KESKO CORPORATION STOCK EXCHANGE RELEASE 22.07.2008 AT 09.30 1(29)
Interim financial report for the period 1 January-30 June 2008:
Earnings per share €2.11 (€1.78)
In January-June 2008, the Group's net sales from continuing
operations were €4,828 million, up 6.5% on the corresponding
period of the previous year (€4,532 million). In January-June, the
operating profit excluding non-recurring items was €117.7 million
(€151.2 million). The pre-tax profit was €232.9 million (€195.7
million). The earnings per share from continuing operations were
€1.69 (€1.44). The Group's profit for the reporting period was
€207.6 million (€175.0 million). The Group's earnings per share
were €2.11 (€1.78).
JANUARY-JUNE 2008
Net sales and profit, continuing operations
The Group's net sales in January-June 2008 were €4,828 million,
which is 6.5% up on the corresponding period of the previous year
(€4,532 million). The Group's net sales increased by 5.5% in
Finland and by 10.3% abroad. The contribution of business
acquisitions and disposals excluded, the Group's net sales growth
was 6.1%. Exports and foreign operations accounted for 21.7%
(20.9%) of the net sales.
In January-June, the K-Group's (i.e. Kesko's and the chain
stores') retail sales (incl. VAT) were €5,764 million, an increase
of 6.9% on the corresponding period of the previous year.
The Group's profit before tax for January-June was €232.9 million
(€195.7 million). The operating profit was €235.0 million (€160.0
million). It was increased by a total of €117.3 million (€8.8
million) in non-recurring gains on the disposal of fixed assets
and businesses. The non-recurring items include a €103.2 million
non-recurring gain on the property lease and sale arrangements
between Kesko and Nordisk Renting Oy, and a €10.3 million gain on
the sale of K-Rahoitus Oy shares. The financial items of the
comparative period included €37.1 million in non-recurring gains
on the sale of SATO Corporation shares.
The operating profit excluding non-recurring items was €117.7
million (€151.2 million). It represented 2.4% of net sales (3.3%).
The smaller year-on-year operating profit excluding non-recurring
items was due to the gross profit remaining below last year's
level, the expansion and renovation of Rautakesko's and
Ruokakesko's store site networks and the decline in demand in the
construction market.
The Group's earnings per share from continuing operations were
€1.69 (€1.44). Equity per share was €20.17 (€18.32).
Discontinued operations
In January-June, the Group's profit from discontinued operations
was €41.4 million (€33.0 million).
On 28 February 2008, Kesko signed a contract of sale by which it
sold the share capital of Kauko-Telko Ltd to Aspo Oyj. The
transaction was completed on 30 April 2008. The debt-free selling
price was about €77 million and the disposal contributed a non-
recurring gain of about €31 million. Kauko-Telko is presented as a
discontinued operation in compliance with IFRS 5.
On 31 March 2008, Kesko Corporation sold all T„hti Optikko Group
Oy shares to the Specsavers optical chain. The debt-free selling
price was about €15 million. The disposal contributed a non-
recurring gain of €8.5 million. T„hti-Optikko is presented as a
discontinued operation in compliance with IFRS 5.
In the year of comparison, discontinued operations include a €28.2
million gain on the disposal of food store properties leased to
Rimi Baltic AB.
Investments
In January-June, the Group's investments totalled €143.3 million
(€110.6 million), which is 3.0% (2.4%) of net sales. Investments
in store sites were 119.4 million (€84.8 million). The Group's
other investments were €23.9 million (€25.8 million). Investments
in foreign operations represented 26.1% of total investments.
Finance
In January-June, the cash flow from operating activities was €90.9
million (€97.0 million) and the cash flow from investing
activities was €78.5 million (€-3.5 million). The cash flow from
investing activities included €217.3 million (€136.5 million) of
proceeds received from the disposal of fixed assets.
At the end of the period, liquid funds totalled €551 million (€283
million). The amount was increased by the debt-free selling price
of about €77 million received from the disposal of Kauko-Telko, by
the property and lease arrangement between Kesko and Nordisk
Renting Oy, which contributed €82 million to the cash flow, and by
the disposal of K-Rahoitus Oy, which contributed about €240
million to liquid funds in finance receivables paid to Kesko. At
the end of the reporting period, the interest-bearing net debt was
€-43 million (€290 million). As a result of the arrangement with
Nordisk Renting, finance lease liabilities decreased by €81
million. Equity ratio was 49.0% (46.5%) and gearing -2.1% (16.0%)
at the end of the period.
In January-June, the Group's net financial expenses were €1.6
million (net financial income was €35.7 million in the previous
year). The income for the comparative period included €37.1
million in non-recurring gains on the sale of SATO Corporation
shares.
Taxes
In January-June, the Group's taxes were €58.8 million (€45.9
million). The effective tax rate was 24.9% (22.7%).
Personnel, continuing operations
In January-June, the average number of personnel in the Kesko
Group was 21,458 (19,643) converted into full-time employees.
There was an increase of 1,815 employees compared with the
corresponding period of the previous year. In Finland, the average
increase was 112 employees, while outside Finland it was 1,703.
The number of personnel was significantly increased by the
employees of the Belorussian subsidiary OMA, acquired in July
2007, who were included in the Group figures.
At the end of June 2008, the total number of personnel was 25,255
(24,156), of whom 13,762 (14,353) worked in Finland and 11,493
(9,803) outside Finland. Compared with the end of June 2007, there
was a decrease of 591 employees in Finland and an increase of
1,690 employees outside Finland.
Market review
The international economy is suffering from the combined impact of
uncertainty in the financial market and rising world market prices
of raw materials. The strong economic upswing of the Finnish
economy is now levelling off and the economic outlook is
deteriorating as a result of an accelerating inflation and the
uncertainty of the international economy, among other things. In
Finland, however, strong private consumption continues and it is
forecast to increase by 3% in 2008. The growth rate of investments
will slow down to 3.7%, and housing production will decelerate
towards the end of the year. The consumer price index is forecast
to rise by 4.0% in 2008, mainly due to housing costs, foodstuffs
and fuels (Ministry of Finance, Economic Bulletin, June 2008).
According to the preliminary data of Statistics Finland, in
January-May 2008, the Finnish retail trade sales increased by 9.1%
compared with the previous year. The wholesale trade sales were up
by 12.7% compared with the previous year. The year-on-year change
in inflation, calculated by Statistics Finland, was 4.4% in June.
According to Statistics Finland's consumer survey of June 2008,
consumers' confidence in the economy weakened again slightly in
June. At the same time, confidence in the economy was clearly
weaker than 12 months earlier and below the long-term average.
Nevertheless, consumers' views concerning their own employment
situation and saving possibilities were still positive and
consumers' views concerning their own finances were bright.
Instead, the outlook for the Finnish economy remains gloomy and
inflation expectations high among consumers.
In 2008, the Estonian economy is forecast to grow by 1.0%, the
Latvian economy by 0.5% and the Lithuanian economy by 5.5%.
Private consumption is estimated to grow by about 0.4% in Estonia,
by -1.4% in Latvia and by 5.8% in Lithuania. Consumer prices are
forecast to rise by 10.6% in Estonia, by 17.5% in Latvia and by
10.0% in Lithuania (Nordea, Baltic Rim Outlook, 11 June 2008).
The Swedish economy is forecast to grow by 2.1% and private
consumption by 2.0% in 2008. Consumer prices are expected to rise
at a rate of 3.1%. The increase in investments is forecast to slow
down and that of housing construction to level off (Nordea,
Economic Outlook, 21 April 2008).
The Norwegian economy is estimated to grow by 3.0% and private
consumption by 3.3% in 2008. Consumer prices are expected to rise
by about 2.9% (Nordea, Economic Outlook, 21 April 2008).
The Russian economy is forecast to grow by 7.0% in 2008. Private
consumption is forecast to increase by 11.5% and investments by
18.5%. Consumer prices are expected to rise by 13.5% (Nordea,
Baltic Rim Outlook, 11 June 2008).
The market and outlook for each of Kesko's business divisions are
discussed in the division reviews of this interim financial
report.
Seasonal nature of operations
The Group's operating activities are affected by seasonal
fluctuations. The net sales and operating profits of its business
segments are not earned evenly throughout the year. Instead they
vary by quarter depending on the characteristics of each business
segment.
Divisions
Kesko Food
In January-June, Kesko Food's net sales were €1,964 million
(€1,866 million), up 5.3%.
In January-June, Kesko Food's operating profit excluding non-
recurring items was €56.1 million (2.9% of net sales), i.e. €14.3
million, or 0.9 percentage points, less than in the previous year.
The operating profit excluding non-recurring items for the first
part of the year was negatively affected by a gross profit
decrease in the home and speciality goods trade and the expansion
and renovation of the store site network. The operating profit was
€159.4 million (€70.1 million). The operating profit was increased
by a €103.2 million non-recurring gain on the property and lease
arrangement between Kesko and Nordisk Renting.
In January-June, Kesko Food's investments totalled €79.8 million
(€54.8 million), of which investments in store sites were €72.0
million (€43.7 million).
In January-June, the retail sales (incl. VAT) of K-food stores
increased by 6.6%, totalling €2,550 million.
The growth rate of the total grocery trade market in Finland for
January-June is estimated at about 9-10% up on the previous year.
In January-May, prices increased at an average monthly rate of
about +6.3% compared with the previous year (Statistics Finland).
During the next 12 months, Kesko Food's net sales are expected to
grow compared with the 12 months preceding the reporting period.
Kesko Food's operating profit excluding non-recurring items for
the next 12 months is expected to match the level of the
comparative period.
Rautakesko
In January-June, Rautakesko's net sales amounted to €1,319 million
(€1,221 million), an increase of 8.1%. The contribution of
acquisitions excluded, the net sales growth was 5.5%. Net sales in
Finland were €491 million (€482 million), an increase of 1.9%. The
net sales of foreign subsidiaries were €827 million (€738
million), up 12.1%. Foreign subsidiaries contributed 62.7% to
Rautakesko's net sales.
In Sweden, the net sales increased by 10.6% to €98 million in
January-June. In Norway, the net sales increased by 4.8% and were
€308 million. In Estonia, the net sales were down by 7.5% to €40
million. In Latvia, the net sales decreased by 6.3% and were €37
million. In Lithuania, the net sales increased by 24.2% to €250
million, of which the contribution of the Belorussian OMA was €31
million. In Russia, Stroymaster's net sales grew by 37.6% to €90
million.
In January-June, Rautakesko's operating profit excluding non-
recurring items was €34.2 million (2.6% of net sales), i.e. €20.8
million, or 1.9 percentage points, less than in the previous year,
affected by the expansion of the store site network and the
weakening demand in the construction market. Rautakesko's
operating profit for January-June was €37.9 million (€56.2
million).
In January-June, Rautakesko's investments were €51.0 million
(€38.6 million), of which 72.3% (47.6%) was abroad.
In January-June, Rautakesko's retail sales (incl. VAT) in Finland
increased by 5.0% and were €597 million. The sales of Rautakesko B-
to-B Service decreased by 5.3%. In January, a new K-rauta store
opened in Lahti and another in Raisio in March.
During the next 12 months, the building and home improvement
market is expected to grow by some 0-3% in the Nordic countries
and Lithuania, while a growth rate of some 10% is forecast for the
St. Petersburg area. The Estonian and Latvian markets are expected
to shrink by some 10-15%. Market development reflects
uncertainties as a result of a general increase in economic
uncertainty (own estimate).
Rautakesko invests in new store sites and information systems. It
is expected that Rautakesko's net sales will grow during the next
12 months, but its operating profit excluding non-recurring items
is expected to remain at a lower level compared with the prior 12-
month comparative period.
VV-Auto
In January-June, VV-Auto's net sales were €506 million (€466
million), up 8.6%. The aggregate number of registrations of
passenger cars and vans imported by VV-Auto increased by 24.1%
during the first part of the year. The net sales growth was
reduced by the average car prices, fallen as a result of the car
tax change, and by the decline in van sales.
In January-June, the number of first registrations of new
passenger cars totalled 88,182 in Finland, up by 13.9% on the
previous year. Compared with the year before, first registrations
of vans were down by 6.0% to 9,055.
In January-June, the first registrations of passenger cars
imported by VV-Auto increased by 31.2%. In January-June, the
registrations of Volkswagen passenger cars totalled 10,258 and
their market share was 11.6%, compared with 9.8% in the previous
year. In January-June, the first registrations of Audis were
3,296, and the market share was 3.7% (3.5%). The registrations of
new Seat passenger cars totalled 1,210 in Finland, 232 in Estonia
and 77 in Latvia. The market share in Finland was 1.4%, compared
with 1.2% the year before. The number of Volkswagen vans
registered was 1,343, while the market share was 14.8% (17.9%).
In January-June, VV-Auto's retail sales were up 12.7%.
In January-June, the operating profit excluding non-recurring
items was €24.9 million (4.9% of net sales), up €5.1 million, or
0.7 percentage points, compared with the corresponding period of
the previous year.
Investments totalled €3.4 million (€3.6 million) in January-June.
It is estimated that this year, owing to the car tax change,
Finland's passenger car market will grow markedly compared with
the previous year. The total market for vans is expected to be at
a slightly lower level than in the previous year (Road Transport
Forecasting Group).
During the next 12 months, VV-Auto's net sales are expected to
grow and its operating profit excluding non-recurring items is
expected to match the level of the prior 12-month comparative
period.
Anttila
In January-June, Anttila's net sales were €244 million (€231
million), up 5.6%.
In January-June, Anttila's operating loss excluding non-recurring
items was €1.9 million (-0.8% of net sales). In January-June of
the previous year, the operating loss excluding non-recurring
items was €2.7 million (-1.2% of net sales). Anttila's operating
loss was €2.0 million (€0.8 million). Due to the nature of the
department store trade, the majority of profits are made towards
the end of the year.
In January-June, the retail sales (incl. VAT) of the Anttila
department stores were €165 million, up 4.0%. The retail sales of
the Kodin Ykkönen department stores for home goods and interior
decoration were €82 million, up 10.2%. Distance retail sales in
Finland were €42 million, up 8.8%. In Estonia, the distance sales
grew by 4.8%, but decreased by 14.3% in Latvia owing to the
weakening of the Latvian economy.
Trends in the home and speciality goods sales vary by product
line. The growth is forecast to average 2-3% in 2008 (own
estimate).
During the next 12 months, Anttila's net sales are expected to
match the level of the 12 months preceding the reporting period.
The operating profit excluding non-recurring items is expected to
match the level of the comparative period during the next 12
months.
Kesko Agro
In January-June, Kesko Agro's net sales were €425 million (€385
million), an increase of 10.4%. The net sales from foreign
operations were €150 million (€131 million), accounting for 35.4%
of the net sales.
In January-June, Kesko Agro's net sales in Finland were €274
million, up 8.2% due to the grain, animal feed and chemicals
trade. The net sales from foreign operations increased by 14.7% in
January-June, which is attributable to an increase in the grain
and agricultural machinery trade.
In January-June, the operating profit excluding non-recurring
items was €8.8 million (2.1% of net sales), i.e. €1.5 million, or
0.2 percentage points, bigger than in the corresponding period of
the previous year.
The sales of the K-maatalous chain increased by 8.3% to €352
million (incl. VAT) in January-June.
In January-June, investments were €1.4 million.
It is estimated that in 2008, the total Finnish and Baltic
agricultural trade market will increase by 5-10% on the previous
year (own estimate).
Regardless of the structural changes taking place in the sector,
Kesko Agro's net sales are expected to grow during the next 12
months compared with the 12 months preceding the reporting period.
During the next 12 months, its operating profit excluding non-
recurring items is expected to match the level of the comparative
period.
Other operating activities
Other operating activities comprise the reporting for Konekesko,
Intersport Finland, Indoor, Musta Pörssi and Kenk„kesko.
In January-June, the aggregate net sales of other operating
activities were €380 million (€377 million), an increase of 0.7%.
In January-June, the net sales from foreign operations totalled
€41 million, accounting for 10.8% of the net sales.
In January-June, the aggregate operating profit of other operating
activities, non-recurring items excluded, was €6.9 million (1.8%
of net sales), i.e. €8.2 million, or 2.2 percentage points, down
on the corresponding period of the previous year. The decline in
profitability was mainly attributable to the weakened profit
performance of the furniture trade compared with the previous
year. In January-June, the operating profit was €7.1 million
(€15.1 million).
In January-June, investments were €7.5 million.
In January-June, Konekesko's net sales were €147 million (€142
million), up 3.9% on the previous year. In Finland, sales were
€122 million, up 3.2% in January-June. Konekesko's export sales
totalled €28 million, an increase of 9.9%.
In January-June, Intersport Finland's net sales were €74 million
(€68 million), an increase of 8.9%. In March, Budget Sport stores
were opened in Espoo and Raisio.
Indoor's net sales in January-June were €88 million (€94 million),
down 6.7%. In January-June, the aggregate net sales of the
furniture trade in foreign operations were €16 million, a decrease
of 38.6%. Indoor's operating activities in Sweden were
discontinued in March 2008.
Musta Pörssi Ltd's net sales in January-June were €59 million (€63
million), down 6.3%.
In January-June, Kenk„kesko Ltd's net sales were €12 million (€11
million), up 14.2%.
As a result of the slowing consumer demand, the net sales of other
operating activities during the next 12 months are expected to
decrease compared with the 12 months preceding the reporting
period. Due to the discontinuation of the loss-making furniture
trade business in Sweden, the operating profit excluding non-
recurring items is expected to grow during the next 12 months
compared with the comparative period.
APRIL-JUNE 2008
Net sales and profit, continuing operations
The Group's net sales in April-June 2008 were €2,549 million,
which is 6.2% up on the corresponding period of the previous year
(€2,401 million). The Group's net sales increased by 5.4% in
Finland and by 8.9% abroad. The contribution of business
acquisitions and disposals excluded, the Group's net sales growth
was 5.9%. Exports and foreign operations accounted for 23.1%
(22.5%) of the net sales.
In April-June, the K-Group's (i.e. Kesko's and the chain stores')
retail sales (incl. VAT) were €3,160 million, an increase of 6.7%
on the corresponding period of the previous year.
The Group's profit before tax for April-June was €84.3 million
(€97.4 million). The operating profit was €84.8 million (€99.6
million). It was increased by a net total of €3.7 million (€6.2
million) in non-recurring gains and losses on the disposal of
fixed assets and businesses.
The operating profit excluding non-recurring items was €81.1
million (€93.4 million). It represented 3.2% of net sales (3.9%).
The smaller year-on-year operating profit excluding non-recurring
items was due to the expansion and renovation of Rautakesko's and
Kesko Food's store site networks, the decline in demand in the
Nordic and Baltic construction markets, and the deceleration of
growth in the home and speciality goods trade.
The Group's earnings per share from continuing operations were
€0.58 (€0.69). Equity per share was €20.17 (€18.32).
Discontinued operations
In April-June, the Group's profit from discontinued operations,
non-recurring items included, was €31.0 million (€2.8 million).
Kesko sold Kauko-Telko Ltd to Aspo plc on 30 April 2008. The debt-
free selling price was about €77 million and a non-recurring gain
on the disposal of about €31 million was recognised in the profit
from discontinued operations.
Investments
The Group's investments in April-June totalled €83.0 million
(€60.3 million), which is 3.3% (2.5%) of net sales. Investments in
store sites were €69.4 million (€43.6 million). The Group's other
investments were €13.6 million (€16.8 million). Investments in
foreign operations represented 24.8% of total investments.
Finance
In April-June, the cash flow from operating activities was €126.4
million (€116.6 million) and the cash flow from investing
activities was €25.9 million (€-58.3 million). The cash flow from
investing activities included €100.2 million (€24.3 million) of
proceeds received from the disposal of fixed assets.
At the end of the period, liquid funds totalled €551 million (€283
million). During the reporting period, the amount was increased by
the debt-free selling price of about €77 million received from the
disposal of Kauko-Telko.
In April-June, the Group's net financial expenses were €0.2
million (€1.9 million).
Taxes
In April-June, the Group's taxes were €21.3 million (€24.2
million). The effective tax rate was 25.3% (23.9%).
Personnel, continuing operations
In April-June, the average number of personnel in the Kesko Group
was 21,769 (20,035) converted into full-time employees. There was
an increase of 1,734 employees compared with the corresponding
period of the previous year. In Finland, the average increase was
34 employees, while outside Finland it was 1,700.
Divisions
Kesko Food
In April-June, Kesko Food's net sales totalled €1,027 million
(€983 million), up 4.5%.
In April-June, Kesko Food's operating profit excluding non-
recurring items was €35.5 million (3.5% of net sales), i.e. €6.0
million, or 0.8 percentage points, less than in the previous year.
The operating profit excluding non-recurring items was negatively
affected by the expansions and renovations carried out in the
store site network, and the weaker year-on-year sales trend in the
home and speciality goods trade. Kesko Food's operating profit was
€35.5 million (€40.9 million).
In April-June, Kesko Food's investments totalled €49.4 million
(€30.5 million), of which investments in store sites were €44.1
million (€23.1 million).
In April-June, the retail sales (incl. VAT) of the K-food stores
increased by 5.2%, totalling €1,324 million. At the end of June,
there were a total of 1,053 K-food stores (mobile stores
excluded).
Kesko Food continued the intensive development of the K-food store
network. In April-June, six new K-supermarkets were opened in
Alavus, Haukipudas, in H„til„, H„meenlinna, in Viitasaari, Raisio
and Joensuu, and the first K-markets operating at Teboil stations
were opened in Hyvink„„, Ilmajoki, Heinola and Lemp„„l„. Other
renovations and expansions were also implemented.
The most important store sites being built are K-citymarkets in
P„iv„ranta, Kuopio, in Pori, Tornio, J„ms„, Ylivieska, in
Klaukkala, Nurmij„rvi, in Ylöj„rvi, Kirkkonummi, in the Skanssi
shopping centre in Turku, in Koilliskeskus, Tampere, as well as
the expansions of K-supermarkets into K-citymarkets in Rusko, Oulu
and in Kemi, the expansion of the K-citymarket in Mikkeli, and the
K-supermarkets being built in Mustasaari, Kempele, Suomussalmi,
Rauma, in Konala, Helsinki, and in Liminka.
Rautakesko
In April-June, Rautakesko's net sales amounted to €728 million
(€687 million), an increase of 6.1%. The contribution of
acquisitions excluded, the net sales growth was 3.5%. Net sales in
Finland were €259 million (€266 million), a decrease of 2.9%. The
net sales of foreign subsidiaries were €469 million (€420
million), up 11.8%. Foreign subsidiaries contributed 64.4% to
Rautakesko's net sales.
In Sweden, the net sales of K-rauta AB increased by 8.6% to €60
million in April-June. In Norway, Byggmakker's net sales increased
by 8.6% and were €179 million. In Estonia, Rautakesko's net sales
were down by 13.2% to €23 million. In Latvia, Rautakesko's net
sales decreased by 14.3% and were €19 million. In Lithuania, the
net sales of UAB Senuku Prekybos Centras (Senukai), in which
Rautakesko has a majority interest, increased by 23.8% to €139
million, of which the contribution of the Belorussian OMA,
acquired by Senukai in July 2007, was €18 million. In Russia,
Stroymaster's net sales grew by 35.6% to €50 million.
In April-June, Rautakesko's operating profit excluding non-
recurring items was €27.3 million (3.7% of net sales), i.e. €11.5
million, or 1.9 percentage points, less than in the corresponding
period of the previous year. The profit performance was affected
by the expansion of the store site network and the weakening
demand in the construction market in the Nordic and Baltic
countries. Rautakesko's operating profit for April-June was €30.9
million (€37.6 million).
In April-June, Rautakesko's investments totalled €28.8 million
(€18.7 million), of which 70.6% (54.4%) was abroad.
New Rautia stores opened in Kerava and Huittinen in April, in
Sodankyl„ in May, and in Ivalo in June. At the end of June, the K-
rauta chain in Finland comprised 41 stores and the Rautia chain
103 stores. In April-June, the retail sales (incl. VAT) of the K-
Group's building and home improvement stores in Finland increased
by 4.2% to €380 million. The sales of Rautakesko B-to-B Service
decreased by 7.9%.
In Sweden, Rautakesko opened new K-rauta stores in Göteborg and
Stockholm in April. There are 19 K-rauta stores in Sweden, one of
which is owned by the retailer. In Estonia, a new K-rauta store
opened in V“ru in April and another in Rakvere in May. There are
seven K-rauta stores in Estonia.
In Norway, Rautakesko opened a new Byggmakker store in Trondheim
in April and sold five of its stores to Byggmakker retailer-
entrepreneurs in May. The Byggmakker chain comprises 120 stores,
18 of which are owned by Byggmakker. The other stores of the chain
are owned by retailer-entrepreneurs who have signed a chain
agreement with Byggmakker. In St. Petersburg, Russia, a concept
reform and expansion were implemented in the K-rauta store in
Vyborskij. Four of the eight K-rauta stores in St. Petersburg now
operate in conformity with the new K-rauta concept.
VV-Auto
In April-June, VV-Auto's net sales totalled €246 million (€218
million), up 12.5%.
In April-June, VV-Auto's retail sales increased by 14.8%.
In April-June, the operating profit excluding non-recurring items
was €11.0 million (4.5% of net sales), up €2.9 million, or 0.8
percentage points, compared with the corresponding period of the
previous year.
Investments totalled €1.7 million (€2.0 million) in April-June.
Anttila
In April-June, Anttila's net sales totalled €116 million (€111
million), up 4.5%.
In April-June, Anttila's operating result excluding non-recurring
items was €-0.6 million (-0.5% of net sales), i.e. €1.2 million,
or 1.1 percentage points, better than for the corresponding period
of the previous year. Anttila's operating loss was €0.6 million
(operating profit €0.1 million). Due to the nature of the
department store trade, the majority of profits are made towards
the end of the year.
In April-June, the retail sales (incl. VAT) of the Anttila
department stores were €82 million, up 5.4%. The retail sales of
the Kodin Ykkönen department stores for home goods and interior
decoration were €39 million, up 3.0%. Distance retail sales in
Finland were €18 million, up 11.8%.
At the end of the reporting period, there were 28 Anttila
department stores and one TopTen specialist store, eight Kodin
Ykkönen department stores, and one Kodin1.com online department
store for home goods and interior decoration. NetAnttila engages
in distance sales and operates in Finland, Estonia and Latvia.
The most important store site projects underway are the department
stores in Rovaniemi and Pori, scheduled to open for the Christmas
season. The new store site in Pori is a replacement of the old
department store.
Kesko Agro
In April-June, Kesko Agro's net sales were €245 million (€216
million), an increase of 13.2%. The net sales from foreign
operations were €88 million (€81 million), accounting for 35.9% of
its total net sales.
In April-June, Kesko Agro's net sales in Finland were €157
million, up 15.9%. The net sales from the agricultural and
machinery trade in the Baltics increased by 8.7% in April-June.
In April-June, Kesko Agro's operating profit excluding non-
recurring items was €9.2 million (3.8% of net sales), i.e. €1.3
million, or 0.1 percentage points, bigger than in the
corresponding period of the previous year. The operating profit
excluding non-recurring items was affected by a good sales trend.
In April-June, investments totalled €0.9 million.
At the end of the reporting period, the K-maatalous chain
comprised 92 agricultural stores in Finland. Kesko Agro has six
stores in Estonia, four in Latvia and three in Lithuania.
Other operating activities
Other operating activities comprise the reporting for Konekesko,
Intersport Finland, Indoor, Musta Pörssi and Kenk„kesko.
In April-June, the aggregate net sales of other operating
activities were €191 million (€193 million), down 1.1%. In April-
June, the net sales of other operating activities from foreign
operations were €19 million, contributing 9.7% to the net sales.
In April-June, the aggregate operating profit of other operating
activities, non-recurring items excluded, was €4.6 million (2.4%
of net sales), i.e. down by €1.8 million, or 0.9 percentage
points, on the corresponding period of the previous year. In April-
June, the operating profit was €4.8 million (€6.5 million).
In April-June, investments were €3.8 million.
Konekesko's net sales in April-June were €80 million (€80
million), an increase of 0.1% on the previous year. In Finland,
sales were €67 million, down by 2.3%. Konekesko's export sales
totalled €14 million, an increase of 17.1%.
Intersport Finland's net sales in April-June were €37 million (€30
million), up 22.3%.
Indoor's net sales in April-June were €43 million (€48 million),
down 10.2%. In April-June, the aggregate net sales of the
furniture trade in foreign operations were €6 million, a decrease
of 54.3%. Indoor's operating activities in Sweden were
discontinued in March 2008.
Musta Pörssi Ltd's net sales in April-June were €26 million (€31
million), down 13.4%.
Kenk„kesko Ltd's net sales in April-June were €5 million (€5
million), an increase of 2.2%.
Changes in the Group composition
K-Rahoitus Oy and its subsidiaries were sold and the disposal was
completed on 31 January 2008. T„hti Optikko Group Oy was sold and
the disposal was completed on 31 March 2008. Kauko-Telko Ltd was
sold and the disposal was completed on 30 April 2008.
Decisions of the Annual General Meeting
Kesko Corporation's Annual General Meeting held on 31 March 2008
adopted the financial statements for 2007 and discharged the
members of the Board of Directors and the Managing Director from
liability. The Annual General Meeting also decided to distribute a
dividend of €1.60 per share, as proposed by the Board of
Directors, or total dividends of €156,428,592. The record date for
dividend distribution was 3 April 2008 and the dividend payment
date 10 April 2008.
The Annual General Meeting decided to leave the number of Board
members unchanged at seven. The members of the Board of Directors
elected by the Annual General Meeting of 27 March 2006 are Pentti
Kalliala, Ilpo Kokkila, Maarit N„kyv„, Seppo Paatelainen, Keijo
Suila, Jukka S„il„ and Heikki Takam„ki. The Board Chairman is
Heikki Takam„ki and the Deputy Chairman is Keijo Suila. The term
of office of each Board member, in accordance with the Articles of
Association, is three years, with the term starting at the close
of the General Meeting electing the member and expiring at the
close of the third Annual General Meeting after the election (in
2009).
The decisions of the Annual General Meeting were published in more
detail in a stock exchange release on 31 March 2008 and in the
interim financial report for January-March 2008.
Corporate governance
Kesko Food Ltd and Rautakesko Ltd, major subsidiaries fully owned
by Kesko Corporation, elected the members of their Boards of
Directors at their Annual General Meetings held on 28 March 2008.
The compositions of the Boards were announced in a stock exchange
release on 28 March 2008.
The organising meeting of Kesko Corporation's Board of Directors
held after the Annual General Meeting on 31 March 2008 decided to
leave the compositions of its committees unchanged. The Board
elected Maarit N„kyv„ as the Chairman of its Audit Committee, and
Seppo Paatelainen and Keijo Suila as its members. The Board
elected Heikki Takam„ki as the Chairman of its Compensation
Committee, and Pentti Kalliala and Keijo Suila as its members. The
committees' terms of office always expire at the Annual General
Meeting. On the basis of the evaluation of independence carried
out by the Board of Directors, all members of the Audit Committee
are independent of the company and its significant shareholders.
The decisions of the organising meeting of the Board of Directors
were published in a stock exchange release on the day of the
meeting.
Shares, securities market and Board authorisations
At the end of the reporting period, Kesko Corporation's share
capital totalled €195,616,108. Of all shares 31,737,007 or 32.4%
are A shares and 66,071,047 or 67.6% are B shares. The aggregate
number of shares was 97,808,054. Each A share entitles to ten (10)
votes and each B share to one (1) vote. During the reporting
period, the share capital was increased three times by share
subscriptions with the stock options of the year 2003 option
scheme. The increases were made on 11 February 2008 (€210), 28
April 2008 (€38,168) and 9 June 2008 (€42,200), and announced in
stock exchange notifications on the same days. The subscribed
shares were included on the main list of the Helsinki Stock
Exchange for public trading with the old B shares on 12 February
2008, 29 April 2008 and 10 June 2008.
The price of a Kesko A share was €37.85 at the end of 2007 and
€26.90 in June 2008, at the end of the reporting period,
representing a decrease of 28.9%. The price of a B share was
€37.72 at the end of 2007, and €20.57 at the end of the reporting
period, representing a decrease of 45.5%. During the reporting
period, the highest A share quotation was €38.20 and the lowest
was €25.02. For B shares, they were €38.12 and €19.70
respectively. During the first part of 2008, the Helsinki Stock
Exchange All Share index (OMX Helsinki) dropped by 26.1%, the
weighted OMX Helsinki CAP index by 19.7%, while the Consumer
Staples Index dropped by 33.9% during the same period.
At the end of the reporting period, the market capitalisation of A
shares was €854 million, while that of B shares was €1,359
million. Their combined market capitalisation was €2,213 million,
a decrease of €1,479 million from the end of 2007. During the
first part of 2008, about 989,000 A shares were traded on the
Helsinki Stock Exchange at a total value of €30.4 million, while
57.8 million B shares were traded at a total value of €1,693
million.
The 2003E and 2003F stock options of the year 2003 option scheme
were now available for trading and a total of some 50,000 pcs were
traded at a total value of €766,000 during the first part of 2008.
The Board of Directors was authorised by the Annual General
Meeting of 26 March 2007 to issue a maximum of 20,000,000 new B
shares against payment. The authorisation also includes a right to
deviate, for a weighty financial reason, from the shareholders'
pre-emptive right with a rights issue so that the issued shares
can be used as consideration in possible company acquisitions,
other arrangements concerning the company's operations, or to
finance investments. The authorisation is valid for two years from
the decision of the Annual General Meeting.
Flagging notifications
Kesko Corporation did not receive any flagging notifications
during the reporting period.
Main events
On 31 January 2008, K-Rahoitus Oy's share capital was transferred
to OKO Bank plc (Pohjola Bank plc from 1 March 2008). An agreement
to this effect was signed between OKO and Kesko Corporation on 21
December 2007. The price paid was about €30 million (stock
exchange releases on 21 December 2007 and 31 January 2008).
Kesko Corporation waived the purchase option included in the lease
agreements made with Nordisk Renting Oy in 2001 and 2002, for
which RBS Nordisk Renting paid Kesko €74.2 million in
compensation. The previous agreements were finance leases and the
non-recurring gain resulting from the cancellation was €26.5
million. The lease arrangement and the property sale contributed a
total of €103 million to Kesko Food's and the Kesko Group's
operating profits for the first quarter, which was reported as a
non-recurring item (stock exchange release on 11 February 2008).
On 31 March 2008, Kesko Corporation sold the shares of T„hti
Optikko Group Oy to the Specsavers optical chain. The debt-free
selling price was about €15 million. The disposal contributed a
non-recurring gain of €8.5 million to Kesko's profit from
discontinued operations (release on 1 April 2008).
Kesko Corporation sold the share capital of Kauko-Telko Ltd to
Aspo plc on 30 April 2008. Based on Kauko-Telko's end-of-April
balance sheet, the debt-free selling price was about €77 million.
A non-recurring gain on the disposal of about €31 million was
recognised in Kesko's profit from discontinued operations (stock
exchange releases on 23 May 2007, 28 February 2008 and 30 April
2008).
Kesko will strengthen the competitiveness of the K-maatalous and
Rautia chains. Kesko Agro Ltd will demerge on 1 January 2009 so
that the agricultural trade activities in Finland will become part
of Rautakesko Ltd. The trade of tractors and combines as well as
the agricultural and machinery trade companies in the Baltic
countries will become part of Konekesko Ltd. The arrangement is
not anticipated to have an immediate impact on the number of
personnel. It is estimated that the arrangement will result in an
annual benefit of approximately €3 million to Kesko (stock
exchange release on 28 May 2008).
Events after the end of the reporting period
No significant events have taken place after the end of the
reporting period.
Risk management
The Kesko Group has adopted an established risk management process
in accordance with which the divisions regularly assess risks and
their management, and report on them to the Group's management.
Kesko's risk management and business risks are described in more
detail in the 2007 Annual Report and financial statements.
For Kesko, the most significant business risks relate to the
general economic development in Kesko's operating area, the
expansion and growth rate of foreign operations especially in
Russia and the Baltic countries, the cost-efficiency of operating
activities, and the availability of competent personnel. During
the past quarter, risks involved in the general economic
development, the construction market and consumers' buying power
and behaviour have risen in the Nordic and Baltic countries.
During the reporting period, no damages that would have a
significant effect on the Group's result were reported to the
Board of Directors. The Board of Directors is not aware of any
legal risks that would have significant effects on the Group's
result.
Other risks and uncertainties relating to profit performance are
described in the outlook for the Group and its divisions.
Future outlook
An estimate of the future outlook for the Kesko Group's and its
divisions' net sales and operating profits excluding non-recurring
items is given for the 12 months following the reporting period
(7/2008-6/2009) in comparison with the 12 months preceding the
reporting period (7/2007-6/2008). The divisions are expected to
perform as described in the above division reports.
The Group's operating activities are affected by the economic
outlook in its different market areas and especially by the growth
rate of private consumption. During the past quarter, the economic
outlook has deteriorated in the Nordic and Baltic countries,
especially as a result of inflation, higher interest rate levels
and weakened consumer confidence. Market growth is expected to
decelerate in the Nordic and the Baltic countries, especially in
the construction market and in the home and speciality goods and
machinery trade.
The net sales from the Group's continuing operations are expected
to grow during the next 12 months compared with the 12 months
preceding the reporting period, which is especially attributable
to the expansion of the food store and the building and home
improvement store networks, and the expected increase in car
sales. However, net sales growth is expected to decelerate as a
result of the general slowdown of economic growth.
During the next 12 months, the Kesko Group's operating profit
excluding non-recurring items from continuing operations is
expected to remain at a good level, although lower than in the
preceding 12 months. In addition to the slowing market growth,
profitability will be impacted by an intensive expansion and
renovation of the store site network.
Helsinki, 22 July 2008
Kesko Corporation
Board of Directors
The figures of this interim financial report are unaudited.
Further information is available from Arja Talma, Senior Vice
President, CFO, telephone +358 1053 22113, and Jukka Erlund, Vice
President, Corporate Controller, telephone +358 1053 22338. A
Finnish-language webcast from the media and analyst briefing on
the interim financial report can be accessed at www.kesko.fi at
11.00. An English-language web conference on the interim financial
report will be held today at 14.30 (Finnish time). The web
conference login is available at www.kesko.fi.
KESKO CORPORATION
Paavo Moilanen
Senior Vice President, Corporate Communications and Responsibility
ATTACHMENTS
Consolidated income statement
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated cash flow statement
Group financial indicators
Net sales by division
Operating profit by division, incl. non-recurring items
Operating profit by division, excl. non-recurring items
Divisions' operating profits, excl. non-recurring items, as % of
net sales
Investments by division
Group contingent liabilities
Group financial indicators by quarter
Calculation of financial indicators
Divisions' net sales by quarter
Divisions' operating profits by quarter, incl. non-recurring items
Divisions' operating profits by quarter, excl. non-recurring items
Personnel, average number, and number at 30 June
The K-Group's retail sales
Kesko Corporation's interim financial report for January-September
will be published on 21 October 2008. In addition, the Kesko Group
sales figures will be published each month. News releases and
other company information are available at www.kesko.fi.
DISTRIBUTION
Helsinki Stock Exchange
Main news media
********
ATTACHMENTS:
This interim financial report has been prepared in accordance with
the IAS 34 standard. The interim financial report has been
prepared in accordance with the same principles as the annual
financial statements for 2007.
Consolidated
income statement
(€ million)
1-6 1-6 Change 4-6 4-6 Change 1-12
2008 2007 % 2008 2007 % 2007
Net sales 4,828 4,532 6.5 2,549 2,401 6.2 9,287
Cost of sales -4,168 -3,895 7.0 -2,196 -2,062 6.5 -
7,957
Gross profit 659 637 3.5 353 338 4.3 1,330
Other operating 406 281 44.3 158 151 4.4 577
income
Staff cost -296 -259 14.1 -150 -135 11.4 -547
Depreciation and -58 -56 3.9 -29 -28 4.6 -116
impairment charges
Other operating -477 -444 7.5 -247 -228 8.5 -922
expenses
Operating profit 235 160 46.9 85 100 -14.8 322
Financial income 22 58 -61.7 11 9 27.9 87
Financial expenses -24 -23 5.9 -11 -11 7.1 -51
Income from 0 0 (..) 0 0 9.1 0
associates*
Profit before tax 233 196 19.0 84 97 -13.4 358
Income tax** -58 -44 31.1 -21 -23 -8.2 -87
Net profit from 175 151 15.5 63 74 -15.1 270
continuing
operations
Net profit from 41 33 25.3 31 3 (..) 37
discontinued
operations
Net profit 216 184 17.3 94 77 22.1 307
Attributable to:
Equity holders 208 175 18.6 88 71 23.4 285
of the
parent company
Minority 8 9 -8.0 6 6 6.9 22
interest
Earnings per share
(€) for profit
attributable to
the equity holders
of the parent
company
Continuing
operations
Basic 1.70 1.46 16.9 0.58 0.70 -17.1 2.54
Diluted 1.69 1.44 17.0 0.58 0.69 -17.0 2.52
Whole Group
Basic 2.12 1.79 18.4 0.90 0.73 23.1 2.92
Diluted 2.11 1.78 18.6 0.89 0.72 23.3 2.90
* Change over 100%
** Income tax has been calculated on the profit for the reporting
period as a proportion of
the estimated tax for the whole financial year.
Consolidated balance sheet
(€ million)
30.6.200 30.6.200 Change, 31.12.20
8 7 % 07
ASSETS
Non-current assets
Intangible assets 217 252 -13.6 252
Tangible assets 1,144 1,119 2.3 1,153
Non-current financial assets 32 31 3.3 31
Loans and receivables 67 147 -54.1 45
Pension assets 268 233 15.1 262
Total 1,729 1,781 -2.9 1,743
Current assets
Inventories 897 833 7.7 922
Trade and other receivables 962 1,034 -6.9 840
Financial assets at fair 216 110 96.7 106
value through profit or loss
Available-for-sale financial 262 116 (..) 156
assets*
Cash and cash equivalents 73 56 30.3 90
Total 2,410 2,149 12.1 2,113
Non-current assets held for 1 1 -29.5 237
sale
Total assets 4,140 3,932 5.3 4,093
* Change over 100%
Consolidated balance sheet
(€ million)
30.6.200 30.6.200 Change, 31.12.20
8 7 % 07
EQUITY AND LIABILITIES
Equity 1,973 1,790 10.2 1,909
Minority interest 47 28 70.7 55
Total equity 2,020 1,818 11.1 1,964
Non-current liabilities
Pension obligations 4 4 3.0 4
Interest-bearing liabilities 211 316 -33.2 314
Non-interest-bearing 5 15 -68.0 12
liabilities
Deferred tax liabilities 137 116 17.9 126
Provisions 18 17 3.1 15
Total 374 468 -20.0 471
Current liabilities
Interest-bearing liabilities 298 257 15.7 311
Non-interest-bearing 1,437 1,375 4.5 1,320
liabilities
Provisions 12 14 -15.0 23
Total 1,746 1,646 6.1 1,654
Liabilities for available- - - - 3
for-sale assets
Total equity and liabilities 4,140 3,932 5.3 4,093
* Change over 100%
Consolidated statement of changes in equity (€ million)
Share Issue Share Other Curre Reval Re- Minor Total
of premi- reser n- u- taine ity
capit share um ves cy ation d inter
al capit trans-surpl earni est
al latio us ngs
n
diffe
r-
ences
Balance at
1.1.2007 195 0 196 246 -6 -1 1,120 27 1,777
Shares
subscribed
for with
options 0 0 2 2
Option 0 0
cost
Currency
translatio
n 3 1 4
difference
s
Minority
interest
acquisitio 1 1
ns
Fair value
changes 3 3
Other
changes 2 2
Dividend -146 -9 -155
Net profit
for the 175 9 184
period
Balance at
30.6.2007 195 0 198 246 -3 3 1,151 28 1,818
Balance at
1.1.2008 196 0 200 247 -3 9 1,260 55 1,964
Shares
subscribed
for with
options 0 0 0 0
Option 2 2
cost
Currency
translatio
n -1 0 -1
difference
s
Fair value
changes 9 9
Other
changes -4 6 2
Dividend -156 -16 -172
Net profit
for the 208 8 216
period
Balance at
30.6.2008 196 0 202 243 -4 18 1,318 47 2,020
Consolidated cash
flow statement (€
million)
1-6 1-6 Change 4-6 4-6 Change, 1-12
2008 2007 ,% 2008 2007 % 2007
Cash flow from
operating activities
Profit before tax 275 230 19.4 115 101 14.0 398
Planned depreciation 59 57 2.9 29 29 2.6 119
Financial income and 1 -36 (..) 0 2 -90.0 -37
expenses*
Other adjustments* -172 -50 (..) -39 -11 (..) -75
Working capital
Current non-interest- -160 -146 9.3 -16 -51 -68.6 -37
bearing trade and
other receivables,
increase (-)/
decrease (+)
Inventories -11 -44 -75.3 3 8 -59.8 -123
increase (-)/
decrease (+)
Current non-interest- 139 136 2.1 59 64 -7.3 95
bearing liabilities,
increase
(+)/decrease (-)
Financial items and -41 -51 -18.9 -26 -25 6.8 -91
taxes
Net cash from 91 97 -6.3 126 117 8.4 248
operating activities
Cash flow from
investing activities
Investments -135 -125 8.1 -75 -68 10.1 -237
Disposals of fixed 217 137 59.2 100 24 (..) 146
assets
Increase of long- -4 -15 -75.6 0 -15 (..) 0
term receivables
Decrease of long- 0 0 (..) 0 0 (..) 6
term receivables*
Net cash used in 79 -3 (..) 26 -58 (..) -85
investing
activities*
Cash flow from
financing activities
Debt increase* 0 0 (..) -3 0 (..) 16
Debt decrease -23 -45 -48.5 -7 19 (..) -20
Increase (- 211 -19 (..) -5 -30 -83.5 -52
)/decrease (+) in
short-term interest-
bearing receivables*
Dividends paid -156 -146 6.9 -156 -146 6.6 -156
Equity increase 0 2 -93.1 0 2 -92.7 3
Short-term money -111 31 (..) -20 28 (..) 35
market investments*
Other items* -2 0 (..) -2 -3 -29.1 1
Net cash used in -82 -178 -54.1 -193 -130 47.7 -173
financing activities
Change in cash and 88 -85 (..) -40 -72 -44.2 -9
cash equivalents*
Cash and cash 245 257 -4.5 371 244 51.8 257
equivalents and
available-for-sale
financial assets
at 1 Jan.
Currency translation 0 0 (..) 0 0 -95.1 0
difference*
Cash and cash -2 0 (..) -4 0 (..) 2
equivalents relating
to available-for-
sale assets*
Cash and cash 335 172 94.0 335 172 94.0 245
equivalents and
available-for-sale
financial assets
at 30 Jun.
* Change over 100%
Group financial indicators
6/2008 6/2007 Change,
pp
Return on invested capital, % 22.8 20.6 2.2
Return on invested capital, %, 19.5 22.3 -2.8
moving 12 months
Return on invested capital 10.6 14.4 -3.8
excl. non-recurring items, %
Return on invested capital 13.2 14.8 -1.6
excl. non-recurring items, %,
moving 12 months
Return on equity, % 21.7 20.5 1.2
Return on equity, %, moving 12 17.7 24.2 -6.5
months
Return on equity excl. non- 8.8 12.5 -3.7
recurring items, %
Return on equity excl. non- 11.1 14.4 -3.3
recurring items, %, moving 12
months
Equity ratio, % 49.0 46.5 2.6
Gearing, % -2.1 16.0 -18.1
Change,
%
Investments, € million* 143.3 110.6 29.5
Investments, % of net sales* 3.0 2.4 21.6
Earnings per share, basic, €* 1.70 1.46 16.9
Earnings per share, diluted, €* 1.69 1.44 17.0
Earnings per share, basic, €** 2.12 1.79 18.4
Earnings per share, diluted, 2.11 1.78 18.6
€**
Equity per share, € 20.17 18.32 10.1
Personnel, average* 21,458 19,643 9.2
* Continuing operations
** Whole Group
Divisions
Net sales by division, 1- 1- Change 4- 4- Change
continuing operations 6/2008 6/2007 ,% 6/2008 6/2007 ,%
€ € € €
millio millio millio millio
n n n n
Kesko Food, Finland 1,956 1,858 5.3 1,024 978 4.6
Kesko Food, other 8 8 -1.2 3 4 -16.6
countries*
Kesko Food, total 1,964 1,866 5.3 1,027 983 4.5
Rautakesko, Finland 491 482 1.9 259 266 -2.9
Rautakesko, other 828 739 12.1 470 420 11.8
countries*
Rautakesko, total 1,319 1,221 8.1 728 687 6.1
VV-Auto, Finland 498 452 10.1 241 210 14.9
VV-Auto, other 8 14 -39.9 4 8 -48.8
countries*
VV-Auto, total 506 466 8.6 246 218 12.5
Anttila, Finland 234 221 5.9 113 107 5.1
Anttila, other 10 10 -1.6 4 4 -9.4
countries*
Anttila, total 244 231 5.6 116 111 4.5
Kesko Agro, Finland 274 253 8.2 157 135 15.9
Kesko Agro, 150 131 14.7 88 81 8.7
other countries*
Kesko Agro, total 425 385 10.4 245 216 13.2
Other operating 339 331 2.4 172 171 0.9
activities, Finland
Other operating 41 46 -11.1 19 22 -16.3
activities,
other countries*
Other operating 380 377 0.7 191 193 -1.1
activities, total
Common operations and -10 -13 -22.9 -5 -7 -35.6
eliminations
Finland, total 3,782 3,584 5.5 1,961 1,861 5.4
Other countries, 1,046 948 10.3 588 540 8.9
total*
Group, total 4,828 4,532 6.5 2,549 2,401 6.2
* Exports and net sales outside Finland
Operating profit by 1- 1- Change 4- 4- Change
division incl. non- 6/2008 6/2007 , 6/2008 6/2007 ,
recurring items, € € € € € €
continuing millio millio millio millio millio millio
operations n n n n n n
Kesko Food 159.4 70.1 89.3 35.5 40.9 -5.4
Rautakesko 37.9 56.2 -18.3 30.9 37.6 -6.7
VV-Auto 24.9 19.8 5.1 11.0 8.1 2.9
Anttila -2.0 -0.8 -1.2 -0.6 0.1 -0.7
Kesko Agro 8.8 7.2 1.5 9.2 7.9 1.3
Other operating 7.1 15.1 -8.0 4.8 6.5 -1.6
activities
Common operations -1.1 -7.7 6.6 -6.0 -1.6 -4.5
and eliminations
Group's operating 235.0 160.0 75.0 84.8 99.6 -14.7
profit
Operating profit by 1- 1- Change 4- 4- Change
division excl. non- 6/2008 6/2007 , 6/2008 6/2007 ,
recurring items, € € € € € €
continuing millio millio millio millio millio millio
operations n n n n n n
Kesko Food 56.1 70.5 -14.3 35.5 41.4 -6.0
Rautakesko 34.2 55.0 -20.8 27.3 38.7 -11.5
VV-Auto 24.9 19.8 5.1 11.0 8.1 2.9
Anttila -1.9 -2.7 0.8 -0.6 -1.8 1.2
Kesko Agro 8.8 7.2 1.5 9.2 7.9 1.3
Other operating 6.9 15.1 -8.2 4.6 6.5 -1.8
activities
Common operations -11.3 -13.7 2.5 -5.9 -7.5 1.6
and eliminations
Total 117.7 151.2 -33.4 81.1 93.4 -12.2
Operating profit 1- 1- Change 4- 4- Change
as % 6/2008 6/2007 pp 6/2008 6/2007 pp
of net sales % of % of % of % of
excl. net net net net
non-recurring sales sales sales sales
items,
continuing
operations
Kesko Food 2.9 3.8 -0.9 3.5 4.2 -0.8
Rautakesko 2.6 4.5 -1.9 3.7 5.6 -1.9
VV-Auto 4.9 4.2 0.7 4.5 3.7 0.8
Anttila -0.8 -1.2 0.4 -0.5 -1.6 1.1
Kesko Agro 2.1 1.9 0.2 3.8 3.6 0.1
Other operating 1.8 4.0 -2.2 2.4 3.4 -0.9
activities
Common (..)* (..)* 6.6 (..)* (..)* 22.5
operations and
eliminations
Total 2.4 3.3 -0.9 3.2 3.9 -0.7
* over 100%
Investments by 1- 1- Change, 4- 4- Change,
division, 6/2008 6/2007 € 6/2008 6/2007 €
continuing € € million € € million
operations million million million million
Kesko Food 80 55 25 49 30 19
Rautakesko 51 39 12 29 19 10
VV-Auto 3 4 0 2 2 0
Anttila 2 3 0 1 1 0
Kesko Agro 1 5 -4 1 3 -2
Other operating 7 3 5 4 1 3
activities
Common operations -2 3 -5 -3 3 -6
and eliminations
Group, total 143 111 33 83 60 23
Group's contingent liabilities 6/2008 6/2007 Change, %
(€ million))
For own commitments 230 266 -13.7
For associates - - -
For shareholders 0 1 -95.0
For others 9 12 -21.6
Lease liabilities 23 12 90.2
Liabilities arising from
derivative financial
instruments
Fair
value
Values of underlying 6/2008 6/2007 30.6.2008
instruments
at 30 Jun.
Interest rate derivatives
Forward and future contracts - 58 -
Interest rate swap contracts 201 202 6.8
Currency derivatives
Forward and future contracts 348 330 1.5
Option contracts
Bought - - -
Written 2 - -0.0
Currency swap contracts 100 100 -24.3
Commodity derivatives
Electricity derivatives 63 40 17.6
Grain derivatives 3 - 0.0
* Change over 100%
Figures by quarter
Group financial 1-3/ 4-6/ 7-9/ 10- 1-3/ 4-6/
indicators by quarter 2007 2007 2007 12/ 2008 2008
2007
Net sales, € million 2,131 2,401 2,365 2,390 2,279 2,549
Change in net sales, % 11.6 8.5 10.8 6.9 6.9 6.2
Operating profit, € 60.4 99.6 93.3 68.3 150.1 84.8
million
Operating profit, % 2.8 4.1 3.9 2.9 6.6 3.3
Operating profit excl. 57.8 93.4 91.9 71.9 36.6 81.1
non-recurring items, €
million
Operating profit excl. 2.7 3.9 3.9 3.0 1.6 3.2
non-recurring items, %
Financial 37.6 -1.9 2.5 -2.1 -1.4 -0.2
income/expenses,
€ million
Profit before tax, € 98 97 96 66 149 84
million
Profit before tax, % 4.6 4.1 4.1 2.8 6.5 3.3
Return on invested 23.5 18.6 17.4 12.4 26.6 19.6
capital, %
Return on invested 11.9 17.5 17.2 13.0 7.4 14.1
capital excl. non-
recurring items, %
Return on equity, % 24.4 17.3 16.2 9.8 25.1 19.1
Return on equity excl. 9.1 16.3 15.9 10.6 5.6 12.3
non-recurring items, %
Equity ratio, % 44.6 46.5 47.4 48.5 46.3 49.0
Gearing, % 9.8 16.0 13.9 14.0 -1.8 -2.1
Investments, € 50.3 60.3 48.2 68.8 60.3 83.0
million*
Investments, % of net 2.4 2.5 2.0 2.9 2.6 3.3
sales*
Earnings/share, 0.75 0.69 0.69 0.39 1.11 0.58
diluted, €*
Equity/share, € 17.52 18.32 19.08 19.53 19.13 20.17
* Continuing operations
Calculation of financial indicators
Return on invested (Profit / loss before tax + financial
capital, % expenses) x 100 /
(Shareholders' equity + interest-bearing
liabilities)
Return on invested (Profit / loss before tax for the prior
capital, %, moving 12 months + financial expenses for the
12 months prior 12 months) x 100 /
(Shareholders' equity + interest-bearing
liabilities)
Return on invested (Profit / loss adjusted for non-
capital, excluding recurring items before tax + financial
non-recurring expenses) x 100 /
items, % (Shareholders' equity + interest-bearing
liabilities)
Return on invested (Profit / loss for the prior 12 months
capital, excluding adjusted for non-recurring items before
non-recurring tax + financial expenses for the prior
items, %, moving 12 months) x 100 /
12 months (Shareholders' equity + interest-bearing
liabilities)
Return on equity, (Profit / loss before tax - income tax)
% x 100 /
Shareholders' equity
Return on equity, (Profit / loss for the prior 12 months
%, moving 12 before tax - income tax for the prior 12
months months) x 100 /
Shareholders' equity
Return on equity, (Profit / loss adjusted for non-
excluding non- recurring items before tax - income tax
recurring items, % adjusted for the tax effect of non-
recurring items) x 100 /
Shareholders' equity
Return on equity, (Profit / loss for the prior 12 months
excluding non- adjusted for non-recurring items before
recurring items, tax - income tax for the prior 12 months
%, moving 12 adjusted for the tax effect of non-
months recurring items) x 100 /
Shareholders' equity
Equity ratio, % Shareholders' equity x 100 /
(Balance sheet total - advances
received)
Earnings/share, (Profit / loss - minority interest) /
diluted Average number of shares adjusted for
the dilutive effect of options
Earnings/share, (Profit / loss - minority interest) /
basic Average number of shares
Equity/share Equity attributable to equity holders of
the parent /
Basic number of shares at balance sheet
date
Gearing, % Net interest-bearing liabilities x 100 /
Shareholders' equity
Divisions' net 1-3/ 4-6/ 7-9/ 10- 1-3/ 4-6/
sales by quarter, 2007 2007 2007 12/ 2008 2008
€ million 2007
Kesko Food 883 983 959 1,046 937 1,027
Rautakesko 534 687 694 622 591 728
VV-Auto 248 218 195 144 261 246
Anttila 120 111 143 189 128 116
Kesko Agro 168 216 196 213 180 245
Other operating 184 193 185 182 189 191
activities
Common operations -6 -7 -7 -6 -6 -5
and eliminations
Group's net sales 2,131 2,401 2,365 2,390 2,279 2,549
Divisions' 1-3/ 4-6/ 7-9/ 10- 1-3/ 4-6/
operating profits 2007 2007 2007 12/ 2008 2008
by quarter incl. 2007
non-recurring
items, € million
Kesko Food 29.2 40.9 41.2 40.0 123.9 35.5
Rautakesko 18.6 37.6 39.5 22.1 7.0 30.9
VV-Auto 11.7 8.1 6.8 -0.5 13.9 11.0
Anttila -0.9 0.1 6.3 21.6 -1.4 -0.6
Kesko Agro -0.6 7.9 3.5 2.1 -0.4 9.2
Other operating 8.6 6.5 3.3 -8.4 2.2 4.8
activities
Common operations -6.1 -1.6 -7.3 -8.6 5.0 -6.0
Group's operating 60.4 99.6 93.3 68.3 150.1 84.8
profit
Divisions' 1-3/ 4-6/ 7-9/ 10- 1-3/ 4-6/
operating 2007 2007 2007 12/ 2008 2008
profits excl. non- 2007
recurring items, by
quarter, € million
Kesko Food 29.0 41.4 41.1 39.8 20.7 35.5
Rautakesko 16.3 38.7 39.0 21.9 7.0 27.3
VV-Auto 11.7 8.1 6.8 -0.5 13.9 11.0
Anttila -0.9 -1.8 6.3 21.6 -1.3 -0.6
Kesko Agro -0.6 7.9 3.0 2.1 -0.4 9.2
Other operating 8.6 6.5 3.3 -4.5 2.2 4.6
activities
Common operations -6.3 -7.5 -7.6 -8.5 -5.4 -5.9
Group's operating 57.8 93.4 91.9 71.9 36.6 81.1
profit
Personnel, 4-6/2008 4-6/2007 Change
average number
Kesko Food 6,150 6,132 18
Rautakesko 10,218 8,390 1,828
VV-Auto 747 756 -9
Anttila 2,124 2,074 50
Kesko Agro 737 819 -82
Other operating 1,793 1,864 -71
activities and common
operations
Kesko Group, total 21,769 20,035 1,734
Personnel at 30 June*, 2008 2007 Change
continuing operations
Kesko Food 7,906 8,274 -368
Rautakesko 11,097 9,274 1,823
VV-Auto 769 794 -25
Anttila 2,791 2,888 -97
Kesko Agro 759 840 -81
Other operating 1,933 2,086 -153
activities and common
operations
Kesko Group, total 25,255 24,156 1,099
* Total number including part-time employees
The K-Group's retail sales (incl. VAT) (preliminary data):
1.1.-30.6.2008 1.4.-30.6.2008
€ Change, € Change,
million % million %
K-Group food stores
K-citymarket 875.2 4.0 450.0 0.7
K-supermarket 768.4 7.7 399.7 7.2
K-market and other K-food 906.3 8.3 474.5 8.2
stores
Finland, total 2,549.9 6.6 1,324.3 5.2
Food stores, total 2,549.9 6.6 1,324.3 5.2
K-Group building and home
improvement stores
K-rauta 328.0 5.1 206.6 4.5
Rautia 269.3 4.9 173.4 3.8
Finland, total 597.3 5.0 380.1 4.2
K-rauta, Sweden 123.2 10.6 74.8 8.7
K-rauta, Estonia 47.6 -7.5 26.9 -13.2
K-rauta, Latvia 44.5 -4.4 23.2 -11.2
Senukai, Lithuania 259.5 9.0 143.1 7.9
OMA, Belarus 36.3 21.2
Stroymaster, Russia 106.8 37.6 59.2 35.6
Byggmakker, Norway 566.2 4.7 338.4 9.5
Other countries, total 1,184.0 11.1 686.9 12.4
Building and home 1,781.3 9.0 1,067.0 9.3
improvement stores, total
Kesko Group car stores
Helsingin VV-Auto and Turun 263.4 12.7 135.6 14.8
VV-Auto
Finland, total 263.4 12.7 135.6 14.8
Anttila
Anttila department stores 165.3 4.0 81.5 5.4
Kodin Ykkönen department 82.2 10.2 39.5 3.0
stores for home goods and
interior decoration
Distance sales (Mail Order 41.6 8.8 18.2 11.8
and NetAnttila)
Finland, total 289.2 6.4 139.2 5.5
Anttila Mail Order, Estonia 9.4 -5.3 3.3 -14.5
and Latvia
Other countries, total 9.4 -5.3 3.3 -14.5
Anttila, total 298.6 6.0 142.5 4.9
K-Group agricultural stores
K-maatalous 351.6 8.3 219.8 15.5
Finland, total 351.6 8.3 219.8 15.5
Kesko Agro, Estonia 43.9 13.7 25.0 3.6
Kesko Agro, Latvia 60.5 7.7 36.5 -0.7
Kesko Agro, Lithuania 26.5 -40.3 19.5 -28.8
Other countries, total 130.9 -6.0 81.0 -8.2
Agricultural stores, total 482.5 4.0 300.8 8.0
Other operating activities
Kesko Group machinery
stores
Yahama Center 10.5 -9.3 8.8 -7.5
Finland, total 10.5 -9.3 8.8 -7.5
K-Group home and speciality
goods stores
Intersport 129.2 4.4 62.8 8.4
Kesport 15.1 5.7 7.7 8.6
Asko 44.3 -0.4 22.5 0.9
Sotka 54.9 -0.5 28.2 -0.1
Musta Pörssi 90.0 4.8 37.0 -9.7
Andiamo and K-kenk„ 23.4 6.3 14.2 10.1
Kenk„expertti 6.1 -3.7 3.6 -0.6
Finland, total 363.0 3.2 175.9 1.7
Furniture sales, Sweden, 14.3 -40.3 5.2 -56.8
Estonia and Latvia
Other countries, total 14.3 -40.3 5.2 -56.8
Home and speciality goods 377.3 0.4 181.1 -2.1
stores, total
Other operating activities, 387.8 0.1 189.8 -2.3
total
Finland, total 4,424.8 6.5 2,383.7 6.1
Other countries, total 1,338.7 8.1 776.3 8.5
Retail sales, total 5,763.5 6.9 3,160.0 6.7
Interim financial report for the period 1 January-30 June 2008: Earnings per share €2.11 (€1.78)
| Source: Kesko Oyj