2015-07-22 08:00:00 CEST
2015-07-22 08:01:37 CEST
REGULATED INFORMATION
Kesko Oyj - Interim report (Q1 and Q3)
Kesko's interim report for the period 1 January to 30 June 2015: Operating profit increased and financial position continued to strengthen
KESKO CORPORATION INTERIM REPORT 22.07.2015 AT 09.00 1(32)
Kesko's interim report for the period 1 January to 30 June 2015: Operating
profit increased and financial position continued to strengthen
Financial performance in brief:
* The Group's net sales for January-June €4,310 million. Net sales performance
in local
currencies excluding Anttila was -0.8%.
* Operating profit excluding non-recurring items increased to €102.9 million
(€86.7 million).
* Earnings per share excluding non-recurring items grew to €0.71 (€0.64).
* Equity ratio 52.2% (52.3%).
* Kesko Group's net sales for the next 12 months are expected to be lower than
the level of the preceding 12 months and the operating profit excluding non-
recurring items for the next 12 months is expected to exceed the level of the
preceding 12 months.
Key performance indicators
1-6/2015 1-6/2014 4-6/2015 4-6/2014
Net sales, € million 4,310 4,499 2,227 2,371
Operating profit excl. non-recurring
items, € million 102.9 86.7 76.4 67.6
Operating profit, € million 72.2 56.3 175.8 69.4
Profit before tax, € million 68.5 57.0 172.1 71.4
Capital expenditure, € million 110.1 99.1 58.6 55.7
Earnings per share, €, diluted 0.38 0.39 1.48 0.51
Earnings per share
excl. non-recurring items, €, basic
0.71 0.64 0.52 0.49
30.6.2015 30.6.2014
Equity ratio, % 52.2 52.3
Equity per share, € 21.21 21.86
President and CEO Mikko Helander:"Kesko improved its profit in the second quarter of the year despite the ongoing
challenging operating environment. In the grocery trade, K-food stores' market
share is estimated to have increased during the second quarter. This indicates
that the changes and renewals implemented during the first months of the year
have been well received by customers. We will continue our responsible approach
based on both affordable price and quality in all respects. The profitability of
the grocery trade remained at a good level as well.
The profitability of the home improvement and speciality goods trade continued
to improve and market share strengthened in the key market areas. In the car
trade, Volkswagen continues as the clear market leader and Audi as number one in
its class. The reduction in car tax contained in the Government's programme
slowed the sales of new cars in May-June.
Kesko's financial position continued to strengthen in the second quarter. This
is partly attributable to the joint real estate arrangement completed in June
between Kesko, Ilmarinen and AMF, in which the sale of real estate property
generated a cash inflow of over €400 million. At the end of the reporting
period, liquid assets were approximately €840 million.
The general economic situation and the expected trend in consumer demand vary in
Kesko's different operating countries. In Finland, the trading sector's
performance is expected to remain weak and the tough competitive situation is
expected to continue. In Sweden, Norway and the Baltic countries, the growth in
demand in the trading sector is expected to continue. In Russia, the economic
situation and consumers' purchasing power are estimated to remain weak.
Kesko's strategy was published at the end of May. The core of the strategy is
profitable growth in the grocery trade, the building and home improvement trade
and the car trade. Strategy implementation has got off to a good start and
practical measures are well under way, which can be seen in, for instance, the
renewal of the Neste service station concept and the first K-rauta Express store
to open in August. We have defined our strategy for the coming years and now we
will concentrate on its systematic implementation."
FINANCIAL PERFORMANCE
Net sales and profit for January-June 2015
The Group's net sales for January-June 2015 were €4,310 million, which is 4.2%
down on the corresponding period of the previous year (€4,499 million). Anttila
excluded, net sales performance was -0.8% in local currencies. The decline in
consumers' purchasing power weakened consumer demand in the reporting period in
Finland and Russia. In the grocery trade, net sales performance was -2.2%. In
the home improvement and speciality goods trade, net sales decreased by 8.0%,
but Anttila excluded, they increased by 1.0% in local currencies. In the car and
machinery trade, net sales were down 3.2%. The Group's net sales in Finland
decreased by 4.4% and in the other countries by 3.3%; in local currencies, net
sales abroad increased by 5.8%. The weakening of the Russian rouble impacted net
sales performance in euros especially in the home improvement and speciality
goods trade. International operations accounted for 18.2% (18.0%) of net sales.
1-6/2015 Net sales, € Change, % Operating profit Change, million excl. non- € million
recurring
items, € million
Grocery trade 2,252 -2.2 78.2 -22.5
Home improvement and
speciality goods trade 1,519 -8.0 18.7 +44.4
Car and machinery
trade 538 -3.2 17.9 -1.2
Common operations and
eliminations 0 (..) -12.0 -4.6
Total 4,310 -4.2 102.9 +16.1
(..) Change over 100%
The operating profit excluding non-recurring items for January-June was €102.9
million (€86.7 million). Profitability was at a good level in the grocery trade,
although the operating profit excluding non-recurring items decreased from the
previous year due to a further intensification of price competition. The
operating profit for the first months of the year includes a €12.7 million
operating loss from Anttila, divested in March; the operating loss for the
previous year was €42.7 million. Profitability strengthened especially in the
building and home improvement trade in Finland and the other Nordic countries.
In the car and machinery trade, profitability remained steady.
Operating profit was €72.2 million (€56.3 million). The operating profit
includes €-30.7 million (€-30.4 million) of non-recurring items. The most
significant non-recurring items are the €75.7 million capital gain recorded on a
real estate transaction completed in the second quarter of the year and the €130
million loss on the divestment of Anttila. In addition, the non-recurring items
include other gains on the sale of properties in the amount of €24.3 million.
The non-recurring expenses of the comparative period included a €30.0 million
restructuring provision recognised on measures taken to improve Anttila's
profitability.
The Group's profit before tax for January-June was €68.5 million (€57.0
million). The Group's earnings per share were €0.38 (€0.39). The Group's equity
per share was €21.21 (€21.86).
In January-June, the K-Group's (i.e. Kesko's and the chain stores') retail and
B2B sales excluding Anttila (VAT 0%) were €5,282 million, down 2.2% compared to
the previous year. The K-Plussa customer loyalty programme gained 27,919 new
households in January-June 2015. At the end of June, there were 2.3 million K-
Plussa households and 3.6 million K-Plussa cardholders.
Net sales and profit for April-June 2015
The Group's net sales for April-June 2015 were €2,227 million, which is 6.0%
down on the corresponding period of the previous year (€2,371 million). Anttila
excluded, net sales performance was -2.2% in local currencies. The decline in
consumers' purchasing power weakened consumer demand in the reporting period in
Finland and Russia. In the grocery trade, net sales performance was -4.4%,
partly weakened by the timing of Easter sales in the first quarter of the year.
In the home improvement and speciality goods trade, net sales decreased by
10.4%, but Anttila excluded, they were at the level of the previous year in
local currencies. In the car and machinery trade, net sales were down 2.2%. The
Group's net sales in Finland decreased by 7.1% and Anttila excluded, by 4.2%. In
the other countries, net sales were down 1.6%, but in local currencies, up
5.6%. International operations accounted for 20.5% (19.6%) of net sales.
4-6/2015 Net sales, € Change, % Operating profit Change,
million excl. non- € million
recurring
items, € million
Grocery trade 1,149 -4.4 43.3 -12.0
Home improvement and
speciality goods trade 797 -10.4 30.1 +24.3
Car and machinery
trade 277 -2.2 11.0 +0.1
Common operations and
eliminations 4 (..) -8.0 -3.7
Total 2,227 -6.0 76.4 +8.7
The operating profit excluding non-recurring items for April-June was €76.4
million (€67.6 million). Profitability improved clearly in the home improvement
and speciality goods trade, whose profit performance strengthened especially in
the building and home improvement trade in Finland and Sweden. The operating
profit of the home improvement and speciality goods trade for the comparative
period includes a €20.5 million operating loss from Anttila.
Operating profit was €175.8 million (€69.4 million). The operating profit
includes €99.4 million (€1.8 million) of non-recurring items. The most
significant non-recurring item was the €75.7 million capital gain recorded on a
real estate arrangement completed in June. In addition, the non-recurring items
include other gains on the sale of properties in the amount of €24.0 million.
The Group's profit before tax for April-June was €172.1 million (€71.4 million).
The Group's earnings per share were €1.48 (€0.51).
In April-June, the K-Group's (i.e. Kesko's and the chain stores') retail and B2B
sales (VAT 0%) were €2,859 million, and Anttila excluded, they were down 2.0%
compared to the previous year.
Finance
In January-June, the cash flow from operating activities was €67.5 million
(€33.9 million). The cash flow from investing activities was €334.3 million (€-
92.5 million) and it included proceeds from the sale of fixed assets in the
amount of €444.2 million (€6.3 million), of which the cash inflow from the real
estate arrangement completed in June was €402.9 million.
The Group's liquidity remained at an excellent level in January-June. At the end
of the period, liquid assets totalled €843 million (€461 million). Interest-
bearing liabilities were €483 million (€539 million) and interest-bearing net
liabilities were €-359 million (€78 million) at the end of June. The equity
ratio was 52.2 % (52.3%) at the end of the period.
In January-June, the Group's net finance costs were €4.5 million (net finance
income €0.6 million). The finance income for the previous year included interest
income on cooperative
capital from Suomen Luotto-osuuskunta in the amount of €4.9 million.
In April-June, the cash flow from operating activities was €142.3 million
(€128.7 million). The cash flow from investing activities was €398.7 million (€-
48.8 million) and it included proceeds from the sale of fixed assets in the
amount of €460.3 million (€4.4 million).
The Group's net finance costs were €4.2 million (net finance income €2.2
million) in April-June. The finance income for the previous year included
interest income on cooperative
capital from Suomen Luotto-osuuskunta in the amount of €4.9 million.
Taxes
In January-June, the Group's taxes were €26.4 million (€15.1 million). The
effective tax rate was 38.5% (26.4%).
In April-June, the Group's taxes were €19.4 million (€17.6 million). The
effective tax rate was 11.2% (24.6%).
Capital expenditure
In January-June, the Group's capital expenditure totalled €110.1 million (€99.1
million), or 2.6% (2.2%) of net sales. Capital expenditure in store sites was
€78.5 million (€74.4 million), in IT €8.6 million (€15.6 million) and other
capital expenditure was €23.0 million (€9.1 million). Capital expenditure in
foreign operations represented 43.4% (42.6%) of total capital expenditure.
In April-June, the Group's capital expenditure totalled €58.6 million (€55.7
million), or 2.6% (2.3%) of net sales. Capital expenditure in store sites was
€38.3 million (€46.6 million), in IT €3.9 million (€4.8 million) and other
capital expenditure was €16.4 million (€4.3 million). Capital expenditure in
foreign operations represented 34.7% (46.8%) of total capital expenditure.
Kesko's strategy was updated
Kesko's Board of Directors decided on a strategy aimed at achieving profitable
growth in three strategic areas: the grocery trade, the building and home
improvement trade and the car trade. Kesko operates the retailer business model
or Kesko's own stores when it provides competitive advantage. Kesko
differentiates from the competitors with quality and customer orientation, and
by bringing the best digital services in the trading sector to the market.
In the grocery trade, Kesko's strategic objective is to turn the K-Group's
market share around in Finland in 2016. Capital expenditure in the K-supermarket
and K-market chains will be increased significantly. The target is approximately
30 new K-supermarkets. In the K-market chain, the current network will be
revised and the objective is to establish over 100 new neighbourhood stores and
to test a completely new store concept. In addition, the whole K-citymarket
concept will be renewed. In the online food trade, the target is a 40% market
share. In Russia, increasing business operations and improving profitability in
the St. Petersburg area will continue. Moreover, new growth opportunities in the
Moscow area and possibly other metropolitan cities in Russia will be explored.
Increasing the business operations of the grocery wholesale company Kespro is
also at the centre of the grocery trade strategy.
In the building and home improvement trade, Kesko's objective is to further
strengthen its position in Europe. Kesko is already now the market leader in
Finland and the fifth largest operator in the sector in Europe. The objective is
to increase market share and achieve profitable growth in the existing markets
alone, through acquisitions, or in cooperation with partners. At the same time,
possibilities to expand also elsewhere in Europe will be examined. The K-rauta
Express concept of fast and easy shopping will be launched for locations with
large flows of customers at, for example, shopping centres and city centres.
In the passenger car and van trade as well, Kesko is currently the clear market
leader in Finland. In the future, the Group aims to increase its market share in
Finland and the Baltic countries.
In the core and support processes of the Group's different business operations,
the objective is to achieve significant synergies and enhancement benefits. For
this purpose, common functions that support business operations will be created
and the competitiveness of business operations will be strengthened through an
even closer cooperation in the core processes of business operations. Kesko
Group will also immediately start planning to simplify the legal structure.
In order to ensure competitiveness and improve profitability, Kesko's objective
is to achieve cost savings of at least €50 million in fixed costs by the end of
2016.
New segment structure
The composition of Kesko's divisional structure and segment reporting has been
changed as of 1 July 2015 to correspond to the new strategy. An agricultural and
machinery trade unit has been established as part of the home improvement and
speciality goods trade division. As of 1 July 2015, Kesko Group's reportable
segments are the grocery trade, the home improvement and speciality goods trade
and the car trade.
Real estate arrangement completed
The joint real estate investment company established by Kesko, AMF
Pensionsförsäkring and Ilmarinen started operating in June. The joint venture
owns, manages and develops store sites primarily used by Kesko Group. Kesko
Group continues operating on the store sites under long-term leases signed in
connection with their sale.
Kesko sold some of its store sites in both Finland and Sweden to the established
joint venture. The fair value of the store sites sold totalled €485 million and
Kesko recorded a €75.7 million non-recurring gain on the store sites sold for
the second quarter of 2015. The cash inflow generated by the arrangement was
€403 million. Kesko's equity investment in the joint venture was €67 million.
Sale of Anttila's shares was implemented
On 16 March 2015, Kesko sold the department store chain Anttila Oy to the German
investment fund 4K INVEST at a price of €1 million. The transaction included all
assets and liabilities in Anttila Oy. Anttila Oy's approximately 1,500 employees
continue in the employment of the company. The date of the transaction was 16
March 2015. Kesko recorded a €-130 million non-recurring item on the transaction
for the first quarter of 2015 relating to the financing, working capital and
fixed assets of Anttila. The transaction will improve Kesko's profitability and
make Kesko's operations more focused.
Personnel
In January-June, the average number of personnel in Kesko Group was 19,065
(19,935) converted into full-time employees. In Finland, the average decrease
was 1,204 people, while outside Finland, there was an increase of 334 people.
At the end of June 2015, the number of personnel was 22,894 (24,493), of whom
10,774 (12,889) worked in Finland and 12,120 (11,604) outside Finland. Compared
to the end of June 2014, there was a decrease of 2,115 people in Finland and an
increase of 516 people outside Finland.
In January-June, the Group's employee benefit expenses were €281.9 million, down
10.4% compared to the previous year. In April-June, employee benefit expenses
decreased by 12.9% compared to the previous year and were €138 million. The
movement is attributable to the divestment of Anttila on 16 March 2015.
SEGMENTS
Seasonal nature of operations
The Group's operating activities are affected by seasonal fluctuations. The net
sales and operating profits of the reportable segments are not earned evenly
throughout the year. Instead, they vary by quarter depending on the
characteristics of each segment.
Grocery trade
1-6/2015 1-6/2014 4-6/2015 4-6/2014
Net sales, € million 2,252 2,304 1,149 1,202
Operating profit excl. non- recurring
items, € million 78.2 100.7 43.3 55.3
Operating margin excl. non-recurring
items, % 3.5 4.4 3.8 4.6
Capital expenditure,
€ million 70.9 50.3 33.2 30.6
Net sales, € million 1-6/2015 Change, % 4-6/2015 Change, %
Sales to K-food stores 1,542 -2.7 785 -5.9
K-citymarket, non-food 267 -0.3 135 +0.6
Kespro 381 +0.3 197 -1.1
K-ruoka, Russia 50 -2.3 29 +10.4
Others 12 -39.6 4 -58.1
Total 2,252 -2.2 1,149 -4.4
January-June 2015
The net sales of the grocery trade for January-June were €2,252 million (€2,304
million), representing a change of -2.2%. In January-June, the grocery sales of
K-food stores in Finland decreased by 1.3% (VAT 0%). In the grocery market in
Finland, retail prices are estimated to have changed by approximately -1%
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 decreased by 1% in January-June (Kesko's own estimate). The
decline in the value of the rouble reduced the sales of the food stores in
Russia in euros. In terms of roubles, the sales increased by 30.6%.
In January-June, the operating profit excluding non-recurring items of the
grocery trade was €78.2 million (€100.7 million). Profitability remained at a
good level despite the measures taken to improve competitiveness. Kespro's
market share increased and profitability remained at a good level. Operating
profit was €151.0 million (€98.8 million). Non-recurring items, in the amount of
€72.8 million (€-2.0 million), include €72 million in gains on the sales of
properties as the most significant items.
The capital expenditure of the grocery trade in January-June was €70.9 million
(€50.3 million), of which €64.3 million (€44.5 million) in store sites.
April-June 2015
The net sales of the grocery trade for April-June were €1,149 million (€1,202
million), representing a change of -4.4%. The timing of Easter sales in the
first quarter of the year impacted the net sales performance in the reporting
period. The net sales of the food stores in Russia increased by 10.4% in euros
and by 36.4% in roubles.
In April-June, the operating profit excluding non-recurring items of the grocery
trade was €43.3 million (€55.3 million). Profitability remained at a good level
despite the measures taken to improve competitiveness. Kespro's market share
increased and profitability remained at a good level. Operating profit was
€115.8 million (€54.4 million). Non-recurring items were €72.4 million (€-0.9
million).
The capital expenditure of the grocery trade in April-June was €33.2 million
(€30.6 million), of which €30.1 million (€27.7 million) in store sites.
In April-June 2015, two K-food stores in St. Petersburg and three new K-
supermarkets, as well as three K-markets in Finland were opened. Renewals and
space modifications were made in a total of 15 stores.
The most significant store sites being built are the K-citymarket shopping
centre in Itäkeskus, Helsinki, the new K-supermarkets in Oulu, in Niittykumpu,
Espoo, in Keuruu, Lappeenranta and in Lauttasaari, Töölö and Kalasatama,
Helsinki. One new food store is being built in Russia.
Numbers of stores as at 30 June 2015 2014
K-citymarket 81 80
K-supermarket 220 220
K-market (incl. service station stores) 441 441
K-ruoka, Russia 8 4
Others* 160 171
* Incl. online stores
In addition, several K-food stores offer e-commerce services to their customers.
Home improvement and speciality goods trade
1-6/2015 1-6/2014 4-6/2015 4-6/2014
Net sales, € million 1,519 1,651 797 890
Operating profit excl. non-recurring
items, € million
18.7 -25.6 30.1 5.8
Operating margin excl. non-recurring
items, % 1.2 -1.6 3.8 0.6
Capital expenditure,
€ million 18.1 31.2 8.6 17.0
Net sales, € million 1-6/2015 Change, % 4-6/2015 Change, %
Rautakesko, Finland 602 -4.1 322 -4.7
K-rauta, Sweden 104 +3.8 64 +3.7
Byggmakker, Norway 216 -2.0 119 -1.0
K-rauta, Estonia 41 +13.2 24 +9.7
K-rauta, Latvia 26 +3.9 15 -0.1
Senukai, Lithuania 144 +4.8 84 +5.5
K-rauta, Russia 94 -20.4 55 -20.0
OMA, Belarus 53 -6.4 31 -6.3
Intersport, Finland 83 +6.4 33 +3.2
Intersport, Russia 6 -22.3 3 -4.0
Indoor 87 +1.6 43 -1.3
Musta Pörssi 6 -39.8 3 -43.1
Kenkäkesko 9 -5.2 3 -6.6
Anttila 53 -63.2 - -
Total 1,519 -8.0 797 -10.4
January-June 2015
The net sales of the home improvement and speciality goods trade for January-
June were €1,519 million (€1,651 million), down 8.0%. Net sales excluding
Anttila increased by 1.0% in local currencies.
The net sales of the home improvement and speciality goods trade for January-
June in Finland were €832 million (€945 million), a decrease of 11.9%. Anttila
excluded, net sales decreased in Finland by 3.0%.
The K-Group's sales of building and home improvement products in Finland
decreased by a total of 2.8% and the total market (VAT 0%) is estimated to have
fallen by approximately 4.4% (Kesko's own estimate). The K-Group's market share
is estimated to have grown during the first months of the year. The retail sales
of the K-maatalous chain were down by 5.1%.
In January-June, the net sales from the foreign operations of the home
improvement and speciality goods trade were €687 million (€707 million), a
decrease of 2.8%. In local currencies, the net sales from foreign operations
increased by 5.2%. In Sweden, net sales in kronas grew by 8.2% and in Norway in
krones by 2.3%. In the building and home improvement trade in Russia, net sales
in roubles grew by 6.3%. Market position is estimated to have strengthened in
the building and home improvement trade in Sweden, the Baltic countries and
Russia. Foreign operations contributed 45.2% (42.8%) to the net sales of the
home improvement and speciality goods trade.
In January-June, the operating profit excluding non-recurring items of the home
improvement and speciality goods trade was €18.7 million (€-25.6 million), up
€44.4 million compared to the previous year. The €12.7 million (€42.7 million)
operating loss of Anttila, divested in March, is included in the profit of the
home improvement and speciality goods trade. The operating profit of the home
improvement and speciality goods trade, excluding non-recurring items and
Anttila, was €31.4 million, up €14.4 million on the previous year. The clearly
improved profitability is attributable to a sales increase in foreign currency
terms, coupled with implemented cost savings. Profit improved especially in the
building and home improvement trade in Finland and the other Nordic countries.
In the building and home improvement trade in Russia, the operational result
excluding foreign exchange impacts remained at the level of the previous year.
The operating profit of the home improvement and speciality goods trade was €-
84.7 million (€-54.1 million). Non-recurring items include a €130 million loss
on the divestment of Anttila and €27 million in gains recorded on the sales of
properties.
In January-June, the capital expenditure of the home improvement and speciality
goods trade totalled €18.1 million (€31.2 million), of which 29.0% (70.4%) was
abroad. Capital expenditure in store sites represented 63.7% of total capital
expenditure.
April-June 2015
The net sales of the home improvement and speciality goods trade for April-June
were €797 million (€890 million), down 10.4%. Net sales excluding Anttila in
local currencies were at the level of the previous year (+0.1%).
The net sales of the home improvement and speciality goods trade for April-June
in Finland were €400 million (€484 million), a decrease of 17.2%. Anttila
excluded, net sales decreased in Finland by 4.2%.
The K-Group's sales of building and home improvement products in Finland
decreased by a total of 2.1% and the total market (VAT 0%) is estimated to have
fallen by approximately 3.8% (Kesko's own estimate). The K-Group's market share
is estimated to have grown during the first months of the year. The retail sales
of the K-maatalous chain were down by 6.9%.
In April-June, the net sales from the foreign operations of the home improvement
and speciality goods trade were €397 million (€407 million), a decrease of
2.4%. In local currencies, the net sales from foreign operations increased by
4.5%. In Sweden, net sales in kronas grew by 7.2% and in Norway in krones by
3.2%. In the building and home improvement trade in Russia, net sales decreased
by 1.1% in roubles. Market position is estimated to have strengthened in the
building and home improvement trade in Sweden, the Baltic countries and Russia.
Foreign operations contributed 49.8% (45.7%) to the net sales of the home
improvement and speciality goods trade.
In April-June, the operating profit excluding non-recurring items of the home
improvement and speciality goods trade was €30.1 million (€5.8 million), up
€24.3 million compared to the previous year. The comparative period includes a
€20.5 million operating loss from Anttila. In addition, the profitability
improvement is attributable to a sales increase in foreign currency terms,
coupled with implemented cost savings. Profit improved especially in the
building and home improvement trade in Sweden, Lithuania and Belarus. The
operating profit of the home improvement and speciality goods trade was €57.1
million (€8.4 million). Non-recurring items include €27 million in gains
recorded on the sales of properties. In the comparative period, non-recurring
items were €2.7 million.
In April-June, the capital expenditure of the home improvement and speciality
goods trade totalled €8.6 million (€17.0 million), of which 21.1% (74.8%) was
abroad. Capital expenditure in store sites represented 74.8% of total capital
expenditure.
In April-June, one K-rauta store was opened in Lahdesjärvi, Tampere, one
building and home improvement store was closed in Norway and one Intersport
store in St. Petersburg. The most significant store sites being built are the K-
rauta stores in Kokkola, Lahti and Imatra.
Numbers of stores as at 30 June 2015 2014
K-rauta 43 42
Rautia* 93 97
K-maatalous* 81 82
K-rauta, Sweden 20 20
Byggmakker, Norway 83 86
K-rauta, Estonia 8 8
K-rauta, Latvia 8 8
Senukai, Lithuania 19 19
K-rauta, Russia 13 13
OMA, Belarus 11 10
Intersport, Finland** 62 62
Budget Sport** 11 11
Asko and Sotka** 87 87
Musta Pörssi** 1 6
Kookenkä** 42 46
Intersport, Russia 16 18
Asko and Sotka, the Baltics** 10 10
* In 2015, 45 (46) Rautia stores also operated as K-maatalous stores
** Incl. online stores
In addition, the building and home improvement stores offer e-commerce services
to their customers.
Car and machinery trade
1-6/2015 1-6/2014 4-6/2015 4-6/2014
Net sales, € million 538 556 277 283
Operating profit excl. non-recurring
items, € million
17.9 19.1 11.0 10.9
Operating margin excl. non-recurring
items, % 3.3 3.4 4.0 3.8
Capital expenditure, € million 6.9 9.4 4.0 6.5
Net sales, € million 1-6/2015 Change, % 4-6/2015 Change, %
VV-Auto 393 -4.2 187 -4.7
Konekesko 145 -0.5 90 +3.4
Total 538 -3.2 277 -2.2
January-June 2015
The net sales of the car and machinery trade for January-June were €538 million
(€556 million), down 3.2%.
VV-Auto's net sales for January-June were €393 million (€410 million), a
decrease of 4.2%. In January-June, the combined market performance of first time
registered passenger cars and vans was -2.8%.
In January-June, the combined market share of passenger cars and vans imported
by VV-Auto was 20.0% (21.0%). Volkswagen was the market leader in passenger cars
and vans.
Konekesko's net sales for January-June were €145 million (€146 million), down
0.5% compared to the previous year. Net sales in Finland were €98 million, up
5.5%. The net sales from Konekesko's foreign operations were €48 million, down
11.0%. The decline in net sales was especially driven by the weak market
performance of the agricultural machinery trade.
In January-June, the operating profit excluding non-recurring items of the car
and machinery trade was €17.9 million (€19.1 million), down €1.2 million
compared to the previous year. The profitability of the car trade remained at a
good level despite the weakened market situation.
The operating profit for January-June was €17.9 million (€19.1 million).
The capital expenditure of the car and machinery trade in January-June was €6.9
million (€9.4 million).
April-June 2015
The net sales of the car and machinery trade for April-June were €277 million
(€283 million), down 2.2%.
VV-Auto's net sales for April-June were €187 million (€196 million), a decrease
of 4.7%.
In April-June, the combined market share of passenger cars and vans imported by
VV-Auto was 21.2% (21.2%).
Konekesko's net sales for April-June were €90 million (€87 million), up 3.4%
compared to the previous year. Net sales in Finland were €60 million, up 6.0%.
Net sales growth was driven by the good sales performance of Yamarin boats. The
net sales from Konekesko's foreign operations were €31 million, down 1.5%.
In April-June, the operating profit excluding non-recurring items of the car and
machinery trade was €11.0 million (€10.9 million), up €0.1 million compared to
the previous year. The profitability of the car trade remained at a good level
despite the weakened market situation. Konekesko improved its profitability.
The operating profit for April-June was €11.0 million (€10.9 million).
The capital expenditure of the car and machinery trade in April-June was €4.0
million (€6.5 million).
Numbers of stores as at 30 June 2015 2014
VV-Auto, retail trade 9 10
Konekesko 1 1
Changes in the Group composition
During the reporting period, Kesko Corporation sold its subsidiary Anttila Oy.
(Stock exchange release on 16 March 2015). As part of the real estate
arrangement completed in June, 11 real estate companies were sold.
Shares, securities market and Board authorisations
At the end of June 2015, 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 June 2015, Kesko Corporation held 876,054 own B
shares as treasury shares. These treasury shares accounted for 1.28% of the
number of B shares, 0.88% of the total number of shares, and 0.23% 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 June 2015, Kesko Corporation's
share capital was €197,282,584.
The price of a Kesko A share quoted on Nasdaq Helsinki was €28.56 at the end of
2014, and €29.50 at the end of June 2015, representing an increase of 3.3%.
Correspondingly, the price of a B share was €30.18 at the end of 2014, and
€31.21 at the end of June 2015, representing an increase of 3.4%. In January-
June, the highest A share price was €38.13 and the lowest was €28.52. The
highest B share price was €41.04 and the lowest was €29.95. In January-June, the
Nasdaq Helsinki All-Share index (OMX Helsinki) was up 6.8% and the weighted OMX
Helsinki Cap index 7.9%. The Retail Sector Index was up 2.5%.
At the end of June 2015, the market capitalisation of A shares was €936 million,
while that of B shares was €2,104 million, excluding the shares held by the
parent company. The combined market capitalisation of A and B shares was €3,040
million, an increase of €103 million from the end of 2014. In January-June
2015, a total of 1.5 million (1.0 million) A shares were traded on Nasdaq
Helsinki, an increase of 42.1%. The exchange value of A shares was €49 million.
The number of B shares traded was 32.2 million (25.3 million), an increase of
27.3%. The exchange value of B shares was €1,132 million. Nasdaq Helsinki
accounted for 56% of Kesko A and B share trading in January-June 2015. Kesko
shares were also traded on multilateral trading facilities, the most significant
of which were BATS Chi-X with 38% and Turquoise with 6% of the trading (source:
Fidessa).
The Board had the authority, granted by the Annual General Meeting of 16 April
2012, to issue a total maximum of 20,000,000 new B shares, which was intended to
expire on 30 June 2015. The shares could be issued against payment for
subscription by shareholders in a directed issue in proportion to their existing
holdings of the company shares regardless of whether they consisted of A or B
shares, or, deviating from the shareholder's pre-emptive right, in a directed
issue, if there had been 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 would
have been recognised in the reserve of invested non-restricted equity. The
authorisation also included the Board's authority to decide on the share
subscription price, the right to issue shares against non-cash consideration and
the right to make decisions on other matters concerning share issues.
On 13 April 2015, the Annual General Meeting approved a share issue
authorisation which cancels the above authority granted by the General Meeting
of 16 April 2012. In consequence, the Board has the authority, granted by the
Annual General Meeting of 13 April 2015 and valid until 30 June 2018, to issue a
total maximum of 20,000,000 new B shares. 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, deviating 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.
In addition, the Board has the authority, valid until 30 June 2017, to decide on
the transfer of a maximum of 1,000,000 own B shares held by the company as
treasury shares. On 9 February 2015, the Board decided to grant own B shares
held by the company as treasury shares to persons included in the target group
of the 2014 vesting period, based on the valid authority to issue treasury
shares granted by the Annual General Meeting held on 8 April 2013 and the
fulfilment of the vesting criteria of the 2014 vesting period of Kesko's three-
year share-based compensation plan. This transfer of a total of 120,022 own B
shares was announced in a stock exchange release on 1 April 2015 and 7 April
2015. 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-June, a total of 761 shares granted based on the earlier share-based
compensation plan (the 2011-2013 share-based compensation plan) was returned to
the company in accordance with the terms and conditions of the share-based
compensation plan. The return during the reporting period was notified in a
stock exchange notification on 23 March 2015.
At the end of June 2015, the number of shareholders was 39,291, which is 578
less than at the end of 2014. At the end of June, foreign ownership of all
shares was 28%. At the end of June, foreign ownership of B shares was 40%.
Flagging notifications
Kesko Corporation did not receive flagging notifications during the reporting
period.
Key events during the reporting period
Kesko's Board of Directors decided on the new strategy which is aimed at
achieving profitable growth in three strategic areas: the grocery trade, the
building and home improvement trade and the car trade. At the same time,
financial targets in accordance with Kesko's new strategy were announced. The
composition of Kesko's divisional structure and segment reporting has been
changed as of 1 July 2015. An agricultural and machinery trade unit has been
established as part of the home improvement and speciality goods trade division.
(Stock exchange release on 27 May 2015)
Kesko Corporation, the Swedish life insurance company AMF Pensionsförsäkring AB
and Ilmarinen Mutual Pension Insurance Company set up a joint venture named
Ankkurikadun Kiinteistöt Oy. The joint venture owns, manages and develops store
sites acquired for it, primarily in use by Kesko Group. (Stock exchange release
on 8 May 2015 and 11 June 2015)
On 20 March 2015, at http://kesko2014.kesko.fi/en, Kesko published its first
annual report that makes use of the <IR> integrated reporting framework. The
annual report includes a business review, GRI indicators, the financial
statements for 2014, the Corporate Governance Statement and the Remuneration
Statement.
Kesko sold the department store chain Anttila Oy to the German investment fund
4K INVEST for €1 million. The transaction includes all assets and liabilities in
Anttila Oy. Anttila Oy's approximately 1,500 employees continue in the
employment of the company. The date of the transaction was 16 March 2015. (Stock
exchange release on 16 March 2015)
M.Sc. (Econ.) Anni Ronkainen, 48, was appointed Kesko's Chief Digital Officer
responsible for business development, digital business environment and
marketing, and a member of the Group Management Board. (Stock exchange release
on 26 January 2015)
Resolutions of the 2015 Annual General Meeting and decisions of the Board's
organisational meeting
Kesko Corporation's Annual General Meeting, held on 13 April 2015, adopted the
financial statements and the consolidated financial statements for 2014 and
discharged the Board members and the Managing Director from liability. The
General Meeting also resolved to distribute a dividend of €1.50 per share as
proposed by the Board, or a total amount of €148,715,547.00. The dividend pay
date was 22 April 2015. The General Meeting resolved to leave the number of
Board members unchanged at seven. The General Meeting resolved to elect
retailer, Business College Graduate Esa Kiiskinen, Master of Science in
Economics, retailer Tomi Korpisaari, retailer, Secondary School Graduate Toni
Pokela, eMBA Mikael Aro (new member), Master of Science in Economics Matti
Kyytsönen (new member), Master of Science in Economics Anu Nissinen (new member)
and Master of Laws Kaarina Ståhlberg (new member) as Board members for a three-
year term expiring at the close of the 2018 Annual General Meeting in accordance
with the Articles of Association. 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 also approved
the Board's proposals for the Board's authorisation to issue of a total maximum
of 20,000,000 new B shares until 30 June 2018, and its authorisation to decide
on donations in a total maximum of €300,000 for charitable or corresponding
purposes until the Annual General Meeting to be held in 2016.
After the Annual General Meeting, Kesko Corporation's Board of Directors held an
organisational meeting in which it elected retailer, Business College Graduate
Esa Kiiskinen as its Chair and eMBA Mikael Aro as its Deputy Chair. Master of
Laws Kaarina Ståhlberg (Ch.), eMBA Mikael Aro (Dep. Ch.) and Master of Science
in Economics Matti Kyytsönen were elected to the Board's Audit Committee. Esa
Kiiskinen (Ch.), Mikael Aro (Dep. Ch.) and Master of Science in Economics Anu
Nissinen were 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 13 April 2015.
Responsibility
In spring 2015, the K-Group and the association Ruokatieto organised Local Food
Date events (Lähiruokatreffit) in six localities in Finland. The events were
aimed to provide retailers and local producers an opportunity to network and
enhance the offer of local products in K-food stores. K-retailers' direct
purchases from Finnish regions totalled €566.7 million in 2014.
Plan, an international development organisation promoting children's rights, and
Kesko presented their research cooperation at the Ratkaisun Paikka 2015
corporate responsibility event in Helsinki in May. A survey carried out in
spring focused on working conditions in the production chain of the fish and
shellfish industry in north-eastern Thailand and the situation of migrant
workers' children in local communities. Cooperation with Plan and their
knowledge of local conditions provided Kesko with an opportunity to progress
beyond the first step in the production chain.
At the beginning of June, Finnwatch published a follow-up report which showed
that the tuna factories of Kesko's suppliers TUM and Unicord have clearly
improved their working conditions over the last few years.
In May, Kesko published a list of the factories in high-risk countries
manufacturing Kesko's own brand clothes and shoes and those imported by the
company itself on its website. Direct purchases from high-risk countries account
for around 20 per cent of the total purchases of clothing.
At the beginning of May, the K-job 2015 competition was launched to seek the
Young K-store Employee of the Year and the Employer of the Young of the Year. K-
stores and Kesko with its subsidiaries annually employ around 5,000 summer
employees and around 10,000 employees under 30 years of age in Finland.
The Veturi shopping centre, opened in Kouvola in 2012, became the first property
in Finland to achieve an Excellent rating in the Building Management part of the
BREEAM environmental assessment. In the assessment, Veturi was praised for its
own energy production, for the continuous monitoring of energy use and for
paying attention to user comfort for example in indoor air conditions and
lighting.
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 economic situation and consumer
confidence especially in Finland and Russia, as well as their impact on Kesko's
sales and profit. Resulting from the crisis in Greece, risks relating in
particular to the euro area economy have increased. In other respects, no
material change is estimated to have taken place during the first months of the
year in the risks described in the Report by the Board of Directors and the
financial statements for 2014 and the risks described on Kesko's website. The
risks and uncertainties related to economic development are described in the
section future outlook of this release.
Future outlook
Estimates of the future outlook for Kesko Group's net sales and operating profit
excluding non-recurring items are given for the 12 months following the
reporting period (7/2015-6/2016) in comparison with the 12 months preceding the
reporting period (7/2014-6/2015).
The general economic situation and the expected trend in consumer demand vary in
Kesko's different operating countries. In Finland, the trading sector's
performance is expected to remain weak and the tough competitive situation is
expected to continue. In Sweden, Norway and the Baltic countries, the growth in
demand in the trading sector is expected to continue. In Russia, the economic
situation and consumers' purchasing power are estimated to remain weak.
Kesko Group's net sales for the next 12 months are expected to be lower than the
level of the preceding 12 months and the operating profit excluding non-
recurring items for the next 12 months is expected to exceed the level of the
preceding 12 months.
Helsinki, 21 July 2015
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
media and analyst briefing on the interim report can be accessed at
www.kesko.fi, at 11.00. 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 interim report for January-September will be published on
22 October 2015. 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
Merja Haverinen
Vice President, Group Communications
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 excl. non-recurring items by segment
Operating margin excl. non-recurring items by segment
Capital employed by segment
Return on capital employed excl. non-recurring items by segment
Capital expenditure by segment
Segment information by quarter
Change in tangible and intangible assets
Related party transactions
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 OMX 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 2014.
Consolidated
income statement
(€ million),
condensed
1-6/ 1-6/ Change, 1-12/
2015 2014 Change, % 4-6/ 2015 4-6/ 2014 % 2014
Net sales 4,310 4,499 -4.2 2,227 2,371 -6.0 9,071
Cost of
goods sold -3,748 -3,895 -3.8 -1,935 -2,046 -5.4 -7,832
Gross profit 562 604 -7.0 292 325 -10.1 1,238
Other operating
income 449 351 27.8 280 186 50.2 729
Employee benefit
expense -282 -314 -10.4 -138 -158 -12.9 -614
Depreciation and
impairment
charges -67 -77 -12.5 -33 -38 -14.5 -195
Other operating
expenses -589 -507 16.1 -225 -245 -8.1 -1,007
Operating profit 72 56 28.2 176 69 (..) 151
Interest income
and other
finance income 4 9 -51.3 2 7 -70.1 14
Interest expense
and other
finance costs -7 -8 -9.1 -4 -4 4.2 -16
Exchange
differences -1 0 (..) -2 -1 (..) -4
Share of
results of
equity accounted
investments 1 0 (..) 1 0 (..) 0
Profit before
tax 68 57 20.1 172 71 (..) 145
Income tax -26 -15 75.1 -19 -18 10.2 -37
Net profit for
the period 42 42 0.4 153 54 (..) 108
Attributable to
Owners of the
parent 37 39 -4.8 147 50 (..) 96
Non-
controlling
interests 5 3 73.3 6 4 68.6 12
Earnings per
share (€)
for profit
attributable to
equity holders
of the parent
Basic 0.38 0.39 -4.7 1.48 0.51 (..) 0.97
Diluted 0.38 0.39 -4.5 1.48 0.51 (..) 0.97
Consolidated
statement
of comprehensive
income (€
million)
1-6/ 1-6/ Change,% 4-6/ 2015 4-6/ 2014 Change, 1-12/
2015 2014 % 2014
Net profit for
the period 42 42 0.4 153 54 (..) 108
Items that will
not be
reclassified
subsequently to
profit or loss
Actuarial
gains/losses 14 -2 (..) -13 -10 30.0 -20
Items that may
be reclassified
subsequently to
profit or loss
Exchange
differences on
translating
foreign
operations 3 -6 (..) -3 0 (..) -28
Adjustment for
hyperinflation - 3 - 1 2 -20.0 4
Cash flow hedge
revaluation 0 0 (..) -1 2 (..) 1
Revaluation of
available-for-
sale financial
assets 1 -3 (..) 0 -3 (..) -3
Other items 0 0 33.3 0 0 33.3 0
Total other
comprehensive
income for the
period,
net of tax 18 -8 (..) -15 -10 48.0 -45
Total
comprehensive
income for the
period 60 34 73.7 138 44 (..) 63
Attributable to
Owners of the
parent 59 31 93.4 134 39 (..) 49
Non-
controlling
interests 1 4 -85.0 3 4 -22.1 14
(..) Change over 100%
Consolidated statement of financial
position (€ million), condensed
30.6.2015 30.6.2014 Change, % 31.12.2014
ASSETS
Non-current assets
Tangible assets 1,265 1,658 -23.7 1,624
Intangible assets 171 195 -12.4 178
Equity accounted investments and other
financial assets 115 106 8.3 105
Loans and receivables 73 14 (..) 11
Pension assets 165 170 -2.6 147
Total 1,788 2,143 -16.6 2,066
Current assets
Inventories 740 828 -10.7 776
Trade receivables 676 733 -7.9 584
Other receivables 160 160 -0.2 173
Financial assets at fair value
through profit or loss 430 154 (..) 219
Available-for-sale financial assets 328 202 62.4 272
Cash and cash equivalents 84 105 -19.4 107
Total 2,418 2,182 10.8 2,131
Non-current assets held for sale 0 1 -16.7 1
Total assets 4,206 4,326 -2.8 4,198
30.6.2015 30.6.2014 Change, % 31.12.2014
EQUITY AND LIABILITIES
Equity 2,103 2,164 -2.8 2,184
Non-controlling interests 76 77 -0.8 82
Total equity 2,179 2,241 -2.8 2,265
Non-current liabilities
Interest-bearing liabilities 266 348 -23.5 319
Non-interest-bearing liabilities 35 8 (..) 11
Deferred tax liabilities 63 63 -0.7 67
Pension obligations 1 2 -29.3 2
Provisions 16 28 -44.7 27
Total 381 450 -15.2 426
Current liabilities
Interest-bearing liabilities 217 190 13.9 180
Trade payables 918 934 -1.7 795
Other non-interest-bearing liabilities 475 465 2.1 490
Provisions 36 45 -20.7 42
Total 1,646 1,635 0.7 1,506
Total equity and liabilities 4,206 4,326 -2.8 4,198
(..) Change over 100%
Consolidated statement of changes in equity (€ million)
Share Res- Cur- Re- Trea- Re- Non- Total
capi- erves rency valu- sury tained cont-
tal trans- ation sha-res earn- rol-
lation reser-ve ings ling
differ- inte-
ences rests
Balance at
1.1.2014 197 461 -13 1 -18 1,651 73 2,352
Shares
subscribed
with options 2 2
Treasury shares -16 -16
Share-based
payments 2 2
Dividends -138 -138
Other changes 0 0 5 0 5
Net profit for
the period 39 3 42
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 -4 -2 -6
Adjustment for
hyperinflation 0 3 3
Cash flow
hedge
revaluation 0 0
Revaluation of
available-for-
sale financial
assets -3 -3
Others 0 0
Tax related to
comprehensive
income 0 0
Total other
comprehensive
income 0 -4 -2 -2 1 -8
Balance at
30.6.2014 197 463 -18 -1 -32 1,555 77 2,241
Balance at
1.1.2015 197 463 -38 -1 -31 1,594 82 2,265
Shares
subscribed
with options
Treasury shares
Share-based
payments 4 0 4
Dividends -149 -6 -155
Other changes 0 0 5 0 5
Net profit for
the period 37 5 42
Other comprehen-
sive income
Items that will
not be
reclassified
subsequently to
profit or loss
Actuarial
gains/losses 18 18
Items that may
be reclassified
subsequently to
profit or loss
Exchange
differences
on translating
foreign
operations 0 7 -4 3
Adjustment for
hyperinflation
Cash flow
hedge
revaluation 0 0
Revaluation of
available-for-
sale financial
assets 1 1
Others 0 0
Tax related to
comprehensive
income 0 -4 -4
Total other
comprehensive
income 0 7 1 14 -4 18
Balance at
30.6.2015 197 463 -31 0 -28 1,502 76 2,179
Consolidated statement of cash flows (€ million), condensed
1-6/ 1-6/ Change,% 4-6/ 2015 4-6/ 2014 Change, % 1-12/
2015 2014 2014
Cash flows from operating
activities
Profit before tax 68 57 20.1 172 71 (..) 145
Planned depreciation 67 76 -11.5 33 37 -12.4 151
Finance income and costs 4 -1 (..) 4 -2 (..) 6
Other adjustments 23 19 22.1 -103 -1 (..) 63
Change in working capital
Current non-interest-
bearing
operating receivables,
increase (-)/decrease (+) -119 -139 -14.3 69 19 (..) 32
Inventories,
increase (-)/decrease (+) -31 -35 -9.9 23 13 72.5 -7
Current non-interest-
bearing
liabilities, increase
(+)/
decrease(-) 69 85 -18.1 -54 5 (..) -21
Financial items and tax -15 -29 -48.1 -1 -14 -89.6 -65
Net cash from operating
activities 68 34 99.4 142 129 10.6 304
Cash flows from investing
activities
Investing activities -109 -98 11.3 -60 -53 14.0 -194
Sales of fixed assets 444 6 (..) 460 4 (..) 11
Increase in non-current
receivables -1 -1 22.8 -2 0 (..) 0
Net cash used in
investing activities 334 -92 (..) 399 -49 (..) -182
Cash flows from financing
activities
Interest-bearing
liabilities, increase
(+)/decrease (-) -18 -12 45.1 -57 -17 (..) -46
Current interest-bearing
receivables, increase (-
)/
decrease (+) -1 -1 -47.4 -1 2 (..) -1
Dividends paid -149 -138 7.4 -149 -138 7.4 -143
Equity increase - 2 (..) - 1 (..) 2
Acquisition of own shares - -16 (..) - -1 (..) -16
Short-term money market
investments, increase (-
)/ decrease (+) -295 14 (..) -279 29 (..) -57
Other items 9 5 97.1 2 2 26.2 7
Net cash used in
financing activities -454 -148 (..) -484 -122 (..) -254
Change in cash and cash
equivalents -52 -206 -74.8 57 -43 (..) -131
Cash and cash
equivalents and current
portion of available-for-
sale financial assets at
1 Jan. 313 453 -30.8 204 288 -29.1 453
Currency translation
difference adjustment and
revaluation 1 -1 (..) 1 0 (..) -8
Cash and cash
equivalents and current
portion of available-for-
sale financial assets at
30 Jun. 262 246 6.8 262 246 6.8 313
(..) Change over 100%
Group's performance
indicators
1-6/2015 1-6/2014 Change, pp 1-12/2014
Return on capital
employed, % 6.4 4.7 1.7 6.4
Return on capital
employed, %,
rolling 12 mo 7.3 8.7 -1.4 6.4
Return on capital employed
excl. non-recurring items,
% 9.2 7.3 1.9 9.9
Return on capital employed
excl. non-recurring items,
%, rolling 12 mo 10.9 9.9 0.9 9.9
Return on equity, % 3.8 3.7 0.1 4.7
Return on equity, %,
rolling 12 mo 4.9 7.3 -2.3 4.7
Return on equity excl.
non-recurring items, % 6.8 5.7 1.0 7.6
Return on equity excl.
non-recurring items, %,
rolling 12 mo 8.4 8.3 0.1 7.6
Equity ratio, % 52.2 52.3 -0.1 54.5
Gearing, % -16.5 3.5 -20.0 -4.4
Change, %
Capital expenditure, €
million 110.1 99.1 11.1 194.0
Capital expenditure, % of
net sales 2.6 2.2 16.0 2.1
Earnings per share, basic,
€ 0.38 0.39 -4.7 0.97
Earnings per share,
diluted, € 0.38 0.39 -4.5 0.97
Earnings per share excl.
non-recurring items,
basic, € 0.71 0.64 11.5 1.65
Cash flows from operating
activities,
€ million 68 34 99.4 304
Cash flows from investing
activities,
€ million 334 -92 (..) -182
Equity per share, € 21.21 21.86 -2.9 22.05
Interest-bearing net debt,
€ million -359 78 (..) -99
Diluted number of shares,
average for the reporting
period, 1,000 pcs 99,084 99,365 -0.3 99,161
Personnel, average 19,065 19,935 -4.4 19,976
(..) Change over 100%
Group's 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 2015
performance 2014 2014 2014 2014 2015
indicators by
quarter
Net sales, €
million 2,129 2,371 2,304 2,267 2,082 2,227
Change in net
sales, % -1.4 -2.1 -2.9 -4.0 -2.2 -6.0
Operating profit,
€ million -13.0 69.4 63.4 31.7 -103.6 175.8
Operating margin,
% -0.6 2.9 2.7 1.4 -5.0 7.9
Operating profit
excl. non-
recurring items,
€ million 19.1 67.6 84.0 61.9 26.5 76.4
Operating margin
excl. non-
recurring items,
% 0.9 2.9 3.6 2.7 1.3 3.4
Finance
income/costs,
€ million -1.6 2.2 -1.8 -5.0 -0.3 -4.2
Profit before
tax, € million -14.4 71.4 61.7 26.4 -103.7 172.1
Profit before
tax, % -0.7 3.0 2.7 1.2 -5.0 7.7
Return on capital
employed, % -2.2 11.5 10.9 5.5 -18.1 31.9
Return on capital
employed, excl.
non-recurring
items, % 3.2 11.2 14.4 10.7 4.6 13.9
Return on equity,
% -2.0 9.4 8.1 3.7 -19.9 28.0
Return on equity,
excl.
non-recurring
items, % 2.3 9.1 11.3 8.0 3.1 10.6
Equity ratio, % 53.2 52.3 54.2 54.5 51.5 52.2
Capital
expenditure,
€ million 43.4 55.7 51.7 43.2 51.5 58.6
Earnings per
share, diluted, € -0.11 0.51 0.41 0.17 -1.11 1.48
Equity per share,
€ 22.83 21.86 22.25 22.05 21.30 21.21
Segmental information
Net sales by 1-6/ 1-6/ Change, % 4-6/ 2015 4-6/ 2014 Change, % 1-12/
segment 2015 2014 2014
(€ million)
Grocery trade,
Finland 2,203 2,253 -2.2 1,120 1,176 -4.7 4,650
Grocery trade,
other countries* 50 51 -2.3 29 26 10.4 103
Grocery trade,
total 2,252 2,304 -2.2 1,149 1,202 -4.4 4,754
- of which
intersegment trade 10 18 -47.8 3 8 -68.1 34
Home improvement
and speciality
goods trade,
Finland 832 945 -11.9 400 484 -17.2 1,854
Home improvement
and speciality
goods trade, other
countries* 687 707 -2.8 397 407 -2.4 1,470
Home improvement
and speciality
goods trade total 1,519 1,651 -8.0 797 890 -10.4 3,324
- of which
intersegment trade 1 0 (..) 0 0 (..) 0
Car and machinery
trade, Finland 490 502 -2.4 246 252 -2.3 916
Car and machinery
trade, other
countries* 48 54 -10.6 31 31 -0.9 96
Car and machinery
trade
total 538 556 -3.2 277 283 -2.2 1,011
- of which
intersegment trade 1 1 43.8 0 0 -58.6 1
Common operations
and
eliminations 0 -11 (..) 4 -5 (..) -19
Finland total 3,525 3,688 -4.4 1,770 1,906 -7.1 7,401
Other countries
total* 784 812 -3.3 457 464 -1.6 1,669
Group total 4,310 4,499 -4.2 2,227 2,371 -6.0 9,071
(..) Change over
100%
* Net sales in countries other than Finland
Operating profit by segment 1-6/ 1-6/ 4-6/ 2015 4-6/ 2014 1-12/
(€ million) 2015 2014 Change Change 2014
Grocery trade 151.0 98.8 52.2 115.8 54.4 61.3 216.2
Home improvement and
speciality goods trade -84.7 -54.1 -30.6 57.1 8.4 48.7 -52.6
Car and machinery trade 17.9 19.1 -1.2 11.0 10.9 0.1 29.4
Common operations and
eliminations -12.0 -7.5 -4.5 -8.0 -4.4 -3.7 -41.6
Group total 72.2 56.3 15.9 175.8 69.4 106.4 151.4
Operating profit excl. non-
recurring items by segment 1-6/ 1-6/ 4-6/ 2015 4-6/ 2014 1-12/
(€ million) 2015 2014 Change Change 2014
Grocery trade 78.2 100.7 -22.5 43.3 55.3 -12.0 223.2
Home improvement and
speciality goods trade 18.7 -25.6 44.4 30.1 5.8 24.3 -0.3
Car and machinery trade 17.9 19.1 -1.2 11.0 10.9 0.1 29.6
Common operations and
eliminations -12.0 -7.5 -4.6 -8.0 -4.4 -3.7 -19.9
Group total 102.9 86.7 16.1 76.4 67.6 8.7 232.6
Operating
margin
excl. non-
recurring Rolling
items by 1-6/ 1-6/ Change, Change, 1-12/ 12 mo
segment, % 2015 2014 pp 4-6/ 2015 4-6/ 2014 pp 2014 6/2015
Grocery trade 3.5 4.4 -0.9 3.8 4.6 -0.8 4.7 4.3
Home
improvement
and speciality
goods trade 1.2 -1.6 2.8 3.8 0.6 3.1 0.0 1.4
Car and
machinery
trade 3.3 3.4 -0.1 4.0 3.8 0.1 2.9 2.9
Group total 2.4 1.9 0.5 3.4 2.9 0.6 2.6 2.8
Capital
employed by
segment,
cumulative Rolling
average 1-6/ 1-6/ 1-12/ 12 mo
(€ million) 2015 2014 Change 4-6/ 2015 4-6/ 2014 Change 2014 6/2015
Grocery trade 988 1,022 -35 975 1,034 -59 1,007 993
Home
improvement
and speciality
goods trade 824 882 -58 804 888 -84 876 850
Car and
machinery
trade 160 166 -7 153 165 -12 162 156
Common
operations and
eliminations 272 316 -44 273 320 -48 310 290
Group
total 2,243 2,387 -143 2,204 2,407 -203 2,354 2,289
Return on
capital 1-6/ 1-6/ Change 4-6/ 2015 4-6/ 2014 Changepp 1-12/
employed excl. 2015 2014 pp 2014
non-recurring Rolling
items 12 mo
by segment, % 6/2015
Grocery trade 15.8 19.7 -3.9 17.8 21.4 -3.6 22.2 20.2
Home
improvement
and speciality
goods trade 4.5 -5.8 10.4 15.0 2.6 12.4 0.0 5.2
Car and
machinery
trade 22.5 23.0 -0.5 28.7 26.4 2.3 18.3 18.2
Group total 9.2 7.3 1.9 13.9 11.2 2.6 9.9 10.9
Capital expenditure 1-6/ 1-6/ 4-6/ 2015 4-6/ 2014 1-12/
by segment (€ million) 2015 2014 Change Change 2014
Grocery trade 71 50 21 33 31 3 98
Home improvement and
speciality goods trade 18 31 -13 9 17 -8 71
Car and machinery trade 7 9 -2 4 7 -3 14
Common operations and
eliminations 14 8 6 13 1 11 11
Group total 110 99 11 59 56 3 194
Segmental information by quarter
Net sales by segment 1-3/ 4-6/ 7-9/ 10-12/ 1-3/
(€ million) 2014 2014 2014 2014 2015 4-6/ 2015
Grocery trade 1,102 1,202 1,190 1,260 1,103 1,149
Home improvement and
speciality goods trade 761 890 877 796 722 797
Car and machinery trade 272 283 240 216 261 277
Common operations and
eliminations -6 -5 -3 -5 -3 4
Group total 2,129 2,371 2,304 2,267 2,082 2,227
Operating profit by segment 1-3/ 4-6/ 7-9/ 10-12/ 1-3/
(€ million) 2014 2014 2014 2014 2015 4-6/ 2015
Grocery trade 44.3 54.4 58.3 59.1 35.2 115.8
Home improvement and
speciality goods trade -62.5 8.4 -0.5 2.0 -141.8 57.1
Car and machinery trade 8.2 10.9 8.7 1.6 7.0 11.0
Common operations and
eliminations -3.1 -4.4 -3.1 -31.0 -4.0 -8.0
Group total -13.0 69.4 63.4 31.7 -103.6 175.8
Operating profit excl.
non-recurring items 1-3/ 4-6/ 7-9/ 10-12/ 1-3/
by segment (€ million) 2014 2014 2014 2014 2015 4-6/ 2015
Grocery trade 45.4 55.3 60.3 62.2 34.9 43.3
Home improvement and speciality goods
trade -31.4 5.8 18.2 7.1 -11.4 30.1
Car and machinery trade 8.2 10.9 8.7 1.8 7.0 11.0
Common operations and eliminations -3.1 -4.4 -3.1 -9.3 -4.0 -8.0
Group total 19.1 67.6 84.0 61.9 26.5 76.4
Operating margin excl.
non-recurring items 1-3/ 4-6/ 7-9/ 10-12/ 1-3/
by segment, % 2014 2014 2014 2014 2015 4-6/ 2015
Grocery trade 4.1 4.6 5.1 4.9 3.2 3.8
Home improvement and speciality goods
trade -4.1 0.6 2.1 0.9 -1.6 3.8
Car and machinery trade 3.0 3.8 3.6 0.8 2.7 4.0
Group total 0.9 2.9 3.6 2.7 1.3 3.4
Change in tangible and intangible assets (€ million)
30.6.2015 30.6.2014
Opening net carrying amount 1,802 1,840
Depreciation, amortisation and impairment -67 -77
Investments in tangible and intangible assets 98 106
Disposals -402 -10
Currency translation differences 4 -6
Closing net carrying amount 1,435 1,853
Related party transactions (€ million)
The Group's related parties include its key 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 related parties:
1-6/2015 1-6/2014
Sales of goods and services 35 40
Purchases of goods and services 9 12
Other operating income 6 6
Other operating expenses 15 15
30.6.2015 30.6.2014
Receivables 62 8
Liabilities 24 21
Fair value hierarchy of financial assets and liabilities (€ million)
Level 1 Level 2 Level 3 30.6.2015
Financial assets at fair value through profit
or loss 216.4 214.0 430.4
Derivative financial instruments at fair value
through profit or loss
Derivative financial assets 9.6 9.6
Derivative financial liabilities 8.4 8.4
Available-for-sale financial assets 150.1 178.0 15.1 343.2
Fair value hierarchy of financial assets and liabilities (€ million)
Level 1 Level 2 Level 3 30.6.2014
Financial assets at fair value through profit
or loss 14.3 139.5 153.8
Derivative financial instruments at fair value
through profit or loss
Derivative financial assets 2.5 2.5
Derivative financial liabilities 17.0 17.0
Available-for-sale financial assets 61.1 141.0 13.3 215.3
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 30.6.
Personnel average by
segment 1-6/2015 1-6/2014 Change
Grocery trade 6,374 6,151 223
Home improvement and speciality goods trade 11,007 12,103 -1,095
Car and machinery trade 1,197 1,250 -54
Common operations 488 432 56
Group total 19,065 19,935 -870
Personnel as at 30.6.*
by segment 2015 2014 Change
Grocery trade 9,003 8,107 896
Home improvement and speciality goods trade 12,065 14,559 -2,494
Car and machinery trade 1,260 1,323 -63
Common operations 566 504 62
Group total 22,894 24,493 -1,599
* Total number incl. part-time employees
Group's commitments (€ million)
30.6.2015 30.6.2014 Change, %
Own commitments 167 206 -18.9
For associates and joint ventures - 65 -100.0
For others 11 10 15.5
Lease liabilities for machinery and equipment 26 25 5.3
Lease liabilities for real estate 2,666 2,251 18.5
Liabilities arising from derivative instruments
(€ million)
Fair value
Values of underlying instruments at 30.6. 30.6.2015 30.6.2014 30.6.2015
Interest rate derivatives
Interest rate swaps 101 101 0.16
Currency derivatives
Forward and future contracts 579 303 3.86
Currency swaps 50 50 3.42
Commodity derivatives
Electricity derivatives 15 27 -6.24
Calculation of performance indicators
Operating profit x 100 / (Non-current
assets + Inventories + Receivables +
Return on capital employed*, % Other current assets - Non-interest-
bearing liabilities) on average for
the reporting period
Operating profit for prior 12 months x
Return on capital employed, %, rolling 100 / (Non-current assets +
12 months Inventories + Receivables + Other
current assets - Non-interest-bearing
liabilities) on average for 12 months
Operating profit excl. non-recurring
Return on capital employed excl. non- items x 100 / (Non-current assets +
recurring items*, % Inventories + Receivables + Other
current assets - Non-interest-bearing
liabilities) on average for the
reporting period
Operating profit excl. non-recurring
Return on capital employed excl. non- items for prior 12 months x 100 /
recurring items, %, rolling 12 months (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
Return on equity, %, rolling 12 months (Profit/loss for prior 12 months
before tax - Income tax for prior 12
months) x 100 / Shareholders' equity
(Profit/loss adjusted for non-
Return on equity excl. non-recurring recurring items before tax - Income
items*, % tax adjusted for the tax effect of
non-recurring items) x 100 /
Shareholders' equity
(Profit/loss for prior 12 months
adjusted for non-recurring items
Return on equity excl. non-recurring before tax - Income tax for prior 12
items, %, rolling 12 months months adjusted for the tax effect of
non-recurring items) x 100 /
Shareholders' equity
Equity ratio, % Shareholders' equity x 100 /
(Total assets - Prepayments received)
(Profit/loss - Non-controlling
Earnings/share, diluted interests) /
Average diluted number of shares
(Profit/loss - Non-controlling
Earnings/share, basic interests) /
Average number of shares
Earnings/share excl. (Profit/loss adjusted for non-
non-recurring items, recurring items - Non-controlling
basic interests) / Average number of shares
Equity attributable to equity holders
Equity/share of the parent /
Basic number of shares at the balance
sheet date
Interest-bearing net liabilities x
Gearing, % 100 /
Shareholders' equity
Interest-bearing liabilities - Money
Interest-bearing net debt market investments - Cash and cash
equivalents
* Indicators for return on capital have been annualised.
K-Group's retail and B2B sales*, VAT 0% (preliminary data):
1.1.-30.6.2015 1.4.-30.6.2015
K-Group's retail and € million Change, % € million Change, %
B2B sales
K-Group's grocery trade
K-food stores, Finland 2,218 -1.7 1,146 -1.8
K-citymarket, non-food 262 0.1 131 0.5
Kespro 379 0.4 196 -0.9
K-ruoka, Russia 50 -2.3 29 10.3
Grocery trade, total 2,908 -1.3 1,502 -1.3
K-Group's home improvement and
speciality goods trade
K-rauta and Rautia 474 -3.2 302 -2.6
Rautakesko B2B Service 91 -0.4 51 0.6
K-maatalous 225 -5.1 136 -6.9
Speciality goods trade, Finland 248 -1.5 117 -3.7
Finland, total 1,038 -3.0 607 -3.5
Home improvement and speciality goods
trade, other Nordic countries 415 -2.0 249 -0.3
Home improvement and speciality goods
trade, the Baltics 217 6.2 126 5.5
Home improvement and speciality goods
trade, other countries 153 -16.1 89 -15.1
Home improvement and speciality goods
trade, total 1,824 -3.1 1,071 -2.9
K-Group's car and
machinery trade
VV-Autotalot 194 -2.7 99 -0.4
VV-Auto, import 210 -5.7 96 -7.5
Konekesko, Finland 97 5.3 60 6.0
Finland total 501 -2.5 254 -1.8
Konekesko, other countries 48 -14.2 31 -5.0
Car and machinery trade, total 550 -3.7 286 -2.2
Finland total 4,398 -1.8 2,334 -2.1
Other countries, total 883 -3.8 525 -1.7
Retail and B2B sales,
total 5,282 -2.2 2,859 -2.0
* Excl. Anttila
[HUG#1940390]
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