Analyst breakfast. CFO Jukka Erlund

Transcription

1 Analyst breakfast CFO

2 Retail trade, trend development Turnover Volume index 2

3 Consumers expectations for own finances Own finances in 12 months 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 Source: Statistics Finland 3

4 Unemployment rate Source: Statistics Finland 4

5 Retail sales of non-food products, excl. fuel (index of turnover, yoy) % Estonia Latvia Lithuania Finland Sweden Norway 2013M M M M M M M M M M M M M M M M M M M07 Source: Eurostat 5

6 Q3/2013-Q2/2014 key figures Net sales, million 9,235 Net sales performance, % -2.7 Gross margin, % 13.8 Fixed costs*, million 1,758 Operating profit*, million 237 Profit before tax, million 206 EPS*, 1.75 Liquid assets, million 461 Return on capital employed*, % 9.9 Equity ratio, % 52.3 Capital expenditure, million 181 * excluding non-recurring items 6

7 Operating margin excl. non-recurring items by division 1-3/ / / / / / / / / / 2014 Food Home and speciality goods Building and home improvement Car and machinery Total

8 Kesko Group s sales 1-8/2014 Food trade, total Home and speciality goods trade, total Building and home improvement trade, Finland Building and home improvement trade, other countries Building and home improvement trade, total Car and machinery trade, total Common operations and eliminations August million Change, % million Change, % , , Grand total , Finland, total , Other countries, total , Grand total ,

9 3 mo rolling sales performance 12% 10% 8% 6% 4% 2% 0% -2% -4% -6% Food trade 9% 6% 3% 0% -3% -6% -9% -12% -15% Home and speciality goods trade 16% 12% 8% 4% 0% -4% -8% -12% Building and home improvement trade 40% 30% 20% 10% 0% -10% -20% -30% Car and machinery trade 9

10 Strategic priorities Strengthening sales growth and improving profitability E-commerce and multi-channel service models Utilising Russia s business opportunities Strong financial position and good dividend payment capacity 10

11 Retail trends Growth of e-commerce and multichannel retailing in all product lines Consumers are increasingly product conscious and demanding Importance of customer-oriented services as a competitive tool emphasized Slow economic growth and consumers price awareness Increasing proportion of private labels Customer loyalty programs to be made interactive and provide more individual rewards 11

12 Shopping via online % from population of ages Sometimes During 12 months During 3 months Source: Statistics Finland 12

13 Food trade Net sales, M 1-6/ 2014 Change, % Sales to K-food stores 1, Kespro K-ruoka Russia 51.. Total 2, Total 916 stores Q3/2013-Q2/2014 Net sales 4,356 million, +0.0% Operating profit* million (4.7%), million Return on capital employed* 25.7% Operating profit *, M 1-6/ / 2013 Total Operating margin *excl. non-recurring items

14 Food trade Sales performance of Kesko s food trade in January-August -1.4% - Two delivery days less than in the previous year - Zero price inflation Weakened purchasing power, importance of price, private label brands Renewal of fresh foods departments Responsibility Quick and easy shopping Online food retailing 14

15 Food trade in Russia Business was begun in St. Petersburg - First store in 12/ Net sales for million - Today, a total of five K-ruoka stores Net sales target for million and a positive business result Best in Fresh concept Extensive fresh foods selections Purchases mainly from local markets, Finnish products and Pirkka have a prominent position Majority of products not affected by sanctions 15

16 Home and speciality goods trade Net sales, M 1-6/ 2014 Change, % K-citymarket, home and speciality goods Anttila Intersport, Finland Intersport, Russia Indoor Total 368 stores Q3/2013-Q2/2014 Net sales 1,390 million, -10.2% Operating profit* million (-1.5%), million Return on capital employed* -5.2% Musta Pörssi Kenkäkesko Total Operating profit *, M 1-6/ / 2013 Total Operating margin *excl. non-recurring items 16

17 Home and speciality goods trade Sales performance of the home and speciality goods trade in January-August -9.3% Change in customer behaviour most notably visible in the home and speciality goods trade Consumer demand has weakened and competition tightened at both physical and online stores Key objective is to achieve growth in online services and e-commerce Improving Anttila s profitability - Concept renewal - Improvement in cost efficiency and network adjustment 17

18 Building and home improvement trade Net sales, M 1-6/ 2014 Change, % Rautakesko, Finland K-rauta, Sweden Byggmakker, Norway K-rauta, Estonia K-rauta, Latvia Senukai, Lithuania Total 339 stores Q3/2013-Q2/2014 Net sales 2,623 million, -3.5% Operating profit* 39.0 million (1.5%), million Return on capital employed* 5.5% *excl. non-recurring items K-rauta, Russia OMA, Belarus Total 1, Operating profit *, M 1-6/ / 2013 Total Operating margin

19 Building permits granted and building starts, mil. m3, variable annual sum * Preliminary data Source: Statistics Finland 19

20 Development of the number of transactions of dwellings in housing companies /2014 Whole country Greater Helsinki Source: Statistics Finland 20

21 Building and home improvement trade Sales performance of Kesko s building and home improvement trade in January- August +0.2% - Performance in local currencies +4.3% Especially in Norway and Russia, sales affected by exchange rate movements - Impact on NOK -8% - Impact on RUB -14% Significant differences in country-specific market developments Increasing e-commerce and online services and strengthening B2B sales 21

22 Car and machinery trade Net sales, M 1-6/ 2014 Change, % VV-Auto Konekesko Total Q3/2013-Q2/2014 Net sales 1,042 million, +0.4% Operating profit* 32.3 million (3.1%), -4.6 million Return on capital employed* 20.1% Operating profit *, M 1-6/ / 2013 Total Operating margin *excl. non-recurring items 22

23 Car and machinery trade Market trend in new registrations of passenger cars in January-August +2.7% Sales performance of Kesko s car and machinery trade in January- August -1.2% - VV-Auto +4.1% - Konekesko -13.4% Market share of Volkswagen, Audi and Seat continued to strengthen Strong brands Emphasis on after-sales services Increasing number of online services Challenging market situation in machinery trade Market share (passenger cars), new registrations 1-8/ % Volkswagen 12.6% Toyota 11.5% Skoda 9.4% Volvo 7.2% Ford 7.0% Audi 6.3% Nissan 6.1% Kia 5.7% Mercedes-Benz 4.8% Seat 1.7% Others 27.7% 23

24 New registrations of passenger cars in Finland Source: Statistics Finland 24

25 Kesko to seek more competitive multichannel home and speciality goods trade In the home and speciality goods trade and the building and home improvement trade, the importance of e-commerce and online services has greatly increased and the improvement of competitiveness necessitates major renewal. In response to these requirements, Kesko is seeking synergies especially in the production of online services and the development of concepts. At the same time, the planned changes will form a basis to improve profitability and the organisational structure will be evaluated. Also the combination of the building and home improvement trade with the home and speciality goods trade, as well as the integration of the non-food part of the K-citymarket chain, currently part of the home and speciality goods division, into Kesko Food operations, are planned. The objective is to offer customers multi-channel building, interior decoration and home and speciality goods stores and services. The aim of the planned integration of resources is to achieve better customer satisfaction as well as improved competitiveness and profitability. In Kesko s food trade, the annual sales are around 4.4 billion, in the building and home improvement trade around 2.7 billion and in the home and speciality goods trade around 1.4 billion. As at 30 June 2014, the food trade employed 4,035 people, the building and home improvement trade 10,520 people and the home and speciality goods trade 8,111 people. The changes will be planned in more detail and the required cooperation negotiations will be conducted during the rest of The aim in Kesko Group s reporting is that starting from 1 January 2015, the reportable segments would be the grocery trade, the home improvement and speciality goods trade, and the car and machinery trade. Kesko will publish comparatives according to the new reporting structure in the first quarter of President Terho Kalliokoski is responsible for the planning concerning the home improvement and speciality goods trade and President Jorma Rauhala is responsible for the planning concerning the grocery 25 trade.

26 Thank you! Twitter.com/Kesko_IR 26