KESKO S ROADSHOW JUKKA ERLUND MAY 2016

Transcription

1 KESKO S ROADSHOW JUKKA ERLUND MAY

2 KESKO Q1/2016 ROLLING 12 MO Net sales 8,610m Operating profit* 250m ROCE* 12.4% Personnel 22,000 Shareholders 40,000 Market capitalisation 3.8bn (Mar. 31, 2016) * excl. non-recurring items 2

3 OPERATIONS IN EIGHT COUNTRIES Retail sales, million, 2015 Finland 8,927 Sweden 209 Norway 664 Estonia 136 Latvia 90 Lithuania 366 Russia 311 Belarus 116 Norway 5% Sweden 2% Finland 81% Estonia 2% Latvia 1% Lithuania 4% Russia 4% Belarus 1% 3

4 K-GROUP K-Group s sales 10.8bn Operations is eight countries Over 1.3 million customer visits every day Personnel 40,000 FOR SHOPPING TO BE FUN 4

5 NET SALES BY DIVISION Q1/2016 ROLLING 12 MO Car trade +0.6% 763m 9% Home improvement and speciality goods trade +1.9% 3,172m 37% 4,664m 54% Grocery trade -1.3% Comparable change 5

6 INVESTING IN STRATEGIC GROWTH AREAS Grocery trade (Finland, Russia, Kespro) Increasing the market share in the Finnish grocery trade Focus on the development of neighbourhood retailing Building and home improvement trade (Europe) Increasing building and home improvement trade in Europe Increasing B2B sales Car trade (Finland, the Baltic countries) 6

7 STRATEGY IMPLEMENTATION IS PROGRESSING Divestment of Anttila Real estate arrangement Kesko Senukai arrangement in the Baltic countries Acquisition of Suomen Lähikauppa Acquisition of Onninen One unified Kesko the customer and quality in everything we do 7

8 8 GROCERY TRADE

9 KESKO GROCERY TRADE Total market 16.6 billion in 2015 Q2/2015-Q1/2016 Net sales 4,664m Operating profit* 174m Operating margin* 3.7% ROCE* 21.0% * excl. non-recurring items K-Group 32.7% S-Group 45.9% Lidl 8.3% Suomen Lähikauppa 6.4% Others 6.7% Source: Nielsen 9

10 RETAIL STORES Sales 2015 million, VAT 0% Number of stores at Concept 1, Hypermarket 1, Supermarket 1, Neighbourhood store Compact hyper, Russia Others Incl. online store Total 5,

11 STRATEGY PROGRESSING AS PLANNED Increasing market share Increase and development of neighbourhood store network Renewal of K-citymarket chain Improvement of quality and service levels Improvement of price competitiveness and price image Best digital services in the trading sector Development of retailer business model 11

12 K-GROUP S NEIGHBOURHOOD RETAIL SERVICES WILL IMPROVE SIGNIFICANTLY K-market chain will be renewed, first stores opened in April Siwa and Valintatalo stores converted into K-markets within a year Selections will improve and price level decrease, Pirkka products included in selections K-retailers to run all stores within two years Acquisition of Suomen Lähikauppa enables significant synergies 12

13 HOME IMPROVEMENT AND SPECIALITY GOODS TRADE 13

14 HOME IMPROVEMENT AND SPECIALITY GOODS TRADE Q2/2015-Q1/2016 Net sales 3,172m Operating profit* 78m Operating margin* 2.5% ROCE* 9.9% * excl. non-recurring items Agricultural and machinery trade Baltics 115m Agricultural and machinery trade Finland 500m Furniture trade 179m Sports trade 186m Building and home improvement trade Belarus 116m Building and home improvement trade Russia 192m Others 37m 2015 Building and home improvement trade Baltics 461m Building and home improvement trade Finland 794m Building and home improvement trade Scandinavia 627m 14

15 STRATEGIC OBJECTIVES OF THE BUILDING AND HOME IMPROVEMENT TRADE Kesko #5 in Europe strong potential for further growth organically or through acquisitions Providing excellent services from the same store network to the three different customer segments Consumer customers Project customers B2B customers A common core for all countries to ensure efficient operations Offering the best omni-channel digital services 15

16 KESKO AND K-GROUP ONE OF THE LEADERS IN ITS FIELD IN EUROPE bn Net sales, Groupe Adeo Source: Companies annual reports, websites, Baumarktmanager Kingfisher OBI Bauhaus K-group and Onninen Hornbach Wolseley Nordic 16 5/2015

17 GROWTH FROM THE BUILDING AND TECHNICAL TRADE 17

18 B2B SALES ARE GROWING FASTER THAN B2C SALES Building and renovation become increasingly technical Consumers increasingly outsource building to professionals Growing need for renovation building Rising standard of living increases the use of services 18

19 RENOVATION CONSTRUCTION IS INCREASING Non-residential construction index 2010=100 Infra construction Residential construction Renovation construction Source: Macrobond/The Confederation of Finnish Construction Industries RT (CFCI), Euroconstruct 19

20 B2B SALES CONTINUE TO STRENGTHEN B2B customers already account for 40% of the K-Group s sales Acquisition of Onninen increases the percentage to 60% B2B sales have long developed better than B2C sales Building and renovation become increasingly technical Consumers increasingly often outsource building to professionals 20

21 ACQUISITION OF ONNINEN STRENGTHENS KESKO S POSITION IN THE TRADE WITH BUILDING PROFESSIONALS AND IN TECHNICAL TRADE Onninen s HEPAC and electrical product groups expand Kesko s offering making it the most comprehensive in the market Share of B2B sales rises strongly Significant synergies Completion of the acquisition is yet to be approved by competition authorities 21

22 22 CAR TRADE

23 CAR TRADE Q2/2015-Q1/2016 Net sales 763m Operating profit* 26m Operating margin* 3.4% ROCE* 24.1% * excl. non-recurring items Q1/ 2016 Toyota 11.1% Volkswagen 10.9% Skoda 9.7% Ford 7.9% Nissan 7.3% Volvo 7.2% Opel 5.6% Audi 5.4% Seat 1.7% Others 33.6% 23

24 MAXIMISING VALUE CREATION ALSO IN OTHER BUSINESSES Important to have the best platform for Kesko s small and medium sized businesses to succeed in tight competition Furniture trade (Finland and Estonia) Agricultural trade (Finland) Machinery trade (Finland and the Baltic countries) Shoe trade (Finland) Sports trade (Finland and Russia) All options which improve competitiveness of other businesses and retailer entrepreneurs are possible 24

25 25 FINANCIALS

26 NET SALES BY QUARTER Q1 COMPARABLE NET SALES AT PREVIOUS YEAR S LEVEL m 2,500 2,000 2,1292,082 2,013 2,371 2,227 2,304 2, ,267 2, ,500 1, Q1 Q2 Q3 Q4 26

27 OPERATING PROFIT EXCL. NON-RECURRING ITEMS BY QUARTER m Q1 Q2 Q3 Q4 27

28 FINANCIAL TARGETS AND CAPITAL EXPENDITURE Return on capital employed 14% Return on equity 12% Interest bearing net debt / EBITDA < 2.5 Capital expenditure in approximately 750 million Excluding possible acquisitions Dividend policy: Kesko Corporation distributes at least 50% of its earnings per share excluding non-recurring items as dividends, taking however the company's financial position and operating strategy into account. 28

29 RETURN ON CAPITAL EMPLOYED EXCL. NON-RECURRING ITEMS, ROLLING 12 MO % Target 14% Q

30 RETURN ON CAPITAL EMPLOYED BY DIVISION MOVING 12 MO, EXCL. NON-RECURRING ITEMS % Grocery trade 9.9 Home improvement and speciality goods trade 24.1 Car trade 12.4 Group total 30

31 CAPITAL EXPENDITURE m Capital expenditure in store sites Acquisitions Other capital expenditure average 31

32 STRONG FINANCIAL POSITION Equity ratio, % Liquid assets, m Cash flow from operating activities, m Capital expenditure, m

33 EARNINGS / SHARE AND DIVIDEND Earnings / share excl. non-recurring items Dividend (2015 Board s proposal to the AGM) 33

34 REAL ESTATE IN 2015 Owned properties Country Area, 1,000 m 2 Classification Finland 540 Other Nordic countries 66 Baltic countries and Belarus 109 Russia 191 Total Carrying amount 906 1,107m Strategic properties 64% Standard properties 26% Leased properties total 1,000 m 2 2,951 Development properties 9% Realisation properties 1% 34

35 SHAREHOLDERS 3/2016 % 1 K-retailers Association 3,899, Vähittäiskaupan Takaus Oy 3,491, Kruunuvuoren Satama Oy 3,438, Ilmarinen Mutual Pension Insurance Company 2,800, Valluga-sijoitus Oy 1,340, Varma Mutual Pension Insurance Company 1,130, The largest registered shareholders by number of shares Foreign ownership of B shares 39% 7 Foundation for Vocational Training in the Retail Trade 1,122, Oy The English Tearoom Ab 1,000, The State Pension Fund 950, Elo Pension Company 896,

36 MARKET SITUATION AND OUTLOOK 36

37 odotukset omasta taloudesta seuraavan 12 kk:n kuluttua CONSUMER CONFIDENCE IN FINLAND Expectations for own finances Expectation, 21st century average /00 7/00 1/01 7/01 1/02 7/02 1/03 7/03 1/04 7/04 1/05 7/05 1/06 7/06 1/07 7/07 1/08 7/08 1/09 7/09 1/10 7/10 1/11 7/11 1/12 7/12 1/13 7/13 1/14 7/14 1/15 7/15 1/16 Source: Statistics Finland

38 RETAIL TRADE TRENDS IN OPERATING COUNTRIES ROLLING 12 MO 10,0 8,0 % (rolling 12 mo) 6,0 4,0 2,0 Estonia Sweden Lithuania Latvia Norway 38 0,0-2,0 1/2013 2/2013 3/2013 4/2013 5/2013 6/2013 7/2013 8/2013 9/ / / /2013 1/2014 2/2014 3/2014 4/2014 5/2014 6/2014 7/2014 8/2014 9/ / / /2014 1/2015 2/2015 3/2015 4/2015 5/2015 6/2015 7/2015 8/2015 9/ / / /2015 1/2016 2/2016 latest month Source: Eurostat, excl. motor vehicles and fuels Finland Latest month

39 OUTLOOK Estimates for the outlook of Kesko Group's net sales and operating profit excluding non-recurring items are given for the 12-month period following the reporting period (4/2016-3/2017) in comparison with the 12 months preceding the end of the reporting period (4/2015-3/2016). The general economic situation and the expected trend in consumer demand vary in Kesko s different operating countries. In Finland, owing to the weak trend in consumers purchasing power, the trading sector s performance is expected to remain modest, which may be complicated further by actions taken to balance the public finances. In the Finnish grocery trade, intense competition is expected to continue. The markets for the Finnish building and home improvement trade and for the car trade are expected to improve slightly. With respect to foreign countries, the economic situation and consumers purchasing power, as well as the outlook in Russia are still weak. In Sweden and Norway and the Baltic countries, the market is expected to grow. Kesko Group's net sales for the next 12 months are expected to exceed the level of the preceding 12 months. The operating profit excluding non-recurring items for the next 12-month period is expected to equal the level of the preceding 12 months. The outlook does not take account of the acquisition of Onninen, in respect of which estimates 39 will be given in connection with its completion.

40 THE WORLD S MOST SUSTAINABLE RETAIL OPERATOR Davos, January 2015 and 2016: The Global 100 Most Sustainable Corporations in the World list. 40

41 KESKO IS THE MOST RESPONSIBLE FOOD AND STAPLES RETAILER IN THE WORLD In 2015, Kesko rose to CDP s Climate A List for the first time At the top of the Nordic Climate Disclosure Leadership climate index since In 2015, Kesko was awarded the full 100 points In The Global 100 Most Sustainable Corporations in the World list since 2005 Included in the FTSE4Good index since 2009 Included in the STOXX Global ESG Leaders index family since 2011 Included in the Dow Jones sustainability indexes DJSI World and DJSI Europe

42 42 Q1 REPORT

43 Q1 HIGHLIGHTS Kesko s net sales stable, comparable change +0.2% Profitability improved, operating profit excluding non-recurring items 32.3 million ( 26.5 million) Return on capital employed continued to improve to 12.4% (10.2%) Good profitability of the grocery trade, acquisition of Suomen Lähikauppa will significantly increase net sales Profitability of the building and home improvement trade continued to improve, strong growth in B2B sales Kesko entered into an agreement to acquire Onninen which will significantly strengthen Kesko s building and technical trade Sales of the car trade increased markedly, profitability at a good level 43

44 KEY PERFORMANCE INDICATORS 44 Q1/2016 Q1/2015 Net sales, m 2,013 2,082 Operating profit*, m Operating margin*, % Profit before tax, m Earnings per share*, Return on capital employed*, %, rolling 12 mo Return on equity*, %, rolling 12 mo *excl. non-recurring items

45 NET SALES BY DIVISION Q1/2016 Car trade +7.1% 225m 11% Home improvement and speciality goods trade 0.4% 695m 35% 1,094m 54% Grocery trade 0.5% Comparable change 45

46 46 GROCERY TRADE

47 GROCERY TRADE, Q1 K-food stores retail sales at the previous year s level, up 0.1% Strengthening of quality and price competitiveness continued in accordance with strategy Change in the grocery market prices around -1.5% Despite intense price competition, profitability at a good level Renewal of Kesko s neighbourhood retail services has started All K-markets will be renewed Siwa and Valintatalo stores acquired from Suomen Lähikauppa will be converted into K-markets The first renewed Neste K service station opened in Tampere Objective is a network of nearly 100 stations extending across the country 47

48 NET SALES Q1 COMPARABLE CHANGE 0.5% m 1,500 1,000 1,103 1, Q1/2015 Q1/

49 OPERATING PROFIT EXCL. NON-RECURRING ITEMS m Q1/2015 Q1/

50 HOME IMPROVEMENT AND SPECIALITY GOODS TRADE 50

51 HOME IMPROVEMENT AND SPECIALITY GOODS TRADE, Q1 Sales growth of B2B trade strengthened Improvement of profitability continued Good performance in the building and home improvement trade outside Finland and in the agricultural and machinery trade Divestment of Anttila in March 2015 Market share of the building and home improvement trade strengthened especially in Finland Acquisition of Onninen will significantly strengthen Kesko s building and technical trade Completion of acquisition expected in H1/2016 Acquisition is subject to EU Commission s approval, FCCA s approval was obtained in April Kesko Senukai s objective is growth in the Baltic countries and Belarus 51

52 NET SALES Q1 IN LOCAL CURRENCIES EXCL. ANTTILA -0.4% m 1, Q1/2015 Q1/2016 Reported net sales,, incl. Anttila 52

53 OPERATING PROFIT EXCL. NON-RECURRING ITEMS m Q1/2015 Q1/

54 54 CAR TRADE

55 CAR TRADE, Q1 Total car trade market performance in January-March was strong VV-Auto s net sales growth +7.1% Combined market share of passenger cars and vans in January-March 18.5% (18.8%) Profitability remained at a good level, operating profit 9.4 million ( 9.8 million) 55

56 NET SALES Q1 +7.1% m Q1/2015 Q1/

57 OPERATING PROFIT EXCL. NON-RECURRING ITEMS m Q1/2015 Q1/

58

59 CONTACT INFORMATION Twitter.com/Kesko_IR 59