KESKO CORPORATION INTERIM REPORT 22.07.2014 AT 09.00 1(32)
Kesko's interim report for the period 1 Jan. to 30 Jun. 2014
Financial performance in brief:
*The Group's net sales for January-June €4,499 million, change -1.8%.
*Operating profit excluding non-recurring items €86.7 million (€88.4 million).
*Earnings per share excluding non-recurring items €0.64 (€0.56).
*Equity ratio 52.3% (50.5%).
*Kesko Group's net sales and operating profit excluding non-recurring items for
the next 12 months are expected to remain at the level of the preceding 12
months, unless the overall consumer demand weakens significantly.
Key performance indicators
1-6/2014 1-6/2013 4-6/2014 4-6/2013
Net sales, € million 4,499 4,580 2,371 2,420
Operating profit excl. non-recurring
items, € million 86.7 88.4 67.6 69.8
Operating profit, € million 56.3 96.3 69.4 77.0
Profit before tax, € million 57.0 93.0 71.4 77.2
Capital expenditure, € million 99.1 89.5 55.7 48.1
Earnings per share, €, diluted 0.39 0.62 0.51 0.50
Earnings per share excl. non-recurring
items, €, basic 0.64 0.56 0.49 0.45
30.6.2014 30.6.2013
Equity ratio, % 52.3 50.5
Equity per share, € 21.86 21.79
FINANCIAL PERFORMANCE
Net sales and profit for January-June 2014
The Group's net sales for January-June 2014 were €4,499 million, which is 1.8%
down on the corresponding period of the previous year (€4,580 million). The
weakening of the general economic situation and consumer demand in Finland and
exchange rate changes contributed to the performance. In terms of local
currencies, net sales were at the previous year's level. Net sales increased in
the building and home improvement trade and in the car trade and declined in the
food trade and in the home and speciality goods trade. In Finland, net sales
decreased by 2.8% and in the other countries, net sales increased by 3.4%. In
the other countries, net sales performance in euros was impacted by the
weakening of the exchange rates of the Russian rouble, the Norwegian krone and
the Swedish krona. Foreign currency net sales increased in foreign operations by
12.4%. International operations accounted for 18.0% (17.1%) of net sales.
1-6/2014 Net sales, € Change, % Operating profit Change, €
million excl. non- million
recurring
items, € million
Food trade 2,112 -1.5 99.4 +0.4
Home and speciality
goods trade 600 -10.0 -41.0 -13.2
Building and home
improvement trade 1,317 +1.2 16.2 +13.3
Car and machinery
trade 556 +0.9 19.1 -1.7
Common operations
and eliminations -85 +2.9 -7.0 -0.6
Total 4,499 -1.8 86.7 -1.7
The operating profit excluding non-recurring items for January-June was €86.7
million (€88.4 million). Profitability was weakened by the decreased sales of
the home and speciality goods trade and especially by Anttila's loss-making
operations. Profit performance was positively impacted by the increase of sales
in the building and home improvement trade and the enhancement measures
implemented in all operations. Operating expenses excluding non-recurring items
decreased by 1.1% despite the expansion of the store site network and cost
inflation.
Operating profit was €56.3 million (€96.3 million). The operating profit
includes €-30.4 million (€7.9 million) of non-recurring items. The non-recurring
items include a restructuring provision of €30.0 million for measures taken to
improve Anttila's profitability.
The Group's profit before tax for January-June was €57.0 million (€93.0
million).
The Group's earnings per share were €0.39 (€0.62). The Group's equity per share
was €21.86 (€21.79).
In January-June, the K-Group's (i.e. Kesko's and the chain stores') retail and
B2B sales (VAT 0%) were €5,539 million, down 1.4% compared to the previous year.
The K-Plussa customer loyalty programme gained 28,419 new households in January-
June. At the end of June, there was 2,260,655 K-Plussa households and 3.6
million K-Plussa cardholders.
Net sales and profit for April-June 2014
The Group's net sales for April-June 2014 were €2,371 million, which is 2.1%
down on the corresponding period of the previous year (€2,420 million). The
decrease in net sales is mainly attributable to the decline in the sales of the
home and speciality goods trade and the machinery trade. In Finland, net sales
were down 2.4% and 0.7% in the other countries. The net sales performance of the
building and home improvement trade in euros (-0.6%) was impacted by the
weakening of the exchange rates of the Russian rouble, the Norwegian krone and
the Swedish krona. In terms of local currencies, the net sales of the building
and home improvement trade increased by 3.7%. International operations accounted
for 19.6% (19.3%) of the Group's net sales.
4-6/2014 Net sales, € Change, % Operating profit Change, €
million excl. non- million
recurring
items, € million
Food trade 1,106 +0.6 52.9 +2.2
Home and speciality
goods trade 288 -10.5 -18.3 -8.2
Building and home
improvement trade 736 -0.6 26.6 +7.1
Car and machinery
trade 283 -6.0 10.9 -2.1
Common operations
and eliminations -42 +1.2 -4.5 -1.1
Total 2,371 -2.1 67.6 -2.1
The operating profit excluding non-recurring items for April-June was €67.6
million (€69.8 million), representing 2.9% (2.9%) of net sales. Profitability
was weakened by the decreased sales of the home and speciality goods trade and
especially by Anttila's loss-making operations. Due to enhancement measures,
operating expenses excluding non-recurring items decreased by 1.0%
Operating profit was €69.4 million (€77.0 million). The operating profit
includes €1.8 million (€7.3 million) of non-recurring items. The Group's profit
before tax for April-June was €71.4 million (€77.2 million).
The Group's earnings per share were €0.51 (€0.50).
In April-June, the K-Group's (i.e. Kesko's and the chain stores') retail and B2B
sales (VAT 0%) were €2,984 million, down 2.0% compared to the previous year.
Finance
In January-June, the cash flow from operating activities was €33.9 million
(€185.7 million). The cash flow from investing activities was €-92.5 million (€-
80.0 million) including a €6.3 million (€14.0 million) amount of proceeds from
the sale of fixed assets.
The Group's liquidity remained at an excellent level in January-June. At the end
of the period, liquid assets totalled €461 million (€474 million). Interest-
bearing liabilities were €539 million (€587 million) and interest-bearing net
debt €78 million (€113 million) at the end of June. Equity ratio was 52.3%
(50.5%) at the end of the period.
In January-June, the Group's net finance income was €0.6 million (net finance
costs €2.9 million).
In April-June, the cash flow from operating activities was €128.7 million
(€244.3 million). The cash flow from investing activities was €-48.8 million (€-
38.1 million) including a €4.4 million (€11.5 million) amount of proceeds from
the sale of fixed assets.
In April-June, the Group's net finance income was €2.2 million (€0.4 million).
It includes a €4.9 million (€4.0 million) amount of interest on cooperative
capital from Suomen Luotto-osuuskunta.
Taxes
In January-June, the Group's taxes were €15.1 million (€28.4 million). The
effective tax rate was 26.4% (30.5%), impacted by loss-making foreign
operations.
In April-June, the Group's taxes were €17.6 million (€23.6 million). The
effective tax rate was 24.6% (30.5%).
Capital expenditure
In January-June, the Group's capital expenditure totalled €99.1 million (€89.5
million), or 2.2% (2.0%) of net sales. Capital expenditure in store sites was
€74.4 million (€66.8 million), in IT €15.6 million (€12.1 million) and other
capital expenditure was €9.1 million (€10.6 million). Capital expenditure in
foreign operations represented 42.6% (42.2%) of total capital expenditure.
In April-June, the Group's capital expenditure totalled €55.7 million (€48.1
million), or 2.3% (2.0%) of net sales. Capital expenditure in store sites was
€46.6 million (€35.2 million), in IT €4.8 million (€6.5 million) and other
capital expenditure was €4.3 million (€6.4 million). Capital expenditure in
foreign operations represented 46.8% (47.0%) of total capital expenditure.
Kesko's strategic focus areas
The key focus areas in Kesko's business operations are to strengthen sales
growth and the return on capital in all divisions, to exploit business
opportunities in e-commerce and in Russia, and to maintain good solvency and
dividend payment capacity.
Profitability programme
Because of the further weakened economic situation and consumer demand, Kesko
continues to implement the profitability programme with the key objective of
improving the Group's cost-effectiveness. Cost savings will be implemented in
all divisions and across all types of expense. The most significant measures
will be targeted at operations with low profitability.
Improving Anttila's profitability
In order to improve Anttila's profitability, a decision was made during the
reporting period to close eight Anttila department stores operating in leased
premises. During the reporting period, it was also decided to close four Kodin1
department stores and to implement enhancement measures in the central units of
Anttila Oy and K-citymarket Oy.
The personnel reductions at the Kodin1 department stores to be closed, the other
Kodin1 department stores, the central unit and logistics operations total
approximately 200 full-time equivalents. The co-operation negotiations conducted
for improving profitability concerned a total of approximately 1,350 people and
at the beginning of the negotiations, the need for reduction was estimated at no
more than 220 full-time equivalents. In addition to the profitability driven
renewal of Anttila's operations, the option of selling Anttila Oy is also being
investigated.
Personnel reductions at the Anttila department stores, the Kodin1 department
stores, the central unit and logistics operations will total approximately 400
full-time equivalents.
Net sales targets in Russia
In consequence of the weakening of the Russian business environment and the
rouble, coupled with the availability of Russian store sites suitable for
Kesko's operations, the growth targets for Russian operations have been updated.
The total net sales from the Russian operations are expected to exceed €1
billion in 2017 and the operating profit is expected to be positive. The capital
expenditure in Russia is anticipated at approximately €100-150 million annually.
The net sales target of the building and home improvement trade for 2017 is set
at €500 million (previously €800 million). The objectives set for the food trade
have not been changed; for 2017, the net sales target is €500 million and a
positive business result.
Kesko looks into setting up a real estate fund
Kesko is looking into selling some of its store sites to a fund to be set up
with Kesko as one of its major investors. Kesko Group would continue its
operations in the store sites under long-term leases signed in connection with
their sales to the fund.
Kesko's objective is to set up a fund of mainly Kesko-owned store sites and
shopping centres in Finland, Sweden and Russia with a maximum fair value of
approximately €750 - 950 million.
Launching the real estate investment fund depends, in addition to investor
interest, on whether it is possible for Kesko to achieve such terms and
conditions in the arrangement that are commercially viable for it, taking the
Group's strong financial position into account. Moreover, starting a real estate
investment fund is subject to the authorisation of the Financial Supervisory
Authority.
The possible fund is expected to be launched in the course of 2014.
Personnel
In January-June, the average number of employees in Kesko Group was 19,935
(19,373) converted into full-time employees. In Finland, the average decrease
was 186 people, while outside Finland, there was an increase of 748 people.
At the end of June 2014, the number of employees was 24,493 (24,026), of whom
12,889 (13,252) worked in Finland and 11,604 (10,774) outside Finland. Compared
to the end of June 2013, there was a decrease of 363 people in Finland and an
increase of 830 people outside Finland.
In January-June, the Group's staff cost was €314 million, showing a 1.3%
increase compared to the previous year. In April-June, staff cost increased by
0.9% compared to the previous year and was €158 million.
SEGMENT INFORMATION
Seasonal nature of operations
The Group's operating activities are affected by seasonal fluctuations. The net
sales and operating profits of the reportable segments are not earned evenly
throughout the year. Instead, they vary by quarter depending on the
characteristics of each segment.
Food trade
1-6/2014 1-6/2013 4-6/2014 4-6/2013
Net sales, € million 2,112 2,144 1,106 1,099
Operating profit excl. non- recurring
items, € million 99.4 99.0 52.9 50.8
Operating margin excl. non-recurring
items, % 4.7 4.6 4.8 4.6
Capital expenditure,
€ million 46.8 43.9 28.7 27.4
Net sales, € million 1-6/2014 Change, % 4-6/2014 Change, %
Sales to K-food stores 1,585 -3.4 834 -0.3
Kespro 380 -2.8 199 -2.4
K-ruoka, Russia 51 (..) 26 +90.9
Others 96 +7.5 46 +4.5
Total 2,112 -1.5 1,106 +0.6
(..) Change over 100%
January-June 2014
In the food trade, the net sales for January-June were €2,112 million (€2,144
million), down 1.5%. During the same period, the grocery sales of K-food stores
in Finland decreased by 2.3% (VAT 0%). In the grocery market, retail prices are
estimated to have changed by some +1% compared to the previous year (VAT 0%,
Kesko's own estimate based on the Consumer Price Index of Statistics Finland),
and the total market (VAT 0%) is estimated to have grown in January-June by some
0-1% compared to the previous year. (Kesko's own estimate). The rise of consumer
prices in the grocery trade has slowed towards the end of the reporting period.
The sales and profitability of the food stores in Russia were realised better
than expected for the reporting period despite the weakening of the Russian
rouble.
In January-June, the operating profit excluding non-recurring items of the food
trade was €99.4 million (€99.0 million), or €0.4 million up on the previous
year. Profitability was improved by savings achieved from enhanced operations.
Operating profit was €97.4 million (€103.3 million). Non-recurring expenses were
€2.0 million (non-recurring income €4.3 million).
The capital expenditure of the food trade in January-June was €46.8 million
(€43.9 million), of which €43.8 million (€38.9 million) in stores sites.
April-June 2014
In the food trade, the net sales for April-June were €1,106 million (€1,099
million), up 0.6%.
In April-June, the operating profit excluding non-recurring items of the food
trade was €52.9 million (€50.8 million), or €2.2 million up on the previous
year. The result from the fair value measurement of derivatives used for hedging
electricity purchases was €-0.2 million (€-2.0 million). Operating profit was
€52.0 million (€55.1 million). Non-recurring expenses were €0.9 million (non-
recurring income €4.3 million).
The capital expenditure of the food trade in April-June was €28.7 million (€27.4
million).
In April-June, one new K-supermarket and one new K-market were opened. Renewals
and space modifications were made in a total of 14 stores.
The most significant store sites being built are a K-citymarket in the Puuvilla
shopping centre in Pori and K-supermarkets in Jakomäki and Lauttasaari,
Helsinki, and in Hanko, Hollola and Lappeenranta. K-market Kreivintori in Raahe
is being expanded into a K-supermarket. The objective of Kesko Food is to open
three new food stores in the St Petersburg area in 2014.
Numbers of stores as at 30 June 2014 2013
K-citymarket 80 80
K-supermarket 220 215
K-market (incl. service station stores) 441 445
K-ruoka, Russia 4 2
Others* 171 178
*incl. online food store
Home and speciality goods trade
1-6/2014 1-6/2013 4-6/2014 4-6/2013
Net sales, € million 600 667 288 322
Operating profit excl. non- recurring
items, € million -41.0 -27.8 -18.3 -10.0
Operating margin excl. non-recurring
items, % -6.8 -4.2 -6.3 -3.1
Capital expenditure, € million 7.4 13.8 3.7 5.8
Net sales, € million 1-6/2014 Change, % 4-6/2014 Change, %
K-citymarket, home and speciality goods 267 -6.1 134 -7.3
Anttila 143 -16.1 67 -18.3
Intersport, Finland 78 -10.5 32 -11.2
Intersport, Russia 8 -21.9 3 -13.8
Indoor 85 -3.0 44 -1.2
Musta Pörssi 10 -37.2 5 -31.7
Kenkäkesko 10 -7.5 4 -11.7
Total 600 -10.0 288 -10.5
January-June 2014
In the home and speciality goods trade, the net sales for January-June were €600
million (€667 million), down 10.0%. Consumer demand in the home and speciality
goods trade has continued to weaken, and the change in customer behaviour has
strengthened during the reporting period. Sales declined especially in the
Anttila and Kodin1 department stores. Net sales performance was also impacted by
the network changes in Musta Pörssi and Intersport Russia. The sales of online
stores were up from the previous year.
In January-June, the operating profit excluding non-recurring items of the home
and speciality goods trade was €-41.0 million (€-27.8 million), down €13.2
million compared to the previous year. The performance was especially impacted
by the loss increased by the decline in Anttila's sales. The profit of
Intersport Finland remained at a good level despite sales decline. Operating
profit was €-72.0 million (€-23.3 million). The most significant non-recurring
item was the restructuring provision of €30.0 million for measures to be taken
to improve the profitability of Anttila.
The capital expenditure of the home and speciality goods trade in January-June
was €7.4 million (€13.8 million).
April-June 2014
In the home and speciality goods trade, the net sales for April-June were €288
million (€322 million), down 10.5%. Sales declined especially in the Anttila and
Kodin1 department stores. The net sales performances of Musta Pörssi and
Intersport Russia were impacted by network changes. The sales of online stores
increased.
In April-June, the operating profit excluding non-recurring items of the home
and speciality goods trade was €-18.3 million (€-10.0 million), down €8.2
million compared to the previous year. The performance was especially impacted
by the loss increased by the decline in Anttila's sales. Operating profit was €-
17.6 million (€-5.6 million).
The capital expenditure of the home and speciality goods trade was €3.7 million
(€5.8 million).
In April-June, a new Asko store, replacing the one closed at the same time, was
opened in Tampere. In addition, the Anttila Koti store in Hämeenlinna and two
Intersport stores in Russia were closed.
Numbers of stores as at 30 June 2014 2013
K-citymarket, home and speciality goods* 81 81
Anttila department stores* 30 31
Kodin1 department stores for interior decoration and home goods* 13 13
Intersport, Finland 63 62
Budget Sport* 11 11
Asko and Sotka 87 84
Musta Pörssi* 6 6
Kookenkä* 46 48
Anttila, Baltics* 3 3
Intersport, Russia 18 20
Asko and Sotka, Baltics* 10 10
*incl. online stores
Building and home improvement trade
1-6/2014 1-6/2013 4-6/2014 4-6/2013
Net sales, € million 1,317 1,302 736 740
Operating profit excl. non- recurring
items, € million 16.2 2.9 26.6 19.5
Operating margin excl. non-recurring
items, % 1.2 0.2 3.6 2.6
Capital expenditure,
€ million 27.3 21.6 15.3 9.1
Net sales,
€ million 1-6/2014 Change, % 4-6/2014 Change, %
Rautakesko, Finland 625 +1.6 336 +0.5
K-rauta, Sweden 100 -3.0 62 -5.1
Byggmakker, Norway 220 -7.5 120 -12.0
K-rauta, Estonia 36 +17.1 22 +17.5
K-rauta, Latvia 25 +6.3 15 +7.5
Senukai, Lithuania 137 +20.5 80 +20.0
K-rauta, Russia 118 -8.1 68 -10.9
OMA, Belarus 57 +14.4 34 +14.7
Total 1,317 +1.2 736 -0.6
January-June 2014
In the building and home improvement trade, the net sales for January-June were
€1,317 million (€1,302 million), up 1.2%. In terms of local currencies, the net
sales growth in the building and home improvement trade was 5.8%. Net sales
increased in all operating countries in terms of local currencies.
In Finland, the net sales for January-June were €625 million (€615 million), an
increase of 1.6%. The building and home improvement products contributed €427
million to the net sales in Finland, an increase of 2.5%. The agricultural
supplies trade contributed €198 million to the net sales, down 0.4%.
The retail sales of the K-rauta and Rautia chains in Finland grew by 1.7% to
€489 million (VAT 0%). The sales of Rautakesko B2B Service increased by 3.1%.
The K-Group's sales of building and home improvement products in Finland
increased by a total of 1.9% and the total market (VAT 0%) is estimated to have
fallen by 1-2% (Kesko's own estimate). The retail sales of the K-maatalous chain
were €238 million (VAT 0%), up 0.6%.
In January-June, the net sales from foreign operations of the building and home
improvement trade were €692 million (€686 million), an increase of 0.8%. In
terms of local currencies, the net sales from foreign operations increased by
9.5%. In Sweden, net sales in kronas were up by 1.8% and in Norway net sales in
krones were up by 1.8%. In Russia, net sales in roubles increased by 8.2%.
Foreign operations contributed 52.5% (52.7%) to the net sales of the building
and home improvement trade.
In January-June, the operating profit excluding non-recurring items of the
building and home improvement trade was €16.2 million (€2.9 million), up €13.3
million compared to the previous year. Due to sales increase and enhancement
measures, profit performance was clearly positive. The financial performance
improved especially in foreign operations. Operating profit was €18.8 million
(€2.0 million).
In January-June, the capital expenditure of the building and home improvement
trade totalled €27.3 million (€21.6 million), of which 80.0% (47.3%) abroad.
Capital expenditure in store sites represented 82.6% of total capital
expenditure.
April-June 2014
In the building and home improvement trade, the net sales for April-June were
€736 million (€740 million), down 0.6%. In terms of local currencies, the net
sales growth in the building and home improvement trade was 3.7%.
In Finland, net sales were €336 million (€334 million), an increase of 0.5%. The
building and home improvement products contributed €230 million to the net sales
in Finland, an increase of 1.5%. The agricultural supplies trade contributed
€106 million to the net sales, down 1.6%. In April-June, the retail sales of the
K-rauta and Rautia chains in Finland were down by 0.2% to €310 million (VAT
0%). The sales of Rautakesko B2B Service remained at the previous year's level.
The retail sales of the K-maatalous chain were €146 million (VAT 0%), up 1.9%.
The net sales from foreign operations of the building and home improvement trade
were €400 million (€406 million), a decrease of 1.5%. In terms of local
currencies, the net sales from foreign operations increased by 6.2%. In Sweden,
net sales in kronas remained at the previous year's level. In Norway, net sales
in krones were down by 4.7%. In Russia, net sales in roubles increased by 3.8%.
Foreign operations contributed 54.3% (54.8%) to the net sales of the building
and home improvement trade.
In April-June, the operating profit excluding non-recurring items of the
building and home improvement trade was €26.6 million (€19.5 million), up €7.1
million compared to the previous year due to sales increase and enhancement
measures. Operating profit was €28.6 million (€18.0 million).
The capital expenditure of the building and home improvement trade was €15.3
million (€9.1 million), of which 82.9% (44.7%) abroad.
In April, Lithuania's 19th building and home improvement store was opened in
Siauliai.
Numbers of stores as at 30 June 2014 2013
K-rauta* 42 42
Rautia* 97 99
K-maatalous* 82 83
K-rauta, Sweden 20 21
Byggmakker, Norway 86 90
K-rauta, Estonia 8 8
K-rauta, Latvia 8 8
Senukai, Lithuania 19 17
K-rauta, Russia 13 15
OMA, Belarus 10 9
*in 2014, 46 Rautia stores also operated as K-maatalous stores
in 2013, 1 K-rauta store and 47 Rautia stores also operated as K-maatalous
stores
Car and machinery trade
1-6/2014 1-6/2013 4-6/2014 4-6/2013
Net sales, € million 556 551 283 301
Operating profit excl. non-recurring
items, € million 19.1 20.8 10.9 13.0
Operating margin excl. non-recurring
items, % 3.4 3.8 3.8 4.3
Capital expenditure, € million 9.4 8.7 6.5 4.8
Net sales, € million 1-6/2014 Change, % 4-6/2014 Change, %
VV-Auto 410 +3.4 196 -4.0
Konekesko 146 -5.7 87 -10.3
Total 556 +0.9 283 -6.0
January-June 2014
In January-June, the net sales of the car and machinery trade were €556 million
(€551 million), up 0.9%.
VV-Auto's net sales for January-June were €410 million (€397 million), an
increase of 3.4%. In January-June, the combined market performance of first time
registered passenger cars and vans was +4.6%.
In January-June, the combined market share of passenger cars and vans imported
by VV-Auto was 21.0% (21.1%). Volkswagen was the market leader in passenger cars
and vans.
Konekesko's net sales for January-June were €146 million (€154 million), down
5.7% compared to the previous year. Net sales in Finland were €92 million, down
3.6%. The net sales from Konekesko's foreign operations were €54 million, down
8.8%. The net sales decline was especially impacted by the weak market
performance of the agricultural machinery trade in Finland and the Baltic
countries.
In January-June, the operating profit excluding non-recurring items of the car
and machinery trade was €19.1 million (€20.8 million), down €1.7 million
compared to the previous year. Profitability in the car trade remained at a good
level despite the weakened market situation.
The operating profit for January-June was €19.1 million (€20.8 million).
The capital expenditure of the car and machinery trade in January-June was €9.4
million (€8.7 million).
April-June 2014
In April-June, the net sales of the car and machinery trade were €283 million
(€301 million), down 6.0%.
VV-Auto's net sales for April-June were €196 million (€204 million), a decrease
of 4.0%. In April-June, the combined market share of passenger cars and vans
imported by VV-Auto was 21.2% (22.1%).
Konekesko's net sales for April-June were €87 million (€97 million), down 10.3%
compared to the previous year.
In April-June, the operating profit excluding non-recurring items of the car and
machinery trade was €10.9 million (€13.0 million), down €2.1 million compared to
the previous year. Profitability was negatively impacted by the decrease in
sales. The operating profit for April-June was €10.9 million (€13.0 million).
The capital expenditure of the car and machinery trade in April-June was €6.5
million (€4.8 million).
Numbers of stores as at 30 June 2014 2013
VV-Auto, retail trade 10 10
Konekesko 1 1
Changes in the Group composition
No significant changes took place in the Group composition during the reporting
period.
Shares, securities market and Board authorisations
At the end of June 2014, the total number of Kesko Corporation shares was
100,019,752, of which 31,737,007, or 31.7%, were A shares and 68,282,745, or
68.3%, were B shares. At 30 June 2014, Kesko Corporation held 1,002,735 own B
shares as treasury shares. These treasury shares accounted for 1.47% of the
number of B shares and 1.00% of the total number of shares, and 0.26% of votes
carried by all shares of the company. The total number of votes carried by all
shares was 385,652,815. Each A share carries ten (10) votes and each B share one
(1) vote. The company cannot vote with own shares held as treasury shares and no
dividend is paid on them. At the end of June 2014, Kesko Corporation's share
capital was €197,282,584. During the reporting period, the number of B shares
was increased three times to account for the shares subscribed for with the
options based on the 2007 option scheme. The increases were made on 10 February
2014 (85,067 B shares), 30 April 2014 (62,778 B shares) and 4 June 2014 (39,214
B shares) and announced in stock exchange notification on the same days. The
shares subscribed for were listed for public trading on NASDAQ OMX Helsinki
(Helsinki Stock Exchange) with the old B shares on 11 February 2014, 2 May 2014
and 5 June 2014. The subscription price of €2,148,641.76 received by the company
was recorded in the company's reserve of invested non-restricted equity.
The price of a Kesko A share quoted on NASDAQ OMX Helsinki was €26.80 at the end
of 2013, and €27.73 at the end of June 2014, representing an increase of 3.5%.
Correspondingly, the price of a B share was €26.80 at the end of 2013, and
€28.87 at the end of June 2014, representing an increase of 7.7%. In January-
June, the highest A share price was €32.31 and the lowest was €26.39. For B
share, they were €33.33 and €26.15 respectively. In January-June, the Helsinki
stock exchange (OMX Helsinki) All-Share index was up 3.3% and the weighted OMX
Helsinki CAP index 3.8%. Correspondingly, the Retail Index was up 4.9%.
At the end of June 2014, the market capitalisation of A shares was €880 million,
while that of B shares was €1,942 million, excluding the shares held by the
parent company. The combined market capitalisation of A and B shares was €2,822
million, an increase of €162 million from the end of 2013. In January-June
2014, a total of 1.0 (0.5) million A shares were traded on the Helsinki stock
exchange, up 94.8%. The exchange value of A shares was €32 million. The total
number of B shares traded was 25.3 (22.2) million, up 14.3%. The exchange value
of B shares was €770 million. In terms of volumes, the Helsinki stock exchange
accounted for 66% of Kesko A and B share trading in January-June 2014. Kesko
shares were also traded on multilateral trading facilities, the most
significant of which were BATS Chi-X with 26% and Turquoise with 8% of the
trades (source: Fidessa).
The company operated the 2007 option scheme for management and other key
personnel, under which the share subscription period of 2007C share options ran
from 1 April 2012 to 30 April 2014 (subscription period has expired). The share
options were included on the official list of the Helsinki stock exchange from
the beginning of the share subscription periods. A total of 94,859 2007C share
options were traded during the reporting period at a total value of €1,688,524.
The option scheme has expired and the share subscription periods of the
2007A, 2007B and 2007C share options under the option scheme and their trading
on the official list have ended.
The Board has the authority, granted by the Annual General Meeting of 16 April
2012 and valid until 30 June 2015, to issue a total maximum of 20,000,000 new B
shares. The shares can be issued against payment for subscription by
shareholders in a directed issue in proportion to their existing shareholdings
regardless of whether they consist of A or B shares, or, deviating from the
shareholder's pre-emptive right, in a directed issue, if there is a weighty
financial reason for the company, such as using the shares to develop the
company's capital structure, and financing possible acquisitions, investments or
other arrangements within the scope of the company's business operations. The
amount paid for the shares is recognised in the reserve of invested non-
restricted equity. The authorisation also includes the Board's authority to
decide on the share subscription price, the right to issue shares against non-
cash consideration and the right to make decisions on other matters concerning
share issuances.
In addition, the Board had the authority, granted by the Annual General Meeting
of 8 April 2013 and valid until 30 September 2014, to decide on the acquisition
of a maximum of 500,000 own B shares. Kesko's Board of Directors made the
decision in February 2014 to start acquiring own B shares. The decision to start
acquisition was announced in a stock exchange release on 4 February 2014 and
acquisition was started on 18 February 2014. The maximum amount of own B shares
the Board was authorised to acquire, 500,000, was purchased by 31 March 2014,
and the authorisation is thus fully used. Each purchase of own shares was
announced in a stock exchange release at the end of the day on which the
purchase was made. At 30 June 2014, Kesko Corporation held 1,002,735 own B
shares as treasury shares. In addition, the Board has the authority, valid until
30 June 2017, to decide on the issuance of the maximum of 1,000,000 own B shares
held as treasury shares by the company.
On 4 February 2014, the Board decided to grant own B shares held by the company
as treasury shares to persons included in the target group of the 2013 vesting
period, based on the authority to issue own shares granted by the Annual General
Meeting held on 8 April 2013, and the fulfilment of the vesting criteria of the
2013 vesting period of Kesko's three-year share-based compensation plan. The
issuance of a total of 50,520 own B shares, referred to above, was announced in
a stock exchange release on 24 March 2014 and on 25 March 2014. In January-June,
a total of 4,271 shares granted based on the fulfilment of the vesting criteria
of the 2011-2013 vesting periods were returned to the company in accordance with
the terms and conditions of the share-based compensation plan. The shares
returned during the reporting period were announced in a stock exchange
notification on 7 February 2014 and 23 May 2014. Further information on the
Board's authorisations is available at www.kesko.fi.
Based on the share-based compensation plan 2014-2016 decided by the Board, a
total of 600,000 own B shares held by the company as treasury shares can be
granted within a period of 3 years based on the fulfilment of the vesting
criteria. The Board will separately decide on the vesting criteria and target
group for each vesting period. The share-based compensation plan was announced
in a stock exchange release on 4 February 2014.
At the end of June 2014, the number of shareholders was 40,402, which is 2,407
less than at the end of 2013. At the end of June, foreign ownership of all
shares was 29%. At the end of June, foreign ownership of B shares was 42%.
Flagging notifications
Kesko Corporation did not receive flagging notifications during the reporting
period.
Key events during the reporting period
Kesko Corporation's Board of Directors has appointed Mikko Helander, Master of
Science (Technology), as Kesko Corporation's Managing Director and Kesko Group's
President and Chief Executive Officer as from 1 January 2015. Mikko Helander (b.
1960) will join Kesko as Kesko Corporation's Deputy Managing Director and Member
of the Group Management Board on 1 December 2014 at the latest and as Kesko
Group's President and CEO starting from 1 January 2015.Starting from 1 January
2015, President and CEO Matti Halmesmäki will continue as a special advisor and
in special assignments to be agreed with Kesko's Board of Directors until 31 May
2015 when he will retire. (Stock exchange release on 28 May 2014)
As a result of the employee cooperation negotiations to improve Anttila's
profitability, the decision was made to close eight Anttila department stores
operating in leased premises. The department stores to be closed have a total of
some 210 employees. In addition, 25 full-time equivalents will be reduced in
other Anttila department stores. Employee co-operation negotiations were also
started in the Kodin1 chain and after their completion, the decision was made to
close four Kodin1 department stores in the Kodin1 department store chain.
Employee cooperation negotiations were also started in the central units of
Anttila Oy and K-citymarket Oy. (Stock exchange release on 31 March 2014)
Kestra Kiinteistöpalvelut Oy, a subsidiary of Kesko Corporation, announced that
it would not participate in further financing of Fennovoima Ltd's Hanhikivi 1
nuclear power project due to the related financial, contractual and schedule
uncertainties. (Stock exchange release on 27 March 2014)
Resolutions of the 2014 Annual General Meeting and decisions of the Board's
organisational meeting
Kesko Corporation's Annual General Meeting, held on 7 April 2014, adopted the
financial statements for 2013 and discharged the Board members and the Managing
Director from liability. The General Meeting also resolved, as proposed by the
Board, to distribute €1.40 per share as dividends, or a total of
€138,484,759.00. The dividend pay date was 17 April 2014. The General Meeting
resolved that the number of Board members be unchanged at seven. In addition,
the General Meeting resolved to leave the Board members' fees and the basis for
reimbursement of expenses unchanged. The term of office of each of the seven (7)
Board members elected by the Annual General Meeting on 16 April 2012, namely Esa
Kiiskinen (Ch.), Seppo Paatelainen (Deputy Ch.), Ilpo Kokkila, Tomi Korpisaari,
Maarit Näkyvä, Toni Pokela and Virpi Tuunainen, will expire at the close of the
2015 Annual General Meeting in accordance with Kesko's Articles of Association.
The General Meeting elected PricewaterhouseCoopers Oy as the company's auditor,
with APA Johan Kronberg as the auditor with principal responsibility. The
General Meeting also approved the Board's proposal that it be authorised to
decide on donations in a total maximum of €300,000 for charitable or
corresponding purposes until the Annual General Meeting to be held in 2015.
The organisational meeting of the company's Board of Directors, held after the
Annual General Meeting, decided to keep the compositions of the Audit Committee
and the Remuneration Committee unchanged.
The resolutions of the Annual General Meeting and the decisions of the Board's
organisational meeting were announced in more detail in stock exchange releases
on 7 April 2014.
Responsibility
Kesko's revised, electronic Corporate Responsibility Report for 2013 was
published at the end of April at yhteiskuntavastuu2013.kesko.fi and in English
at corporateresponsibility2013.kesko.fi.
Kesko gave out more than 16,000 Pirkka Fairtrade roses to mothers at the
Mother's Day celebration in Helsinki and in maternity wards across Finland.
K-food stores and K-citymarkets will join the Red Nose Day campaign in 2014.
During the autumn to come, the chains' stores across Finland will sell Red Nose
Day products that support the fundraising.
For the 27th time, Kesko's Board awarded scholarships to talented young athletes
and art students. The total amount of the scholarships awarded in May was
42,000 euros.
Kesko granted Fair Play scholarships to 3,000 young people ending their primary
education as rewards for exemplary promotion of peace and tolerance at school.
Risk management
Kesko Group has an established and comprehensive risk management process. Risks
and their management responses are regularly assessed within the Group and
reported to the Group management. Kesko's risk management and risks associated
with business operations are described in more detail on Kesko's website in the
Corporate Governance section.
The most significant near-future risks in Kesko's business operations are
associated with the general development of the economic situation and consumer
confidence, as well as their impact on Kesko's sales and profit. Because of the
continuing crisis in Ukraine, the country risks of Russia remain at a higher
level than before. In other respects, no material change is estimated to have
taken place in 2014 in the risks described in the report by the Board of
Directors and financial statements for 2013 and the risks described on Kesko's
website.
The risks and uncertainties related to economic development are described in the
section future outlook of this release.
Future outlook
Estimates of the future outlook for Kesko Group's net sales and operating profit
excluding non-recurring items are given for the 12 months following the
reporting period (7/2014-6/2015) in comparison with the 12 months preceding the
reporting period (7/2013-6/2014).
Future prospects for the general economic situation and consumer demand continue
to be characterised by significant uncertainty in Kesko's operating area. Due to
the weakened economic situation and the decline in consumers' purchasing power,
demand in the trading sector is expected to remain weak.
Kesko Group's net sales and operating profit excluding non-recurring items for
the next 12 months are expected to remain at the level of the preceding 12
months, unless the overall consumer demand weakens significantly.
Helsinki, 21 July 2014
Kesko Corporation
Board of Directors
The information in the interim report release is unaudited.
Further information is available from Jukka Erlund, Senior Vice President, Chief
Financial Officer, telephone +358 105 322 113 and Eva Kaukinen, Vice President,
Group Controller, telephone +358 105 322 338. A Finnish-language webcast from
the media and analyst briefing on the interim report can be accessed at
www.kesko.fi at 10:00. An English-language web conference on the interim report
will be held today at 14:30 (Finnish time). The web conference login is
available at www.kesko.fi.
Kesko Corporation's interim report for January-September will be released on 22
October 2014. In addition, Kesko Group's sales figures are published each month.
News releases and other company information are available on Kesko's website at
www.kesko.fi.
KESKO CORPORATION
Merja Haverinen
Vice President, Group Communications
ATTACHMENTS: TABLES SECTION
Accounting policies
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Group's performance indicators
Net sales by segment
Operating profit by segment
Operating profit excl. non-recurring items by segment
Operating margin excl. non-recurring items by segment
Capital employed by segment
Return on capital employed excl. non-recurring items by segment
Capital expenditure by segment
Segment information by quarter
Change in tangible and intangible assets
Related party transactions
Fair value hierarchy of financial assets and liabilities
Personnel average and at the end of the reporting period
Group's commitments
Calculation of performance indicators
K-Group's retail and B2B sales
DISTRIBUTION
NASDAQ OMX Helsinki
Main news media
www.kesko.fi
TABLES SECTION:
Accounting policies
This interim report has been prepared in accordance with the IAS 34 standard.
The interim report has been prepared in accordance with the same accounting
principles as the annual financial statements for 2013, with the exception of
the following changes due to the adoption of new and revised IFRS standards and
IFRIC interpretations:
-IFRS 10 Consolidated financial statements
-IFRS 11 Joint arrangements
-IFRS 12 Disclosure of interests in other entities
The above amendments to standards and interpretations do not have a material
impact on the reported income statement and statement of financial position. The
amendment will have an impact on the notes to the financial statements.
Consolidated income statement
(€ million), condensed
1-6/ 1-6/ 4-6/ 4-6/ 1-12/
2014 2013 Change% 2014 2013 Change% 2013
Net sales 4,499 4,580 -1.8 2,371 2,420 -2.1 9,315
Cost of goods sold -3,895 -3,965 -1.8 -2,046 -2,090 -2.1 -8,034
Gross profit 604 615 -1.7 325 331 -1.7 1,281
Other operating income 351 367 -4.2 186 194 -3.8 734
Staff cost -314 -310 1.3 -158 -157 0.9 -611
Depreciation and impairment
charges -77 -76 0.7 -38 -40 -3.7 -153
Other operating expenses -507 -498 1.8 -245 -251 -2.1 -1,003
Operating profit 56 96 -41.5 69 77 -9.9 248
Interest income and other
finance income 9 11 -15.4 7 7 -4.7 20
Interest expense and other
finance costs -8 -10 -21.9 -4 -5 -25.3 -20
Exchange differences 0 -3 -91.2 -1 -2 -47.4 -6
Investments accounted for
using the equity method 0 0 (..) 0 0 -30.3 0
Profit before tax 57 93 -38.7 71 77 -7.5 242
Income tax -15 -28 -46.9 -18 -24 -25.5 -58
Net profit for the period 42 65 -35.1 54 54 0.4 185
Attributable to
Owners of the parent 39 61 -35.9 50 50 0.8 173
Non-controlling
interests 3 4 -20.8 4 4 -5.2 12
Earnings per share (€)
for profit attributable to
equity holders of the parent
Basic 0.39 0.62 -36.4 0.51 0.51 0.1 1.75
Diluted 0.39 0.62 -36.3 0.51 0.50 0.3 1.75
Consolidated statement
of comprehensive income (€
million)
1-6/ 1-6/ Change% 4-6/ 4-6/ Change% 1-12/
2014 2013 2014 2013 2013
Net profit for the period 42 65 -35.1 54 54 0.4 185
Items that will not be
reclassified subsequently to
profit or loss
Actuarial gains/losses -2 - - -10 - - 12
Items that may be
reclassified subsequently to
profit or loss
Exchange differences on
translating foreign
operations -6 -7 -6.8 0 -10 -96.0 -14
Adjustment for hyperinflation 3 2 84.8 2 0 (..) 3
Cash flow hedge revaluation 0 -2 (..) 2 -2 (..) -4
Revaluation of available-for-
sale financial assets -3 -4 -31.4 -3 -4 -20.3 -5
Other items 0 0 -3.2 0 0 -3.2 0
Total other comprehensive
income for the period, net of
tax -8 -12 -35.7 -10 -16 -37.4 -8
Total comprehensive income
for the period 34 53 -35.0 44 37 16.8 177
Attributable to
Owners of the parent 31 48 -36.6 39 34 15.0 166
Non-controlling
interests 4 5 -17.6 4 3 36.0 11
(..) Change over 100%
Consolidated statement of financial
position (€ million), condensed
30.6.2014 30.6.2013 Change % 31.12.2013
ASSETS
Non-current assets
Tangible assets 1,658 1,665 -0.4 1,651
Intangible assets 195 189 3.2 189
Investments accounted for using the
equity method and other
financial assets 106 105 0.8 104
Loans and receivables 14 87 -84.2 15
Pension assets 170 155 9.3 170
Total 2,143 2,202 -2.7 2,131
Current assets
Inventories 828 807 2.6 797
Trade receivables 733 790 -7.1 617
Other receivables 160 183 -12.3 136
Financial assets at fair value
through profit or loss 154 115 33.4 171
Available-for-sale financial assets 202 271 -25.4 398
Cash and cash equivalents 105 88 19.5 112
Total 2,182 2,253 -3.1 2,231
Non-current assets held for sale 1 1 -1.7 1
Total assets 4,326 4,455 -2.9 4,362
30.6.2014 30.6.2013 Change % 31.12.2013
EQUITY AND LIABILITIES
Equity 2,164 2,156 0.4 2,279
Non-controlling interests 77 67 15.3 73
Total equity 2,241 2,223 0.8 2,352
Non-current liabilities
Interest-bearing liabilities 348 370 -6.0 355
Non-interest-bearing liabilities 8 12 -30.5 10
Deferred tax liabilities 63 81 -21.4 68
Pension obligations 2 2 10.6 2
Provisions 28 20 41.7 17
Total 450 484 -7.1 452
Current liabilities
Interest-bearing liabilities 190 217 -12.1 199
Trade payables 934 1,015 -7.9 825
Other non-interest-bearing liabilities 465 482 -3.5 494
Provisions 45 35 28.7 38
Total 1,635 1,748 -6.5 1,557
Total equity and liabilities 4,326 4,455 -2.9 4,362
Consolidated statement of changes in equity (€ million)
Share Res- Cur- Re- Trea- Re- Non- Total
capi- erves rency valu- sury tained cont-
tal trans- ation sha-res earn- rol-
lation reser-ve ings ling
differ- inte-
ences rests
Balance at
1.1.2013 197 442 -2 10 -19 1,578 67 2,272
Shares
subscribed
with options 16 16
Treasury shares
Share-based
payments 1 0 1
Dividends -118 -5 -122
Other
changes 0 3 3
Net profit for
the period 61 4 65
Other comprehen-
sive income
Items that will
not be
reclassified
subsequently to
profit or loss
Actuarial
gains/losses
Items that may be
reclassified
subsequently to
profit or loss
Exchange
differences
on translating
foreign
operations 0 -6 -1 -7
Adjustment for
hyperinflation 0 2 2
Cash flow
hedge
revaluation -3 -3
Revaluation of
available- for-
sale financial
assets -4 -4
Others 0 0
Tax relating to
other comprehen-
sive income 1 1
Total other
comprehen-sive
income 0 -6 -6 0 1 -12
Balance at
30.6.2013 197 457 -8 3 -18 1,525 67 2,223
Balance at
1.1.2014 197 461 -13 1 -18 1,651 73 2,352
Shares
subscribed
with options 2 2
Treasury shares -16 -16
Share-
based payments 2 2
Dividends -138 -138
Other changes 0 0 5 0 5
Net profit for
the period 39 3 42
Other comprehen-
sive income
Items that will
not be
reclassified
subsequently to
profit or loss
Actuarial
gains/losses -2 -2
Items that may be
reclassified
subsequently to
profit or loss
Exchange
differences
on translating
foreign
operations 0 -4 -2 -6
Adjustment for
hyperinflation 0 3 3
Cash flow
hedge
revaluation 0 0
Revaluation of
available- for-
sale financial
assets -3 -3
Others 0 0
Tax relating to
other comprehen-
sive income 0 0
Total other
comprehen-sive
income 0 -4 -2 -2 1 -8
Balance at
30.6.2014 197 463 -18 -1 -32 1,555 77 2,241
Consolidated statement of cash flows (€ million), condensed
1-6/ 1-6/ Change% 4-6/ 4-6/ Change% 1-12/
2014 2013 2014 2013 2013
Cash flows from operating activities
Profit before tax 57 93 -38.7 71 77 -7.5 242
Planned depreciation 76 75 1.4 37 38 -2.4 152
Finance income and costs -1 3 (..) -2 0 (..) 6
Other adjustments 19 -5 (..) -1 -4 -76.0 8
Change in working capital
Current non-interest-bearing
operating receivables,
increase (-)/decrease (+) -139 -117 18.7 19 28 -29.6 89
Inventories,
increase (-)/decrease (+) -35 0 (..) 13 43 -69.6 3
Current non-interest-bearing
liabilities, increase (+)/
decrease(-) 85 170 -50.1 5 83 -94.5 -1
Financial items and tax -29 -33 -13.9 -14 -20 -31.6 -85
Net cash from operating activities 34 186 -81.8 129 244 -47.3 414
Cash flows from investing activities
Investing activities -98 -94 4.4 -53 -49 6.7 -174
Sales of fixed assets 6 14 -55.1 4 12 -62.0 22
Increase in non-current receivables -1 0 (..) 0 0 66.3 0
Net cash used in investing activities -92 -80 15.6 -49 -38 27.9 -152
Cash flows from financing activities
Interest-bearing liabilities, increase
(+)/decrease (-) -12 -19 -35.3 -17 -41 -58.6 -47
Current interest-bearing
receivables, increase (-)/
decrease (+) -1 2 (..) 2 1 9.3 78
Dividends paid -138 -118 17.5 -138 -118 17.5 -122
Equity increase 2 16 -86.3 1 15 -92.5 20
Acquisition of own shares -16 - - -1 - - -
Short-term money market investments,
increase (-)/ decrease (+) 14 0 (..) 29 -21 (..) -91
Other items 5 -1 (..) 2 1 88.1 5
Net cash used in financing activities -148 -120 23.0 -122 -163 -24.7 -159
Change in cash and cash equivalents -206 -14 (..) -43 43 (..) 103
Cash and cash
equivalents and current
portion of available-for-sale
financial assets at 1 Jan. 453 352 28.7 288 294 -2.1 352
Currency translation difference
adjustment and revaluation -1 -1 10.9 0 -1 (..) -2
Cash and cash
equivalents and current
portion of available-for-sale
financial assets at 30 Jun. 246 337 -27.0 246 337 -27.0 453
(..) Change over 100%
Group's performance indicators
1-6/2014 1-6/2013 Change, pp 1-12/2013
Return on capital employed, % 4.7 7.7 -3.0 10.2
Return on capital employed, %,
moving 12 mo 8.7 8.8 -0.1 10.2
Return on capital employed, excl.
non-recurring items, % 7.3 7.1 0.2 9.8
Return on capital employed excl.
non-recurring items, %, moving 12 mo 9.9 9.3 0.7 9.8
Return on equity, % 3.7 5.7 -2.1 8.0
Return on equity, %, moving 12 mo 7.3 6.5 0.8 8.0
Return on equity, excl. non-
recurring items, % 5.7 5.2 0.5 7.7
Return on equity excl. non-recurring
items, %, moving 12 mo 8.3 7.1 1.1 7.7
Equity ratio, % 52.3 50.5 1.8 54.5
Gearing, % 3.5 5.1 -1.6 -5.4
Change %
Capital expenditure, € million 99.1 89.5 10.7 171.5
Capital expenditure, % of net sales 2.2 2.0 12.6 1.8
Earnings per share, basic, € 0.39 0.62 -36.4 1.75
Earnings per share, diluted, € 0.39 0.62 -36.3 1.75
Earnings per share excl. non-
recurring items, basic, € 0.64 0.56 13.2 1.68
Cash flow from operating activities, 414
€ million 34 186 -81.8
Cash flow from investing activities, -152
€ million -92 -80 15.6
Equity per share, € 21.86 21.79 0.3 22.96
Interest-bearing net debt 78 113 -31.2 -126
Diluted number of shares, average
for the reporting period 99,365 98,880 0.5 99,136
Personnel, average 19,935 19,373 2.9 19,489
Group's performance
indicators 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/
by quarter 2013 2013 2013 2013 2014 2014
Net sales, € million 2,159 2,420 2,374 2,362 2,129 2,371
Change in net sales, % -6.9 -1.6 -3.1 -3.9 -1.4 -2.1
Operating profit, €
million 19.2 77.0 84.1 68.0 -13.0 69.4
Operating margin, % 0.9 3.2 3.5 2.9 -0.6 2.9
Operating profit excl.
non- recurring items, €
million 18.6 69.8 83.6 66.8 19.1 67.6
Operating margin
excl. non-recurring
items, % 0.9 2.9 3.5 2.8 0.9 2.9
Finance income/costs,
€ million -3.3 0.4 -2.6 -0.4 -1.6 2.2
Profit before tax, €
million 15.8 77.2 81.5 67.9 -14.4 71.4
Profit before tax, % 0.7 3.2 3.4 2.9 -0.7 3.0
Return on capital
employed, % 3.1 12.3 14.2 11.5 -2.2 11.5
Return on capital
employed, excl. non-
recurring items, % 3.0 11.1 14.1 11.3 3.2 11.2
Return on equity, % 1.9 9.5 10.2 10.8 -2.0 9.4
Return on equity, excl.
non-recurring items, % 1.8 8.6 10.1 10.6 2.3 9.1
Equity ratio, % 51.7 50.5 52.9 54.5 53.2 52.3
Capital expenditure,
€ million 41.5 48.1 35.4 46.6 43.4 55.7
Earnings per share,
diluted, € 0.11 0.50 0.53 0.60 -0.11 0.51
Equity per share, € 22.62 21.79 22.39 22.96 22.83 21.86
Segment information
Net sales by segment 1-6/ 1-6/ Change 4-6/ 4-6/ Change 1-12/
(€ million) 2014 2013 % 2014 2013 % 2013
Food trade, Finland 2,061 2,121 -2.8 1,079 1,085 -0.5 4,316
Food trade, other countries* 51 22 (..) 26 14 90.9 71
Food trade total 2,112 2,144 -1.5 1,106 1,099 0.6 4,387
- of which intersegment trade 86 83 3.0 41 41 0.9 172
Home and speciality goods trade,
Finland 585 649 -9.9 281 314 -10.7 1,424
Home and speciality goods trade,
other
countries* 15 17 -13.1 7 7 -3.6 33
Home and speciality goods trade
total 600 667 -10.0 288 322 -10.5 1,457
- of which intersegment trade 7 8 -16.5 4 4 -13.2 17
Building and home improvement trade,
Finland 625 615 1.6 336 334 0.5 1,173
Building and home improvement trade,
other countries* 692 686 0.8 400 406 -1.5 1,435
Building and home improvement trade
total 1,317 1,302 1.2 736 740 -0.6 2,607
- of which intersegment trade 0 0 -75.1 0 0 (..) -1
Car and machinery trade, Finland 502 492 2.1 252 261 -3.4 921
Car and machinery trade, other
countries* 54 59 -9.4 31 41 -23.1 116
Car and machinery trade
total 556 551 0.9 283 301 -6.0 1,037
- of which intersegment trade 1 1 1.3 0 0 -0.4 1
Common operations and
eliminations -85 -83 2.9 -42 -41 1.2 -173
Finland total 3,688 3,795 -2.8 1,906 1,953 -2.4 7,661
Other countries total* 812 785 3.4 464 467 -0.7 1,654
Group total 4,499 4,580 -1.8 2,371 2,420 -2.1 9,315
* Net sales in countries other than Finland
(..) Change over 100%
Operating profit by segment (€ 1-6/ 1-6/ 4-6/ 4-6/ 1-12/
million) 2014 2013 Change 2014 2013 Change 2013
Food trade 97.4 103.3 -5.8 52.0 55.1 -3.1 208.0
Home and speciality goods trade -72.0 -23.3 -48.7 -17.6 -5.6 -12.0 -2.1
Building and home improvement trade 18.8 2.0 16.9 28.6 18.0 10.6 24.8
Car and machinery trade 19.1 20.8 -1.7 10.9 13.0 -2.1 33.9
Common operations and eliminations -7.0 -6.4 -0.6 -4.5 -3.4 -1.1 -16.3
Group total 56.3 96.3 -39.9 69.4 77.0 -7.7 248.4
Operating profit excl.
non-recurring items 1-6/ 1-6/ 4-6/ 4-6/ 1-12/
by segment (€ million) 2014 2013 Change 2014 2013 Change 2013
Food trade 99.4 99.0 0.4 52.9 50.8 2.2 203.3
Home and speciality goods trade -41.0 -27.8 -13.2 -18.3 -10.0 -8.2 -8.3
Building and home improvement trade 16.2 2.9 13.3 26.6 19.5 7.1 25.7
Car and machinery trade 19.1 20.8 -1.7 10.9 13.0 -2.1 33.9
Common operations and eliminations -7.0 -6.4 -0.6 -4.5 -3.4 -1.1 -15.8
Group total 86.7 88.4 -1.7 67.6 69.8 -2.1 238.8
Operating margin
excl. non-recurring 1-6/ 1-6/ 4-6/ 4-6/ 1-12/ Moving12 mo
items by segment , % 2014 2013 Change pp 2014 2013 Change pp 2013 6/2014
Food trade 4.7 4.6 0.1 4.8 4.6 0.2 4.6 4.7
Home and speciality
goods trade -6.8 -4.2 -2.7 -6.3 -3.1 -3.2 -0.6 -1.5
Building and home
improvement trade 1.2 0.2 1.0 3.6 2.6 1.0 1.0 1.5
Car and machinery
trade 3.4 3.8 -0.3 3.8 4.3 -0.5 3.3 3.1
Group total 1.9 1.9 0.0 2.9 2.9 0.0 2.6 2.6
Capital employed by Moving 12 mo
segment, cumulative 1-6/ 1-6/ 4-6/ 4-6/ 1-12/ 6/2014
average (€ million) 2014 2013 Change 2014 2013 Change 2013
Food trade 780 842 -62 785 842 -57 821 792
Home and speciality
goods trade 403 478 -76 402 481 -79 445 412
Building and home
improvement trade 723 763 -40 736 769 -33 732 713
Car and machinery
trade 166 164 3 165 160 5 161 160
Common operations and
eliminations 315 258 57 319 259 60 278 306
Group total 2,387 2,504 -118 2,407 2,511 -104 2,438 2,384
Return on capital Moving 12 mo
employed excl. 1-6/ 1-6/ Change pp 4-6/ 4-6/ Change pp 1-12/ 6/2014
non-recurring 2014 2013 2014 2013 2013
items
by segment, %
Food trade 25.5 23.5 2.0 27.0 24.1 2.8 24.8 25.7
Home and
speciality goods
trade -20.4 -11.6 -8.7 -18.2 -8.3 -9.8 -1.9 -5.2
Building and home
improvement trade 4.5 0.8 3.7 14.5 10.1 4.3 3.5 5.5
Car and machinery
trade 23.0 25.4 -2.4 26.4 32.5 -6.1 21.1 20.1
Group total 7.3 7.1 0.2 11.2 11.1 0.1 9.8 9.9
Capital expenditure 1-6/ 1-6/ 4-6/ 4-6/ 1-12/
by segment (€ million) 2014 2013 Change 2014 2013 Change 2013
Food trade 47 44 3 29 27 1 92
Home and speciality goods trade 7 14 -6 4 6 -2 23
Building and home improvement trade 27 22 6 15 9 6 38
Car and machinery trade 9 9 1 7 5 2 15
Common operations and eliminations 8 2 7 1 1 0 4
Group total 99 90 10 56 48 8 171
Segment information by quarter
Net sales by segment 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/
(€ million) 2013 2013 2013 2013 2014 2014
Food trade 1,045 1,099 1,095 1,148 1,007 1,106
Home and speciality goods trade 345 322 351 439 312 288
Building and home improvement trade 562 740 710 596 581 736
Car and machinery trade 249 301 260 226 272 283
Common operations and
eliminations -42 -41 -43 -46 -44 -42
Group total 2,159 2,420 2,374 2,362 2,129 2,371
Operating profit by 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/
segment (€ million) 2013 2013 2013 2013 2014 2014
Food trade 48.2 55.1 56.5 48.3 45.4 52.0
Home and speciality goods trade -17.7 -5.6 -2.1 23.3 -54.5 -17.6
Building and home improvement trade -16.1 18.0 23.9 -1.0 -9.7 28.6
Car and machinery trade 7.8 13.0 9.8 3.3 8.2 10.9
Common operations and
eliminations -3.0 -3.4 -4.0 -5.9 -2.5 -4.5
Group total 19.2 77.0 84.1 68.0 -13.0 69.4
Operating profit excl.
non-recurring items 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/
by segment (€ million) 2013 2013 2013 2013 2014 2014
Food trade 48.2 50.8 56.0 48.3 46.5 52.9
Home and speciality goods trade -17.8 -10.0 -2.2 21.6 -22.7 -18.3
Building and home improvement trade -16.6 19.5 23.9 -1.1 -10.4 26.6
Car and machinery trade 7.8 13.0 9.8 3.3 8.2 10.9
Common operations and
eliminations -3.0 -3.4 -4.0 -5.4 -2.5 -4.5
Group total 18.6 69.8 83.6 66.8 19.1 67.6
Operating margin excl.
non-recurring items 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/
by segment, % 2013 2013 2013 2013 2014 2014
Food trade 4.6 4.6 5.1 4.2 4.6 4.8
Home and speciality goods trade -5.2 -3.1 -0.6 4.9 -7.3 -6.3
Building and home improvement trade -3.0 2.6 3.4 -0.2 -1.8 3.6
Car and machinery trade 3.1 4.3 3.8 1.5 3.0 3.8
Group total 0.9 2.9 3.5 2.8 0.9 2.9
Change in tangible and intangible assets (€ million)
30.6.2014 30.6.2013
Opening net carrying amount 1,840 1,870
Depreciation, amortisation and impairment -77 -76
Investments in tangible and intangible assets 106 90
Disposals -10 -20
Currency translation differences -6 -10
Closing net carrying amount 1,853 1,854
Related party transactions (€ million)
The Group's related parties include its key management (the Board of Directors,
the Managing Director and the Group Management Board) and companies controlled
by them, the Group's subsidiaries, associates as well as Kesko Pension Fund.
The following transactions were carried out with related parties:
1-6/2014 1-6/2013
Sales of goods and services 45 42
Purchases of goods and services 12 11
Other operating income 0 0
Other operating expenses 15 13
Finance costs - 0
30.6.2014 30.6.2013
Receivables 8 8
Liabilities 21 20
Fair value hierarchy of financial assets and liabilities (€ million)
Level Level 2 Level 3 30.6.2014
1
Financial assets at fair value through profit or
loss 14.3 139.5 153.8
Derivative financial instruments at fair value
through profit or loss
Derivative financial assets 2.5 2.5
Derivative financial liabilities 17.0 17.0
Available-for-sale financial assets 61.1 141.0 13.3 215.3
Fair value hierarchy of financial assets and liabilities (€ million)
Level Level 2 Level 3 30.6.2013
1
Financial assets at fair value through profit or
loss 10.0 105.3 115.4
Derivative financial instruments at fair value
through profit or loss
Derivative financial assets 5.7 5.7
Derivative financial liabilities 15.9 15.9
Available-for-sale financial assets 21.8 249.0 6.8 277.6
Level 1 instruments are traded in active markets and their fair values are
directly based on quoted market prices. The fair values of level 2 instruments
are derived from market data. The fair values of level 3 instruments are not
based on observable market data.
Personnel, average and as at 30 June
Personnel average by
segment 1-6/2014 1-6/2013 Change
Food trade 3,412 3,030 381
Home and speciality goods trade 5,585 5,805 -220
Building and home improvement trade 9,257 8,852 404
Car and machinery trade 1,250 1,245 5
Common operations 432 440 -9
Group total 19,935 19,373 562
Personnel at 30 June*
by segment 2014 2013 Change
Food trade 4,035 3,706 329
Home and speciality goods trade 8,111 8,462 -351
Building and home improvement trade 10,520 10,016 504
Car and machinery trade 1,323 1,329 -6
Common operations 504 513 -9
Group total 24,493 24,026 467
*total number incl. part-time employees
Group's commitments (€ million) 30.6.2014 30.6.2013 Change %
Own commitments 206 191 7.8
For associates 65 65 0.0
For others 10 10 4.2
Lease liabilities for machinery and equipment 25 25 -2.4
Lease liabilities for real estate 2,251 2,413 -6.7
Liabilities arising from derivative instruments
(€ million)
Fair value
Values of underlying instruments at 30 June 30.6.2014 30.6.2013 30.6.2014
Interest rate derivatives
Interest rate swaps 101 203 -0.83
Currency derivatives
Forward and future contracts 303 232 -1.05
Option agreements - 4 -
Currency swaps 50 100 -6.28
Commodity derivatives
Electricity derivatives 27 38 -6.31
Calculation of performance indicators
Return on capital employed*, % Operating profit x 100 / (Non-current
assets + Inventories + Receivables +
Other current assets - Non-interest-
bearing liabilities) on average for
the reporting period
Operating profit for prior 12 months x
Return on capital employed, %, moving 12 100 / (Non-current assets +
mo Inventories + Receivables + Other
current assets - Non-interest-bearing
liabilities) on average for 12 months
Operating profit excl. non-recurring
items x 100 / (Non-current assets +
Return on capital employed Inventories + Receivables + Other
excl. non-recurring items*, % current assets - Non-interest-bearing
liabilities) on average for the
reporting period
Operating profit excl. non-recurring
items for prior 12 months x 100 /
Return on capital employed excl. non- (Non-current assets + Inventories +
recurring items, %, moving 12 months Receivables + Other current assets -
Non-interest-bearing liabilities) on
average for 12 months
(Profit/loss before tax - Income tax)
Return on equity*, % x 100 /
Shareholders' equity
(Profit/loss for prior 12 months
Return on equity, %, moving 12 months before tax - Income tax for prior 12
months) x100 / Shareholders' equity
(Profit/loss adjusted for non-
Return on equity excl. recurring items before tax -
non-recurring items*, % Income tax adjusted for the tax effect
of non-recurring items) x 100 /
Shareholders' equity
(Profit/loss for prior 12 months
adjusted for non-recurring items
Return on equity excl. non-recurring before tax - Income tax for prior 12
items, %, moving 12 months months adjusted for the tax effect of
non-recurring items) x 100 /
Shareholders' equity
Shareholders' equity x 100 /
Equity ratio, % (Balance sheet total - Prepayments
received)
(Profit/loss - Non-controlling
Earnings/share, diluted interests) /
Average diluted number of shares
(Profit/loss - Non-controlling
Earnings/share, basic interests) /
Average number of shares
Earnings/share excl. (Profit/loss adjusted for non-
non-recurring items, recurring items - Non-controlling
basic interests) / Average number of shares
Equity attributable to equity holders
Equity/share of the parent /
Basic number of shares at the balance
sheet date
Interest-bearing net liabilities x
Gearing, % 100 / Shareholders' equity
Interest-bearing liabilities - Money
Interest-bearing net debt market investments - Cash and cash
equivalents
* Indicators for return on capital have been annualised.
K-Group's retail and B2B sales, VAT 0% (preliminary data):
1.1.-30.6.2014 1.4.-30.6.2014
K-Group's retail and € million Change,% € million Change,%
B2B sales
K-Group's food trade
K-food stores, Finland 2,256 -2.6 1,167 -1.4
Kespro 377 -2.8 198 -2.1
K-ruoka, Russia 51 (..) 26 90.8
Food trade total 2,684 -1.5 1,391 -0.6
K-Group's home and speciality goods trade
Home and speciality goods stores, Finland 652 -9.2 317 -9.8
Home and speciality goods stores, other
countries 14 -11.4 7 2.5
Home and speciality goods trade total 666 -9.2 324 -9.5
K-Group's building and home improvement
trade
K-rauta and Rautia 489 1.7 310 -0.2
Rautakesko B2B Service 91 3.1 51 0.0
K-maatalous 238 0.6 146 1.9
Finland total 818 1.5 507 0.4
Building and home improvement stores,
other Nordic countries 424 -4.4 250 -7.2
Building and home improvement stores,
Baltic countries 201 18.5 118 18.5
Building and home improvement stores,
other countries 175 -1.8 102 -3.8
Building and home improvement trade total 1,618 1.3 977 -0.3
K-Group's car and
machinery trade
VV-Autotalot 200 2.1 99 -6.1
VV-Auto, import 223 5.6 103 -0.5
Konekesko, Finland 92 -3.6 56 -1.2
Finland total 515 2.5 259 -2.9
Konekesko, other countries 56 -7.7 33 -20.9
Car and machinery trade
total 571 1.4 292 -5.3
Finland total 4,618 -2.3 2,448 -2.4
Other countries total 920 3.5 536 -0.2
Retail and B2B sales
total 5,539 -1.4 2,984 -2.0
(..) Change over 100%
[HUG#1833032]
