuanian economy by 7.8% this year.
Private consumption is estimated to grow by about 12% in Estonia,
by 17% in Latvia and by 12.5% in Lithuania. Consumer prices are
forecast to rise by 5.8% in Estonia, by 8.7% in Latvia and by 4.8%
in Lithuania (Nordea). The retail trade will continue growing
briskly in all Baltic countries.
This year, the Swedish economy is forecast to grow by 3.3% and
private consumption by 2.9%. The increase in consumer prices is
anticipated to be 1.0% (Nordea). Due to brisk housing
construction, total building investments are forecast to continue
increasing at a rate of some 4% in 2007 (Sveriges Byggindustrier).
The Norwegian economy is forecast to grow by 5.1% and private
consumption by 5.9% in 2007.
The Russian economy is forecast to grow by 7.5%. Private
consumption and investments are estimated to increase by 12% in
2007 (Nordea). The strong growth in private consumption will be
reflected positively in the growth of retail trade. As income
levels rise, households will have more money to spend on the
maintenance of homes, gardens and countryside houses.
The market and outlook for each of Kesko's business divisions are
discussed in the business division reviews of this interim
financial report.
Divisions
Kesko Food
In July-September, Kesko Food's net sales totalled €959 million,
up by 6.8%. In January-September, the net sales were €2,825
million, an increase of 6.9%.
In July-September, Kesko Food's operating profit excluding non-
recurring items was €41.1 million (4.3% of net sales), i.e. €8.6
million, and 0.7 percentage points, more than in the previous
year. Kesko Food's operating profit was €41.2 million (€32.6
million).
In January-September, Kesko Food's operating profit excluding non-
recurring items was €111.6 million (3.9% of net sales), i.e. €19.9
million, and 0.5 percentage points, more than in the previous
year. The operating profit increased as a result of improved cost
efficiency and good retail sales growth. The operating profit was
€111.3 million (€136.3 million). The comparable operating profit
was increased by non-recurring gains from the disposal of real
estate.
In July-September, Kesko Food's investments totalled €25 million
(€11 million), of which investments in retail store sites were €24
million (€7 million). In January-September, investments totalled
€80 million (€46 million), of which investments in retail store
sites were €68 million (€40 million).
In July-September, the retail sales of the K-food stores increased
by 5.6%, totalling €1,263 million (incl. VAT). In January-
September, the retail sales increased by 6.6% to €3,659 million
(incl. VAT). At the end of September, there were a total of 1,064
K-food stores.
Kesko Food continued to develop the K-food store network. In July-
September, K-markets were opened in Tampere and Kaavi. In
addition, the expansion of the K-market network to service
stations was continued. In January-June, K-supermarkets were
opened in Siilinjärvi, Naantali, Tampere, Eura and Saarijärvi, and
K-markets in Nilsiä, Kuopio and Karigasniemi. K-citymarkets are
being built in Kerava, Päiväranta in Kuopio, Pori and Tornio, and
a K-supermarket in Kuninkoja, Raisio. Other renovations and
extensions were also implemented.
The total grocery trade market in Finland has continued to grow
steadily. The growth rate for January-September is estimated at
about 4.5% up on the previous year. In January-September, prices
rose at an average monthly rate of about 1.9% compared with the
corresponding period of the previous year (Statistics Finland).
On 23 April 2007, Kesko Food announced that it had decided to look
into opportunities to sell its HoReCa wholesaling subsidiary,
Kespro Ltd, and its sourcing operations. The investigation of
sales opportunities carried out during the summer showed that the
selling price would be low in relation to the sales and profit
expectations of Kespro. Therefore, on 12 October 2007, it was
decided that Kespro will continue to be developed as an
independent subsidiary of Kesko Food.
Kesko Food's net sales and operating profit excluding non-
recurring items are expected to increase in 2007.
Rautakesko
In July-September, Rautakesko's net sales amounted to €694.3
million, an increase of 18.1%. The contribution of acquisitions
excluded, the net sales growth was 15.2%. Net sales in Finland
were €232.2 million, an increase of 4.7%. The net sales of foreign
subsidiaries were €460.9 million, up 26.1%. Foreign subsidiaries
contributed 66.4% to Rautakesko's net sales.
In Sweden, the net sales of K-rauta AB increased by 26.2% to €53.4
million. In Estonia, Rautakesko's net sales were up by 19.5% to
€26.7 million. In Lithuania, the net sales of UAB Senuku Prekybos
Centras (Senukai), in which Rautakesko has a majority interest,
increased by 38.9% to €144.7 million, of which the contribution of
the Belorussian OOO OMA, acquired by Senukai in July, was €16.9
million. In Latvia, Rautakesko's net sales increased by 38.2% to
€24.0 million. In Russia, Stroymaster's net sales grew by 50.7% to
€42.6 million. In Norway, Byggmakker's net sales grew by 12.8% and
were €167.9 million.
In January-September, Rautakesko's net sales amounted to €1,915.0
million, an increase of 20.6%. The contribution of acquisitions
excluded, the net sales growth was 19.5%. Net sales in Finland
were €713.9 million, an increase of 11.7%. The net sales of
foreign subsidiaries were €1,198.8 million, up 26.4%. Foreign
subsidiaries contributed 62.6% to Rautakesko's net sales.
In Sweden, in January-September, the net sales increased by 22.3%
to €142.0 million. In Estonia, the net sales were up by 29.3% to
€70.3 million. In Lithuania, the net sales increased by 34.6% to
€345.9 million, of which the contribution of the Belorussian OOO
OMA was €16.9 million. In Latvia, the net sales increased by 52.1%
to €63.4 million. In Russia, Stroymaster's net sales grew by 54.1%
to €108.4 million. In Norway, the net sales grew by 14.6% and were
€462.3 million.
In July-September, Rautakesko's operating profit excluding non-
recurring items was €39.0 million (5.6% of net sales), i.e. €4.8
million more, but 0.2 percentage points less, than in the
corresponding period of the previous year. Rautakesko's operating
profit for July-September was €39.5 million (€34.3 million).
During the review period, two new stores were opened.
In January-September, Rautakesko's operating profit excluding non-
recurring items was €94.0 million (4.9% of net sales), i.e. €19.3
million, or 0.2 percentage points, more than in the corresponding
period of the previous year. The operating profit excluding non-
recurring items increased due to good sales growth and regardless
of the fact that a total of eight new stores were opened in
January-September. Rautakesko's operating profit for January-
September was €95.7 million (€122.8 million). During the
comparable period, the operating profit was increased by non-
recurring gains on disposal of real estate.
In July-September, Rautakesko's investments totalled €17.2 million
(€17.8 million), of which 65.7% (69.5%) was abroad. In January-
September, the investments were €55.7 million (€44.7 million), of
which 53.2% (58.8%) was abroad.
At the end of September, the K-rauta chain in Finland comprised 41
stores and the Rautia chain 105 stores. In July-September, the
sales of the K-Group's building and home improvement stores in
Finland increased by 4.9% to €353.7 million (incl. VAT). The sales
of the Rautakesko B-to-B Service increased by 13.0%. In January-
September, the sales of the K-Group's building and home
improvement stores in Finland increased by 10% to €922.3 million
(incl. VAT). The sales of the Rautakesko B-to-B Service increased
by 19.9%.
Rautakesko operates 17 K-rauta stores in Sweden, the latest of
which was opened in Växjö in April. A new K-rauta was opened in
Gävle in August 2007 to replace the outlet destroyed in a fire in
August 2006. In Estonia, Rautakesko has five K-rauta stores, the
latest of which opened in Tallinn in March. In Latvia, Rautakesko
has seven stores of its own and two partner stores. A new K-rauta
was opened in Tukums in June and in Daugavpils in September.
In Lithuania, UAB Senuku Prekybos Centras (Senukai) operates 14
Senukai stores and 76 Partnershops. On 12 July 2007, Senukai
signed an agreement to acquire an approximately 21% ownership
interest in the Lithuanian Romos Holdingas, the owner of 99.99% of
the shares of the Belorussian DIY operator, OOO OMA. According to
the vote transfer agreement included in the deal, Senukai has the
majority of voting rights in Romos Holdingas. The total price of
the acquisition is €4 million, of which €2 milllion was paid for
the ownership interest acquired during the period under review.
According to the terms and conditions of the deed, the buyer has
the right to cancel the transaction if the terms and conditions
are not fulfilled.
In Norway, Rautakesko owns Byggmakker Norge AS, a company managing
the Byggmakker chain of building and home improvement stores. The
chain comprises 120 stores, 22 of which are owned by Byggmakker.
The other stores of the chain are owned by retailer-entrepreneurs
who have signed a chain agreement with Byggmakker. Byggmakker
Norge AS opened a new Byggmakker store in Oslo in March and in
Haugesund in September. There are seven K-rauta stores in St.
Petersburg, Russia, two of which are new and operate in conformity
with the K-rauta concept.
The building and home improvement trade market is anticipated to
grow in all countries in which Rautakesko operates. In 2007, a
growth rate of about 5-10% is forecast for the Nordic countries
and 10% for the Baltic countries. The forecast for the St.
Petersburg area is about 15%.
In 2007, Rautakesko will invest heavily in new store sites,
employee competence and a uniform information system. It is
expected that Rautakesko's net sales and its operating profit
excluding non-recurring items will grow in 2007.
VV-Auto
In July-September, VV-Auto's net sales totalled €195 million, up
by 5.0%. In January-September, VV-Auto's net sales totalled €661
million, up by 3.7%. The new Volkswagen and Audi retail businesses
acquired by VV-Auto at the beginning of March 2006 contributed 0.8
percentage points to the growth of VV-Auto's net sales in January-
September.
In July-September, the operating profit was €6.8 million (3.5% of
net sales), up €1.9 million, or 0.8 percentage points, compared
with the corresponding period of the previous year.
In January-September, the operating profit was €26.6 million (4.0%
of net sales), down €1.3million, or 0.4 percentage points,
compared with the corresponding period of the previous year.
Investments totalled €1.5 million (€6.2 million) in July-
September. In January-September, investments were €5.1 million
(€29.6 million).
In January-September, first registrations of new passenger cars
totalled 108,687 in Finland, down by 9.2% on the previous year.
Compared with the previous year, first registrations of vans were
up by 14.3% to 13,414. The sale of new cars has been constrained
by a rise in interest rates and uncertainty about future tax
decisions. In addition, the prices of used cars have come down,
which has increased the customer's cash payment in exchange.
In July-September, VV-Auto's retail sales volume increased by
3.6%. In January-September, it grew by 12.5% compared with the
corresponding period of the previous year. The growth is mainly
attributable to the business acquisition completed in March 2006.
In January-September, the registrations of Volkswagen passenger
cars totalled 10,982 and their market share was 10.1%, compared
with 10.8% in the previous year. The number of Volkswagen vans
registered was 2,327, while the market share was 17.3% (16.9%). In
January-September, first registrations of Audis were 3,676, and
the market share was 3.4% (3.4%). The registrations of new Seat
passenger cars totalled 1,352 in Finland, 575 in Estonia and 203
in Latvia. The market share in Finland was 1.2%, compared with
0.8% in the previous year.
It is estimated that Finland's total market for passenger cars
will fall well short of the previous year. The total market for
vans is expected to grow on 2006.
A forecast for the fourth quarter of the year is difficult to make
because of major fluctuations in the total market in the autumn
and a continuing uncertainty about future tax decisions. In 2007,
VV-Auto's net sales are expected to slightly exceed the previous
year's level and the operating profit excluding non-recurring
items is expected to match the previous year's level.
Anttila
In July-September, Anttila's net sales totalled €143.1 million, up
8.8% (€131.6 million). The net sales growth is attributable to
good sales in the summer and home technology sales. The sales
growth was negatively affected by the closing down of the City
department store in Helsinki due to the expiry of the lease in
January. In January-September, the net sales were €374.2 million,
up 3.1%.
In July-September, Anttila's operating profit excluding non-
recurring items was €6.3 million
(4.4% of net sales), showing a decrease of €0.8 million, or 1.0
percentage points, on the corresponding period of the previous
year. Anttila's operating profit was €6.3 million (€7.1 million).
In January-September, the operating profit excluding non-recurring
items was €3.6 million
(1.0% of net sales), showing a decrease of €1.5 million, or 0.4
percentage points, on the corresponding period of the previous
year. Anttila's operating profit was €5.5 million (€17.3 million).
Non-recurring items included €1.9 million in gains on the disposal
of real estate. In the corresponding period of the previous year,
the gains on the disposal of real estate were €12.2 million. Due
to the nature of the department store trade, the majority of
profits are made towards the end of the year.
In January-September, the sales of the Anttila department stores
were €255.1 million (incl. VAT), up 1.0%. The closing down of the
City department store in Helsinki in January affected the sales
trend. The sales of the Kodin Ykkönen department stores for home
goods and interior decoration were €123.0 million (incl. VAT), up
6.7%. Distance sales in Finland were €62.8 million (incl. VAT), up
6.9%. The sales trend was affected by a reduction in the number of
illustrated catalogues. Online sales, which are part of distance
sales, increased by 25.3%. Sales trends vary significantly by
product line. The sales of home electronics and information
technology developed the most favourably.
Trends in the home and speciality goods sales vary considerably by
product line. The growth is forecast to average 3-5%.
In 2007, Anttila's net sales are expected to grow, while its
operating profit excluding non-recurring items is expected to
remain slightly smaller than in the previous year.
Kesko Agro
In July-September, Kesko Agro's net sales were €195.9 million, an
increase of 12.5%. The net sales of foreign subsidiaries were
€77.2 million, accounting for 39.4% of net sales.
In July-September, Kesko Agro's net sales in Finland were €115.4
million, up by 2.2%. In July-September, the sales in the Baltic
countries increased by 32.8%, which is attributable to the trend
in the grain and agricultural machinery trade.
In January-September, the net sales were €580.4 million, an
increase of 5.7%. The net sales of foreign subsidiaries were
€205.1 million, accounting for 35.3% of net sales.
In January-September, Kesko Agro's net sales in Finland were
€368.7 million, up by 2.2%, which is mainly attributable to the
successful grain trade. The net sales in the Baltic countries
increased by 27.3% in January-September, which is in line with the
trend in the agricultural and construction machinery trade.
In July-September, Kesko Agro's operating profit excluding non-
recurring items was €3.0 million (1.5% of net sales), i.e. €2.0
million, or 1.0 percentage point, bigger than in the corresponding
period of the previous year.
In January-September, the operating profit excluding non-recurring
items was €10.3 million (1.8% of net sales), which was €2.8
million, or 0.4 percentage points bigger than in the corresponding
period of the previous year. The operating profit, non-recurring
items excluded, was affected by the good sales trend and cost
savings in Finland. In January-September, Kesko Agro's operating
profit was €10.8 million (€8.9 million), positively affected by a
non-recurring gain on the disposal of operating activities. Kesko
Agro's comparable operating profit included non-recurring gains on
the disposal of operating activities and fixed assets.
In July-September, investments totalled €1.3 million, 42.1% of
which were in projects abroad. In January-September, investments
totalled €6.7 million, 73.5% of which were in projects abroad.
At the end of the period under review, the K-maatalous chain
comprised 97 agricultural stores in Finland. The sales of the K-
maatalous chain increased by 8.9% in July-September to €157.8
million (incl. VAT). In January-September, the sales increased by
9.3% to €482.4 million. Kesko Agro has six stores in Estonia, four
in Latvia and three in Lithuania.
It is estimated that Finland's total agricultural trade market
will increase slightly on the previous year. The total Baltic
market is anticipated to grow by about 5-10%.
Kesko Agro will discontinue its grain, animal feed and chemicals
trade in Lithuania by the end of 2007 because of its poor
profitability. With the company concentrating exclusively on the
machinery trade in Lithuania, the profitability of its operating
activities is expected to improve.
Regardless of the structural changes taking place in the sector,
and the discontinuation of the grain, animal feed and chemicals
trade in Lithuania, Kesko Agro's net sales are expected to grow
slightly and operating profit excluding non-recurring items to
increase on the level of 2006.
Other operating activities
Other operating activities comprise the reporting for Konekesko,
Intersport Finland, Indoor, Musta Pörssi, Kenkäkesko, Tähti
Optikko and Kauko-Telko.
In July-September, the aggregate net sales from other operating
activities were €243.3 million, up 8.0%. Net sales from foreign
operations were €41.9 million, contributing 17.2% to the net
sales.
In January-September, the net sales were €749.4 million, up 8.8%.
Net sales from foreign operations were €143.4 million,
contributing 19.1% to the net sales.
In July-September, the aggregate operating profit from other
operating activities, non-recurring items excluded, was €5.3
million (2.2% of net sales), which was down by €0.9 million, or
0.6 percentage points, on the corresponding period of the previous
year. The operating profit trend is mainly attributable to the
weakened profitability of the furniture trade. The biggest
improvement in profitability was achieved by Musta Pörssi. The
operating profit from other operating activities was €5.3 million
(€6.2 million).
In January-September, the operating profit excluding non-recurring
items was €25.9 million (3.5% of net sales), which was €7.0
million, or 0.7 percentage points bigger than in the corresponding
period of the previous year. The biggest improvements in
profitability were achieved by Musta Pörssi, Intersport Finland
and Kauko-Telko. The operating profit was €26.1 million (€22.3
million). The operating profit was improved by the €0.1 million
non-recurring gain on the disposal of fixed assets. The operating
profit for the comparable period included €3.7 million in non-
recurring gains on the disposal of operating activities and fixed
assets.
In July-September, investments totalled €2.5 million. In January-
September, investments were €8.9 million.
Konekesko's net sales in July-September were €44.9 million (€40.3
million), an increase of 11.4% on the previous year. In Finland,
sales were €39.7 million, up by 11.3% in July-September.
Konekesko's export sales totalled €5.7 million, an increase of
8.4%. In January-September, the net sales were €186.5 million
(€154.3 million), an increase of 20.9%. In Finland, sales were
€157.9 million, up by 19.4% in January-September. Konekesko's
export sales totalled €31.3 million, an increase of 30.7%.
Intersport Finland's net sales in July-September were €38.1
million (€36.2 million), up by 5.3%. The net sales in January-
September were €105.9 million, (€99.6 million), an increase of
6.4%.
Indoor's net sales in July-September were €51.7 million (€47.2
million), up by 9.6%. In July-September, the aggregate net sales
of the furniture trade in the Baltic countries and Sweden were
€12.9 million, an increase of 29%. In January-September, the net
sales were €146 million (€131 million), up by 11.1%. In January-
September, the aggregate net sales of the furniture trade in the
Baltic countries and Sweden were €39 million, an increase of
41.5%.
Musta Pörssi Ltd's net sales in July-September were €42.9 million
(€31.4 million), up by 36.4%. In January-September, the net sales
were €105.7 million (€88.3 million), up by 19.7%.
Kenkäkesko Ltd's (former WellStep Ltd) net sales in July-September
were €7.0 million (€7.1 million), a decrease of 1.4%. In January-
September, the net sales dropped by 7.8% to €17.9 million (€19.4
million).
Tähti Optikko's net sales in July-September were €4.9 million
(€4.7 million), up 3.3%. In January-September, the net sales were
€16.0 million (€14.9 million), an increase of 7.1%.
Kauko-Telko's net sales in July-September were €54.1 million
(€58.5 million), down 7.6%. In July-September, foreign operations
contributed €26.3 million, or 48.6%, to the net sales. In January-
September, the net sales were €172.4 million (€183.3 million),
down by 6.0% from the previous year. In January-September, foreign
operations contributed €81.7 million, or 47.4%, to the net sales.
Kauko-Telko's profitability improved in January-September.
In May, Kesko announced that it would look into opportunities to
sell Kauko-Telko (stock exchange release on 23 May 2007). Kauko-
Telko will be classified as a discontinuing operation in
compliance with the IFRS 5 when it meets the criteria of the
standard.
It is expected that in 2007, the net sales of other operating
activities and the operating profit excluding non-recurring items
will increase somewhat.
Changes in Group structure
No significant changes took place in the Group structure during
the period under review.
Decisions of the Annual General Meeting
Kesko Corporation's Annual General Meeting held on 26 March 2007
adopted the financial statements for 2006 and discharged the
members of the Board of Directors and the Managing Director from
liability. The Annual General Meeting also decided to distribute a
dividend of €1.50 per share, as proposed by the Board of
Directors, or total dividends of €146,314,669.50.
The Annual General Meeting decided to leave the number of Board
members unchanged at seven. The members of the Board of Directors
elected by the Annual General Meeting of 27 March 2006 are Pentti
Kalliala, Ilpo Kokkila, Maarit Näkyvä, Seppo Paatelainen, Keijo
Suila, Jukka Säilä and Heikki Takamäki. The term of office of each
Board member, in accordance with the Articles of Association, is
three years, with the term starting at the close of the General
Meeting electing the member and expiring at the close of the third
Annual General Meeting after the election (in 2009).
The decisions of the Annual General Meeting were published in more
detail in a stock exchange release on the day of the meeting and
in the 3-month interim financial report.
Corporate governance
Kesko Food Ltd and Rautakesko Ltd, major subsidiaries fully owned
by Kesko Corporation, elected the members of their Boards of
Directors at their Annual General Meetings held on 23 March 2007.
The compositions of the Boards were announced in a stock exchange
release on 23 March 2007.
The organising meeting of Kesko Corporation's Board of Directors
held after the Annual General Meeting on 26 March 2007 decided to
leave the compositions of its committees unchanged. The Board
elected Maarit Näkyvä as the Chairman of its Audit Committee, and
Seppo Paatelainen and Keijo Suila as its members. The Board
elected Heikki Takamäki as the Chairman of its Compensation
Committee, and Pentti Kalliala and Keijo Suila as its members. The
committees' terms of office always expire at the Annual General
Meeting. On the basis of the evaluation of independence carried
out by the Board of Directors, all members of the Audit Committee
are independent of the company and its significant shareholders.
The decisions of the organising meeting of the Board of Directors
were published in a stock exchange release on the day of the
meeting.
Juhani Järvi resigned from the positions of Kesko's Corporate
Executive Vice President and Deputy to the President and CEO as of
1 June 2007. He also gave up membership in the Corporate
Management Board and in the Boards of Kesko Food Ltd and
Rautakesko Ltd. Järvi's duties have been divided between the other
Corporate Management Board members. His responsibility areas
included corporate development, IT management, real estate
services, and corporate responsibility and business development. A
more detailed stock exchange release about the matter was
published on 24 May 2007.
Shares and the securities market and Board authorisations
At the end of the review period, Kesko Corporation's share capital
totalled €195,519,630. Of all shares, 31,737,007, i.e. 32.5%, were
A shares and 66,022,808, i.e. 67.5%, were B shares. During the
review period, the share capital was increased five times by share
subscriptions with the stock options of the year 2003 option
scheme. The increases were made on 12 February 2007 (€46,376), 26
April 2007 (€86,800), 29 May 2007 (€298,572), 24 July 2007
(€9,000) and 26 September 2007 (€39,032) and were announced in
stock exchange notifications on the respective dates. The
subscribed shares were included on the main list of the Helsinki
Stock Exchange for public trading with the old B shares on 13
February 2007, 27 April 2007, 30 May 2007, 25 July 2007 and 27
September 2007.
The price of a Kesko A share was €38.43 at the end of 2006 and
€44.74 at the end of the review period in September 2007,
representing an increase of 16.4%. The price of a B share was
€40.02 at the end of 2006 and €46.59 at the end of September 2007,
an equal increase of 16.4%. During the period under review, the
highest A share quotation was €53.44 and the lowest was €34.52.
For B shares, they were €54.85 and €34.40 respectively.
From the beginning of 2007 until the end of September 2007, the
Helsinki Stock Exchange All Share index (OMX Helsinki) rose by
27.7%, the weighted OMX Helsinki CAP index by 14.5%, and the
Consumer Staples Index by 14.3% during the review period.
At the end of the review period, the market value of A shares was
€1,419.9 million, while that of B shares was €3,076.0 million.
Their combined market capitalisation was €4,495.9 million, an
increase of €644 million from the beginning of the year. During
the first part of 2007, approximately 3.2 million A shares were
traded on the Helsinki Stock Exchange at a total value of €145.5
million, while 101.1 million B shares were traded at a total value
of €4,416.2 million.
The 2003D stock options of the year 2003 option scheme were
included on the main list of the Helsinki Stock Exchange on 1
April 2005. The number of 2003D options traded during the review
period was 87,888 at a total value of €3.4 million.
The 2003E stock options were included on the main list of the
Helsinki Stock Exchange on 3 April 2006. The number of 2003E
options traded during the review period was 169,108 at a total
value of €5.7 million.
The 2003F stock options were included on the main list of the
Helsinki Stock Exchange on 2 April 2007. The number of 2003F
options traded during the review period was 243,637 at a total
value of €7.8 million.
The Board of Directors was authorised by the Annual General
Meeting of 26 March 2007 to issue a maximum of 20,000,000 new B
shares against payment. The authorisation also includes a right to
deviate, for a weighty financial reason, from the shareholders'
pre-emptive right with a rights issue so that the issued shares
can be used as consideration in possible company acquisitions,
other arrangements concerning the company's operating activities,
or to finance investments. The authorisation is valid for two
years from the decision of the Annual General Meeting.
The Annual General Meeting of 26 March 2007 decided to grant stock
options for no consideration to the Kesko Group management, other
key Kesko personnel, and to Sincera Oy, a subsidiary wholly owned
by Kesko Corporation. The stock options shall be marked with the
symbols 2007A, 2007B and 2007C, and their total number shall be
3,000,000 at the maximum. Each option entitles its holder to
subscribe for one B share, so that a maximum of 3,000,000 new B
shares can be subscribed for with the options in compliance with
the terms and conditions of the stock option plan.
The Board's share issue authorisation and the year 2007 stock
option scheme were disclosed in more detail in a stock exchange
release on 26 March 2007. The Board's decision to grant the year
2007 stock options to persons in the Kesko Group management, other
key personnel and Sincera Oy, a subsidiary wholly-owned by Kesko
Corporation, was announced in a stock exchange release on 18 July
2007.
The Board has no other valid authorisation concerning an issue of
shares, options or other special rights entitling to shares.
Flagging notifications
Under Chapter 2, Section 9 of the Finnish Securities Market Act,
Kesko Corporation was notified by Barclays Plc, that the aggregate
ownership interest of Barclays Plc's fund management companies in
Kesko Corporation shares had exceeded 5% on 4 April 2007. The
matter was disclosed without delay after receipt of the
notification in a stock exchange notification on 4 October 2007.
Main events
Fiesta Real Estate AS, an Estonian subsidiary of Kesko
Corporation, sold the food trade properties leased by Rimi Baltic
AB in Estonia to Rimi Baltic for €50 million. The €28.2 million
gain on the disposal was recognised in discontinued operations for
the first quarter of 2007 (stock exchange release on 4 January
2007).
On 16 February 2007, Kesko Corporation and Varma Mutual Pension
Insurance Company completed a deal in which Kesko sold its SATO
Corporation shares to Varma. Kesko's ownership interest in SATO
was approximately 16.5%. The price of the shares was about €46
million and the gain on the disposal (€37.1 million) was
recognised for the first quarter of 2007 (stock exchange releases
on 7 and 16 February 2007).
In its meeting, Kesko Corporation's Board of Directors specified
the company strategy. Based on the expansion of the Group's
international operations and the current business outlook, the
targets for return on capital were raised. The target value for
return on equity was raised from 12% to 14% and that of invested
capital from 12% to 16%. Large-scale store site investments in
Finland and the other operating countries are expected to be made
during the next few years. The Board also decided to look into
possibilities to dispose of Kauko-Telko (stock exchange release on
23 May 2007).
Events after the end of the review period
During the summer, Kesko Food Ltd has looked into opportunities to
sell its HoReCa wholesaling subsidiary, Kespro Ltd, and its
sourcing operations. The investigation of sales opportunities
carried out during the summer showed that the selling price would
be low in relation to the sales and profit expectations of Kespro.
Therefore, Kespro will continue to be developed as an independent
subsidiary of Kesko Food (stock exchange release on 12 October
2007).
Future outlook
In 2007, the Kesko Group divisions are expected to perform as
described in the above division reviews.
The Group's operating activities are affected by the economic
outlook in its different market areas and especially by the growth
rate of private consumption and any changes therein. Markets in
the Baltic countries and in Russia are expected to continue to
grow more rapidly than markets in the Nordic countries. The
Finnish market is expected to maintain a good growth rate,
although there are clear signs of a slow-down in construction.
Due to the more rapid market growth and the expansion of the
retail store network, the Group's sales will grow more strongly in
the other operating countries than Finland. The Group's sales are
expected to grow in the next six months, but at a slightly slower
rate than during January-September 2007. Regardless of the
expansion of the retail store network, the Kesko Group's operating
profit for the next six months, non-recurring items excluded, is
expected to remain at a good level.
A higher-than-expected rise in labour costs in Finland may affect
the materialization of the future outlook and forecasts presented
in this interim financial report.
Helsinki, 17 October 2007
Kesko Corporation
Board of Directors
The figures of the interim financial report are unaudited.
Further information is available from Arja Talma, Senior Vice
President, CFO, telephone +358 1053 22113, and Jukka Erlund, Vice
President, Corporate Controller, telephone +358 1053 22338. A
Finnish-language webcast on the interim result can be accessed at
www.kesko.fi at 13.00 (Finnish time). An English-language web
conference on the interim financial 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
ATTACHMENTS
Consolidated income statement
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated cash flow statement
Group indicators
Net sales by division, continuing operations
Operating profit by division incl. non-recurring items, continuing
operations
Operating profit by division excl. non-recurring items, continuing
operations
Operating profit as % of net sales excl. non-recurring items,
continuing operations
Investments by division, continuing operations
Group contingent liabilities
Group indicators by quarter
Calculation of indicators
Divisions' net sales by quarter
Divisions' operating profits by quarter incl. non-recurring items
Divisions' operating profits by quarter excl. non-recurring items
Personnel, average number, and number at 30 September
The K-Group retail sales
Kesko Corporation's financial statements for 2007 will be
published on 5 February 2008. In addition, the Kesko Group sales
figures will be published each month. News releases and other
company information are available at www.kesko.fi.
DISTRIBUTION
Helsinki Stock Exchange
Main news media
********
ATTACHMENTS:
This interim financial report has been prepared in accordance with
the IAS 34 standard. The interim financial report has been
prepared in accordance with the same principles as the annual
financial statements for 2006.
Consolidated
income statement
(€ million)
1-9 1-9 Change 7-9 7-9 Change 1-12
2007 2006 % 2007 2006 % 2006
Net sales 7,079 6,445 9.8 2,421 2,196 10.2 8,749
Cost of sales -6,068 -5,520 9.9 -2,078 -1,882 10.4 -7,474
Gross profit 1,011 924 9.4 344 314 9.3 1,275
Other operating 422 507 -16.7 140 135 3.9 661
income
Staff cost -413 -394 4.8 -140 -131 6.9 -544
Depreciation and -87 -90 -3.8 -30 -30 -2.5 -160
impairment charges
Operating expenses -673 -622 8.1 -219 -206 6.6 -869
Operating profit 261 325 -19.7 95 83 15.5 363
Financial income* 75 29 (..) 16 12 38.8 38
Financial expenses -36 -29 25.1 -14 -10 32.2 -44
Income from 0 1 -58.6 0 0 -41.9 1
associates
Profit before 300 326 -8.0 98 84 16.5 358
taxes
Income tax** -69 -99 -30.4 -23 -15 53.5 -107
Net profit from 232 228 1.7 75 69 8.6 251
continuing
operations
Net profit from 28 -3 (..) - 0 (..) 129
discontinued
operations*
Net profit 260 225 15.8 75 70 8.5 379
Attributable to:
Equity holders 244 216 13.2 69 66 5.0 369
of the
parent company
Minority 16 9 81.5 6 4 73.7 11
interest
Earnings per share
(€) for profit
attributable to
the equity holders
of the parent
company
Continuing
operations
Basic 2.21 2.26 -2.0 0.71 0.68 4.5 2.47
Diluted 2.20 2.24 -1.9 0.70 0.67 4.6 2.45
Whole Group
Basic 2.50 2.23 12.5 0.71 0.68 4.4 3.80
Diluted 2.48 2.21 12.6 0.70 0.67 4.5 3.76
* Change over 100%
** Income tax has been calculated on the profit for the review
period as a proportion of
the estimated tax for the whole financial year.
Consolidated balance sheet
(€ million)
30.9.200 30.9.200 Change, 31.12.20
7 6 % 06
ASSETS
Non-current assets
Intangible assets 258 302 -14.8 248
Tangible assets 1,137 1,190 -4.4 1,115
Investments 31 37 -17.3 38
Loans and receivables 125 157 -20.4 126
Pension assets 238 218 9.2 220
Total 1,789 1,905 -6.1 1,746
Current assets
Inventories 887 803 10.5 789
Trade and other receivables 1,027 913 12.6 852
Marketable securities* 298 54 (..) 341
Cash on hand and balances 55 58 -4.2 57
with banks
Non-current assets held for 1 2 -55.9 22
sale
Total 2,269 1,830 24.0 2,061
Total assets 4,058 3,735 8.7 3,807
* Change over 100%
Consolidated balance sheet
(€ million)
30.9.2007 30.9.2006 Change, % 31.12.20
06
EQUITY AND LIABILITIES
Equity 1,865 1,602 16.4 1,750
Minority interest 47 29 62.4 27
Total equity 1,913 1,632 17.2 1,777
Non-current liabilities
Pension obligations 4 4 4.7 4
Interest-bearing 317 377 -16.0 317
Non-interest-bearing 14 18 -20.9 18
Deferred tax liabilities 119 121 -1.8 113
Provisions 17 19 -10.2 18
Total 470 538 -12.6 469
Current
Interest-bearing 303 271 11.8 293
Non-interest-bearing 1,359 1,288 5.6 1,254
Provisions* 13 6 (..) 14
Total 1,675 1,565 7.0 1,561
Total equity and 4,058 3,735 8.7 3,807
liabilities
* Change over 100%
Consolidated statement of changes in equity (€ million)
Share Issue Share Other Curre Reval Re- Minor Total
capit of premi- reser n-cy u- taine ity
al share um ves trans-ation d inter
capit latio surpl earni est
al n us ngs
diffe
r-
ences
Balance at
1 Jan. 193 1 189 246 -4 0 857 27 1,508
2006
Shares 5
subscribed
for with 2 -1 4
options
Option 2 2
cost
Currency
translatio
n -3 -3
difference
s
Fair value
changes 6 6
Other 1 1
changes
Dividend -106 -6 -112
Net profit
for the 216 9 224
period
Balance at
30 Sept. 195 0 195 246 -6 6 967 29 1,632
2006
Balance at
1 Jan. 195 0 196 246 -6 0 1,120 27 1,777
2007
Shares
subscribed
for with 1 0 2 3
options
Option 1 1
cost
Currency
translatio
n 6 1 7
difference
s
Minority
interest 14 14
Foreign
net
investment -1 -1
hedging
Fair value
changes 5 5
Other 2 2
changes
Dividend -146 -9 -155
Net profit 244 16 260
Balance at
30 Sept. 196 0 199 246 -1 5 1,220 47 1,913
2007
Consolidated cash flow
statement
(€ million)
1-9 1-9 Change, 7-9 7-9 Change, 1-12
2007 2006 % 2007 2006 % 2006
Cash flow from operating
activities
Profit before tax 329 323 1.7 98 85 16.0 487
Planned depreciation 87 100 -13.2 30 34 -12.2 142
Financial income and -39 1 (..) -3 -1 (..) 7
expenses*
Other adjustments -54 -122 -55.4 -4 5 (..) -215
Working capital
Current non-interest- -102 -103 -1.3 44 47 -4.9 -85
bearing trade
receivables,
increase (-)/decrease
(+)
Inventories -85 -16 (..) -41 -4 (..) -36
increase (-)/decrease
(+)*
Current non-interest- 105 106 -1.8 -32 -41 -22.3 142
bearing liabilities,
increase (+)/decrease (-
)
Financial items and -62 -80 -22.4 -11 -40 -71.4 -114
taxes
Net cash from operating 178 209 -14.9 81 85 -4.1 328
activities
Cash flow from investing
activities
Investments -164 -166 -1.1 -39 -53 -25.4 -237
Disposals of fixed 141 256 -45.0 4 2 85.5 450
assets
Loans granted* 0 -34 (..) 15 5 (..) -10
Repayments of loan 10 0 (..) 10 0 (..)
assets*
Net cash used in -14 56 (..) -10 -45 -77.1 203
investing activities*
Cash flow from financing
activities
Debt increase* 6 0 (..) 6 -17 (..) 18
Debt decrease -63 -161 -60.9 1 -22 (..) -159
Dividends paid -156 -113 37.6 -9 -6 56.7 -113
Equity increase 3 5 -51.2 0 0 (..) 6
Short-term money market 32 0 (..) 1 0 (..) -140
investments*
Other items* 1 -1 (..) 1 -1 (..) -3
Net cash used in -177 -269 -34.2 0 -45 (..) -390
financing activities
Change in cash and cash -13 -4 (..) 72 -5 (..) 141
equivalents*
Cash and cash 257 115 (..) 0 0 (..) 115
equivalents
at 1 Jan. *
Currency translation 0 1 (..) 0 1 (..) 1
difference*
Cash and cash 244 112 (..) 72 -5 (..) 257
equivalents at 30 Sept.*
* Change over 100%
Group indicators
9/2007 9/2006 Change,
pp
Return on invested capital, % 19.2 20.4 -1.2
Return on invested capital, %, 22.1 17.2 4.9
moving 12 months
Return on equity, % 18.8 19.1 -0.3
Return on equity, %, moving 12 23.4 16.4 7.1
months
Equity ratio, % 47.4 43.8 3.6
Change,
%
Investments, € million* 164.0 162.5 0.9
Earnings per share, basic, €* 2.21 2.26 -2.0
Earnings per share, diluted, €* 2.20 2.24 -1.9
Earnings per share, basic, €** 2.50 2.23 12.5
Earnings per share, diluted, 2.48 2.21 12.6
€**
Equity per share, € 19.08 16.46 15.9
Personnel, average 20,534 23,848 -13.9
* Continuing operations
** Whole Group
Divisions
Net sales by 1-9/2007 1-9/2006 Change 7-9/2007 7-9/2006 Change
division, continuing € € ,% € € , %
operations million million million million
Kesko Food, Finland 2,813 2,630 7.0 955 894 6.8
Kesko Food, other 12 14 -10.7 4 4 -5.6
countries*
Kesko Food, total 2,825 2,643 6.9 959 899 6.8
Rautakesko, Finland 714 639 11.7 232 222 4.7
Rautakesko, other 1,201 949 26.5 462 366 26.2
countries*
Rautakesko, total 1,915 1,588 20.6 694 588 18.1
VV-Auto, Finland 640 623 2.7 188 180 4.6
VV-Auto, other 21 14 50.8 7 6 16.7
countries*
VV-Auto, total 661 637 3.7 195 186 5.0
Anttila, Finland 359 347 3.3 138 126 9.1
Anttila, other 16 16 -2.1 5 5 2.0
countries*
Anttila, total 374 363 3.1 143 132 8.8
Kesko Agro, Finland 369 361 2.2 115 113 2.2
Kesko Agro, 212 188 12.4 81 61 31.5
other countries*
Kesko Agro, total 580 549 5.7 196 174 12.5
Other operating 606 566 7.0 201 185 8.6
activities, Finland
Other operating 143 122 17.5 42 40 5.0
activities,
foreign countries*
Other operating 749 688 8.8 243 225 8.0
activities, total
Common operations -26 -25 4.0 -9 -6 43.7
and eliminations
Finland, total 5,474 5,141 6.5 1,820 1,714 6.2
Other countries, 1,605 1,303 23.2 601 483 24.5
total*
Group, total 7,079 6,445 9.8 2,421 2,196 10.2
* Exports and net sales in other countries than Finland
Operating profit by 1- 1- Change 7- 7- Change
division incl. non- 9/2007 9/2006 , € 9/2007 9/2006 ,€
recurring items, € € millio € € millio
continuing millio millio n millio millio n
operations n n n n
Kesko Food 111.3 136.3 -25.0 41.2 32.6 8.6
Rautakesko 95.7 122.8 -27.1 39.5 34.3 5.2
VV-Auto 26.6 27.9 -1.3 6.8 5.0 1.9
Anttila 5.5 17.3 -11.8 6.3 7.1 -0.8
Kesko Agro 10.8 8.9 1.8 3.5 1.0 2.5
Other operating 26.1 22.3 3.8 5.3 6.2 -0.9
activities
Common operations -15.0 -10.5 -4.5 -7.3 -3.6 -3.7
and eliminations
Group's operating 261.0 325.0 -64.0 95.4 82.6 12.8
profit
Operating profit by 1- 1- Change 7- 7- Change
division excl. non- 9/2007 9/2006 , € 9/2007 9/2006 , €
recurring items, € € millio € € millio
continuing millio millio n millio millio n
operations n n n n
Kesko Food 111.6 91.6 19.9 41.1 32.5 8.6
Rautakesko 94.0 74.7 19.3 39.0 34.2 4.8
VV-Auto 26.6 27.9 -1.3 6.8 5.0 1.9
Anttila 3.6 5.1 -1.5 6.3 7.1 -0.8
Kesko Agro 10.3 7.5 2.8 3.0 1.0 2.0
Other operating 25.9 18.9 7.0 5.3 6.2 -0.9
activities
Common operations -21.4 -17.3 -4.1 -7.6 -3.6 -4.1
and eliminations
Total 250.6 208.4 42.2 94.0 82.4 11.6
Operating profit 1- 1- Chang 7- 7- Chang
as % of net sales 9/2007 9/2006 e, pp 9/2007 9/2006 e, pp
excl. non- % of % of % of % of
recurring items, net net net net
continuing sales sales sales sales
operations
Kesko Food 3.9 3.5 0.5 4.3 3.6 0.7
Rautakesko 4.9 4.7 0.2 5.6 5.8 -0.2
VV-Auto 4.0 4.4 -0.4 3.5 2.7 0.8
Anttila 1.0 1.4 -0.4 4.4 5.4 -1.0
Kesko Agro 1.8 1.4 0.4 1.5 0.6 1.0
Other operating 3.5 2.7 0.7 2.2 2.7 -0.6
activities
Common operations 82.4 69.3 13.1 82.7 55.4 27.4
and eliminations
Total 3.5 3.2 0.3 3.9 3.7 0.1
Investments by 1- 1- Change, 7- 7- Change,
division, 9/2007 9/2006 € 9/2007 9/2006 €
continuing € € million € € million
operations million million million million
Kesko Food 80 46 34 25 11 14
Rautakesko 56 45 11 17 18 -1
VV-Auto 5 30 -25 1 6 -5
Anttila 4 4 1 2 0 1
Kesko Agro 7 7 0 1 2 -1
Other operating 9 30 -21 2 7 -4
activities
Common 3 1 2 0 2 -1
operations and
eliminations
Group, total 164 162 2 50 46 4
Group's contingent liabilities 9/2007 9/2006 Change, %
(€ million)
For own commitments 268 274 -2.2
For associates - - -
For shareholders 1 1 0.0
For others 11 31 -66.2
Lease liabilities 14 9 48.8
Liabilities arising from
derivative financial
instruments
Fair
value
Values of underlying 9/2007 9/2006 30.9.2007
instruments
at 30 Sept.
Interest rate derivatives
Forward and future contracts 40 35 -0.1
Interest rate swap contracts 202 204 1.9
Currency derivatives
Forward and future contracts 329 190 0.3
Currency swap contracts 100 100 -15.8
Commodity derivatives
Electricity derivatives 42 36 4.9
Grain derivatives 2 - -0.0
* Change over 100%
Figures by quarter
Group indicators by 1-3/ 4-6/ 7-9/ 10- 1-3/ 4-6/ 7-9/
quarter 2006 2006 2006 12/ 2007 2007 2007
2006
Net sales, € million 1,971 2,277 2,196 2,304 2,193 2,464 2.421
Change in net sales, 15.6 12.8 6.2 8.2 11.3 8,2 10,2
%
Operating profit, € 150.8 91.6 82.6 37.6 62.4 103.2 95.4
million
Operating profit, % 7.7 4.0 3.8 1.6 2.8 4.2 3.9
Operating profit 36.6 89.4 82.4 71.4 59.8 96.8 94.0
excl. non-recurring
items, € million
Operating profit 1.9 3.9 3.7 3.1 2.7 3.9 3.9
excl. non-recurring
items, %
Financial -1.5 0.4 1.5 -5.9 37.9 -1.7 2.8
income/expenses,
€ million
Profit before tax, € 150 92 84 31 101 101 98
million
Profit before tax, % 7.6 4.0 3.8 1.4 4.6 4.1 4.1
Return on invested 27.8 17.7 16.5 30.4 23.5 18.6 17.4
capital, %
Return on equity, % 29.4 11.3 17.4 36.4 24.4 17.3 16.2
Equity ratio, % 41.2 41.7 43.8 47.0 44.6 46.5 47.4
Investments, € 56.6 60.1 45.8 88.0 51.6 62.8 49.6
million*
Earnings/share, €* 1.14 0.42 0.67 0.21 0.77 0.72 0.70
Equity/share, € 15.43 15.79 16.46 17.94 17.52 18.32 19.08
* Continuing operations
Calculation of indicators
Return on invested Profit before extraordinary items +
capital = interest and other financial expenses x
100/
Balance sheet total - non-interest-
bearing debt (average)
Return on equity = Profit before extraordinary items -
income tax x 100/
Shareholders' equity + minority
interest (average)
Equity ratio = Equity + minority interest x 100/
Balance sheet total - advances received
Earnings/share, Profit before taxes - income tax -
diluted = minority interest/
Average number of shares adjusted for
dilutive effect of options
Equity/share = Equity/
Number of shares at end of period
Divisions' net sales 1-3/ 4-6/ 7-9/ 10- 1-3/ 4-6/ 7-9/
by quarter, € 2006 2006 2006 12/ 2007 2007 2007
million 2006
Kesko Food 814 931 899 971 883 983 959
Rautakesko 428 572 588 541 534 687 694
VV-Auto 230 221 186 152 248 218 195
Anttila 120 112 132 185 120 111 143
Kesko Agro 162 212 174 206 168 216 196
Other operating 225 238 225 257 248 259 243
activities
Common operations -10 -9 -6 -7 -7 -9 -9
and eliminations
Group's net sales 1,971 2,277 2,196 2,304 2,193 2,464 2,421
Divisions' operating 1-3/ 4-6/ 7-9/ 10- 1-3/ 4-6/ 7-9/
profits by quarter 2006 2006 2006 12/ 2007 2007 2007
incl. non-recurring 2006
items, € million
Kesko Food 64.8 38.9 32.6 36.9 29.2 40.9 41.2
Rautakesko 56.5 32.1 34.3 16.5 18.6 37.6 39.5
VV-Auto 11.1 11.9 5.0 1.5 11.7 8.1 6.8
Anttila 10.8 -0.7 7.1 21.4 -0.9 0.1 6.3
Kesko Agro -0.1 8.1 1.0 0.3 -0.6 7.9 3.5
Other operating 8.4 7.7 6.2 -17.4 10.7 10.1 5.3
activities
Common operations -0.6 -6.3 -3.6 -21.6 -6.1 -1.6 -7.3
Group's operating 150.8 91.6 82.6 37.6 62.4 103.2 95.4
profit
Divisions' operating 1-3/ 4-6/ 7-9/ 10- 1-3/ 4-6/ 7-9/
profits excl. non- 2006 2006 2006 12/ 2007 2007 2007
recurring items, by 2006
quarter, € million
Kesko Food 20.5 38.7 32.5 37.0 29.0 41.4 41.1
Rautakesko 8.8 31.7 34.2 16.5 16.3 38.7 39.0
VV-Auto 11.1 11.9 5.0 1.5 11.7 8.1 6.8
Anttila -1.5 -0.6 7.1 21.4 -0.9 -1.8 6.3
Kesko Agro -1.6 8.1 1.0 0.3 -0.6 7.9 3.0
Other operating 5.5 7.2 6.2 2.7 10.6 9.9 5.3
activities
Common operations -6.2 -7.5 -3.6 -8.0 -6.3 -7.5 -7.6
Group's operating 36.6 89.4 82.4 71.4 59.8 96.8 94.0
profit
Personnel, 7-9/2007 7-9/2006 Change
average number
Kesko Food 6,103 6,242 -139
Rautakesko 8,763 7,667 1,096
VV-Auto 745 717 28
Anttila 2,090 2,058 32
Kesko Agro 781 914 -133
Other operating 2,514 2,553 -39
activities and common
operations
Group companies, total 20,996 20,151 845
Kesko Food's joint 0 4,565 -4,565
ventures
Kesko Group, total 20,996 24,716 -3,720
Personnel at 30 Sept.* 2007 2006 Change
Kesko Food 7,457 7,449 8
Rautakesko 9,550 8,436 1,114
VV-Auto 737 721 16
Anttila 2,663 2,678 -15
Kesko Agro 785 927 -142
Other operating 2,689 2,704 -15
activities and common
operations
Group companies, total 23,881 22,915 966
Kesko Food's joint 0 4,959 -4,959
ventures
Kesko Group, total 23,881 27,874 -3,993
* Total number including part-time employees
The K-Group's retail sales (incl. VAT) (preliminary data):
1.1.-30.9.2007 1.7.-30.9.2007
€ Change, € Change,
million % million %
K-Group food stores
K-citymarket 1,290.4 6.5 448.7 7.4
K-supermarket 1,081.3 6.1 368.0 5.6
K-market 934.0 6.5 324.1 2.9
Other K-food stores and 352.8 8.7 122.1 6.9
mobile stores
Finland, total 3,658.5 6.6 1,262.9 5.6
Food stores, total 3,658.5 6.6 1,262.9 5.6
K-Group building and home
improvement stores
K-rauta 500.9 9.5 188.9 4.8
Rautia 421.4 10.5 164.8 5.1
Finland, total 922.3 10.0 353.7 4.9
K-rauta, Sweden 177.5 22.5 66.2 26.3
K-rauta, Estonia 83.0 30.7 31.5 20.3
K-rauta, Latvia 74.9 53.1 28.4 39.6
Senukai, Lithuania 389.7 28.1 151.6 22.8
OMA, Belorussia 19.9 19.9
Stroymaster, Russia 127.9 54.1 50.3 50.7
Byggmakker, Norway 858.0 10.8 317.4 7.1
Other countries, total 1,730.8 22.0 665.1 20.5
2,653.1 17.5 1,018.8 14.6
Building and home
improvement stores, total
Kesko Group car stores
Helsingin VV-Auto and Turun 338.5 12.5 104.7 3.6
VV-Auto
Finland, total 338.5 12.5 104.7 3.6
Anttila
Anttila department stores 255.1 1.0 96.2 5.3
Kodin Ykkönen department 123.0 6.7 48.6 13.6
stores for home goods
and interior decoration
Distance sales (Mail Order 62.8 6.9 24.4 16.5
and NetAnttila)
Finland, total 440.9 3.4 169.2 9.1
Anttila Mail Order, Estonia 15.2 -4.4 5.3 -0.6
and Latvia
Other countries, total 15.2 -4.4 5.3 -0.6
Anttila, total 456.1 3.1 174.5 8.8
K-Group agricultural stores
K-maatalous 482.4 9.3 157.8 8.9
Finland, total 482.4 9.3 157.8 8.9
Kesko Agro, Estonia 56.7 0.8 18.1 67.5
Kesko Agro, Latvia 97.5 24.3 41.4 65.5
Kesko Agro, Lithuania 68.2 5.3 23.7 -4.3
Other countries, total 222.4 11.5 83.2 37.3
Agricultural stores, total 704.8 10.0 241.0 17.2
Other operating activities
Kesko Group machinery
stores
Yahama Center 15.7 -6.1 4.1 -29.7
Finland, total 15.7 -6.1 4.1 -29.7
K-Group home and speciality
goods stores
Intersport 181.5 5.7 57.9 5.6
Kesport 21.8 8.4 7.8 17.3
Asko 71.0 3.3 26.5 2.0
Sotka 86.9 4.8 31.7 4.6
Musta Pörssi 146.4 17.9 60.5 30.3
Andiamo and K-kenkä 32.8 -6.7 10.8 -6.4
Kenkäexpertti 9.5 -7.0 3.2 -8.6
Tähti Optikko chain 37.0 2.2 11.8 2.8
Finland, total 586.9 6.9 210.0 10.2
Furniture sales, Sweden, 36.0 52.1 12.0 39.0
Estonia and Latvia
Other countries, total 36.0 52.1 12.0 39.0
Home and speciality goods 622.9 8.7 222.0 11.4
stores, total
Other operating activities, 638.6 8.3 226.1 10.3
total
Finland, total 6,445.1 7.3 2,262.4 6.2
Other countries, total 2,004.5 20.9 765.6 22.2
Retail sales, total 8,449.6 10.2 3,028.1 9.8
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