2016-10-26 08:02:02 CEST
2016-10-26 08:02:02 CEST
SÄÄNNELTY TIETO
Kesko Oyj - Interim report (Q1 and Q3)
Kesko's interim report for the period 1 January to 30 September 2016: Kesko's net sales and operating profit increased
KESKO CORPORATION INTERIM REPORT 26.10.2016 AT 09.00 1(36)
Kesko's interim report for the period 1 January to 30 September 2016: Kesko's
net sales and operating profit increased
Financial performance in brief:
* Group's net sales for January-September were €7,415 million (€6,513 million).
Net sales grew by 13.9% and in local currencies, acquisitions and disposals
excluded,
by 2.0%
* Comparable operating profit was €209.6 million (€185.3 million)
* Operating profit was €187.0 million (€155.3 million)
* Comparable return on capital employed was 12.5% (rolling 12 mo)
* Comparable profit before tax was €211.2 million (€177.3 million)
* Comparable earnings per share were €1.59 (€1.24)
* Kesko Group's net sales for the next 12 months are expected to exceed the
level of the preceding 12 months. The comparable operating profit for the next
12-month period is expected to exceed the level of the preceding 12 months.
Key performance indicators
1-9/2016 1-9/2015 7-9/2016 7-9/2015
Net sales, € million 7,415 6,513 2,792 2,203
Operating profit, comparable,
€ million 209.6 185.3 98.2 82.5
Operating profit, € million 187.0 155.3 85.5 83.1
Profit before tax, comparable,
€ million 211.2 177.3 97.5 78.2
Profit before tax, € million 188.7 147.3 84.8 78.8
Capital expenditure, € million 637.7 151.6 73.6 41.5
Earnings per share, €, diluted 1.40 0.81 0.63 0.43
Earnings per share, comparable, €, basic 1.59 1.24 0.73 0.53
30.9.2016 30.9.2015
Equity ratio, % 47.9 54.2
Equity per share, € 20.84 21.41
President and CEO Mikko Helander:
"Kesko's business operations grew strongly in the third quarter due to the
acquisitions that have been made. The integration of Suomen Lähikauppa has
progressed as planned and by the end of September, 118 Siwa and Valintatalo
stores had been converted into K-Market stores. The acquisition of Onninen can
be seen in the significant growth in the B2B trade of the building and technical
trade.
Owing to acquisitions, Kesko's third quarter net sales increased by 26.7% and in
local currencies by 1.1% excluding the impact of acquisitions. The comparable
operating profit was up by €15.7 million and profit improved in all divisions.
The return on capital employed also improved compared to the corresponding
period of the previous year.
The K-Group's grocery sales increased in the third quarter by 0.7%, excluding
the impact of Suomen Lähikauppa. In the grocery trade, the operating profit
strengthened owing to synergies and the enhancement actions taken. In the
building and technical trade, market share continued to strengthen. Onninen's
contribution to the net sales and the operating profit of the building and
technical trade was significant. In the car trade, net sales and operating
profit showed good growth.
The K-Plussa revision has progressed well and in the future, the renewing K-
Plussa will be the most personally rewarding customer loyalty programme offering
the best digital services.
Kesko wants to be a pioneering company in responsibility, which also our
stakeholders expect of us. The new K Code of Conduct defines what is expected of
the Kesko personnel and our business partners for example in the areas of human
rights, environmental care and fair competition. This is because we want to be
the most responsible trading sector company in the world also in the future."
FINANCIAL PERFORMANCE
Net sales and profit for January-September 2016
The Group's net sales for January-September 2016 were €7,415 million, which is
13.9% up on the corresponding period of the previous year (€6,513 million).
Acquisitions and disposals excluded, net sales in local currencies grew by
2.0%. Suomen Lähikauppa Oy has been consolidated into Kesko Group as of 12 April
2016 and Onninen Group as of 1 June 2016. Anttila was included in the figures
for the comparative period until 16 March 2015.
In the grocery trade, the 11.4% net sales growth was significantly attributable
to the acquisition of Suomen Lähikauppa. Net sales in local currencies,
excluding Suomen Lähikauppa, were up 0.5%. In the building and technical trade,
net sales increased by 18.5% and in local currencies, excluding Onninen and
Anttila, by 3.0%. In the car trade, net sales were markedly up by 10.0%. The
Group's net sales in Finland increased by 12.3%, and acquisitions and disposals
excluded, by 0.9%. In the other countries, net sales increased by 20.3% and in
local currencies, acquisitions and disposals excluded, by 6.9%. International
operations accounted for 20.2% (19.1%) of net sales.
1-9/2016 Net sales, Change, % Change in local Operating Change, €
€ million currency excl. profit, million
acquisitions and comparable,
disposals, % € million
Grocery trade 3,814 +11.4 +0.5 124.0 +1.0
Building and
technical trade 2,979 +18.5 +3.0 83.5 +27.4
Car trade 628 +10.0 +10.0 22.0 -0.3
Common functions
and eliminations -5 (..) (..) -19.9 -3.9
Total 7,415 +13.9 +2.0 209.6 +24.2
(..) Change over 100%
The Group's comparable operating profit for January-September was €209.6 million
(€185.3 million). In the grocery trade, profitability was good. The comparable
operating profit was €124.0 million (€123.0 million), adversely affected by €5.5
million due to the real estate arrangement completed in June 2015. In the
building and technical trade, profitability was improved by the acquisition of
Onninen and the disposal of the Intersport business operations in Russia in the
financial period, the good profit performance of foreign operations and the
divestment of Anttila completed in the previous year. In the car trade,
profitability remained steadily at a good level. The total impact of the real
estate arrangement implemented in June 2015 on the comparable operating profit
of the grocery trade and the building and technical trade was €-7.4 million.
The operating profit was €187.0 million (€155.3 million). The items affecting
comparability totalled €-22.6 million (€-30.0 million). The most significant
items affecting comparability included €7.0 million in gains on the disposal of
real estate, €6.5 million in asset transfer taxes on acquisitions included in
structural arrangements and €5.3 million in costs related to the conversion of
the Suomen Lähikauppa chains, as well as €11.1 million in impairment charges. In
the previous year, the items affecting the comparability of the operating profit
included a €130 million loss on the divestment of Anttila and €101 million in
gains on the disposal of real estate.
Items affecting comparability, € million 1-9/2016 1-9/2015
Operating profit, comparable 209.6 185.3
Items affecting comparability
+gains on disposal 7.9 101.1
-losses on disposal -0.4 -131.8
-impairment charges -11.1 -
+/-structural arrangements -13.7 -
+/-others -5.3 0.7
Total items affecting comparability -22.6 -30.0
Operating profit 187.0 155.3
The Group's profit before tax for January-September was €188.7 million (€147.3
million). The Group's earnings per share were €1.40 (€0.81). The Group's equity
per share was €20.84 (€21.41).
In January-September, the K-Group's (i.e. Kesko's and the chain stores') retail
and B2B sales (VAT 0%) were €9,107 million, up 12.0% compared to the previous
year. The K-Plussa customer loyalty programme gained 50,692 new households in
January-September 2016. At the end of September, there were 2.3 million K-Plussa
households and 3.6 million K-Plussa cardholders.
Net sales and profit for July-September 2016
The Group's net sales for July-September 2016 were €2,792 million, which is
26.7% up on the corresponding period of the previous year (€2,203 million).
Acquisitions excluded, net sales in local currencies grew by 1.1%.
In the grocery trade, the 16.7% net sales growth was affected by the acquisition
of Suomen Lähikauppa. Net sales performance in local currencies, excluding
Suomen Lähikauppa, was -0.5%. In the building and technical trade, net sales
increased by 44.4% and in local currencies, excluding Onninen, by 2.0%. In the
car trade, net sales increased by 11.2%. The Group's net sales in Finland
increased by 23.3% and acquisitions excluded, by 0.3%. In the other countries,
net sales increased by 39.8% and in local currencies, acquisitions excluded, by
4.2%. International operations accounted for 23.1% (20.9%) of net sales.
7-9/2016 Net sales, Change, % Change in local Operating Change, €
€ million currency excl. profit, million
acquisitions and comparable,
disposals, % € million
Grocery trade 1,367 +16.7 -0.5 49.2 +4.4
Building and
technical trade 1,238 +44.4 +2.0 45.3 +9.5
Car trade 190 +11.2 +11.2 6.8 +0.8
Common functions
and eliminations -3 (..) (..) -3.1 +1.0
Total 2,792 +26.7 +1.1 98.2 +15.7
(..) Change over 100%
The comparable operating profit for July-September was €98.2 million (€82.5
million). The comparable operating profit of the grocery trade strengthened
owing to synergies and the enhancement actions taken. In the building and
technical trade, the comparable operating profit was increased by the
acquisition of Onninen, the profit improvement of the building and home
improvement trade operations in Sweden, the disposal of the Intersport business
operations in Russia and the good profit performance of the furniture trade and
the agricultural and machinery trade. In the car trade, the comparable operating
profit was €6.8 million (€6.0 million).
The operating profit was €85.5 million (€83.1 million). The operating profit
includes items affecting comparability in the amount of €-12.7 million (€0.7
million). The most important items were €3.9 million in costs related to the
conversion of the Suomen Lähikauppa chains and €3.1 million in impairment
charges. In the previous year, the items affecting the comparability of the
operating profit mainly included gains on the disposal of real estate.
Items affecting comparability, € million 7-9/2016 7-9/2015
Operating profit, comparable 98.2 82.5
Items affecting comparability
+gains on disposal 0.8 1.2
-losses on disposal -0.1 -0.2
-impairment charges -3.1 -
+/-structural arrangements -4.6 -
+/-others -5.7 -0.4
Total items affecting comparability -12.7 0.7
Operating profit 85.5 83.1
The Group's profit before tax for July-September was €84.8 million (€78.8
million). The Group's earnings per share were €0.63 (€0.43).
In July-September, the K-Group's (i.e. Kesko's and the chain stores') retail and
B2B sales (VAT 0%) were €3,441 million, up 23.0% compared to the previous year.
Finance
In January-September, the cash flow from operating activities was €62.4 million
(€153.1 million). The cash flow from investing activities was €-576.6 million
(€288.0 million).
At the end of the period, liquid assets totalled €245 million (€858 million).
Interest-bearing liabilities were €545 million (€464 million) and interest-
bearing net debt was €299 million (€-394 million) at the end of September. The
equity ratio was 47.9% (54.2%) at the end of the period.
The Group's net finance income was €3.3 million (net finance costs €8.0 million)
in January-September.
In July-September, the cash flow from operating activities was €80.2 million
(€85.6 million). The cash flow from investing activities was €-47.6 million (€-
46.2 million).
The Group's net finance costs were €1.1 million (€3.5 million) in July-
September.
Taxes
In January-September, the Group's taxes were €37.7 million (€56.7 million). The
effective tax rate was 20.0% (38.5%).
In July-September, the Group's taxes were €16.4 million (€30.4 million). The
effective tax rate was 19.3% (38.5%).
Capital expenditure
In January-September, the Group's capital expenditure totalled €637.7 million
(€151.6 million), or 8.6% (2.3%) of net sales. Capital expenditure in store
sites was €158.6 million (€111.9 million), acquisitions €431.0 million, capital
expenditure in IT €19.8 million (€12.7 million) and other capital expenditure
€28.2 million (€26.9 million).
In July-September, the Group's capital expenditure totalled €73.6 million (€41.5
million), or 2.6% (1.9%) of net sales. Capital expenditure in store sites was
€58.1 million (€33.5 million), in IT €10.9 million (€4.1 million) and other
capital expenditure was €4.6 million (€3.9 million).
Personnel
In January-September, the average number of personnel in Kesko Group was 21,940
(19,075) converted into full-time employees. The increase was due to the
acquisitions of Suomen Lähikauppa and Onninen.
At the end of September 2016, the number of personnel was 29,332 (21,861), of
whom 15,008 (9,898) worked in Finland and 14,324 (11,963) outside Finland. The
number of Suomen Lähikauppa's personnel was 3,609 and that of Onninen 3,115.
SEGMENTS
Seasonal nature of operations
The Group's operating activities are affected by seasonal fluctuations. The net
sales and the 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. In terms of the operating profit level, the
second and third quarter are strongest, whereas the impact of the first quarter
on the full year profit is smallest. The acquisitions of Suomen Lähikauppa and
Onninen increase the seasonal fluctuations between the quarters. The operating
profit levels of Onninen and Suomen Lähikauppa are lowest for the first quarter.
Grocery trade
1-9/2016 1-9/2015 7-9/2016 7-9/2015
Net sales, € million 3,814 3,424 1,367 1,171
Operating profit, comparable, € million 124.0 123.0 49.2 44.8
Operating margin, comparable, % 3.3 3.6 3.6 3.8
Capital expenditure, € million 188.4 99.0 49.1 28.2
Net sales, € million 1-9/2016 Change, % 7-9/2016 Change, %
Sales to K-food stores 2,336 0.0 786 -0.8
K-citymarket, non-food 403 -0.5 141 +1.4
Suomen Lähikauppa 387 - 202 -
Kespro 601 +2.2 211 +2.2
K-ruoka, Russia 82 +9.9 28 +12.8
Others and eliminations 4 -81.2 -1 (..)
Total 3,814 +11.4 1,367 +16.7
(..) Change over 100%
January-September 2016
The net sales of the grocery trade for January-September were €3,814 million
(€3,424 million), representing a growth of 11.4%. Suomen Lähikauppa excluded,
net sales in local currencies increased by 0.5%. In January-September, the
grocery sales of K-food stores in Finland increased by 0.1% (VAT 0%) (excluding
Suomen Lähikauppa) and Suomen Lähikauppa included, by 11.0%. In the grocery
market in Finland, retail prices are estimated to have changed by approximately
-0.8% compared to the previous year (VAT 0%; Kesko's own estimate based on the
Consumer Price Index of Statistics Finland) and the total market (VAT 0%) is
estimated to have increased by approximately 1.2% in January-September (Kesko's
own estimate). The sales in roubles of the food stores in Russia increased by
26.6%.
The acquisition of Suomen Lähikauppa was completed on 12 April 2016 and the
conversion of the Siwa and Valintatalo stores into K-Market stores was begun in
May. At the same time, the renewal of the entire K-Market chain started. Kesko's
neighbourhood retail services improve significantly and the acquisition will
provide significant economies of scale and synergies for Kesko.
In January-September, the comparable operating profit of the grocery trade was
€124.0 million (€123.0 million). Owing to the enhancement actions taken,
profitability was good in the grocery trade. The real estate arrangement
completed in June 2015 had a €-5.5 million impact on the comparable operating
profit. The operating profit of the grocery trade was €119.1 million (€195.9
million). The items affecting comparability were €5.0 million (€72.9 million)
the most important of which is related to the conversion of the Siwa and
Valintatalo stores into K-Market stores. Suomen Lähikauppa contributed €-1.8
million to the comparable operating profit and €-7.0 million to the operating
profit for January-September.
The capital expenditure of the grocery trade in January-September was €188.4
million (€99.0 million), of which €115.6 million (€90.3 million) was in store
sites and €54.1 million in acquisitions.
July-September 2016
The net sales of the grocery trade for July-September were €1,367 million
(€1,171 million), representing a growth of 16.7%. Suomen Lähikauppa excluded,
net sales in local currencies decreased by 0.5%. In July-September, the grocery
sales of K-food stores in Finland increased by 0.7% (VAT 0%) (excluding Suomen
Lähikauppa) and Suomen Lähikauppa included, sales increased by 17.3%. In the
grocery market in Finland, retail prices are estimated to have changed by
approximately -0.5% compared to the previous year. The sales in roubles of the
food stores in Russia increased by 16.0%.
In July-September, the comparable operating profit of the grocery trade was
€49.2 million (€44.8 million). The comparable operating profit strengthened due
to synergies and the enhancement actions taken. The operating profit was €44.8
million (€45.0 million). The items affecting comparability were €-4.4 million
(€0.2 million). The most significant item affecting comparability is the €3.9
million of costs related to the conversion of Suomen Lähikauppa's stores. Suomen
Lähikauppa contributed €-0.7million to the comparable operating profit for July-
September and €-4.6 million to the operating profit.
The capital expenditure of the grocery trade in July-September was €49.1 million
(€28.2 million), of which €45.4 million (€26.0 million) was in store sites.
In July-September, one new K-Market in Finland and two food stores in Russia
were opened. Renewals and extensions were made in a total of 139 stores, of
which 102 were conversions of Siwa and Valintatalo stores into K-Markets.
The most significant project under construction is the shopping centre i3 in
Itäkeskus, Helsinki. A K-citymarket is being built in Sastamala and a new K-
supermarket is being built in Tampere, in Niittykumpu, Espoonlahti and Suurpelto
in Espoo, in Lappeenranta, Porvoo, Ilmajoki, Kemiönsaari and in Lauttasaari,
Kalasatama and Pasila, Helsinki.
Store numbers at 30.9. 2016 2015
K-citymarket 80 81
K-supermarket 226 220
K-Market** 531 394
Neste K 67 65
Valintatalo and Siwa** 435 -
K-ruoka, Russia 11 8
Others* 94 136
* Incl. online stores
** The total number of Suomen Lähikauppa's stores was 583.
In addition, several K-food stores offer e-commerce services to their customers.
Building and technical trade
1-9/2016 1-9/2015 7-9/2016 7-9/2015
Net sales, € million 2,979 2,514 1,238 857
Operating profit, comparable, € million 83.5 56.1 45.3 35.8
Operating margin, %, comparable 2.8 2.2 3.7 4.2
Capital expenditure, € million 428.0 26.5 15.1 8.0
Net sales, € million 1-9/2016 Change, % 7-9/2016 Change, %
Building and home improvement
trade, Finland 650 +4.1 214 +4.1
Indoor 138 +3.7 51 +10.2
K-rauta, Sweden 173 +7.2 61 +6.5
Byggmakker, Norway 313 -3.8 107 -2.6
Kesko Senukai, the Baltics 358 +5.3 138 +5.8
K-rauta, Russia 129 -12.0 51 -2.4
OMA, Belarus 75 -13.8 29 -13.7
Onninen 512 - 376 -
Intersport, Finland 131 +1.7 47 +3.3
Agricultural and machinery trade 485 +0.6 161 -1.8
Others 26 -71.9 7 -51.9
Total 2,979 +18.5 1,238 +44.4
January-September 2016
The net sales of the building and technical trade for January-September were
€2,979 million (€2,514 million), up 18.5%. Net sales in local currencies,
excluding acquisitions, increased by 3.0%.
In January-September, the net sales of the building and technical trade in
Finland were €1,562 million (€1,343 million), up 16.4%. Acquisitions and
disposals excluded, net sales in Finland grew by 0.5%. In January-September, the
net sales from foreign operations were €1,417 million (€1,171 million), up
21.0%. In local currencies, excluding acquisitions and disposals, the net sales
from foreign operations increased by 5.7%. Foreign operations contributed 47.6%
(46.6%) to the net sales of the building and technical trade.
The acquisition of Onninen was completed in 1 June 2016. Onninen's net sales in
June-September were €512 million. The acquisition accelerates the implementation
of the international growth strategy of Kesko's building and technical trade and
provides significant synergy potential.
In January-September, the net sales of the building and home improvement trade
were €1,828 million (€1,812 million), an increase of 0.9%. In local currencies,
net sales were up by 4.4 %. In respective local currencies, net sales grew in
Sweden by 7.2%, in Norway by 2.4% and in Russia by 1.3%. In the building and
home improvement trade, growth strengthened especially in the B2B trade. The
market share of the K-Group's building and home improvement trade is estimated
to have strengthened especially in Finland, Sweden and Norway. The K-Group's
sales of building and home improvement products in Finland increased by a total
of 5.2% and the total market (VAT 0%) is estimated to have grown by
approximately 2.6% (Kesko's own estimate).
The net sales of the agricultural and machinery trade for January-September were
€485 million (€482 million), up 0.6% compared to the previous year. Net sales in
Finland were €372 million, down 3.8%. The net sales from foreign operations were
€113 million, up 18.4%. The retail sales of the K-maatalous chain in Finland
were €320 million, down 1.3%.
The net sales of the leisure trade were €153 million (€154 million), a decrease
of 0.6%.
In January-September, the comparable operating profit of the building and
technical trade was €83.5 million (€56.1 million), up €27.4 million compared to
the previous year. The profit for the comparative period includes a €12.7
million operating loss from Anttila divested in March 2015. Profitability was
improved by the acquisition of Onninen and the good profit performance of
foreign operations. Onninen's contribution to the operating profit for January-
September was €11.0 million, adversely impacted by the fair value allocations of
inventories written off in the amount of €3.4 million.
The operating profit of the building and technical trade was €72.5 million (€-
46.4 million). The most significant items in the previous year affecting
comparability include a €130 million loss on the divestment of Anttila and €28
million in gains on the disposal of real estate.
In January-September, the capital expenditure of the building and technical
trade totalled €428.0 million (€26.5 million), of which €376.9 million were in
acquisitions and €42.1 million (€16.6 million) in store sites. The acquisitions
include €364.1 million for the acquisition of Onninen and €10.0 million for
increasing the ownership interest in the Belarusian OMA.
July-September 2016
The net sales of the building and technical trade for July-September were €1,238
million (€857 million), up 44.4%. Net sales in local currencies, excluding
acquisitions, increased by 2.0%.
In July-September, the net sales of the building and technical trade in Finland
were €622 million (€421 million), up 47.5%. Acquisitions excluded, net sales in
Finland grew by 0.4%. In July-September, the net sales from foreign operations
were €616 million (€436 million), up 41.3%. In local currencies, excluding
acquisitions, the net sales from foreign operations increased by 3.6%. Foreign
operations contributed 49.8% (50.9%) to net sales. In the building and technical
trade, market share continued to strengthen.
In July-September, the net sales of the building and home improvement trade were
€649 million (€634 million), up 2.4%. In local currencies, net sales grew by
4.2%. In respective local currencies, net sales grew in Sweden by 7.4% and in
Russia by 2.1%. In Norway, net sales decreased by 0.9% in local currencies. The
K-Group's sales of building and home improvement products in Finland increased
by a total of 4.6% and the total market (VAT 0%) is estimated to have grown by
approximately 3.1% (Kesko's own estimate).
Onninen's net sales in July-September 2016 were €376 million.
The net sales of the agricultural and machinery trade for July-September were
€161 million (€164 million), down 1.8% compared to the previous year. Net sales
in Finland were €109 million, down 7.0%. The net sales from foreign operations
were €53 million, up 11.0%. The retail sales of the K-maatalous chain were down
by 0.2%.
The net sales of the leisure trade were €54 million (€56 million), a decrease of
2.8%. The decline is attributable to the disposal of the Intersport business
operations in Russia in July 2016.
In July-September, the comparable operating profit of the building and technical
trade was €45.3 million (€35.8 million), up €9.5 million compared to the
previous year. The operating profit was increased by the acquisition of Onninen,
the profit improvement of the building and home improvement trade operations in
Sweden, the disposal of the Intersport business operations in Russia and the
good profit performance of the furniture trade and the agricultural and
machinery trade. Onninen's operating profit in July-September 2016 was €8.8
million, adversely impacted by the fair value allocations of inventories written
off in the amount of €2.6 million.
The operating profit of the building and technical trade was €37.9 million
(€36.8 million). Items affecting comparability were €-7.4 million (€1.0
million).
In July-September, the capital expenditure of the building and technical trade
totalled €15.1 million (€8.0 million), of which €12.4 million (€5.1 million)
were in store sites.
In July-September 2016, a building and home improvement store was opened in St.
Petersburg and two The Athlete's Foot stores in Finland.
The most significant store sites under construction are a K-rauta store in
Savonlinna, a K-rauta store in St. Petersburg and a building and home
improvement store in Belarus.
Store numbers at 30.9. 2016 2015
K-rauta 46 44
Rautia* 95 93
K-maatalous* 80 80
K-rauta, Sweden 20 20
Byggmakker, Norway 86 89
K-rauta, Estonia 8 8
K-rauta, Latvia 8 8
Senukai, Lithuania 22 19
K-rauta, Russia 13 13
OMA, Belarus 13 12
Onninen 149 -
Intersport, Finland** 60 61
Budget Sport** 11 11
Asko and Sotka** 88 88
Kookenkä** 38 38
Intersport, Russia - 17
Asko and Sotka, the Baltics** 12 10
Konekesko 1 1
* In 2016, 43 (45) Rautia stores also operated as K-maatalous stores
** Including online stores
In addition, the building and home improvement stores offer e-commerce services
to their customers.
Car trade
1-9/2016 1-9/2015 7-9/2016 7-9/2015
Net sales, € million 628 571 190 170
Operating profit, comparable, € million 22.0 22.3 6.8 6.0
Operating margin, comparable, % 3.5 3.9 3.6 3.5
Capital expenditure, € million 11.2 11.3 3.1 4.7
Net sales, € million 1-9/2016 Change, % 7-9/2016 Change, %
VV-Auto 628 +10.0 190 +11.2
January-September 2016
The net sales of the car trade for January-September were €628 million (€571
million), up 10.0%. In January-September, the combined market performance of
first registrations of passenger cars and vans was 12.4% (0.0%). The combined
market share of passenger cars and vans imported by VV-Auto in January-September
was 18.2% (19.4%).
The profitability of the car trade remained at a good level. The comparable
operating profit for January-September was €22.0 million (€22.3 million). The
operating profit for January-September was €22.0 million (€22.3 million).
The capital expenditure of the car trade in January-September was €11.2 million
(€11.3 million).
July-September 2016
The net sales of the car trade for July-September were €190 million (€170
million), up 11.2%. The combined market share of passenger cars and vans
imported by VV-Auto in July-September was 17.2% (18.0%).
The profitability of the car trade remained at a good level. The comparable
operating profit for July-September was €6.8 million (€6.0 million). The
operating profit for July-September was €6.8 million (€6.0 million). VV-Auto's
order books continued to strengthen markedly from the previous year.
The capital expenditure of the car trade in July-September was €3.1 million
(€4.7 million).
Store numbers at 30.9. 2016 2015
VV-Auto, retail trade 10 9
Changes in the Group composition
Kesko implemented the arrangement it had agreed in the autumn of 2015 to
centralise its Baltic building and home improvement trade in UAB Senuku Prekybos
centras (Senukai). The company's name has been changed to Kesko Senukai. In the
arrangement, Kesko sold the shares in its wholly owned companies responsible for
the operations of K-rauta stores in Estonia and Latvia to its subsidiary
Senukai, in which Kesko has a majority interest. (Stock exchange release on 1
April 2016).
Kesko Food Ltd, a Kesko Corporation subsidiary, acquired the whole share capital
of Suomen Lähikauppa Oy from the private equity investment firm Triton. (Stock
exchange release on 12 April 2016). Suomen Lähikauppa Oy was renamed to K-Market
Oy in August.
Kesko Corporation acquired Onninen Oy's whole share capital from Onvest Oy. The
acquisition does not include Onninen's steel business or Russian subsidiary.
(Stock exchange release on 1 June 2016).
In July, Kesko Corporation disposed of the Intersport business operations in
Russia.
In June, the Group's ownership interest in the Group's Belarusian subsidiary OMA
increased to 25% (previously 9%).
In September, Kesko acquired the Russian project business operations from Onvest
Oy.
Shares, securities market and Board authorisations
At the end of September 2016, the total number of Kesko Corporation shares was
100,019,752, of which 31,737,007, or 31.7%, were A shares and 68,282,745, or
68.3%, were B shares. At 30 September 2016, Kesko Corporation held 742,272 own B
shares as treasury shares. These treasury shares accounted for 1.09% of the
number of B shares, 0.74% of the total number of shares, and 0.19% of votes
attached to all shares of the Company. The total number of votes attached to all
shares was 385,652,815. Each A share carries ten (10) votes and each B share one
(1) vote. The Company cannot vote with own shares held by it as treasury shares
and no dividend is paid on them. At the end of September 2016, Kesko
Corporation's share capital was €197,282,584.
The price of a Kesko A share quoted on Nasdaq Helsinki was €31.12 at the end of
2015, and €38.56 at the end of September 2016, representing an increase of
23.9%. Correspondingly, the price of a B share was €32.37 at the end of 2015,
and €41.00 at the end of September 2016, representing an increase of 26.7%. In
January-September, the highest A share price was €39.70 and the lowest was
€28.98. The highest B share price was €42.65 and the lowest was €29.56. In
January-September, the Nasdaq Helsinki All-Share index (OMX Helsinki) was up by
0.3% and the weighted OMX Helsinki Cap index by 4.0%. The Retail Sector Index
was up by 26.8%.
At the end of September 2016, the market capitalisation of A shares was €1,224
million, while that of B shares was €2,769 million, excluding the shares held by
the parent company. The combined market capitalisation of A and B shares was
€3,993 million, an increase of €823 million from the end of 2015. In January-
September 2016, a total of 1.3 million (1.8 million) A shares were traded on
Nasdaq Helsinki, a decrease of 29.9%. The exchange value of A shares was €46
million. The number of B shares traded was 39.1 million (43.7 million), a
decrease of 10.5%. The exchange value of B shares was €1,448 million. Nasdaq
Helsinki accounted for 53% of the Kesko A and B share trading in January-
September 2016. Kesko shares were also traded on multilateral trading
facilities, the most significant of which were BATS Chi-X with 27% and Turquoise
with 19% of the trading (source: Fidessa).
During the reporting period, the Board had the authority to decide on the
transfer of a maximum of 1,000,000 own B shares held by the Company as treasury
shares. On 3 February 2016, the Board decided to grant own B shares held by the
Company as treasury shares to persons included in the target group of the 2015
vesting period, based on this share issue authorisation and the fulfilment of
the vesting criteria of the 2015 vesting period of Kesko's three-year share-
based compensation plan. This transfer of a total of 137,054 own B shares was
announced in a stock exchange release on 17 March 2016, and the transfer of
2,670 own B shares was announced in a stock exchange release on 27 April 2016.
Based on the 2014-2016 share-based compensation plan decided by the Board, a
total maximum of 600,000 own B shares held by the Company as treasury shares can
be granted within a period of three years based on the fulfilment of the vesting
criteria. The Board will separately decide on the vesting criteria and target
group for each vesting period. The share-based compensation plan was announced
in a stock exchange release on 4 February 2014. In January-September, a total of
4,419 shares granted based on the fulfilment of the vesting criteria of the
share-based compensation plans (the 2011-2013 and the 2014-2016 share-based
compensation plans) was returned to the Company in accordance with the terms and
conditions of the share-based compensation plans. The returns during the
reporting period were notified in a stock exchange release on 17 March 2016, 31
March 2016, 27 April 2016 and 30 May 2016.
Kesko's Annual General Meeting held on 4 April 2016 authorised the Company's
Board to make decisions concerning the transfer of a total maximum of 1,000,000
own B shares held by the Company as treasury shares (the 2016 share issue
authorisation). The authorisation cancelled the earlier share issue
authorisation corresponding in content. Based on the authorisation, own B shares
held by the Company as treasury shares can be issued for subscription by
shareholders in a directed issue in proportion to their existing holdings of the
Company shares, regardless of whether they own A or B shares. Shares can also be
issued in a directed issue, departing from the shareholder's pre-emptive right,
for a weighty financial reason of the Company, such as using the shares to
develop the Company's capital structure, to finance possible acquisitions,
capital expenditure or other arrangements within the scope of the Company's
business operations, and to implement the Company's commitment and incentive
scheme. Own B shares held by the Company as treasury shares can be transferred
either against or without payment. A share issue can only be without payment, if
the Company, taking into account the best interests of all of its shareholders,
has a particularly weighty financial reason for it. The authorisation also
includes the Board's authority to make decisions concerning any other matters
related to share issues. The amount possibly paid for the Company's own shares
is recorded in the reserve of unrestricted equity. The authorisation is valid
until 30 June 2020.
The Annual General Meeting held on 4 April 2016 also approved the Board's
proposal for its authorisation to decide on the acquisition of a maximum of
1,000,000 own B shares of the Company (the 2016 authorisation to acquire own
shares). B shares are acquired with the Company's distributable unrestricted
equity, not in proportion to the shareholdings of shareholders, at the market
price quoted in public trading organised by Nasdaq Helsinki Ltd ("the exchange")
at the date of acquisition. The shares are acquired and paid in accordance with
the rules of the exchange. The acquisition of own shares reduces the amount of
the Company's distributable unrestricted equity. B shares are acquired for use
in the development of the Company's capital structure, to finance possible
acquisitions, capital expenditure and/or other arrangements within the scope of
the Company's business operations, and to implement the Company's commitment and
incentive scheme. The Board makes decisions concerning any other issues related
to the acquisition of own B shares. The authorisation is valid until 30
September 2017.
In addition, the Board has a share issue authorisation according to which the
Board is authorised to issue a maximum of 20,000,000 new B shares (the 2015
share issue authorisation). The authorisation is valid until 30 June 2018. The
shares can be issued against payment to be subscribed by shareholders in a
directed issue in proportion to their existing holdings of the Company shares
regardless of whether they hold A or B shares, or, departing from the
shareholder's pre-emptive right, in a directed issue, if there is a weighty
financial reason for the Company, such as using the shares to develop the
Company's capital structure and financing possible acquisitions, capital
expenditure or other arrangements within the scope of the Company's business
operations. The amount paid for the shares is recognised in the reserve of
invested non-restricted equity. The authorisation also includes the Board's
authority to decide on the share subscription price, the right to issue shares
for non-cash consideration and the right to make decisions on other matters
concerning share issues.
At the end of September 2016, the number of shareholders was 39,516, which is
13 less than at the end of 2015. At the end of September, foreign ownership of
all shares was 31%. Foreign ownership of B shares was 45% at the end of
September.
Flagging notifications
Kesko Corporation did not receive any flagging notifications during the
reporting period.
Key events during the reporting period
Tomi Korpisaari, a member of Kesko Corporation's Board of Directors, announced
that he would resign from the Company's Board of Directors for reasons of health
as of 1 March 2016. Kaarina Ståhlberg was appointed General Counsel and member
of the Management Board of Posti Group Corporation as of 1 March 2016, as a
result of which Ståhlberg announced that she would resign from Kesko
Corporation's Board of Directors as of 1 March 2016. (Stock exchange release on
5 February 2016 and 15 February 2016)
The arrangement agreed by Kesko in the autumn of 2015 to centralise the Baltic
building and home improvement trade in UAB Senuku Prekybos centras (Senukai) was
completed. The company's name has been changed to Kesko Senukai. In the
arrangement, Kesko sold the shares in its wholly owned companies responsible for
the operations of K-rauta stores in Estonia and Latvia to its subsidiary
Senukai, in which Kesko has a majority interest. (Stock exchange release on 1
April 2016)
The transaction agreed between Kesko Corporation's subsidiary Kesko Food and the
private equity investment firm Triton to acquire Suomen Lähikauppa was
completed. The debt-free price of the acquisition, structured as a share
purchase, was €54 million. In 2015, Suomen Lähikauppa's net sales were €935.7
million, it has around 600 Siwa and Valintatalo stores and around 3,800
employees. The Finnish Competition and Consumer Authority (FCCA) announced their
approval of the acquisition on 11 April 2016. The permission contains conditions
imposed by the FCCA. The FCCA made the acquisition conditional on the sale of
60 stores of Suomen Lähikauppa Oy to competitors. In case the sale of some store
or some stores is not possible, the selling obligation imposed on Kesko Food Ltd
will cease. (Stock exchange release on 11 April 2016 and 12 April 2016)
The transaction agreed between Kesko Corporation and Onvest Oy to acquire the
whole share capital of Onninen Oy was completed. The acquisition does not
include Onninen's steel business or Russian subsidiary. In 2015, the pro forma
net sales of the acquired business were €1,465 million and the EBITDA was €39
million. The price of the debt-free acquisition, structured as a share purchase,
was €364 million. (Stock exchange release on 12 January 2016, 20 April 2016 and
1 June 2016)
Johan Friman, 51, Master of Science (Economics), has been appointed Senior Vice
President responsible for Kesko's car trade and President of VV-Auto Group Oy.
He will also become a member of Kesko's Group Management Board. Johan Friman
will take over his new position on 1 January 2017 and Pekka Lahti, the current
Senior Vice President for the car trade division, will retire on a pension in
accordance with his service contract on 1 April 2017. (Stock exchange release on
21 September 2016)
Events after the reporting period
On 26 October 2016, Kesko Food Russia Holding Oy signed an agreement to dispose
of its grocery trade business in Russia to Lenta Ltd. Lenta is the largest
hypermarket chain in Russia in terms of selling space and the country's fifth
largest retail chain in terms of 2015 sales. The aggregate consideration for the
disposal is approximately RUB 11 billion (approximately €158 million). The
disposal includes 11 food stores operating in the St. Petersburg and
Leningradskiy regions, three land plots in the Moscow and Leningradskiy regions,
as well as administrative and support functions. The growth of grocery trade in
Russia would have required significant capital expenditures. The disposal is yet
subject to the approval of the Russian competition authority, The Federal
Antimonopoly Service of the Russian Federation, FAS, and the fulfilment of the
other terms and conditions of the disposal. The disposal is estimated to be
completed on November 30, 2016. (Stock exchange release on 26 October 2016)
Resolutions of the 2016 Annual General Meeting and decisions of the Board's
organisational meeting
Kesko Corporation's Annual General Meeting, held on 4 April 2016, adopted the
financial statements and the consolidated financial statements for 2015 and
discharged the Board members and the Managing Director from liability. The
General Meeting also resolved to distribute a dividend of €2.50 per share as
proposed by the Board, or a total amount of €248,195,187.50. The dividend pay
date was 13 April 2016.
The General Meeting resolved to leave the number of Board members unchanged at
seven. The term of office of each of the seven (7) Board members elected by the
Annual General Meeting on 13 April 2015, i.e. retailer, Business College
Graduate Esa Kiiskinen, retailer, Master of Science in Economics Tomi
Korpisaari, retailer, eMBA Toni Pokela, eMBA Mikael Aro, Master of Science in
Economics Matti Kyytsönen, Master of Science in Economics Anu Nissinen and
Master of Laws Kaarina Ståhlberg, will expire at the close of the 2018 Annual
General Meeting in accordance with Kesko's Articles of Association. Korpisaari
and Ståhlberg had resigned from the membership of the Company's Board of
Directors as of 1 March 2016. The General Meeting resolved to replace them by
retailer, trade technician Matti Naumanen and Managing Director, Master of
Science in Economics Jannica Fagerholm until the close of the Annual General
Meeting to be held in 2018. In addition, the General Meeting resolved to leave
the Board members' fees and the basis for reimbursement of expenses unchanged.
The General Meeting elected the firm of auditors PricewaterhouseCoopers Oy,
Authorised Public Accountants, as the Company's auditor with APA Mikko Nieminen
as the auditor with principal responsibility.
The General Meeting approved the Board's proposal for share issue authorisation
according to which the Board may decide on the transfer of a total maximum of
1,000,000 own B shares held by the Company as treasury shares (the 2016 share
issue authorisation). The General Meeting also approved the Board's proposal for
the authorisation to acquire own shares, according to which the Board may decide
on the acquisition of a maximum of 1,000,000 own B shares of the Company (the
2016 authorisation to acquire own shares).
Moreover, the General Meeting approved the Board's proposal for its
authorisation to decide on the donations in a total maximum of €300,000 for
charitable or similar purposes until the Annual General Meeting to be held in
2017 and to decide on the donation recipients, purposes of use and other terms
of the donations.
After the Annual General Meeting, Kesko Corporation's Board of Directors held an
organisational meeting in which it elected M.Sc. (Econ.) Jannica Fagerholm as
the Chair of the Audit Committee, re-elected eMBA Mikael Aro as its Deputy Chair
and M.Sc. (Econ.) Matti Kyytsönen as its member. Business College Graduate Esa
Kiiskinen (Ch.), Mikael Aro (Dep. Ch.) and M.Sc. (Econ.) Anu Nissinen were re-
elected to the Board's Remuneration Committee.
The resolutions of Annual General Meeting and the decisions of the Board's
organisational meeting were announced in more detail in stock exchange releases
on 4 April 2016.
Responsibility
Kesko has completed a human rights impact assessment in compliance with UN's
Guiding Principles on Business and Human Rights and published a human rights
commitment on its web pages in September.
In January-September, Pirkka 'Thank the Producer' products sold at K-food stores
generated a support amount of approximately €170,000 to be remitted to Finnish
producers. The aim is to add more products to the product group, provided that
their good sales performance continues.
In September, K-food stores and Kesko joined the Consumer Association's Food
Waste Week Campaign to promote the reduction of food wastage and increase the
appreciation of food.
In September-October, K-food stores took part in the Pink Ribbon campaign
raising funds for Finnish breast cancer research and cancer counselling. The aim
is to increase tenfold the amounts donated by K-food stores to the Pink Ribbon
campaign.
K-rauta is a partner in the Liiteri tool rental service trial targeted at urban
home renovators, which was launched in September at Teurastamo, Helsinki.
Risk management
Kesko Group has an established and comprehensive risk management process. Risks
and their management responses are regularly assessed within the Group and
reported to the Group management. Kesko's risk management and risks associated
with business operations are described in more detail on Kesko's website in the
Corporate Governance section.
The most significant near-future risks in Kesko's business operations are
associated with the general development of the economy and consumer behaviour in
Finland and the weakening of the Russian economy and operating conditions, as
well as their impact on Kesko's sales and profit. There are risks involved in
the integration of the business operations of Suomen Lähikauppa, Onninen and
Kesko Senukai that, if realised, may slow the achievement of the financial
objectives set. In other respects, no material change is estimated to have taken
place during 2016 in the risks described in Kesko's Report by the Board of
Directors and the financial statements for 2015 and the risks described on
Kesko's website. The risks and uncertainties related to economic development are
described in the outlook section of this release.
Outlook
Estimates for the outlook of Kesko Group's net sales and comparable operating
profit are given for the 12-month period following the reporting period
(10/2016-9/2017) in comparison with the 12 months preceding the end of the
reporting period (10/2015-9/2016).
The general economic situation and the expected trend in consumer demand vary in
Kesko's different operating countries. In Finland, owing to the weak trend in
consumers' purchasing power, the trading sector's growth is expected to remain
slow. In the Finnish grocery trade, intense competition is expected to continue.
The market for the Finnish building and technical trade is expected to improve
slightly. In Sweden and Norway, the market is expected to grow but at a somewhat
slower rate. The trend in the Russian market is expected to remain modest. In
the Baltic countries, the market is expected to grow.
Kesko Group's net sales for the next 12 months are expected to exceed the level
of the preceding 12 months. The comparable operating profit for the next 12-
month period is expected to exceed the level of the preceding 12 months.
Helsinki, 25 October 2016
Kesko Corporation
Board of Directors
The information in the interim report is unaudited.
Further information is available from Jukka Erlund, Senior Vice President, Chief
Financial Officer, telephone +358 105 322 113, and Eva Kaukinen, Vice President,
Group Controller, telephone +358 105 322 338. A Finnish-language webcast of the
interim report briefing can be viewed at 11.00 at www.kesko.fi. An English-
language audio conference on the interim report will be held today at 14.30
(Finnish time). The audio conference login is available on Kesko's website at
www.kesko.fi.
Kesko Corporation's financial statements release for 2016 will be published on
2 February 2017. In addition, Kesko Group's sales figures are published each
month. News releases and other Company information are available on Kesko's
website at www.kesko.fi.
KESKO CORPORATION
ATTACHMENTS: TABLES SECTION
Accounting policies
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Group's performance indicators
Net sales by segment
Operating profit by segment
Operating profit by segment, comparable
Operating margin by segment, comparable
Capital employed by segment
Return on capital employed by segment, comparable
Items affecting comparability
Capital expenditure by segment
Segment information by quarter
Acquisitions
Change in tangible and intangible assets
Transactions conducted by persons discharging managerial responsibilities or
persons closely associated with them
Fair value hierarchy of financial assets and liabilities
Personnel average and at the end of the reporting period
Group's commitments
Calculation of performance indicators
K-Group's retail and B2B sales
DISTRIBUTION
Nasdaq Helsinki Ltd
Main news media
www.kesko.fi
TABLES SECTION
Accounting policies
This interim report has been prepared in accordance with the IAS 34 standard.
The interim report has been prepared in accordance with the same principles as
the annual financial statements for 2015.
Consolidated income
statement (€ million),
condensed
1-9/ 1-9/ Change, % 7-9/ 7-9/ Change, % 1-12/
2016 2015 2016 2015 2015
Net sales 7,415 6,513 13.9 2,792 2,203 26.7 8,679
Cost of goods sold -6,372 -5,665 12.5 -2,382 -1,917 24.2 -7,540
Gross profit 1,043 847 23.1 409 285 43.5 1,139
Other operating income 525 622 -15.6 177 174 1.9 800
Employee benefit expense -508 -407 24.7 -192 -125 52.9 -545
Depreciation and
impairment charges -105 -97 8.5 -39 -29 32.4 -137
Other operating expenses -768 -811 -5.3 -270 -221 22.1 -1,063
Operating profit 187 155 20.4 85 83 2.8 195
Interest income and other
finance income 10 7 39.7 3 3 19.5 10
Interest expense and
other finance costs -7 -12 -37.9 -3 -5 -30.5 -14
Exchange differences 1 -3 (..) -1 -2 -29.2 -3
Share of results of
equity accounted
investments -2 0 (..) 0 -1 (..) 1
Profit before tax 189 147 28.1 85 79 7.6 188
Income tax -38 -57 -33.5 -16 -30 -46.1 -71
Net profit for the period 151 91 66.6 68 48 41.2 117
Attributable to
Owners of the parent 138 80 73.1 63 43 46.9 102
Non-controlling
interests 12 11 17.6 6 6 -1.3 16
Earnings per share
for profit attributable
to
equity holders of the
parent, €
Basic and diluted 1.40 0.81 72.9 0.63 0.43 46.7 1.03
Consolidated statement
of comprehensive income
(€ million)
1-9/ 1-9/ Change,% 7-9/ 7-9/ Change,% 1-12/
2016 2015 2016 2015 2015
Net profit for the period 151 91 66.6 68 48 41.2 117
Items that will not be
reclassified subsequently
to profit or loss
Actuarial gains/losses -6 1 (..) -14 -13 8.5 23
Items that may be
reclassified subsequently
to profit or loss
Exchange differences on
translating foreign
operations 4 -13 (..) 2 -16 (..) -17
Cash flow hedge
revaluation 2 -1 (..) 1 -1 (..) 0
Revaluation of available-
for-sale financial assets 1 1 -49.8 0 0 (..) 1
Other items 0 0 -1.0 0 0 - 0
Total other comprehensive
income for the period,
net of tax 1 -12 (..) -10 -29 -64.7 6
Total comprehensive
income for the period 151 79 92.4 58 19 (..) 124
Attributable to
Owners of the parent 140 78 78.9 52 19 (..) 119
Non-controlling
interests 11 0 (..) 6 0 (..) 5
(..) Change over 100%
Consolidated statement of financial
position (€ million), condensed
30.9.2016 30.9.2015 Change, % 31.12.2015
ASSETS
Non-current assets
Tangible assets 1,388 1,257 10.4 1,282
Intangible assets 418 174 (..) 168
Equity accounted investments and other
financial assets 121 114 5.9 115
Loans and receivables 64 72 -11.3 67
Pension assets 172 149 15.6 176
Total 2,162 1,766 22.4 1,808
Current assets
Inventories 1,011 709 42.6 735
Trade receivables 926 620 49.4 582
Other receivables 194 133 45.8 127
Financial assets at fair value
through profit or loss 46 421 -89.0 374
Available-for-sale financial assets 77 351 -78.0 372
Cash and cash equivalents 122 86 42.3 141
Total 2,375 2,319 2.4 2,331
Non-current assets held for sale 0 0 - 0
Total assets 4,538 4,086 11.1 4,139
30.9.2016 30.9.2015 Change, % 31.12.2015
EQUITY AND LIABILITIES
Equity 2,069 2,122 -2.5 2,163
Non-controlling interest 92 76 21.0 79
Total equity 2,161 2,199 -1.7 2,242
Non-current liabilities
Interest-bearing liabilities 359 263 36.2 258
Non-interest-bearing liabilities 37 36 4.4 42
Deferred tax liabilities 56 62 -9.3 71
Pension obligations 1 1 -32.9 1
Provisions 14 16 -13.0 16
Total 467 378 23.4 388
Current liabilities
Interest-bearing liabilities 186 201 -7.4 181
Trade payables 1,197 842 42.1 795
Other non-interest-bearing liabilities 485 433 12.1 495
Provisions 42 33 28.9 38
Total 1,910 1,509 26.6 1,509
Total equity and liabilities 4,538 4,086 11.1 4,139
(..) Change over 100%
Consolidated statement of changes in equity (€ million)
Share Re- Cur- Re- Treas- Re- Non- Total
capi- serves rency valu- ury tained con-
tal trans- ation shares earn- trol-
lation re- ings ling
differ- serve inter-
ences ests
Balance at
1.1.2015 197 463 -38 -1 -31 1,594 82 2,265
Share-based
payments 4 0 4
Dividends -149 -6 -155
Other changes 0 0 5 0 5
Net profit for
the period 80 11 91
Other comprehen-
sive income
Items that will
not be
reclassified
subsequently to
profit or loss
Actuarial
gains/losses 2 2
Items that may
be reclassified
subsequently to
profit or loss
Exchange
differences
on translating
foreign
operations 0 -3 0 -10 -13
Cash flow hedge
revaluation -1 -1
Revaluation of
available-for-
sale financial
assets 1 1
Others 0 0
Tax related to
comprehensive
income 0 0 0
Total other
comprehensive
income 0 -3 0 1 -10 -12
Balance at
30.9.2015 197 463 -41 -1 -28 1,531 76 2,199
Balance at
1.1.2016 197 463 -45 0 -27 1,575 79 2,242
Share-based
payments 4 4
Increase in
share capital 13 13
Acquisition of
subsidiary and
minority
interest 0 0 0 -9 -9
Disposal of
subsidiary 17 -17 0
Dividends -248 -1 -250
Other changes 9 9
Net profit for
the period 138 12 151
Other comprehen-
sive income
Items that will
not be
reclassified
subsequently to
profit or loss
Actuarial
gains/losses -7 -7
Items that may
be reclassified
subsequently to
profit or loss
Exchange
differences
on translating
foreign
operations 0 5 -1 4
Cash flow
hedge
revaluation 2 2
Revaluation of
available-for-
sale financial
assets 1 1
Others 0 0
Tax related to
comprehensive
income -1 1 1
Total other
comprehensive
income 0 5 2 -6 -1 1
Balance at
30.9.2016 197 463 -23 3 -23 1,451 92 2,161
Consolidated statement of cash flows (€ million), condensed
1-9/ 1-9/ Change,% 7-9/ 7-9/ Change,% 1-12/
2016 2015 2016 2015 2015
Cash flows from operating activities
Profit before tax 189 147 28.1 85 79 7.6 188
Depreciations according to plan 96 97 -0.4 36 29 23.5 128
Finance income and costs -3 8 (..) 1 4 -70.0 7
Other adjustments 8 22 -63.1 4 -1 (..) 40
Change in working capital
Current non-interest-bearing
receivables, increase (-)/
decrease (+) -128 -49 (..) 71 70 0.4 -2
Inventories,
increase (-)/decrease (+) -12 -13 -8.1 7 18 -60.1 -44
Current non-interest-bearing
liabilities, increase (+)/
decrease(-) -15 -24 -39.2 -96 -93 2.9 7
Financial items and tax -73 -35 (..) -28 -20 36.6 -48
Net cash from operating activities 62 153 -59.3 80 86 -6.3 276
Cash flows from investing activities
Investing activities -607 -150 (..) -77 -41 88.5 -215
Sales of fixed assets 33 439 -92.5 29 -5 (..) 432
Increase in non-current receivables -2 -1 (..) 1 0 (..) -1
Net cash used in investing
activities -577 288 (..) -48 -46 3.0 217
Cash flows from financing activities
Interest-bearing liabilities,
increase (+)/decrease (-) 100 -36 (..) -113 -18 (..) -61
Current interest-bearing
receivables, increase (-)/
decrease (+) 1 -1 (..) 0 0 (..) 2
Dividends paid -250 -155 61.4 0 -6 (..) -156
Equity increase 13 - - 0 - - -
Short-term money market investments,
increase (-)/ decrease (+) 457 -321 (..) 51 -26 (..) -269
Other items 5 14 -64.2 -1 5 (..) 19
Net cash used in financing
activities 326 -498 (..) -64 -45 43.5 -466
Change in cash and cash equivalents -188 -57 (..) -32 -5 (..) 28
Cash and cash
equivalents and current
portion of available-for-sale
financial assets at 1 Jan. 334 313 6.6 178 262 -32.0 313
Currency translation difference
adjustment and revaluation 1 -2 (..) 0 -3 (..) -7
Cash and cash
equivalents and current
portion of available-for-sale
financial assets at 30 Sep. 147 254 -42.0 147 254 -42.0 334
(..) Change over 100%
Group's performance indicators
1-9/2016 1-9/2015 Change, pp 1-12/2015
Return on capital employed, % 11.2 9.7 1.5 9.3
Return on capital employed, %,
rolling 12 mo 10.5 8.6 1.9 9.3
Return on capital employed, comparable, % 12.5 11.6 1.0 11.7
Return on capital employed, comparable,
%, rolling 12 mo 12.5 11.3 1.2 11.7
Return on equity, % 9.1 5.4 3.7 5.2
Return on equity, %, rolling 12 mo 8.2 5.0 3.2 5.2
Return on equity, comparable, % 10.3 8.0 2.3 8.2
Return on equity, comparable, %,
rolling 12 mo 10.1 8.0 2.1 8.2
Equity ratio, % 47.9 54.2 -6.3 54.7
Gearing, % 13.9 -17.9 31.8 -20.0
Interest-bearing net debt/EBITDA,
rolling 12 mo 0.8 -1.1 1.9 -1.4
Change, %
Capital expenditure, € million 637.7 151.6 (..) 218.5
Capital expenditure, % of net sales 8.6 2.3 (..) 2.5
Earnings per share, basic, € 1.40 0.81 72.9 1.03
Earnings per share, diluted, € 1.40 0.81 72.9 1.03
Earnings per share, comparable, basic, € 1.59 1.24 27.9 1.70
Cash flows from operating activities,
€ million 62 153 -59.3 276
Cash flows from investing activities,
€ million -577 288 (..) 217
Equity per share, € 20.84 21.41 -2.7 21.82
Interest-bearing net debt, € million 299 -394 (..) -448
Diluted number of shares, average for the
reporting period, 1,000 pcs 99,240 99,104 0.1 99,114
Personnel, average 21,940 19,075 15.0 18,955
(..) Change over 100%
Group's performance indicators by 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/
quarter 2015 2015 2015 2015 2016 2016 2016
Net sales, € million 2,082 2,227 2,203 2,166 2,013 2,610 2,792
Change in net sales, % -2.2 -6.0 -4.4 -4.4 -3.3 17.2 26.7
Operating profit, € million -103.6 175.8 83.1 39.3 33.5 68.0 85.5
Operating margin, % -5.0 7.9 3.8 1.8 1.7 2.6 3.1
Operating profit, comparable, €
million 26.5 76.4 82.5 59.1 32.3 79.1 98.2
Operating margin, comparable, % 1.3 3.4 3.7 2.7 1.6 3.0 3.5
Finance income/costs,
€ million -0.3 -4.2 -3.5 0.9 2.7 1.7 -1.1
Profit before tax, € million -103.7 172.1 78.8 40.7 35.7 68.1 84.8
Profit before tax, % -5.0 7.7 3.6 1.9 1.8 2.6 3.0
Return on capital employed, % -18.1 31.9 17.6 8.2 6.7 12.3 13.6
Return on capital employed,
comparable, % 4.6 13.9 17.5 12.4 6.5 14.3 15.6
Return on equity, % -19.9 28.0 8.9 4.8 5.1 9.8 12.8
Return on equity, comparable, % 3.1 10.6 10.6 9.2 4.8 11.7 14.7
Equity ratio, % 51.5 52.2 54.2 54.7 54.8 44.8 47.9
Capital expenditure,
€ million 51.5 58.6 41.5 66.9 51.4 512.7 73.6
Earnings per share,
diluted, € -1.11 1.48 0.43 0.22 0.28 0.49 0.63
Equity per share, € 21.30 21.21 21.41 21.82 22.13 20.31 20.84
Segment information
Net sales by segment
1-9/ 1-9/ 7-9/ 7-9/ 1-12/
(€ million) 2016 2015 Change,% 2016 2015 Change,% 2015
Grocery trade, Finland 3,732 3,349 11.4 1,339 1,146 16.8 4,566
Grocery trade,
other countries* 82 75 9.9 28 25 12.8 107
Grocery trade, total 3,814 3,424 11.4 1,367 1,171 16.7 4,673
- of which intersegment trade 8 13 -35.1 2 3 -17.6 15
Building and technical trade,
Finland 1,562 1,343 16.4 622 421 47.5 1,719
Building and technical trade,
other countries* 1,417 1,171 21.0 616 436 41.3 1,530
Building and technical trade
total 2,979 2,514 18.5 1,238 857 44.4 3,250
- of which intersegment trade 10 1 (..) 4 0 (..) 1
Car trade, Finland 628 571 10.0 190 170 11.2 748
Car trade total 628 571 10.0 190 170 11.2 748
- of which intersegment trade 0 0 -72.6 0 0 -65.7 0
Common functions and
eliminations -5 5 (..) -3 4 (..) 8
Finland total 5,916 5,267 12.3 2,147 1,742 23.3 7,042
Other countries total* 1,499 1,246 20.3 644 461 39.8 1,637
Group total 7,415 6,513 13.9 2,792 2,203 26.7 8,679
(..) Change over 100%
* Net sales in countries other than Finland
Operating profit by segment
1-9/ 1-9/ 7-9/ 7-9/ 1-12/
(€ million) 2016 2015 Change 2016 2015 Change 2015
Grocery trade 119.1 195.9 -76.9 44.8 45.0 -0.2 249.4
Building and technical trade 72.5 -46.4 118.9 37.9 36.8 1.1 -57.2
Car trade 22.0 22.3 -0.3 6.8 6.0 0.8 26.1
Common functions and eliminations -26.5 -16.6 -9.9 -4.0 -4.6 0.7 -23.7
Group total 187.0 155.3 31.7 85.5 83.1 2.3 194.6
Operating profit by segment,
comparable 1-9/ 1-9/ 7-9/ 7-9/ 1-12/
(€ million) 2016 2015 Change 2016 2015 Change 2015
Grocery trade 124.0 123.0 1.0 49.2 44.8 4.4 177.5
Building and technical trade 83.5 56.1 27.4 45.3 35.8 9.5 63.6
Car trade 22.0 22.3 -0.3 6.8 6.0 0.8 26.1
Common functions and eliminations -19.9 -16.0 -3.9 -3.1 -4.1 1.0 -22.7
Group total 209.6 185.3 24.2 98.2 82.5 15.7 244.5
Operating margin by Rolling
segment, comparable 1-9/ 1-9/ 7-9/ 7-9/ 1-12/ 12 mo
(%) 2016 2015 Change, pp 2016 2015 Change, pp 2015 9/2016
Grocery trade 3.3 3.6 -0.3 3.6 3.8 -0.2 3.8 3.5
Building and
technical trade 2.8 2.2 0.6 3.7 4.2 -0.5 2.0 2.4
Car trade 3.5 3.9 -0.4 3.6 3.5 0.0 3.5 3.2
Group total 2.8 2.8 0.0 3.5 3.7 -0.2 2.8 2.8
Capital employed by
segment, cumulative Rolling
1-9/ 1-9/ 7-9/ 7-9/ 1-12/ 12 mo
average (€ million) 2016 2015 Change 2016 2015 Change 2015 9/2016
Grocery trade 840 913 -73 875 739 137 871 816
Building and
technical trade 950 843 107 1,188 747 440 823 907
Car trade 119 97 22 120 98 22 104 117
Common functions
and eliminations 320 281 39 340 305 35 285 316
Group total 2,229 2,135 95 2,523 1,889 634 2,083 2,156
Return on capital Rolling
employed by segment, 1-9/ 1-9/ 7-9/ 7-9/ 1-12/ 12 mo
comparable (%) 2016 2015 Change, pp 2016 2015 Change, pp 2015 9/2016
Grocery trade 19.7 18.0 1.7 22.5 24.2 -1.8 20.4 21.9
Building and technical
trade 11.7 8.9 2.9 15.2 19.1 -3.9 7.7 10.0
Car trade 24.6 30.6 -5.9 22.7 24.7 -2.0 25.2 22.0
Group total 12.5 11.6 1.0 15.6 17.5 -1.9 11.7 12.5
Items affecting comparability
€ million 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/
2015 2015 2015 2015 2016 2016 2016
Items affecting comparability
Gains on disposal 0.3 99.6 1.2 0.1 1.3 5.9 0.8
Losses on disposal -130.6 -1.0 -0.2 - - -0.3 -0.1
Impairment charges - - - - - -7.9 -3.1
Structural arrangements - - - -19.3 0.0 -9.1 -4.6
Others 0.2 0.9 -0.4 -0.7 - 0.3 -5.7
Items in operating profit
affecting comparability -130.1 99.4 0.7 -19.9 1.3 -11.1 -12.7
Items in income taxes
affecting comparability 2.1 -4.5 -10.4 -4.6 0.1 0.8 2.7
Total items affecting
comparability -128.0 95.0 -9.7 -24.5 1.4 -10.3 -10.0
Operating profit, comparable
Operating profit -103.6 175.8 83.1 39.3 33.5 68.0 85.5
Net of
Items in operating profit
affecting comparability -130.1 99.4 0.7 -19.9 1.3 -11.1 -12.7
Operating profit, comparable 26.5 76.4 82.5 59.1 32.3 79.1 98.2
Operating margin, %,
comparable 1.3 3.4 3.7 2.7 1.6 3.0 3.5
Capital employed, average 2,295 2,204 1,889 1,907 1,990 2,207 2,523
Return on capital employed,
comparable, % 4.6 13.9 17.5 12.4 6.5 14.3 15.6
Profit before tax, comparable
Profit before tax -103.7 172.1 78.8 40.7 35.7 68.1 84.8
Net of
Items in operating profit
affecting comparability -130.1 99.4 0.7 -19.9 1.3 -11.1 -12.7
Profit before tax, comparable 26.4 72.7 78.2 60.6 34.5 79.2 97.5
Profit, comparable
Profit before tax, comparable 26.4 72.7 78.2 60.6 34.5 79.2 97.5
Net of
Income tax -7.0 -19.4 -30.4 -14.0 -7.0 -14.3 -16.4
Items in income tax affecting
comparability -2.1 4.5 10.4 4.6 -0.1 -0.8 -2.7
Profit, comparable 17.4 57.8 58.2 51.3 27.3 64.0 78.4
Equity, average 2,227 2,184 2,189 2,220 2,265 2,195 2,131
Return on equity, comparable,
% 3.1 10.6 10.6 9.2 4.8 11.7 14.7
Profit attributable to owners
of the parent, comparable
Profit, comparable 17.4 57.8 58.2 51.3 27.3 64.0 78.4
Profit attributable to non-
controlling interests -1.1 5.9 5.8 5.1 1.3 5.5 5.7
Profit attributable to owners
of the parent, comparable 18.5 51.9 52.5 46.1 26.0 58.6 72.7
Average number of shares,
basic, 1,000 pcs 99,024 99,084 99,104 99,114 99,163 99,221 99,240
Earnings per share,
comparable, € 0.19 0.52 0.53 0.47 0.26 0.59 0.73
Capital expenditure
1-9/ 1-9/ 7-9/ 7-9/ 1-12/
by segment, € million 2016 2015 Change 2016 2015 Change 2015
Grocery trade 188 99 89 49 28 21 129
Building and technical trade 428 26 402 15 8 7 55
Car trade 11 11 0 3 5 -2 16
Common functions and eliminations 10 15 -5 6 1 6 18
Group total 638 152 486 74 42 32 219
Segment information by quarter
Net sales by segment, 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/
€ million 2015 2015 2015 2015 2016 2016 2016
Grocery trade 1,103 1,149 1,171 1,249 1,094 1,353 1,367
Building and technical trade 773 883 857 736 695 1,046 1,238
Car trade 210 190 170 177 225 214 190
Common functions and eliminations -3 4 4 4 -1 -2 -3
Group total 2,082 2,227 2,203 2,166 2,013 2,610 2,792
1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/
Operating profit by segment, € million 2015 2015 2015 2015 2016 2016 2016
Grocery trade 35.2 115.8 45.0 53.4 30.2 44.1 44.8
Building and technical trade -144.7 61.5 36.8 -10.9 1.8 32.8 37.9
Car trade 9.8 6.5 6.0 3.8 9.4 5.8 6.8
Common functions and eliminations -3.9 -8.0 -4.6 -7.1 -7.8 -14.7 -4.0
Group total -103.6 175.8 83.1 39.3 33.5 68.0 85.5
Items affecting
1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/
comparability, € million 2015 2015 2015 2015 2016 2016 2016
Grocery trade 0.3 72.4 0.2 -1.0 -1.1 0.5 -4.4
Building and technical trade -130.4 27.0 1.0 -18.4 1.5 -5.1 -7.4
Car trade - - - - - - -
Common functions and eliminations - 0.0 -0.6 -0.5 0.9 -6.5 -0.9
Group total -130.1 99.4 0.7 -19.9 1.3 -11.1 -12.7
Operating profit by segment, comparable,
1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/
€ million 2015 2015 2015 2015 2016 2016 2016
Grocery trade 34.9 43.3 44.8 54.5 31.3 43.6 49.2
Building and technical trade -14.2 34.5 35.8 7.5 0.3 37.9 45.3
Car trade 9.8 6.5 6.0 3.8 9.4 5.8 6.8
Common functions and eliminations -3.9 -8.0 -4.1 -6.7 -8.7 -8.2 -3.1
Group total 26.5 76.4 82.5 59.1 32.3 79.1 98.2
Operating margin by segment, %, comparable 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/
2015 2015 2015 2015 2016 2016 2016
Grocery trade 3.2 3.8 3.8 4.4 2.9 3.2 3.6
Building and technical trade -1.8 3.9 4.2 1.0 0.0 3.6 3.7
Car trade 4.7 3.4 3.5 2.1 4.2 2.7 3.6
Group total 1.3 3.4 3.7 2.7 1.6 3.0 3.5
Acquisitions
On 12 April 2016, Kesko Food Ltd, a Kesko Corporation subsidiary, acquired the
whole share capital of Suomen Lähikauppa Oy from the private equity investment
firm Triton. In addition, Kesko Corporation acquired Onninen Oy's whole share
capital from Onvest Oy on 1 June 2016.
Suomen Lähikauppa Onninen group
€ million € million
Consideration paid 54 364
Provisionally determined fair values of assets
acquired and liabilities assumed as at the date
of acquisition
Intangible assets 5 94
Tangible assets 33 21
Inventories 33 227
Receivables 12 238
Deferred tax asset 22 3
Cash and cash equivalents 8 17
Total assets 113 599
Trade payables, other
payables, provisions 134 275
Deferred tax liability 0 16
Total liabilities 134 291
Net assets acquired, total -22 309
Provisional goodwill 76 55
Provisional cash flow impact
of acquisition
Consideration paid -54 -364
Cash and cash equivalents 8 17
acquired
Provisional cash flow impact
of acquisition -46 -347
Suomen Lähikauppa Oy
On 12 April 2016, Kesko Food Ltd, a Kesko Corporation subsidiary, acquired the
whole share capital of Suomen Lähikauppa Oy from the private equity investment
firm Triton. The debt-free price of the acquisition, structured as a share
purchase, was €54 million.
Suomen Lähikauppa has concentrated on grocery stores located near customers. The
acquisition underpins Kesko's new strategy, one focus area of which is to
increase and renew the neighbourhood store network.
The tables above are a condensed presentation of the consideration paid to
Triton, the values of the assets acquired and liabilities assumed by Kesko Group
as at the date of the acquisition, as well as the cash flow impact of the
acquisition.
The €76 million goodwill from the acquisition reflects the synergies expected to
arise especially from purchasing and logistics, marketing, store site network
development, information system expenses and administration. Kesko estimates
that it will gain annual synergy benefits of approximately €25-30 million at
EBITDA level from the acquisition as of 2018. The achievement of synergies will
require conversion costs for the renewal of the stores acquired from Suomen
Lähikauppa. The costs of store and network conversion, to be treated as
restructuring costs affecting the comparability of the operating profit, will
total approximately €30 million in 2016-2018. The goodwill derived from the
acquisition is not tax deductible.
The Group's profit for January-September 2016 includes costs incurred from an
acquisition in the amount of €1.1 million, the most significant of which is the
€0.6 million asset transfer tax. The costs are presented within items affecting
comparability.
Suomen Lähikauppa contributed €387 million to the net sales of the April-
September period. The impact on the comparable operating profit for the April-
September period was €-1.8 million. Management estimates that if the acquisition
had been completed on 1 January 2016, the impact on the Group's net sales would
have been approximately €607 million. The impact on the comparable operating
profit would have been €-11 million. When determining the amounts of net sales
and comparable operating profit, management estimates that the fair values
recognized at the date of acquisition would have been the same if the
acquisition had been completed on 1 January 2016.
Onninen Oy
Kesko Corporation acquired Onninen Oy's whole share capital from Onvest Oy on 1
June 2016. The debt-free price of the acquisition, structured as a share
purchase, was €364 million.
Onninen is one of the leading providers of HEPAC and electrical products and
services in the Baltic Sea Region and Scandinavia. The group specializes in the
B2B trade and has around 150 units in Finland, Sweden, Norway, Poland, the
Baltic countries and Russia. Kesko's business operations will expand in the
HEPAC and electrical product groups and it will be able to better serve
contractor customers in particular. In addition, Kesko will gain new customer
relationships in the infrastructure and industry customer groups.
The tables above are a condensed presentation of the consideration paid to
Onvest Oy, the values of the assets acquired and liabilities assumed by Kesko
Group as at the date of the acquisition, as well as the cash flow impact of the
acquisition.
The total provisional value of the intangible assets acquired as at the date of
the acquisition (including customer relationships and trademarks) is €94
million. The balance sheet value of current trade receivables equals their fair
value.
The €55 million goodwill from the acquisition reflects the synergies expected to
mainly arise from the utilisation of the common customer relationships, from
purchasing and logistics, the development of the store site network, as well as
from ICT and administration. Kesko estimates that it will gain annual synergy
benefits of approximately €30 million at EBITDA level from the acquisition as of
2020. The achievement of synergies will require both capital expenditures and
non-recurring costs. The combined net cash flow impact of synergy benefits is
estimated at around €25 million positive in 2016-2019. The goodwill derived from
the acquisition is not tax deductible.
The Group's profit for January-September 2016 include costs incurred from an
acquisition in the amount of €6.8 million, the most significant of which is the
€5.8 million asset transfer tax. The costs are presented within items affecting
comparability.
Onninen contributed €512 million to the net sales of the June-September period.
The impact on the comparable operating profit for the June-September period was
€11.0 million, adversely impacted by the fair value allocations of inventories
written off in the amount of €3.4 million. Management estimates that if the
acquisition had been completed on 1 January 2016, the impact on the Group's net
sales would have been approximately €1,104 million. The impact on the comparable
operating profit would have been €10.5 million. When determining the amounts of
net sales and comparable operating profit, management estimates that the fair
values recognized at the date of acquisition would have been the same if the
acquisition had been completed on 1 January 2016.
Change in tangible and intangible assets (€ million)
30.9.2016 30.9.2015
Opening net carrying amount 1,451 1,802
Acquisitions 291 -
Depreciation, amortisation and impairment charges -105 -97
Investments in tangible and intangible assets 205 141
Disposals -41 -405
Currency translation differences 6 -10
Closing net carrying amount 1,806 1,431
Transactions conducted by persons discharging managerial responsibilities or
persons closely associated with them (€ million)
The Group's persons discharging managerial responsibilities or persons closely
associated with them include its management (the Board of Directors, the
Managing Director and the Group Management Board) and companies controlled by
them, the Group's subsidiaries, associates and joint ventures as well as Kesko
Pension Fund.
The following transactions were carried out with persons discharging managerial
responsibilities or persons closely associated with them:
1-9/2016 1-9/2015
Sales of goods and services 57 53
Purchases of goods and services 146 11
Other operating income 10 9
Other operating expenses 44 34
Finance income and costs 1 2
30.9.2016 30.9.2015
Receivables 69 67
Liabilities 53 26
Fair value hierarchy of financial assets and liabilities (€ million)
Level 1 Level 2 Level 3 30.9.2016
Financial assets at fair value through profit
or loss 14.7 31.5 46.2
Derivative financial instruments at fair
value through profit or loss
Derivative financial assets 2.4 2.4
Derivative financial liabilities 6.6 6.6
Available-for-sale financial assets 51.8 25.4 15.2 92.5
Fair value hierarchy of financial assets and liabilities (€ million)
Level 1 Level 2 Level 3 30.9.2015
Financial assets at fair value through profit
or loss 214.5 206.8 421.3
Derivative financial instruments at fair
value through profit or loss
Derivative financial assets 11.0 11.0
Derivative financial liabilities 10.2 10.2
Available-for-sale financial assets 183.0 168.3 15.5 366.9
Level 1 instruments are traded in active markets and their fair values are
directly based on quoted market prices. The fair values of level 2 instruments
are derived from market data. The fair values of level 3 instruments are not
based on observable market data.
Personnel, average and as at 30.9.
Personnel average by
segment 1-9/2016 1-9/2015 Change
Grocery trade 8,142 6,461 1,681
Building and technical trade 12,274 11,336 938
Car trade 780 786 -6
Common functions 745 492 252
Group total 21,940 19,075 2,865
Personnel as at 30.9.*
by segment 2016 2015 Change
Grocery trade 12,067 8,119 3,948
Building and technical trade 15,623 12,427 3,196
Car trade 784 784 0
Common functions 858 531 327
Group total 29,332 21,861 7,471
* Total number including part-time employees
Group's commitments (€ million)
30.9.2016 30.9.2015 Change, %
Own commitments 176 164 7.7
For others 18 15 25.4
Lease liabilities for machinery and equipment 34 26 31.9
Lease liabilities for real estate 2,893 2,623 10.3
Liabilities arising from derivative instruments (€ million)
Fair value
Values of underlying instruments at 30.9. 30.9.2016 30.9.2015 30.9.2016
Interest rate derivatives
Interest rate swaps 40 101 -0.06
Currency derivatives
Forward and future contracts 153 290 -2.60
Currency swaps 20 50 1.42
Commodity derivatives
Electricity derivatives 8 12 -2.95
Calculation of performance indicators
Return on capital employed*, %
Operating profit x 100 / (Non-current assets + Inventories + Receivables + Other
current assets - Non-interest-bearing liabilities) on average for the reporting
period
Return on capital employed, %, rolling 12 months
Operating profit for the preceding 12 months x 100 / (Non-current assets +
Inventories + Receivables + Other current assets - Non-interest-bearing
liabilities) on average for 12 months
Return on capital employed*, %, comparable
Comparable operating profit x 100 / (Non-current assets + Inventories +
Receivables + Other current assets - Non-interest-bearing liabilities) on
average for the reporting period
Return on capital employed, comparable, %, rolling 12 months
Comparable operating profit for the preceding 12 months x 100 / (Non-current
assets + Inventories + Receivables + Other current assets - Non-interest-bearing
liabilities) on average for 12 months
Return on equity*, %
(Profit/loss before tax - Income tax) x 100 / Shareholders' equity, average of
the beginning and end of the reporting period
Return on equity, %, rolling 12 months
(Profit/loss for the preceding 12 months before tax - Income tax for the
preceding 12 months) x 100 / Shareholders' equity, average of the beginning and
end of the reporting period
Return on equity*, %, comparable
(Profit/loss adjusted for items affecting comparability before tax - Income tax
adjusted for the tax effect of items affecting comparability) x 100 /
Shareholders' equity, average of the beginning and end of the reporting period
Return on equity, %, comparable, rolling 12 months
(Profit/loss for the preceding 12 months adjusted for items affecting
comparability before tax - Income tax for the preceding 12 months adjusted for
the tax effect of items affecting comparability) x 100 / Shareholders' equity,
average of the beginning and end of the reporting period
Equity ratio, %
Shareholders' equity x 100 /
(Total assets - Prepayments received)
Earnings/share, diluted
(Profit/loss - Non-controlling interests) /
Average diluted number of shares
Earnings/share, basic
(Profit/loss - Non-controlling interests) /
Average number of shares
Earnings/share,
basic, comparable
(Profit/loss adjusted for items affecting comparability - Non-controlling
interests) / Average number of shares
Equity/share
Equity attributable to equity holders of the parent /
Basic number of shares at the balance sheet date
Gearing, %
Interest-bearing net liabilities x 100 /
Shareholders' equity
Interest-bearing net debt
Interest-bearing liabilities - Financial assets at fair value through profit or
loss - Available-for-sale financial assets - Cash and cash equivalents
EBITDA, rolling 12 mo
Operating profit + Depreciation, amortisation and impairment + Depreciation and
impairment charges for the preceding 12 months
Interest-bearing net debt/ EBITDA, rolling 12 mo
Interest-bearing net debt/ EBITDA, rolling 12 mo
* Indicators for return on capital have been annualised
K-Group's retail and B2B sales*, VAT 0% (preliminary data):
1.1.-30.9.2016 1.7.-30.9.2016
K-Group's retail and € million Change, % € million Change, %
B2B sales
K-Group's grocery trade
K-food stores, Finland 3,360 -0.1 1,148 0.5
K-citymarket, non-food 394 -0.8 137 1.4
Suomen Lähikauppa 378 - 198 -
Kespro 596 2.2 209 2.1
K-ruoka, Russia 82 10.0 28 12.9
Grocery trade, total 4,811 8.9 1,721 14.1
K-Group's building and technical trade
K-rauta and Rautia 787 2.6 299 2.0
Rautakesko B2B Service 170 19.3 61 19.4
Onninen 273 - 204 -
K-maatalous 320 -1.3 99 -0.2
Machinery trade, Finland 120 -4.3 32 -8.3
Speciality goods trade, Finland 355 -0.1 123 6.5
Finland, total 2,024 13.9 818 37.2
Building and technical trade, other
Nordic countries 842 27.4 369 50.1
Building and technical trade, the Baltic
countries 508 13.5 214 17.3
Building and technical trade, other
countries 276 13.8 125 40.6
Building and technical trade, total 3,651 16.7 1,527 37.0
K-Group's car trade
VV-Autotalot 318 13.1 99 14.2
VV-Auto, import 327 7.1 94 6.1
Car trade, total 645 10.0 193 10.1
Finland total 7,398 10.3 2,704 19.9
Other countries, total 1,709 19.8 737 35.8
Retail and B2B sales,
total 9,107 12.0 3,441 23.0
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