FINANCIAL PERFORMANCE IN BRIEF, CONTINUING OPERATIONS:
7-9/2020
· Net sales for the Group's continuing operations in July-September totalled €2,651.9 million (€2,803.9 million); in comparable terms net sales increased by 4.6%, reported net sales decreased by 5.4%
· The comparable operating profit totalled €181.8 million (€152.0 million), up by €38.2 million when
Kesko Senukai is recognised as a joint venture also for the comparison period (illustrative comparison figures)
· Operating profit totalled €224.6 million (€148.6 million)
· Comparable earnings per share were €0.33 (€0.25)
· Reported earnings per share for continuing operations were €0.48
1-9/2020
· Net sales for the Group's continuing operations in January-September totalled €8,006.9 million (€7,986.1 million); in comparable terms net sales increased by 3.3%, reported net sales were flat year-on-year
· The comparable operating profit totalled €402.1 million (€331.9 million), up by €74.4 million when
Kesko Senukai is recognised as a joint venture also for the comparison period (illustrative comparison figures)
· Operating profit totalled €444.6 million (€320.1 million)
· Comparable earnings per share were €0.66 (€0.52)
· Reported earnings per share for continuing operations were €0.81
KEY PERFORMANCE INDICATORS
7-9/2020 7-9/2019 1-9/2020 1-9/2019 1-12/2019
Continuing operations
Net sales, € 2,651.9 2,803.9 8,006.9 7,986.1 10,720.3
million
Operating profit, 181.8 152.0 402.1 331.9 461.6
comparable, € million
Operating margin, 6.9 5.4 5.0 4.2 4.3
comparable, %
Operating profit, € 224.6 148.6 444.6 320.1 447.8
million
Profit before tax, 163.6 129.3 331.5 263.1 370.7
comparable, € million
Profit before tax, € 220.0 154.8 389.3 297.6 403.3
million
Cash flow from 286.6 191.6 844.0 619.9 893.1
operating activities, €
million
Capital expenditure, € 174.8 132.2 342.9 602.9 686.1
million
Earnings per share, €,
basic and diluted
Continuing operations 0.48 0.32 0.81 0.60 0.83
Discontinued operations - 0.00 - 0.02 0.03
Group, total 0.48 0.31 0.81 0.63 0.86
Earnings per share,
comparable, €, basic
Continuing operations 0.33 0.25 0.66 0.52 0.74
1-9/2020 1-9/2019 1-12/2019
Continuing operations
Return on capital employed, 11.0 9.6 9.6
comparable, %, rolling 12
months
Group
Return on equity, comparable, 17.3 14.4 15.1
%, rolling 12 months
Kesko reports
performance
indicators
Continuing
operations
Net sales, € million 2,651.9 2,568.9 7,580.2 7,352.2 9,862.0
Operating profit, 181.8 143.7 388.0 313.6 434.7
comparable, €
million
Operating margin, 6.9 5.6 5.1 4.3 4.4
comparable, %
Operating profit, € 176.9 140.3 382.8 301.8 421.0
million
Profit before tax, 163.6 123.8 327.6 252.6 356.7
comparable, €
million
Profit before tax, € 172.3 149.4 337.7 287.3 389.3
million
*Reported 7-9/2020
In this interim report release, the comparable change % in net sales has been calculated in local currencies and excluding the impact of Kesko Senukai and acquisitions and divestments completed in 2020 and 2019. The comparable operating profit has been calculated by deducting items affecting comparability from the reported operating profit. The illustrative performance indicators have been calculated for the reporting period 1-9/2020 and the comparison periods as if Kesko Senukai had been consolidated as a joint venture.
OUTLOOK AND GUIDANCE FOR 2020
Outlook for
Kesko specifies its profit guidance for 2020. The company now estimates that the comparable operating profit for its continuing operations will be in the range of €530-570 million in 2020. Before, the company estimated that the comparable operating profit for continuing operations would be in the range of €510-570 million.
Retail sales in K-food stores have remained strong in the grocery trade. In the building and technical trade, sales remain at a good level in both B2B and B2C trade. The car trade has recovered well from the decline in sales in H1. At the same time, Kesko has managed to improve cost efficiency.
Expectations for the remainder of the year are good in the grocery trade and building and technical trade with, for example, household consumption more focused on domestic purchases than previously estimated.
The outlook is based on the epidemic situation remaining under control in Kesko's operating countries.
However, concerns over the expansion of the Covid-19 epidemic and general economic weakening remain high. A worsened epidemic situation would have a negative impact on Kesko's businesses and, for example, Christmas sales.
PRESIDENT AND CEO
The results for the third quarter of 2020 were the best in Kesko's history. Sales grew in all divisions. Net sales grew by 4.6% in comparable terms, totalling €2,651.9 million. The comparable operating profit totalled €181.8 million, representing an increase of €38.2 million when accounting for the change in the consolidation method of Kesko Senukai. Cash flow from operating activities totalled €286.6 million, and grew by €95.0 million. We were also able to meet our long-term financial targets faster than we had anticipated.
Our strategy is working well in the grocery trade, and our market share has continued to strengthen further in both grocery sales and foodservice. Sales to grocery stores rose by 11.4% and K-Citymarket's home and speciality goods trade also grew. Despite the exceptional circumstances, we have managed to offer safe and successful shopping for our customers, complemented by inspiring digital services that make life easier, such as online grocery sales. The positive customer experiences are reflected in the good sales development of all
Good performance in all operating countries in the building and technical trade division clearly strengthened our profit performance. Growth in consumer sales remained very strong. Performance was also good in B2B trade, in both building and home improvement trade and
In the car trade, there was an upturn in demand during the summer for both new and used cars. Net sales for the car trade division grew by 9.6%. Servicing and spare part sales were also good. The positive development in the car trade has been affected by our wider range and improved availability of cars. Demand has especially continued to grow for all-electric cars and rechargeable hybrids.
The Covid-19 epidemic has remained under control in all of Kesko's operating countries. However, concerns over the expansion of the epidemic and general economic weakening remain high. We estimate that the comparable operating profit for Kesko's continuing operations will be in the range of €530-570 million in 2020.
Kesko celebrates its 80th anniversary this year. The company was founded under exceptional circumstances back in
IMPORTANT EVENTS
Positive profit warning on
Kesko raised its guidance for the comparable operating profit for its continuing operations in 2020. Kesko estimates that the comparable operating profit for its continuing operations will be in the range of €510-570 million in 2020. The guidance upgrade is based on better than anticipated sales development in all divisions, improved cost efficiency, and a more positive outlook for the remainder of the year.
On
Before, the company estimated that the comparable operating profit for continuing operations would be in the range of €430-510 million. In the previous guidance, Kesko Senukai was treated as a subsidiary for the full year 2020. (Stock exchange releases 17.9.2020)
Positive profit warning on
Kesko raised its guidance for the comparable operating profit for its continuing operations, issued in connection with the company's interim report on
Share issue without payment (share split)
Kesko`s Annual General Meeting on
Profit warning on
Kesko issued a profit warning due to the Covid-19 pandemic and related global economic uncertainty. Kesko estimated at the time that the comparable operating profit for its continuing operations would be in the range of €400-450 million in 2020. (Stock exchange release 18.3.2020)
Strategic review of operations in the Baltics and
Kesko is reporting
In its half year financial report on
After re-examining the conditions for consolidation, Kesko has deemed that it no longer exercises the type of control referred to in IFRS 10 over Kesko Senukai. Consequently, Kesko has decided to classify Kesko Senukai as a joint venture. Due to the change in classification, from
FINANCIAL PERFORMANCE FOR CONTINUING OPERATIONS
In the table of key performance indicators of this "Financial performance for continuing operations" section, illustrative Group performance indicators are used alongside the reported performance indicators based on the consolidated financial statements, to depict the change in comparable operating profit as if Kesko Senukai had been consolidated in the consolidated financial statements as a joint venture also in the comparison period. The change based on the illustrative comparison figures is reported in the column "Change, € million, Illustrative comparison figures."
NET SALES AND PROFIT FOR JULY-
7-9/2020 Net Change, Change, Operating Change, Change,
sales, % comparable, profit, € millio € millionIl
€ millio % comparable, l
€ million u
s
t
r
a
t
i
v
e
n comparison
n figures*
Grocery 1,462.1 +4.2 +4.2 108.7 +15.2 +15.2
trade
Building and 895.2 +6.7 +4.5 63.7 +19.5 +19.5
technical
trade,
excl.
speciality
goods
trade and
Kesko
Senukai
Speciality 56.0 -47.3 +2.9 3.5 -2.2 -2.2
goods
trade
Kesko - - - 6.0 -4.3 +4.0
Senukai
Building and 951.2 -19.4 +4.4 73.2 +12.9 +21.3
technical
trade,
total
Car trade 244.3 +9.6 +9.6 7.4 +2.3 +2.3
Common -5.7 (..) (..) -7.4 -0.7 -0.7
functions
and
eliminations
Total 2,651.9 -5.4 +4.6 181.8 +29.8 +38.2
(...) Change over 100%
* Kesko Senukai treated as a joint venture in the illustrative comparison figures
Despite the Covid-19 epidemic and related restrictions, the net sales for the Group's continuing operations increased in comparable terms by 4.6% in July-September. Kesko's businesses and operating countries have been affected by the exceptional situation in different ways. Net sales grew in comparable terms in the grocery trade, building and technical trade, and car trade. The Group's net sales increased in comparable terms by 5.1% in
In the grocery trade division, net sales grew in all grocery store chains and home and speciality goods in K-Citymarket. The restrictions imposed on restaurants and events due to the Covid-19 epidemic impacted Kespro's foodservice business, and Kespro's net sales decreased by 9.5%. However, the growth in grocery sales to K-food stores clearly exceeded the decrease in the net sales for Kespro's foodservice business.
In the building and technical trade division, net sales grew in comparable terms in
In the car trade division, net sales increased in July-September as demand strengthened markedly for both new and used cars.
The Group's comparable operating profit for continuing operations in July-September increased by €29.8 million, or by €38.2 million with Kesko Senukai recognised as a joint venture (illustrative comparison figures). Profitability improved in the grocery trade division due to good retail sales development and improved operational efficiency. In the building and technical trade division, the comparable operating profit for building and home improvement trade grew in
Items affecting comparability, € million 7-9/2020 7-9/2019
Operating profit, comparable 181.8 152.0
Items affecting comparability
+gains on disposal - 0.4
-losses on disposal -0.1 -
+/-structural arrangements 42.8 -3.8
Items affecting comparability, total 42.8 -3.5
Operating profit 224.6 148.6
The most significant items affecting comparability were the positive €47.7 million profit impact of the change in Kesko Senukai's consolidation method, and the negative €2.4 million profit impact of changes in the store network in
In July-September,
Net finance costs, income tax and earnings per share
7-9/2020 7-9/2019
Continuing operations
Net finance costs, € million -19.1 -23.3
Interests on lease liabilities, € million -19.0 -23.1
Profit before tax, comparable, € million 163.6 129.3
Profit before tax, € million 220.0 154.8
Income tax, € million -30.2 -25.3
Earnings per share, comparable, € 0.33 0.25
Earnings per share, € 0.48 0.32
Group
Equity per share, € 5.15 4.92
The net finance costs for the Group's continuing operations were positively impacted by the recovery of valuation losses on investments of liquid assets. A change in the fair value of interest rate derivatives increased finance costs. The share of result of associates, reported under financial items, amounted to €14.4 million (€29.5 million), or €0.9 million (€0.5 million) in comparable terms. The share of result of associates included a €13.6 million profit related to the dissolution of
The Group's effective tax rate was 13.7% (16.3%). The Group's effective tax rate decreased due to a positive profit impact of €47.7 million arising from the change in the consolidation method of Kesko Senukai, recognised as an item affecting comparability. The effective tax rate for the comparison period was affected by the share of result of associates.
The comparable profit before tax for the Group's continuing operations grew in July-September thanks to operating profit growth. Earnings per share and comparable earnings per share for the Group's continuing operations grew compared to the year before.
NET SALES AND PROFIT FOR JANUARY-
1-9/2020 Net Change, Change, Operating Change, Change,
sales, % comparable, profit, € millio € million
€ % comparable, Illustrative
million € million comparison
n figures*
Grocery 4,214.7 +3.4 +3.4 252.0 +22.7 +22.7
trade
Building and 2,562.1 +7.9 +6.3 131.1 +49.8 +49.8
technical
trade,
excl.
speciality
goods trade
Speciality 159.8 -41.2 -6.1 2.9 -5.1 -5.1
goods trade
Kesko 427.3 -32.7 - 23.6 +1.0 +5.2
Senukai
Building and 3,148.6 -4.0 +5.6 157.6 +45.7 +49.8
technical
trade,
total
Car trade 658.9 +3.7 -5.2 17.3 -0.5 -0.5
Common -15.3 (..) (..) -24.7 +2.3 +2.3
functions
and
eliminations
Total 8,006.9 +0.3 +3.3 402.1 +70.2 +74.4
(...) Change over 100%
* Kesko Senukai treated as a joint venture in the illustrative comparison figures
Net sales for the Group's continuing operations were flat year-on-year in January-September, but in comparable terms net sales increased by 3.3% despite the Covid-19 epidemic and related restrictions. Kesko's businesses and operating countries have been affected by the exceptional situation in different ways. Net sales grew in the grocery trade division. In the building and technical trade division, net sales decreased by 4.0% compared to the year before, but increased by 5.6% in comparable terms. In the car trade division, net sales increased, but decreased in comparable terms. The Group's net sales increased in comparable terms by 3.2% in
Net sales increased in all grocery store chains, but decreased in Kespro's foodservice business due to the Covid-19 epidemic and related restrictions.
Net sales for the building and technical trade division grew in comparable terms in
In the car trade division, net sales increased due to the acquisitions carried out in 2019, but in comparable terms, net sales decreased. Net sales saw a turnaround and began to grow in the third quarter thanks to strengthened demand.
The comparable operating profit for the Group's continuing operations grew by €70.2 million in January-September, or by €74.4 million with Kesko Senukai recognised as a joint venture (illustrative comparison figures). In the grocery trade division, profitability improved thanks to good grocery sales development in the grocery store chains and cost adjustment measures especially in Kespro's foodservice business and K-Citymarket's home and speciality goods trade. The decrease in Kespro's net sales, resulting from restrictions imposed due to the Covid-19 epidemic, had a weakening impact on Kespro's comparable operating profit for the reporting period. In the building and technical trade division, the comparable operating profit for building and home improvement trade grew in
Items affecting comparability, € million 1-9/2020 1-9/2019 1-12/2019
Operating profit, comparable 402.1 331.9 461.6
Items affecting comparability
+gains on disposal 6.4 1.3 4.6
-losses on disposal -0.2 - -0.9
+/-structural arrangements 36.3 -13.2 -17.5
Items affecting comparability, total 42.5 -11.9 -13.8
Operating profit 444.6 320.1 447.8
The most significant items affecting comparability in January-September were the profit impact of €47.7 million resulting from the change in the consolidation method of Kesko Senukai; the €2.4 million negative profit impact of changes in the store site network in
Net finance costs, income tax and earnings per share
1-9/2020 1-9/2019 1-12/2019
Continuing operations
Net finance costs, € million -71.8 -70.1 -91.4
Interests on lease liabilities, € million -64.5 -71.9 -95.4
Profit before tax, comparable, € million 331.5 263.1 370.7
Profit before tax, € million 389.3 297.6 403.3
Income tax, € million -67.6 -54.7 -69.6
Earnings per share, comparable, € 0.66 0.52 0.74
Earnings per share, € 0.81 0.60 0.83
Group
Equity per share, € 5.15 4.92 5.11
Net finance costs for the Group's continuing operations were up in January-September due to exchange differences and change in the fair value of interest rate derivatives. Of the exchange differences, €-2.8 million was due to exchange rate losses on euro-denominated loan financing in January-June at Kesko Senukai's Belarussian subsidiary OMA, and €-1.9 million due to the weakening of the Norwegian krone, Swedish krona and Polish zloty. The share of result of associates amounted to €16.4 million (€47.6 million), or €1.2 million (€1.2 million) in comparable terms. The share of result of associates included a €13.6 million profit related to the dissolution of
The Group's effective tax rate was 17.4% (18.4%). The Group's effective tax rate decreased due to a positive profit impact of €47.7 million arising from the change in the consolidation method of Kesko Senukai, recognised as an item affecting comparability.
The comparable profit before tax for the Group's continuing operations grew in January-September thanks to operating profit growth. Earnings per share and comparable earnings per share for the Group's continuing operations grew compared to the year before.
Cash flow and financial position
€ million 7-9/2020 7-9/2019 1-9/2020 1-9/2019 1-12/2019
Continuing
operations
Cash flow from 286.6 191.6 844.0 619.9 893.1
operating
activities
Cash flow from -265.4 -126.0 -371.0 -559.2 -620.3
investing
activities
Group
Cash flow from -179.0 -86.9 -423.2 -78.4 -295.4
financing
activities
€ million
Group
Liquid assets 304.1 171.8 169.0
Interest-bearing liabilities 2,665.5 3,029.2 3,037.3
Lease liabilities 2,014.1 2,392.3 2,422.2
Interest-bearing net debt excl. 347.3 465.1 446.1
lease liabilities
Interest-bearing net debt/EBITDA, 0.5 1.0 0.9
excl. IFRS 16 impact, rolling 12
months
Gearing, % 115.6 138.8 134.0
Equity ratio, % 30.8 29.6 31.2
In July-September, the cash flow from operating activities for the Group's continuing operations totalled €286.6 million (€191.6 million). Cash flow increased due to operating profit growth and improved capital efficiency. The cash flow from operating activities for discontinued operations in the comparison period totalled €-0.8 million. The Group's cash flow from operating activities totalled €286.6 million (€190.7 million).
The cash flow from investing activities for the Group's continuing operations in July-September totalled €-265.4 million (€-126.0 million), which included €135.8 million in acquisitions, and a negative €92.7 million impact of the change in Kesko Senukai's consolidation method, with Kesko Senukai's cash and cash equivalents no longer recognised in the consolidated statement of financial position.
In January-September, the cash flow from operating activities for the Group's continuing operations totalled €844.0 million (€619.9 million). The cash flow from operating activities for continuing operations in the comparison period included a €48.3 million return of surplus assets paid by
The cash flow from investing activities for the Group's continuing operations in January-September totalled
€-371.0 million (€-559.2 million), which included €146.0 in acquisitions, a negative €92.7 million impact of the change in Kesko Senukai's consolidation method, and a positive €19.6 million cash flow impact of the divestment of Baltic machinery trade operations. The acquisition of the store property of K-Citymarket in Järvenpää, previously leased by Kesko, is reported under cash flow from financing activities. The cash flow from investing activities for the comparison period included acquisitions totalling €280.7 million and
The Group's liquidity remained strong despite the economic uncertainty caused by the Covid-19 epidemic.
CAPITAL EXPENDITURE
€ million 7-9/2020 7-9/2019 1-9/2020 1-9/2019 1-12/2019
Capital expenditure, 174.8 132.2 342.9 602.9 686.1
continuing operations
Store sites 15.4 40.7 109.0 195.4 227.7
Acquisitions 135.9 45.0 146.7 290.3 290.5
IT 4.8 5.5 20.0 22.0 33.9
Other investments 18.7 41.1 67.2 95.2 134.0
Capital expenditure in store sites decreased in July-September by €25.3 million compared to the year before.
Capital expenditure in store sites in January-September was increased in part by the acquisition of the store property of K-Citymarket in Järvenpää in the first quarter.
Acquisitions in January-September consisted of Mark & Infra i
Personnel
1-9/2020 1-9/2019 1-12/2019
Average number of personnel 18,658 20,717 20,846
converted into full-time
employees,
continuing operations
Personnel at the end of the
reporting period
Other countries 4,958 12,161 12,511
Total 17,346 24,806 25,168
The change in the consolidation method of Kesko Senukai had a marked impact on the number of Group employees outside
In the first year-half, Kesko carried out adjustment measures due to a reduction in workloads brought on by the Covid-19 epidemic. In total, some 2,500 Kesko employees in
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. In terms of the level of operating profit, the second and third quarter are the strongest, whereas the impact of the first quarter on the full year profit is the smallest. The acquisitions of Suomen Lähikauppa,
GROCERY TRADE
July-
7-9/2020 7-9/2019
Net sales, € million 1,462.1 1,402.7
Operating profit, comparable, € million 108.7 93.5
Operating margin, comparable, % 7.4 6.7
Return on capital employed, comparable, %, rolling 12 months 15.5 14.2
Capital expenditure, € million 17.3 30.0
Personnel, average 6,310 6,202
Net sales, € million 7-9/2020 7-9/2019 Change, % Change, comparable, %
Sales to K-food stores
K-Citymarket, food 312.6 280.6 11.4 11.4
K-Supermarket 380.4 356.8 6.6 6.6
K-Market 371.2 348.2 6.6 6.6
K-Citymarket, non-food 147.0 143.0 2.8 2.8
Kespro 224.4 247.9 -9.5 -9.5
Others 26.6 26.1 1.9 1.9
Total 1,462.1 1,402.7 4.2 4.2
Net sales for the grocery trade totalled €1,462.1 million (€1,402.7 million) in July-September, up by 4.2%. Net sales grew in all grocery store chains and home and speciality goods in K-Citymarket. The restrictions imposed on restaurants and events due to the Covid-19 epidemic impacted Kespro's foodservice business, and Kespro's net sales decreased by 9.5%. However, the growth in grocery sales to K-food stores clearly exceeded the decrease in the net sales for Kespro's foodservice business.
The total grocery market in
The comparable operating profit for the grocery trade in July-September totalled €108.7 million (€93.5 million), up by €15.2 million. Profitability improved due to good retail sales development and improved operational efficiency. Operating profit for the grocery trade totalled €108.6 million (€93.7 million). Items affecting comparability totalled €-0.1 million (€0.3 million).
Capital expenditure for the grocery trade totalled €17.3 million (€30.0 million), of which €14.2 million (€23.9 million) was in store sites.
Three new K-Market stores opened in July-September (one replacement new building). Remodelling and extensions were made in five stores.
The most significant store sites under construction are K-Supermarket stores in the centre of Jyväskylä and at Vaajakoski,
January-
1-9/2020 1-9/2019 1-12/2019
Net sales, € million 4,214.7 4,075.2 5,531.2
Operating profit, comparable, 252.0 229.3 327.9
€ million
Operating margin, comparable, 6.0 5.6 5.9
%
Return on capital employed, 15.5 14.2 14.5
comparable, %, rolling 12
months
Capital expenditure, € million 109.9 148.6 180.8
Personnel, average 6,148 6,099 6,063
Net sales, 1-9/2020 1-9/2019 Change, % Change, comparable, % 1-12/2019
€ million
Sales to K
-food
stores
K-Citymarket 943.0 837.5 12.6 12.6 1,150.4
, food
K-Supermarke 1,147.8 1,049.6 9.4 9.4 1,417.0
t
K-Market 1,071.9 999.0 7.3 7.3 1,336.3
K-Citymarket 403.4 408.4 -1.2 -1.2 584.6
, non-food
Kespro 582.3 701.5 -17.0 -17.0 944.9
Others 66.3 79.1 -16.2 -16.2 98.0
Total 4,214.7 4,075.2 3.4 3.4 5,531.2
Net sales for the grocery trade in January-September amounted to €4,214.7 million (€4,075.2 million), an increase of 3.4%. Net sales increased in all grocery store chains, but decreased in K-Citymarket's home and speciality goods trade and Kespro's foodservice business due to the Covid-19 epidemic and related restrictions.
The total grocery market in
The comparable operating profit for the grocery trade in January-September totalled €252.0 million (€229.3 million), up by €22.7 million. Profitability improved thanks to good grocery sales development in the grocery store chains and cost adjustment measures especially in Kespro's foodservice business and K-Citymarket's home and speciality goods trade. The decrease in Kespro's net sales, resulting from restrictions imposed due to the Covid-19 epidemic, had a weakening impact on Kespro's comparable operating profit for the reporting period. Operating profit for the grocery trade totalled €250.7 million (€236.1 million). Items affecting comparability totalled €-1.3 million (€6.9 million).
Capital expenditure for the grocery trade totalled €109.9 million (€148.6 million), of which €95.6 million (€136.5 million) was in store sites.
Seven new K-Market stores opened in January-September (four replacement new buildings). Remodelling and extensions were made in 33 stores.
Number of stores 9/2020 9/2019 12/2019
K-Citymarket 81 81 81
K-Supermarket 239 243 243
K-Market 770 780 777
Neste K 72 73 73
Others 72 78 78
Total 1,234 1,257 1,252
In addition, 456 K-food stores offer online grocery sales services to their customers.
BUILDING AND TECHNICAL TRADE
The change in Kesko Senukai's consolidation method from a subsidiary to a joint venture as of
July-
7-9/2020 7-9/2019
Net sales, € million 951.2 945.1
Building and technical trade, excl. 895.2 839.0
speciality goods trade and Kesko
Senukai
Building & home improvement trade 487.4 438.9
Speciality goods trade 56.0 106.1
Operating profit, comparable, € 73.2 51.9
million
Building and technical trade, excl. 63.7 44.2
speciality goods trade and Kesko
Senukai
Building & home improvement trade 38.4 24.2
Speciality goods trade 3.5 5.8
Kesko Senukai 6.0 2.0
Operating margin, comparable, % 7.7 5.5
Building and technical trade, excl. 7.1 5.3
speciality goods trade and Kesko
Senukai
Building & home improvement trade 7.9 5.5
Speciality goods trade 6.3 5.4
7-9/2020 7-9/2019
Return on capital employed, 10.0 7.6
comparable, %, rolling 12 months
Capital expenditure, € million 139.9 32.7
Personnel, average 5,747 12,784
Net sales, € million 7-9/20 7-9/20 Change, Change, comparable, %
20 19 %
Building and home improvement 250.1 234.0 +6.9 +6.7
trade,
K-Rauta,
K-Bygg,
Byggmakker and Carlsen Fritzøe, 126.8 108.1 +17.3 +4.9
Building and home improvement 487.4 438.9 +11.1 +6.8
trade, total
Building and technical trade, 895.2 839.0 +6.7 +4.5
excl. speciality goods trade,
total
Leisure trade,
Machinery trade - 51.7 -100.0 -
Speciality goods trade, total 56.0 106.1 -47.3 +2.9
Total 951.2 945.1 +0.6 +4.4
(...) Change over 100%
*
Net sales for the building and technical trade in July-September totalled €951.2 million (€945.1 million). Reported net sales were at last year's level, while in comparable terms, net sales grew by 4.4%. Net sales grew in comparable terms in
K-Bygg in 2019 and the acquisition of Bygg & Interiör completed in
In
Net sales for the building and home improvement trade grew in both B2C and B2B trade. Net sales grew in
In the speciality goods leisure trade, net sales increased.
The comparable operating profit for the building and technical trade totalled €73.2 million (€51.9 million) in July-September, up by €21.3 million year-on-year. Comparable operating profit grew in the building and home improvement trade in
Operating profit for the building and technical trade totalled €69.0 million (€49.4 million). Items affecting comparability totalled €-4.1 million (€-2.5 million). The most significant item affecting comparability in the reporting period was the €2.4 million negative profit impact of changes in the store site network in
Capital expenditure for the building and technical trade totalled €139.9 million (€32.7 million) in July-September. Capital expenditure included €135.9 million in acquisitions.
One new Onninen Express store opened in Riihimäki,
The most significant store sites under construction are one K-Bygg store in
January-
1-9/2020 1-9/2019 1-12/2019
Net sales, € million 2,721.9 2,645.6 3,472.8
Building and technical trade, excl. 2,562.1 2,374.0 3,126.1
speciality goods trade and Kesko
Senukai
Building & home improvement trade 1,387.5 1,218.9 1,589.0
Speciality goods trade 159.8 271.7 346.7
Operating profit, comparable, € 143.4 93.6 115.9
million
Building and technical trade, excl. 131.1 81.3 98.5
speciality goods trade and Kesko
Senukai
Building & home improvement trade 79.9 45.2 48.6
Speciality goods trade 2.9 8.0 9.5
Kesko Senukai 9.5 4.3 7.8
Operating margin, comparable, % 5.3 3.5 3.3
Building and technical trade, excl. 5.1 3.4 3.2
speciality goods trade and Kesko
Senukai
Building & home improvement trade 5.8 3.7 3.1
Speciality goods trade 1.8 2.9 2.7
1-9/2020 1-9/2019 1-12/2019
Return on capital employed, 10.0 7.6 7.4
comparable, %, rolling 12 months
Capital expenditure, € million 169.5 314.6 332.7
Personnel, average 10,385 12,503 12,630
Net sales, € 1-9/2020 1-9/2019 Change, Change, 1-12/201
million % comparable, 9
%
Building and 764.0 707.5 +8.0 +7.8 908.4
home
improvement
trade,
K-Rauta,
K-Bygg,
Byggmakker and 314.6 300.5 +4.7 +6.4 386.9
Carlsen
Fritzøe,
Building and 1,387.5 1,218.9 +13.8 +8.0 1,589.0
home
improvement
trade, total
MIAB,
Baltics
Building and 2,562.1 2,374.0 +7.9 +6.3 3,126.1
technical
trade,
excl.
speciality
goods trade,
total
Leisure trade, 137.1 145.9 -6.1 -6.1 203.7
Machinery trade 22.8 125.8 -81.9 - 143.0
Speciality 159.8 271.7 -41.2 -6.1 346.7
goods trade,
total
Total 2,721.9 2,645.6 +2.9 +5.6 3,472.8
(...) Change over 100%
*
Net sales for the building and technical trade in January-September totalled €2,721.9 million (€2,645.6 million). Net sales increased by 2.9%, or by 5.6% in comparable terms. Net sales grew in comparable terms in
In
Net sales for the building and home improvement trade grew in
In the speciality goods trade, net sales in the leisure trade were down due to mild winter weather and a decline in customer visits due to the Covid-19 epidemic.
The comparable operating profit for the building and technical trade totalled €143.4 million (€93.6 million) in January-September, up by €49.8 million year-on-year. The comparable operating profit for the building and home improvement trade was up by €35.1 million, and grew in
Operating profit for the building and technical trade totalled €145.3 million (€81.0 million). Items affecting comparability totalled €1.9 million (€-12.6 million). The most significant items affecting comparability were the €2.4 million negative profit impact of changes to the store site network in
Capital expenditure for the building and technical trade in January-September totalled €169.5 million (€314.6 million). Capital expenditure included €146.7 million (€232.8 million) in acquisitions.
Kesko reports
Kesko Senukai 7-9/2020 7-9/2019 1-9/2020 1-9/2019 1-12/2019
financials, € million
Net sales 250.8 235.4 678.1 635.2 860.1
Operating profit 18.8 10.2 36.4 22.5 34.6
Operating profit, 18.8 10.3 36.4 22.6 34.7
comparable
Net profit for the 11.9 3.9 18.9 8.5 15.9
period
result of joint
ventures
Assets 813.9 717.5 721.2
Liabilities 613.2 543.1 529.2
Equity 200.7 174.4 191.9
The figures include Kesko Senukai's business and real estate companies.
Number of stores 9/2020 9/2019 12/2019
Building and technical trade
K-Rauta,
K-Rauta,
K-Bygg,
Byggmakker and Carlsen Fritzøe,
Speciality goods trade
Budget Sport 10 10 10
The Athlete's Foot 9 8 9
Kookenkä 32 33 34
Total 507 478 481
In addition, building and technical trade stores offer extensive e-commerce services to their customers.
Three
CAR TRADE
July-
7-9/2020 7-9/2019
Net sales, € million 244.3 222.9
Operating profit, comparable, € million 7.4 5.0
Operating margin, comparable, % 3.0 2.3
Return on capital employed, comparable, %, rolling 12 months 7.1 10.9
Capital expenditure, € million 14.1 61.0
Personnel, average 1,282 1,423
Net sales, € million 7-9/2020 7-9/2019 Change, % Change, comparable, %
Car trade 244.3 222.9 +9.6 +9.6
Net sales for the car trade in July-September totalled €244.3 million (€222.9 million), an increase of 9.6% on the previous year. Net sales increased as demand strengthened markedly for both new and used cars.
The combined market performance of first registrations of passenger cars and vans was -7.5% (-0.9%) in July-September. The combined market share of the
The comparable operating profit for the car trade in July-September totalled €7.4 million (€5.0 million). Operating profit for the car trade in July-September totalled €7.3 million (€4.9 million).
Capital expenditure for the car trade totalled €14.1 million (€61.0 million). Capital expenditure for the comparison period contained acquisitions totalling €46.1 million.
January-
1-9/2020 1-9/2019 1-12/2019
Net sales, € million 658.9 635.4 863.9
Operating profit, comparable, 17.3 17.8 26.8
€ million
Operating margin, comparable, 2.6 2.8 3.1
%
Return on capital employed, 7.1 10.9 9.5
comparable, %, rolling 12
months
Capital expenditure, € million 47.2 109.7 131.3
Personnel, average 1,281 1,127 1,179
Net sales, 1-9/2020 1-9/2019 Change, % Change, comparable, % 1-12/2019
€ million
Car trade 658.9 635.4 +3.7 -5.2 863.9
Net sales for the car trade in January-September totalled €658.9 million (€635.4 million). In comparable terms, net sales decreased by 5.2% in January-September. The comparable change % has been calculated excluding the impact of acquisitions completed in 2019. The Covid-19 epidemic weakened customer demand for both new and used cars in the first half of the year. Net sales saw a turnaround and began to grow in the third quarter thanks to strengthened demand.
The combined market performance of first registrations of passenger cars and vans was -17.4% (-9.5%) in January-September. The combined market share of the
The comparable operating profit for the car trade in January-September totalled €17.3 million (€17.8 million). Operating profit for the car trade in January-September totalled €17.2 million (€17.5 million).
Capital expenditure for the car trade totalled €47.2 million (€109.7 million). Capital expenditure for the comparison period contained the acquisitions of Huittisten Laatuauto and the
Number of stores 9/2020 9/2019 12/2019
K-Auto 42 41 42
AutoCarrera 4 3 3
Total 46 44 45
CHANGES IN GROUP COMPOSITION
On
On
K-Rauta in
On
On
In 2019, Byggmakker Sør AS assumed ownership of the building and home improvement stores and store properties of the Norwegian Sørbø on
SHARES, SECURITIES MARKET AND BOARD AUTHORISATIONS
At the end of
The price of a Kesko A share quoted on Nasdaq Helsinki was €58.80 at the end of 2019 (€14.70 with the share split), and €21.20 at the end of
The market capitalisation of the A shares was €2,691.3 million at the end of
In January-September, a total of 7.8 million A shares were traded on Nasdaq Helsinki (calculated with the post-split number of shares). The exchange value of the A shares was €120.1 million. Meanwhile, 161.6 million B shares were traded (calculated with the post-split number of shares), with an exchange value of €2,608.2 million. Nasdaq
At the end of
Kesko has a share-based commitment and incentive scheme. To implement the scheme, Kesko's Board of Directors may decide, within share issue authorisations granted by the company's General Meeting, to transfer Kesko B shares held by the company as treasury shares. In January-
Kesko's Annual General Meeting of
KEY EVENTS DURING THE REPORTING PERIOD
The Market Court in
Kesko agreed to acquire the Swedish Mark & Infra i
Kesko issued a profit warning due to the Covid-19 pandemic and related global economic uncertainty. Kesko cancelled its previous outlook statement regarding the net sales for continuing operations and changed the outlook statement regarding the comparable operating profit for continuing operations, both issued in connection with the financial statements release on
Kesko's Board of Directors decided to cancel the Annual General Meeting convened for
Kesko announced that it would adjust its operations due to the coronavirus epidemic. Temporary lay-off measures were estimated to affect approximately 2,000 Kesko employees in
Kesko's Annual General Meeting convened on
A total of 95,211,021 new A shares and 204,848,235 new B shares issued in the share issue without payment (share split) decided upon by the Annual General Meeting of
Kesko issued a positive profit warning and provided preliminary information on its second-quarter net sales and comparable operating profit. Kesko raised its guidance for the comparable operating profit for its continuing operations, issued in connection with the company's interim report on
Kesko's subsidiary
Kesko acquired the Swedish Bygg & Interiör building and home improvement trade stores. The acquisition complements Kesko's growing K-Bygg chain for professional builders in the Mälaren Valley region of
Kesko's Annual General Meeting of
Kesko announced that it would be changing the consolidation method of
Kesko issued a positive profit warning and raised its guidance for the 2020 comparable operating profit for its continuing operations. Kesko estimated that the comparable operating profit for its continuing operations would be in the range of €510-570 million in 2020. The guidance upgrade was based on better than anticipated sales development in all divisions, improved cost efficiency, and a more positive outlook for the remainder of the year. (Stock exchange release 17.9.2020)
RESOLUTIONS OF THE 2020 ANNUAL GENERAL MEETING AND DECISIONS OF THE BOARD'S ORGANISATIONAL MEETING
The Annual General Meeting of
The resolutions of the Annual General Meeting and the decisions of the Board's organisational meeting were communicated in more detail in stock exchange releases on
SUSTAINABILITY
Solar power plants were built on the rooftops of K-Citymarket Mäntsälä, K-Citymarket Rusko in Oulu and Kesko's logistics terminal in Oulu. By the end of the year,
A new feature was introduced to the K-Ostokset service, showing customers nutritional information based on their purchase data. Customers can compare their consumption with national nutrition recommendations, and set goals such as reducing their consumption of salt or buying more fish.
RISK MANAGEMENT
The impacts of Covid-19 on Kesko's operations in all operating countries from March onwards represent a material change to the risks described in Kesko's 2019 Report by the Board of Directors and financial statements. The key risks related to the virus concern the health and safety of personnel and customers. In the latter half of the year, the biggest risk related to the coronavirus is the second wave of the epidemic in Kesko's operating countries and the resulting impacts on Kesko's operations.
Risk management in
The Group's risk map, the most significant risks and uncertainties, as well as material changes in and responses to them are reported to the Kesko Board's Audit Committee quarterly in connection with the review of interim reports, the half year financial report and financial statements. The Audit Committee Chair reports on risk management to the Board as part of the Audit Committee report. The most significant risks and uncertainties are reported to the market by the Board in the Report by the Board of Directors and any material changes in them in the interim reports and the half year financial report.
The risks and uncertainties related to economic development are described in more detail in the outlook section of this release.
Board of Directors
The information in this interim report is unaudited.
Further information is available from
ATTACHMENT: Kesko Q3 2020 Interim Report pdf
DISTRIBUTION
Main news media
www.kesko.fi
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https://mb.cision.com/Main/13061/3227449/1327560.pdf
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