INTERIM REPORT Q JUKKA ERLUND 28 APRIL 2016

Transcription

1 INTERIM REPORT Q JUKKA ERLUND 28 APRIL

2 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 2

3 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 3

4 KEY PERFORMANCE INDICATORS 4 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

5 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 5

6 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 6

7 OPERATING PROFIT EXCL. NON-RECURRING ITEMS BY QUARTER m Q1 Q2 Q3 Q4 7

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

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

10 10 GROCERY TRADE

11 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 11

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

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

14 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 14

15 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 15

16 HOME IMPROVEMENT AND SPECIALITY GOODS TRADE 16

17 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 17

18 NET SALES Q1 IN LOCAL CURRENCIES EXCL. ANTTILA -0.4% m 1, Q1/2015 Q1/2016 Reported net sales,, incl. Anttila 18

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

20 GROWTH FROM THE BUILDING AND TECHNICAL TRADE 20

21 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 21

22 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 22

23 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 23

24 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 24

25 25 CAR TRADE

26 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) 26

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

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

29 MARKET SITUATION AND OUTLOOK 29

30 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

31 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 31 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

32 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 32 will be given in connection with its completion.

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