KESKO CORPORATION FINANCIAL STATEMENTS RELEASE 10.2.2015 AT 09.00 1(36)
Kesko's financial statements release for the period 1 Jan. 2014 to 31 Dec.
2014: Profitability and balance sheet remained strong, profit was adversely
affected by non-recurring items
Financial performance in brief:
* The Group's net sales for January-December €9,071 million, change -2.6%.
* Operating profit excluding non-recurring items €232.6 million (€238.8
million).
* Earnings per share excluding non-recurring items €1.65 (€1.68).
* Equity ratio 54.5% (54.5%).
* The Board's proposal for dividend is €1.50 per share.
* Kesko Group's net sales for 2015 are expected to equal the level of 2014.
Operating profit excluding non-recurring items for 2015 is expected to equal or
fall slightly short of the level of 2014.
Key performance indicators
1-12/2014 1-12/2013 10-12/2014 10-12/2013
Net sales, € million 9,071 9,315 2,267 2,362
Operating profit excl. non-recurring
items, € million 232.6 238.8 61.9 66.8
Operating profit, € million 151.4 248.4 31.7 68.0
Profit before tax, € million 145.0 242.3 26.4 67.9
Capital expenditure, € million 194.0 171.5 43.2 46.6
Earnings per share, €, diluted 0.97 1.75 0.17 0.60
Earnings per share excl. non-
recurring items, €, basic 1.65 1.68 0.42 0.59
31.12.2014 31.12.2013
Equity ratio, % 54.5 54.5
Equity per share, € 22.05 22.96
President and CEO Mikko Helander:
"As a whole, Kesko's financial performance in 2014 was good despite the
difficult market situation. In the food trade and the car trade, profit remained
at a good level and the building and home improvement trade more than doubled
its operating profit. In the home and speciality goods trade, profitability was
negatively impacted by Anttila's significant losses.
Kesko's financial position remained very strong. Liquid assets totalled around
€600 million at the end of the year and the balance sheet was net debt-free,
which provides an excellent basis for Kesko's development. The Board's dividend
proposal to the General Meeting is €1.50 per share.
Consumer demand is expected to remain weak in Finland also in the current year.
The declined purchasing power is reflected in consumers' choices and price
competition is tough in all product lines. In the Baltic countries and the other
Nordic countries, demand is expected to develop positively. In Russia, the
economic situation and purchasing power will weaken. Kesko Group's net sales for
2015 are expected to equal the level of 2014. Operating profit excluding non-
recurring items for 2015 is expected to equal or fall slightly short of the
level of 2014.
We will respond to the increasing competition in the grocery trade by taking new
measures which will improve our competitiveness. New actions with which to put
an end to Anttila's prolonged loss-making are planned. Preparatory work for the
real estate arrangement continues and the arrangement is expected to be
implemented during the first part of 2015, provided that the terms and
conditions are acceptable to Kesko.
Kesko's strategy work is underway and Kesko will be a more focused and unified
operator in the future. The weak trend in purchasing power in Finland requires
Kesko to be more cost effective. Digital trade and services are a significant
opportunity for Kesko to improve the existing business functions and create new
services. The appointment of Anni Ronkainen as a member of Kesko's Group
Management Board and Chief Digital Officer contribute to this development."
FINANCIAL PERFORMANCE
Net sales and profit for January-December 2014
The Group's net sales for January-December 2014 were €9,071 million, which is
2.6% down on the corresponding period of the previous year (€9,315 million). The
general economic situation and consumer demand remained weak during the
reporting period especially in Finland. In the food trade, net sales decreased
by 1.6%, in the home and speciality goods trade by 9.6% and in the machinery
trade by 12.6%. In the building and home improvement trade, net sales in euros
were at the previous year's level, net sales in local currencies increased by
3.6%. In the car trade, net sales increased by 1.5%. The Group's net sales in
Finland decreased by 3.4% and in the other countries, net sales increased by
0.9% and by 8.2% in local currencies. The weakening of the Russian rouble
impacted net sales performance in euros especially in the building and home
improvement trade. International operations accounted for 18.4% (17.8%) of net
sales.
1-12/2014 Net sales, € Change, % Operating profit Change,
million excl. non- € million
recurring
items, € million
Food trade 4,316 -1.6 202.4 -0.8
Home and speciality
goods trade 1,316 -9.6 -37.4 -29.0
Building and home
improvement trade 2,598 -0.4 57.7 +32.0
Car and machinery
trade 1,011 -2.5 29.6 -4.3
Common operations and
eliminations -171 -0.8 -19.7 -4.0
Total 9,071 -2.6 232.6 -6.2
The operating profit excluding non-recurring items for January-December was
€232.6 million (€238.8 million). Despite the decline in net sales, profitability
remained at a good level due to significant cost savings. The profitability of
the building and home improvement trade improved markedly and remained at a good
level in the food trade and in the car and machinery trade. Profit was
negatively impacted by the sales decrease of the home and speciality goods trade
and especially by Anttila's loss-making business. Operating expenses excluding
non-recurring items decreased by €25.5 million (1.4%).
Operating profit was €151.4 million (€248.4 million). The operating profit
includes €-81.3 million (€9.6 million) of non-recurring items. The non-recurring
items include a restructuring provision recognised for the reduction of the
Anttila department store network and an impairment charge on fixed assets
related to the integration of K-citymarket non-food with Anttila, a total of
€46.8 million. In addition, the non-recurring items include a restructuring
provision of €5.2 million related to changes in the retail business of
Byggmakker in Norway, €4.2 million of personnel reduction costs related to the
change in Kesko's divisional structure and a €21.0 million impairment charge on
property, related to the renovation of Kesko's main office building. The non-
recurring items for the comparative period included €9.4 million of gains on the
disposal of properties.
The Group's profit before tax for January-December was €145.0 million (€242.3
million).
The Group's earnings per share were €0.97 (€1.75). The Group's equity per share
was €22.05 (€22.96).
In January-December, the K-Group's (i.e. Kesko's and the chain stores') retail
and B2B sales (VAT 0%) were €11,305 million, down 2.4% compared to the previous
year. The K-Plussa customer loyalty programme gained 68,568 new households in
2014. At the end of December, there was 2.3 million K-Plussa households and 3.6
million K-Plussa cardholders.
Net sales and profit for October-December 2014
The Group's net sales for October-December 2014 were €2,267 million, which is
4.0% down on the corresponding period of the previous year (€2,362 million). The
decrease in net sales is mainly attributable to the decline in the net sales of
the home and speciality goods trade and the machinery trade. In Finland, net
sales were down 4.7% and 0.3% in the other countries. The net sales of the food
trade decreased by 2.5%. The net sales performance of the building and home
improvement trade in euros (-1.9%) was impacted by the weakening of the exchange
rate of the Russian rouble. In local currencies, the net sales of the building
and home improvement trade were up 3.3%. International operations accounted for
17.1% (16.5%) of the Group's net sales.
10-12/2014 Net sales, € Change, % Operating profit Change, €
million excl. non- million
recurring
items, € million
Food trade 1,119 -2.5 46.7 -1.6
Home and speciality
goods trade 393 -10.4 11.0 -10.6
Building and home
improvement trade 585 -1.9 11.9 +12.9
Car and machinery
trade 216 -4.7 1.8 -1.5
Common operations
and eliminations -45 -2.1 -9.5 -4.2
Total 2,267 -4.0 61.9 -4.9
The operating profit excluding non-recurring items for October-December was
€61.9 million (€66.8 million) representing 2.7% (2.8%) of net sales.
Profitability was improved by the good profit performance of the foreign
operations of the building and home improvement trade. As a result of the
decline in sales, profitability weakened in the home and speciality goods trade,
especially in Anttila. Due to enhancement measures, operating expenses excluding
non-recurring items decreased by 1.9%
Operating profit was €31.7 million (€68.0 million). The operating profit
includes €-30.2 million (€1.2 million) of non-recurring items. The item includes
€4.2 million of personnel reduction costs related to the change in Kesko's
divisional structure and a €21.0 million impairment charge on property, related
to the renovation of Kesko's main office building. The Group's profit before tax
for October-December was €26.4 million (€67.9 million).
The Group's earnings per share were €0.17 (€0.60).
In October-December, the K-Group's (i.e. Kesko's and the chain stores') retail
and B2B sales (VAT 0%) were €2,832 million, down 3.8% compared to the previous
year.
Finance
In January-December, the cash flow from operating activities was €304.4 million
(€413.8 million). The cash flow from investing activities was €-182.1 million
(€-152.0 million) including €11.2 million (€21.8 million) of proceeds from the
sale of fixed assets.
The Group's liquidity remained at an excellent level in January-December. At the
end of the period, liquid assets totalled €598 million (€681 million). Interest-
bearing liabilities were €499 million (€554 million) and interest-bearing net
liabilities were €-99 million (€-126 million) at the end of December. Equity
ratio was 54.5% (54.5%) at the end of the period.
In January-December, the Group's net finance costs were €6.1 million (€5.8
million). They include interest income on cooperative capital from Suomen
Luotto-osuuskunta in the amount of €4.9 million (€5.7 million).
In October-December, the cash flow from operating activities was €137.0 million
(€114.5 million). The cash flow from investing activities was €-38.5 million (€-
38.7 million) including €3.3 million (€5.1 million) of proceeds from the sale of
fixed assets.
In October-December, the Group's net finance costs were €5.0 million (€0.4
million).
Taxes
In January-December, the Group's taxes were €36.6 million (€57.7 million). The
effective tax rate was 25.2% (23.8%). The tax rate of the comparative period was
affected by the reduction of the corporate tax rate to 20%, effective from 1
January 2014 in Finland, which is why deferred taxes of €14 million were
recognised as income in the consolidated income statement. The impact of the tax
rate change on the tax rate of January-December 2013 was 5.6 percentage points.
In October-December, the Group's taxes were €5.4 million (€5.3 million). The
effective tax rate was 20.3% (7.9%).
Capital expenditure
In January-December, the Group's capital expenditure totalled €194.0 million
(€171.5 million), or 2.1% (1.8%) of net sales. Capital expenditure in store
sites was €142.7 million (€125.5 million), in IT €34.4 million (€22.9 million)
and other capital expenditure was €17.0 million (€23.2 million). Capital
expenditure in foreign operations represented 40.5% (41.3%) of total capital
expenditure.
In October-December, the Group's capital expenditure totalled €43.2 million
(€46.6 million), or 1.9% (2.0%) of net sales. Capital expenditure in store sites
was €29.2 million (€33.0 million), in IT €10.2 million (€6.8 million) and other
capital expenditure was €3.9 million (€6.8 million). Capital expenditure in
foreign operations represented 34.0% (37.8%) of total capital expenditure.
Kesko's strategy work progresses
Kesko's strategy work has been started and the strategy will be ready during
spring 2015. In the future, Kesko will be a more focused and unified operator.
Special focus areas in the strategy work are to strengthen sales and
competitiveness, reduce the cost level through revised functions and develop
digital trade and services.
Kesko changed its divisional structure and seeks more competitive multi-channel
home and speciality goods trade
Kesko revised the Group's divisional structure by integrating K-citymarket Oy,
the non-food part of the K-citymarket chain in the home and speciality goods
division, into Kesko Food Ltd. Kesko's food trade division was changed to the
grocery trade division. The separate divisions of the building and home
improvement trade and the home and speciality goods trade were combined into the
home improvement and speciality goods trade division.
As from 1 January 2015, Kesko Group's reportable segments are the grocery trade,
the home improvement and speciality goods trade, and the car and machinery
trade. Kesko publishes comparatives according to the new reporting structure on
a separate release on 10 February 2015.
The change in the divisional structure is aimed to provide a uniform customer
experience and improve customer satisfaction in all of the divisions' chain
stores. The objective is to enable customers to have an easier multi-channel
shopping experience at physical and online stores, as well as to increase
competitiveness and improve profitability.
Cooperation negotiations about changes planned in Kesko's home and speciality
goods trade, building and home improvement trade and food trade were started on
7 October 2014 in Kesko's home and speciality goods trade companies and building
and home improvement trade companies in Finland and in Kesko Food Ltd, Kesko
Corporation and K-Plus Oy. The negotiations were completed on 24 November 2014.
A total of approximately 2,800 people were included in the negotiations and the
combined reduction need in the companies was estimated at a maximum of 230 full-
time equivalents. As a result of the negotiations, the total need for reductions
in personnel was confirmed at 193 full-time equivalents. The reductions also
include possible pension plans and terminations of fixed-term employments.
Improving Anttila's profitability
In order to improve Anttila's profitability, a decision was made in March to
close eight Anttila department stores operating in leased premises and four
Kodin1 department stores and to implement enhancement measures in the central
units of Anttila Oy and K-citymarket Oy. By the end of the reporting period, six
Anttila department stores had been closed. In addition to the renewal of
Anttila's operating activities aimed at improving profitability, the option of
selling Anttila Oy is also investigated.
Kesko continues preparations for real estate arrangement
The intention is to sell some of the store sites Kesko owns to a joint venture
to be set up. The arrangement is expected to be implemented during the first
part of 2015.
Kesko's objective is to set up a limited liability company (a joint venture) to
own and manage mainly Kesko-owned store sites and shopping centres with Kesko as
one of its significant investors. If the joint venture is set up, Kesko Group
would continue operating on the store sites under long-term leases. The fair
value of store sites planned to be sold to the joint venture in Finland and
Sweden has been specified at a maximum of around €670 million.
Launching the joint venture depends, in addition to investor interest, on
whether it is possible for Kesko to achieve such terms and conditions in the
arrangement that are economically justifiable for it, taking the Group's strong
financial position into account.
If implemented, the sale of store sites is estimated to generate a significant
non-recurring profit, the amount of which will be specified as the examination
progresses.
Personnel
In January-December, the average number of employees in Kesko Group was 19,976
(19,489) converted into full-time employees. In Finland, the average decrease
was 225 people, while outside Finland, there was an increase of 713 people.
At the end of December 2014, the number of employees was 23,794 (23,863), of
whom 12,180 (12,776) worked in Finland and 11,614 (11,087) outside Finland.
Compared to the end of December 2013, there was a decrease of 596 people in
Finland and an increase of 527 people outside Finland.
In January-December, the Group's staff cost was €614 million, showing a 0.5%
increase compared to the previous year. In October-December, staff cost
decreased by 0.1% compared to the previous year and was €162 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
1-12/2014 1-12/2013 10-12/2014 10-12/2013
Net sales, € million 4,316 4,387 1,119 1,148
Operating profit excl. non- recurring
items, € million 202.4 203.3 46.7 48.3
Operating margin excl. non-recurring
items, % 4.7 4.6 4.2 4.2
Capital expenditure,
€ million 91.4 91.6 19.4 23.7
Net sales, € million 1-12/2014 Change, % 10-12/2014 Change, %
Sales to K-food stores 3,233 -2.9 842 -3.0
Kespro 789 -1.7 200 -1.4
K-ruoka, Russia 103 +46.7 27 -5.6
Others 191 +3.6 50 +4.5
Total 4,316 -1.6 1,119 -2.5
January-December 2014
In the food trade, the net sales for January-December were €4,316 million
(€4,387 million), down 1.6%. During the same period, the grocery sales of K-food
stores in Finland decreased by 1.9% (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-
December by some 0.5-1% compared to the previous year (Kesko's own estimate).
The rise of consumer prices in the grocery trade stopped during the reporting
period. Kespro's market position and profitability remained at a good level. The
performance of sales in roubles and profitability of the food stores in Russia
were as planned despite the slowdown of the Russian economy and the weakening of
the rouble.
In January-December, the operating profit excluding non-recurring items of the
food trade was €202.4 million (€203.3 million), or €0.8 million down on the
previous year. Profitability remained at an excellent level due to savings
achieved from enhanced operations. Operating profit was €196.0 million (€208.0
million). Non-recurring items were €-6.5 million (€+4.8 million).
The capital expenditure of the food trade in January-December was €91.4 million
(€91.6 million), of which €81.5 million (€80.5 million) in store sites.
October-December 2014
In the food trade, the net sales for October-December were €1,119 million
(€1,148 million), down 2.5%.
In October-December, the operating profit excluding non-recurring items of the
food trade was €46.7 million (€48.3 million), or €1.6 million down on the
previous year. Operating profit was €44.2 million (€48.3 million). Non-recurring
items were €-2.6 million.
The capital expenditure of the food trade in October-December was €19.4 million
(€23.7 million).
In October-December 2014, one new K-citymarket, one new K-supermarket and two
new K-markets were opened. Renewals and space modifications were made in a total
of 15 stores.
The most significant store sites being built are K-supermarkets in Hollola,
Lappeenranta, Savonlinna and Uusikaarlepyy. Three new food stores are under
construction in Russia.
Numbers of stores as at 31.12. 2014 2013
K-citymarket 81 80
K-supermarket 218 218
K-market (incl. services station stores) 444 442
K-ruoka, Russia 5 4
Others* 164 176
* incl. online stores
Home and speciality goods trade
1-12/2014 1-12/2013 10-12/2014 10-12/2013
Net sales, € million 1,316 1,457 393 439
Operating profit excl. non-recurring
items, € million -37.4 -8.3 11.0 21.6
Operating margin excl. non-recurring
items, % -2.8 -0.6 2.8 4.9
Capital expenditure, € million 17.4 23.1 5.4 6.3
Net sales, € million 1-12/2014 Change, % 10-12/2014 Change, %
K-citymarket,
non-food 593 -5.5 183 -5.9
Anttila 324 -17.0 109 -16.6
Intersport, Finland 171 -10.0 46 -14.7
Intersport, Russia 15 -17.6 3 -16.2
Indoor 176 -3.3 46 -1.3
Musta Pörssi 20 -33.1 4 -45.7
Kenkäkesko 20 -5.6 4 +0.1
Total 1,316 -9.6 393 -10.4
January-December 2014
In the home and speciality goods trade, the net sales for January-December were
€1,316 million (€1,457 million), down 9.6%. Consumer demand in the home and
speciality goods trade continued to weaken during the reporting period. Sales
declined especially in the Anttila and Kodin1 department stores. Six Anttila
department stores were closed during the reporting period. Musta Pörssi
concentrates on e-commerce in accordance with its strategy and its sales
performance was impacted by the discontinuation of the store site network. The
decline in Intersport Russia's sales in euro terms was impacted by the weakening
of the Russian rouble. Investments in e-commerce were continued in all chains.
In January-December, the operating profit excluding non-recurring items of the
home and speciality goods trade was €-37.4 million (€-8.3 million), down €29.0
million compared to the previous year. The performance was especially impacted
by the loss increased by the decline in Anttila's sales. The profits of K-
citymarket non-food, Intersport Finland and Indoor remained at a good level
despite sales decline.
The operating profit of the home and speciality goods trade was €-85.0 million
(€-2.1 million). The most significant non-recurring expenses included in the
total of €47.6 million were the restructuring provision recognised for the
reduction of the Anttila department store network and an impairment charge on
fixed assets related to the integration of K-citymarket non-food with Anttila.
The capital expenditure of the home and speciality goods trade in January-
December was €17.4 million (€23.1 million).
October-December 2014
In the home and speciality goods trade, the net sales for October-December were
€393 million (€439 million), down 10.4%. The decrease in Anttila's sales was
partly attributable to the closure of six Anttila department stores. The decline
in Musta Pörssi's net sales was impacted by the implemented network changes. The
decline in Intersport Russia's sales in euro terms was impacted by the weakening
of the Russian rouble.
In October-December, the operating profit excluding non-recurring items of the
home and speciality goods trade was €11.0 million (€21.6 million), down €10.6
million compared to the previous year. The performance was partly attributable
to Anttila's weak profitability. The operating profit of the home and speciality
goods trade was €7.1 million (€23.3 million). The non-recurring items include
€3.4 million of expenses related to the reduction of the Anttila department
store network.
The capital expenditure of the home and speciality goods trade was €5.4 million
(€6.3 million).
In October-December, a K-citymarket, a Budget Sport and a Kookenkä were opened
in the new Puuvilla shopping centre in Pori and an Anttila department store and
a Kookenkä in the new Goodman shopping centre in Hämeenlinna. In addition,
Intersport Itäkeskus was opened in Helsinki (replacing the store closed in
August 2014) and a Sotka in Kuusamo. In October-December, an Asko and a Sotka
were closed in Porvoo, a Kookenkä in downtown Hämeenlinna and in Lappeenranta
and an Intersport in Vaasa (to be opened after refurbishment in spring 2015).
Numbers of stores as at 31.12. 2014 2013
K-citymarket, non-food* 82 81
Anttila department stores* 26 31
Kodin1 department stores for interior decoration and home goods* 13 13
Intersport, Finland* 62 63
Budget Sport* 12 11
Asko and Sotka 86 85
Musta Pörssi* 1 6
Kookenkä* 44 46
Anttila, Baltics* 3 3
Intersport, Russia 19 21
Asko and Sotka, Baltics* 10 10
* incl. online stores
Building and home improvement trade
1-12/2014 1-12/2013 10-12/2014 10-12/2013
Net sales, € million 2,598 2,607 585 596
Operating profit excl. non-recurring
items, € million 57.7 25.7 11.9 -1.1
Operating margin excl. non-recurring
items, % 2.2 1.0 2.0 -0.2
Capital expenditure,
€ million 60.0 37.8 16.2 11.4
Net sales,
€ million 1-12/2014 Change, % 10-12/2014 Change, %
Rautakesko, Finland 1,157 -1.3 244 -5.0
K-rauta, Sweden 194 -5.3 42 -5.3
Byggmakker, Norway 431 -8.4 93 -7.6
K-rauta, Estonia 78 +14.0 20 +12.3
K-rauta, Latvia 53 +2.7 13 +1.8
Senukai, Lithuania 312 +18.6 86 +19.5
K-rauta, Russia 250 -8.2 60 -9.4
OMA, Belarus 125 +17.8 28 +4.9
Total 2,598 -0.4 585 -1.9
January-December 2014
In the building and home improvement trade, the net sales for January-December
were €2,598 million (€2,607 million), down 0.4%. In terms of local currencies,
the net sales growth in the building and home improvement trade was 3.6%.
In Finland, the net sales for January-December were €1,157 million (€1,173
million), a decrease of 1.3%. The building and home improvement products
contributed €785 million to the net sales in Finland, a decrease of 1.4%. The
agricultural supplies trade contributed €372 million to the net sales, down
1.3%.
The retail sales of the K-rauta and Rautia chains in Finland were down by 2.1%
to €1,003 million (VAT 0%). The sales of Rautakesko B2B Service were at the
previous year's level. The K-Group's sales of building and home improvement
products in Finland decreased by a total of 1.8% and the total market (VAT 0%)
is estimated to have fallen by some 4.2% (Kesko's own estimate). The retail
sales of the K-maatalous chain were €463 million (VAT 0%), up 0.6%.
In January-December, the net sales from the foreign operations of the building
and home improvement trade were €1,441 million (€1,435 million), an increase of
0.4%. In terms of local currencies, the net sales from foreign operations
increased by 7.7%. In Sweden and Norway, net sales in local currencies were at
the previous year's level. In Russia, net sales in roubles increased by 10.5%.
Foreign operations contributed 55.5% (55.0%) to the net sales of the building
and home improvement trade.
In January-December, the operating profit excluding non-recurring items of the
building and home improvement trade was €57.7 million (€25.7 million), up €32.0
million compared to the previous year. Due to a sales increase in foreign
currency terms, coupled with growth of sales margin and cost savings, the profit
performance was clearly positive. Profit from foreign operations improved. The
operating profit of the building and home improvement trade was €52.4 million
(€24.8 million). Non-recurring items include a restructuring provision of €5.2
million related to changes in the retail business of Byggmakker in Norway.
In January-December, the capital expenditure of the building and home
improvement trade totalled €60.0 million (€37.8 million), of which 67.0% (44.1%)
was abroad. Capital expenditure in store sites represented 83.4% of total
capital expenditure.
October-December 2014
In the building and home improvement trade, the net sales for October-December
were €585 million (€596 million), down 1.9%. In terms of local currencies, the
net sales growth of the building and home improvement trade was 3.3%.
In Finland, net sales were €244 million (€257 million), a decrease of 5.0%. The
building and home improvement products contributed €159 million to the net sales
in Finland, a decrease of 7.1%. The agricultural supplies trade contributed €85
million to the net sales, down 0.9%. In October-December, the retail sales of
the K-rauta and Rautia chains in Finland were down by 7.3% to €218 million (VAT
0%). According to Kesko's estimate, the market share of the building and home
improvement trade increased in October-December. The sales of Rautakesko B2B
Service decreased by 2.6%. The retail sales of the K-maatalous chain were €108
million (VAT 0%), down 0.8%.
The net sales from the foreign operations of the building and home improvement
trade were €341 million (€339 million), an increase of 0.5%. In terms of local
currencies, the net sales from foreign operations increased by 9.5%. In Sweden,
net sales in kronas were down by 1.0%. In Norway, net sales in krones were down
by 4.2%. In Russia, net sales in roubles increased by 23.1%. Foreign operations
contributed 58.3% (56.9%) to the net sales of the building and home improvement
trade.
In October-December, the operating profit excluding non-recurring items of the
building and home improvement trade was €11.9 million (€-1.1 million), up €12.9
million compared to the previous year due to a sales increase in foreign
currency terms, coupled with growth of sales margin, gains on currency hedges
and cost savings. Profit from the foreign operations of the building and home
improvement trade improved. Operating profit was €10.1 million (€-1.0 million).
The capital expenditure of the building and home improvement trade was €16.2
million (€11.4 million), of which 49.7% (41.4%) was abroad.
In October, four building and home improvement stores were closed in Norway.
Numbers of stores as at 31.12. 2014 2013
K-rauta 42 42
Rautia* 96 99
K-maatalous* 81 83
K-rauta, Sweden 20 20
Byggmakker, Norway 82 91
K-rauta, Estonia 8 8
K-rauta, Latvia 8 8
Senukai, Lithuania 19 18
K-rauta, Russia 13 13
OMA, Belarus 11 10
In addition, the stores offer e-commerce services to their customers.
* in 2014, 46 Rautia stores also operated as K-maatalous stores
in 2013, 47 Rautia stores also operated as K-maatalous stores
Car and machinery trade
1-12/2014 1-12/2013 10-12/2014 10-12/2013
Net sales, € million 1,011 1,037 216 226
Operating profit excl. non-recurring
items, € million 29.6 33.9 1.8 3.3
Operating margin excl. non-recurring
items, % 2.9 3.3 0.8 1.5
Capital expenditure, € million 14.3 15.1 2.7 3.3
Net sales, € million 1-12/2014 Change, % 10-12/2014 Change, %
VV-Auto 756 +1.5 173 -1.9
Konekesko 256 -12.6 43 -14.3
Total 1,011 -2.5 216 -4.7
January-December 2014
In the car and machinery trade, the net sales for January-December were €1,011
million (€1,037 million), down 2.5%.
VV-Auto's net sales for January-December were €756 million (€745 million), an
increase of 1.5%. In January-December, the combined market performance of first
time registered passenger cars and vans was +3.1%.
In January-December, the combined market share of passenger cars and vans
imported by VV-Auto was 20.7% (20.6%). Volkswagen was the market leader in
passenger cars and vans.
Konekesko's net sales for January-December were €256 million (€293 million),
down 12.6% compared to the previous year. Net sales in Finland were €161
million, down 9.4%. The net sales from Konekesko's foreign operations were €96
million, down 17.1%. 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-December, the operating profit excluding non-recurring items of the
car and machinery trade was €29.6 million (€33.9 million), down €4.3 million
compared to the previous year. The adjustment of costs and inventories has been
implemented as planned. Profitability in the car trade remained at a good level
despite the weakened market situation.
The operating profit for January-December was €29.4 million (€33.9 million).
The capital expenditure of the car and machinery trade in January-December was
€14.3 million (€15.1 million).
October-December 2014
In October-December, the net sales of the car and machinery trade were €216
million (€226 million), down 4.7%.
VV-Auto's net sales for October-December were €173 million (€176 million), a
decrease of 1.9%. In October-December, the combined market share of passenger
cars and vans imported by VV-Auto was 20.7% (21.1%).
Konekesko's net sales for October-December were €43 million (€50 million), down
14.3% compared to the previous year.
In October-December, the operating profit excluding non-recurring items of the
car and machinery trade was €1.8 million (€3.3 million), down €1.5 million
compared to the previous year. Profitability was weakened by the decrease in
sales. The operating profit for October-December was €1.6 million (€3.3
million).
The capital expenditure of the car and machinery trade in October-December was
€2.7 million (€3.3 million).
Numbers of stores as at 31.12. 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 December 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 31 December 2014, Kesko Corporation held 995,315 own B
shares as treasury shares. These treasury shares accounted for 1.46% of the
number of B shares, 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 by the company as
treasury shares and no dividend is paid on them. At the end of December 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 Helsinki was €26.80 at the end of
2013, and €28.56 at the end of 2014, representing an increase of 6.6%.
Correspondingly, the price of a B share was €26.80 at the end of 2013, and
€30.18 at the end of 2014, representing an increase of 12.6%. In January-
December, the highest A share price was €32.31 and the lowest was €24.60. The
highest B share price was €33.33 and the lowest was €25.10. In January-December,
the Nasdaq Helsinki All-Share index (OMX Helsinki) was up 5.7% and the weighted
OMX Helsinki Cap index 5.7%. The Retail Sector Index was down 1.4%.
At the end of December 2014, the market capitalisation of A shares was €906
million, while that of B shares was €2,031 million, excluding the shares held by
the parent company. The combined market capitalisation of A and B shares was
€2,937 million, an increase of €276 million from the end of 2013. In January-
December 2014, a total of 2.0 (1.1) million A shares were traded on Nasdaq
Helsinki, an increase of 75.3%. The exchange value of A shares was €58 million.
The number of B shares traded was 47.3 million (51.3 million), a decrease of
7.8%. The exchange value of B shares was €1,412 million. Nasdaq Helsinki
accounted for 66% of Kesko A and B share trading in January-December 2014. Kesko
shares were also traded on multilateral trading facilities, the most significant
of which were BATS Chi-X with 27% and Turquoise with 7% of the trading (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 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 expired.
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 holdings of the
company shares 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,
capital expenditure 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
the acquisition was announced in a stock exchange release on 4 February 2014 and
acquisition was started on 18 February 2014. The maximum of 500,000 own B shares
the Board was authorised to acquire 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. As
at 31 December 2014, Kesko held a total of 995,315 own B shares as treasury
shares. In addition, the Board has the authority, valid until 30 June 2017, to
decide on the issuance of a 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-
December, a total of 5,642 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, 23 May 2014 and 25 July 2014. On 16
December 2014, Kesko Corporation's Board of Directors decided to transfer 8,791
own B shares held by the company as treasury shares to Mikko Helander, the
company's President and CEO as from 1 January 2015. The share transfer is based
on the managing director's service contract signed with Mikko Helander. The
transfer was announced in a stock exchange release on 16 December 2014 and on
17 December 2014. Further information on the Board's authorisations is available
at www.kesko.fi.
Based on the 2014-2016 share-based compensation plan decided by the Board, a
total maximum of 600,000 own B shares held by the company as treasury shares can
be granted within a period of three 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 December 2014, the number of shareholders was 39,869, which is
2,940 less than at the end of 2013. At the end of December, foreign ownership of
all shares was 27%. At the end of December, foreign ownership of B shares was
39%.
Flagging notifications
Kesko Corporation did not receive flagging notifications during the reporting
period.
Key events during the reporting period
Two new members were appointed to Kesko's Group Management Board. CCJ Lauri
Peltola, 51, was appointed Senior Vice President for corporate responsibility,
communications and stakeholder relations and a Group Management Board member. He
will take office on 2 March 2015 at the latest. Kesko's General Counsel, Senior
Vice President Anne Leppälä-Nilsson, 61, LL.M., B.Sc. (Econ.), was appointed a
Group Management Board member. As from 1 January 2015, Kesko's Group Management
Board members are: Mikko Helander, Chair; Jorma Rauhala, the grocery trade;
Terho Kalliokoski, the home improvement and speciality goods trade; Pekka Lahti,
the car and machinery trade; Jukka Erlund, accounting and finance, CFO; Matti
Mettälä, human resources; and Anne Leppälä-Nilsson, legal affairs. (Stock
exchange release on 16 December 2014)
Kesko continues the preparation of a real estate arrangement. The intention is
to sell some of the store sites it owns to a joint venture to be set up. The
arrangement is expected to be implemented during the first part of 2015. The
fair value of store sites planned to be sold to the joint venture in Finland and
Sweden has been specified at a maximum of around €670 million. (Stock exchange
release on 29 November 2013 and 28 November 2014)
Kesko revised the Group's divisional structure by integrating K-citymarket Oy,
the non-food part of the K-citymarket chain in the home and speciality goods
division, into Kesko Food Ltd. Kesko's food trade division was changed to the
grocery trade division. The separate divisions of the building and home
improvement trade and the home and speciality goods trade were combined into the
home improvement and speciality goods trade division. As from 1 January 2015,
Kesko Group's reportable segments are the grocery trade, the home improvement
and speciality goods trade, and the car and machinery trade. (Stock exchange
release on 24 September 2014, 7 October 2014 and 27 November 2014)
Cooperation negotiations about changes planned in Kesko's home and speciality
goods trade, building and home improvement trade and food trade were started on
7 October 2014 in Kesko's home and speciality goods trade companies and building
and home improvement trade companies in Finland and in Kesko Food Ltd, Kesko
Corporation and K-Plus Oy. The negotiations were completed on 24 November 2014.
A total of approximately 2,800 people were included in the negotiations and the
combined reduction need in the companies was estimated at a maximum of 230 full-
time equivalents. As a result of the negotiations, the total need for reductions
in personnel was confirmed at 193 full-time equivalents. The reductions also
include possible pension plans and terminations of fixed-term employments.
(Stock exchange release on 24 September 2014, 7 October 2014 and 27 November
2014)
Kesko Corporation's Board of Directors appointed Mikko Helander, M.Sc. (Tech.),
as Kesko Corporation's Managing Director and Kesko Group's President and Chief
Executive Officer as from 1 January 2015. Mikko Helander, b. 1960, joined Kesko
as the Executive Vice President and Member of the Group Management Board on 1
October 2014 and took office as the President and CEO on 1 January 2015. As from
1 January 2015, President and CEO Matti Halmesmäki will continue in advisory and
special assignments to be agreed with the Board of Directors until 31 May 2015
when he will retire. (Stock exchange release on 28 May 2014 and 19 September
2014)
As a result of the cooperation negotiations conducted in order to improve
Anttila's profitability, a decision was made to close eight Anttila department
stores operating in leased premises. These department stores have a total of
around 210 employees. In addition, the workforce in other Anttila department
stores is reduced by 25 full-time equivalents. Cooperation negotiations were
also started in the Kodin1 chain and after their completion, a decision was made
to close four Kodin1 department stores in the Kodin1 department store chain.
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 will not participate in the future 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)
Events after the reporting period
Anni Ronkainen, 48, M.Sc. (Econ.), has been appointed Kesko's Chief Digital
Officer, responsible for business development, digital business environment and
marketing, and a member of the Group Management Board. She will join Kesko
Corporation on 20 April 2015 at the latest. (Stock exchange release on 26
January 2015)
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
In October, Kesko was included in the Nordic Climate Disclosure Leadership Index
in a fourth consecutive year. Kesko improved its score to 99/100 points. In the
FTSE4Good Index, Kesko's overall score assessment was 99/100.
Kesko's Corporate Responsibility Report 2013 was chosen as Finland's best in the
2014 Sustainability Reporting Award Finland Competition. Kesko's report was
ranked the best also by non-governmental organisations.
K-stores were the main partners in the Finnish Red Nose Day campaign organised
by the Nose Day Foundation and raised over €353,000 during the campaign. The
funds raised will be used to support long-term development cooperation projects
aimed to promote children's rights in developing countries in several ways.
Kesko and K-stores were the national partner of the Salvation Army's Christmas
Kettle collection and they also participated in the Christmas Spirit collection.
Risk management
Risk management in Kesko Group is guided by the risk management policy confirmed
by Kesko's Board of Directors. The policy defines the goals and principles,
organisation, responsibilities and practices of risk management in Kesko Group.
The management of financial risks is based on the Group's finance policy, which
is confirmed by Kesko's Board of Directors. The business division and Group
managements are responsible for the execution of risk management. Kesko Group
applies a business-oriented and comprehensive approach to risk assessment and
management. This means that key risks are systematically identified, assessed,
managed, monitored and reported at the Group, division, company and unit levels
in all operating countries.
Kesko Group's risk map is considered by the Kesko Board's Audit Committee in
connection with the quarterly interim reports and the financial statements. The
Audit Committee Chair reports on risk management to the Board as part of the
Audit Committee report. The Kesko Board considers Kesko Group's most significant
risks and uncertainties and their management responses, and assesses the
efficiency and performance of risk management at least once a year. The most
significant risks and uncertainties are reported to the market by the Board in
the Report by the Board of Directors and any material changes in them in the
interim reports.
The following describes the risks and uncertainties assessed as significant.
Significant risks and uncertainties
The geopolitical situation, the weak outlook for the Finnish economy, increases
in taxes and public payments resulting from the indebtedness of the public
sector, coupled with increasing unemployment, weaken purchasing power and
consumer confidence and may cause a long-term decline in the level of demand.
This would have negative repercussions especially on the home improvement and
speciality goods trade and the car and machinery trade in Finland. In the food
trade, price is increasingly important.
The level of uncertainty around economic development in Russia is high and
political and country risks in Russia have risen significantly. The fall of
crude oil prices cuts the revenues of the Russian state. The decline in the
rouble's exchange rate weakens purchasing power, demand and profitability, and
increases hedging costs. The economic sanctions imposed by the EU and the USA
make it difficult to get financing in Russia. Russia's counter-sanctions have
impacts especially on food stores' operations and raise the price level in
Russia even on a wider scale. Corruption, unpredictability of officials and
rapid changes in laws and their application, as well as unexpected changes in
the operating environment make business operations more difficult and, if
continued, will delay or, at worst, prevent expansion.
E-commerce and online services are becoming increasingly popular in the retail
trade, especially in the home technology, sports and other speciality goods
trade. International e-commerce increases price transparency and consumers'
alternatives at the same time when buying and marketing of products and services
become more personalised and increasingly take place online. Buying decisions
are often made based on information available on the web. The risk is that the
progress of e-commerce and e-service development projects is outpaced by
competitors, or that competing online stores and e-services are found more
attractive by customers. For the food trade, the challenges in the development
of e-commerce include cost effectiveness of logistic models and the suitability
of the existing store sites for e-commerce.
In the retail trade, it is essential to succeed in the development of concepts
so that they meet the needs and preferences of local customers. The change in
the trading sector and customers' purchasing behaviour requires continuous
renewal. The growth of e-commerce has cut the sales of the department store
trade and there has been a failure to renew Anttila's concept and selections
fast enough. The sales and profitability of the building and home improvement
stores in Sweden and Intersport stores in Russia have failed to reach the
targets. In the Finnish food trade, it is increasingly challenging to meet the
market share targets as price competition increases.
Kesko's chain operations are, contrary to most competitors, based on a retailer
business model to a significant extent. The competitive advantages of the
retailer business model include the retailer's local expertise and ability to
rapidly respond to changes in customer needs or competitive situations.
Decision-making concerning the development of the chains' operations and the
implementation of changes in business operations can, however, be outpaced by
competitors. A prolonged decline in the level of demand and sales can weaken the
profitability and performance of retailer operations.
The Finnish competition legislation has been amended to the effect that, unlike
in the rest of the EU area, the prohibition of abuse of dominant market position
can be applied on companies whose national market share in the groceries retail
markets exceeds 30 percent. According to the law, Kesko Food is in a dominant
market position. Special obligations have been imposed on a company in a
dominant market position which can weaken the trading sector's competitive
opportunities to serve customers and operate efficiently. The implications of
dominant market position are partly open to interpretation. An erroneous
interpretation may result in monetary penalties, liability for damages and
weakened reputation.
The trading sector is characterised by increasingly complicated and long supply
chains and a higher dependency on information systems, data communications and
external service providers. Failures in information systems and the transfer of
payments, or in other parts of the supply chain can cause significant losses in
sales and weaken customer satisfaction.
With the view of increasing the market share, good store sites are a key
competitive factor. The acquisition of store sites can be delayed by zoning and
permit procedures and the availability and pricing of sites. Considerable
amounts of capital or lease liabilities are tied up in store properties for
years. When the share of e-commerce grows, the market situation changes, or a
chain concept proves inefficient there is a risk that a store site becomes
unprofitable and operations are discontinued while long-term liabilities remain.
A failure in product safety control or in the quality assurance of the supply
chain can result in financial losses, the loss of customer confidence or, in the
worst case, a health hazard to customers.
The implementation of strategies and the achievement of objectives require
competent and motivated personnel. There is a risk that the trading sector does
not attract the most competent people. A growing need for special competencies
increases the dependency on individual expertise and the key person risk.
In divisions strongly dependent on individual principals and suppliers, such as
the car and machinery trade, ownership arrangements and changes in a principal's
or supplier's strategy concerning product selections, pricing and distribution
channel solutions can mean weakened competitiveness, or a loss of sales or
business.
Crimes are increasingly committed through data networks and crime has become
more international and professional. A failure especially in the protection of
payment transactions and personal information can cause losses, claims for
damages and endanger reputation. There is a risk that controls against such
crime are not sufficient.
Different aspects of responsibility, such as ethicality of production and the
supply chain, fair and equal treatment of employees and environmental protection
are increasingly important to customers. Possible failures of responsibility
would result in negative publicity for Kesko. Kesko's challenges in
responsibility work include communicating its responsibility principles to
customers, suppliers and retailers, and ensuring responsibility in the supply
chain.
Compliance with laws and agreements is an important part of Kesko's
responsibility. Non-compliance can result in fines, compensations for damages
and other financial losses, and a loss of confidence and reputation.
Kesko's objective is to produce and publish reliable and timely information. If
some information published by Kesko proved to be incorrect, or communications
failed to meet regulations in other respects, it could result in losing investor
and other stakeholder confidence and in possible sanctions.
Accidents, natural phenomena and epidemics can cause damages or business
interruptions which cannot be prevented. There is also the risk that insurances
do not cover all unexpected accidents and damages. Other risks and uncertainties
related to profit performance are described in the Group's future outlook.
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 (1/2015-12/2015) in comparison with the 12 months preceding the
reporting period (1/2014-12/2014).
The general economic situation and the expected trend in consumer demand vary in
Kesko's different operating countries. In Finland, demand in the trading sector
is expected to be weak also in the current year and the competitive situation is
expected to tighten further, especially in the grocery trade and the home and
speciality goods trade. In Sweden and Norway and in the Baltic countries, the
growth in demand in the trading sector is expected to continue. In Russia, the
economic situation and consumers' purchasing power will weaken.
Kesko Group's net sales for 2015 are expected to equal the level of 2014.
Operating profit excluding non-recurring items for 2015 is expected to equal or
fall slightly short of the level of 2014.
Proposal for profit distribution
The parent's distributable profits are €1,084,158,672.62, of which the profit
for the financial year is €16,269,287.26.
The Board of Directors proposes to the Annual General Meeting to be held on 13
April 2015 that a dividend of €1.50 per share be paid on shares held outside the
company at the date of dividend distribution. No dividend is paid on own shares
held by the company as treasury shares at the record date of dividend
distribution.
At the date of the proposal for distributions of profits, 9 February 2015, a
total of 99,024,437 shares were held outside the Company, amounting to a total
dividend of €148,536,655.50.
Annual General Meeting
The Board of Directors decided to convene the Annual General Meeting at
Messukeskus Helsinki, on 13 April 2015 at 13.00. Kesko Corporation will publish
a notice of the General Meeting at a later date.
Annual Report 2014
Kesko will publish an Integrated Annual Report for 2014 on week 12 on its
website at www.kesko.fi. The report contains a business review, Kesko's Annual
Report and the financial statements for 2014, the responsibility reporting
indicators (GRI), Kesko's Corporate Governance Statement and Remuneration
Statement.
Helsinki, 9 February 2015
Kesko Corporation
Board of Directors
The information in the financial statements 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 of the
media and analyst briefing on the financial statements can be accessed at
www.kesko.fi, at 11.00. An English-language audio conference on the financial
statements will be held today at 14.30 (Finnish time). The audio conference
login is available on Kesko's website at www.kesko.fi.
Kesko Corporation's interim report for January-March will be published on 28
April 2015. 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 Ltd
Main news media
www.kesko.fi
TABLES SECTION
Accounting policies
This financial statements release has been prepared in accordance with the IAS
34 standard. The financial statements release has been prepared in accordance
with the same 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 have not had impact on the
reported income statement and the statement of financial position. The amendment
will have an impact on the notes to the financial statements.
Consolidated income statement (€
million), condensed
1-12/ 1-12/ Change% 10-12/ 10-12/ Change%
2014 2013 2014 2013
Net sales 9,071 9,315 -2.6 2,267 2,362 -4.0
Cost of goods sold -7,832 -8,034 -2.5 -1,948 -2,014 -3.3
Gross profit 1,238 1,281 -3.4 319 348 -8.4
Other operating income 729 734 -0.7 199 185 7.1
Staff cost -614 -611 0.5 -162 -162 -0.1
Depreciation and impairment charges -195 -153 27.5 -62 -39 57.9
Other operating expenses -1,007 -1,003 0.4 -262 -265 -0.9
Operating profit 151 248 -39.1 32 68 -53.5
Interest income and other finance
income 14 20 -32.0 2 6 -59.3
Interest expense and other finance
costs -16 -20 -23.7 -4 -5 -29.1
Exchange differences -4 -6 -22.9 -4 -1 (..)
Share of results of equity accounted
investments 0 0 -48.6 0 0 (..)
Profit before tax 145 242 -40.1 26 68 -61.2
Income tax -37 -58 -36.6 -5 -5 0.4
Net profit for the period 108 185 -41.2 21 63 -66.4
Attributable to
Owners of the parent 96 173 -44.5 17 59 -72.0
Non-controlling
interests 12 12 7.8 4 3 43.4
Earnings per share (€)
for profit attributable to
equity holders of the parent
Basic 0.97 1.75 -44.7 0.17 0.60 -72.1
Diluted 0.97 1.75 -44.5 0.17 0.60 -72.1
Consolidated statement
of comprehensive income (€ million)
1-12/ 1-12/ Change% 10-12/ 10-12/ Change%
2014 2013 2014 2013
Net profit for the period 108 185 -41.2 21 63 -66.4
Items that will not be reclassified
subsequently to profit or loss
Actuarial gains/losses -20 12 (..) -18 7 (..)
Items that may be reclassified
subsequently to profit or loss
Exchange differences on translating
foreign operations -28 -14 (..) -20 -5 (..)
Adjustment for hyperinflation 4 3 56.9 0 2 -89.2
Cash flow hedge revaluation 1 -4 (..) 0 -3 -85.3
Revaluation of available-for-sale
financial assets -3 -5 -37.3 0 -1 -89.1
Other items 0 0 -3.2 - - -
Total other comprehensive income for
the period, net of tax -45 -8 (..) -38 -1 (..)
Total comprehensive income for the
period 63 177 -64.3 -17 61 (..)
Attributable to
Owners of the parent 49 166 -70.2 -20 58 (..)
Non-controlling
interests 14 11 23.7 3 3 17.0
(..) change over 100%
Consolidated statement of financial position (€
million), condensed
31.12.2014 31.12.2013 Change, %
ASSETS
Non-current assets
Tangible assets 1,624 1,651 -1.7
Intangible assets 178 189 -5.9
Equity accounted investments and other financial
assets 105 104 0.8
Loans and receivables 11 15 -26.8
Pension assets 147 170 -13.5
Total 2,066 2,131 -3.0
Current assets
Inventories 776 797 -2.6
Trade receivables 584 617 -5.3
Other receivables 173 136 27.3
Financial assets at fair value
through profit or loss 219 171 28.5
Available-for-sale financial assets 272 398 -31.8
Cash and cash equivalents 107 112 -4.2
Total 2,131 2,231 -4.5
Non-current assets held for sale 1 1 0.0
Total assets 4,198 4,362 -3.8
31.12.2014 31.12.2013 Change %
EQUITY AND LIABILITIES
Equity 2,184 2,279 -4.2
Non-controlling interests 82 73 11.6
Total equity 2,265 2,352 -3.7
Non-current liabilities
Interest-bearing liabilities 319 355 -10.1
Non-interest-bearing liabilities 11 10 5.9
Deferred tax liabilities 67 68 -1.0
Pension obligations 2 2 9.0
Provisions 27 17 53.5
Total 426 452 -5.8
Current liabilities
Interest-bearing liabilities 180 199 -9.9
Trade payables 795 825 -3.7
Other non-interest-bearing liabilities 490 494 -0.9
Provisions 42 38 11.6
Total 1,506 1,557 -3.2
Total equity and liabilities 4,198 4,362 -3.8
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 20 20
Treasury shares
Share-based
payments 2 0 2
Dividends -118 -5 -122
Other
changes 0 0 5 5
Net profit for
the period 173 12 185
Other comprehen-
sive income
Items that will
not be
reclassified
subsequently to
profit or loss
Actuarial
gains/losses 15 15
Items that may
be reclassified
subsequently to
profit or loss
Exchange
differences
on translating
foreign
operations 0 -11 -3 -14
Adjustment for
hyperinflation 0 3 3
Cash flow
hedge
revaluation -5 -5
Revaluation of
available- for-
sale financial
assets -5 -5
Others 0 0
Tax relating to
other comprehen-
sive income 1 -2 -2
Total other
comprehen-sive
income 0 -11 -9 12 -1 -8
Balance at
31.12.2013 197 461 -13 1 -18 1,651 73 2,352
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 0 2
Dividends -138 -5 -143
Other
changes 0 0 5 0 5
Net profit for
the period 96 12 108
Other comprehen-
sive income
Items that will
not be
reclassified
subsequently to
profit or loss
Actuarial
gains/losses -25 -25
Items that may
be reclassified
subsequently to
profit or loss
Exchange
differences
on translating
foreign
operations 0 -25 -3 -28
Adjustment for
hyperinflation 0 4 4
Cash flow
hedge
revaluation 1 1
Revaluation of
available- for-
sale financial
assets -3 -3
Others 0 0
Tax relating to
other comprehen-
sive income 0 5 4
Total other
comprehen-sive
income 0 -25 -2 -19 1 -45
Balance at
31.12.2014 197 463 -38 -1 -31 1,593 82 2,265
Consolidated statement of cash flows (€ million), condensed
1-12/ 1-12/ Change% 10-12/ 10-12/ Change%
2014 2013 2014 2013
Cash flows from operating activities
Profit before tax 145 242 -40.1 26 68 -61.2
Planned depreciation 151 152 -0.6 38 39 -2.7
Finance income and costs 6 6 6.1 5 0 (..)
Other adjustments 63 8 (..) 29 11 (..)
Change in working capital
Current non-interest-bearing
operating receivables,
increase (-)/decrease (+) 32 89 -64.4 76 94 -19.3
Inventories,
increase (-)/decrease (+) -7 3 (..) 5 -26 (..)
Current non-interest-bearing
liabilities, increase (+)/
decrease(-) -21 -1 (..) -27 -48 -43.5
Financial items and tax -65 -85 -23.7 -15 -24 -36.9
Net cash from operating activities 304 414 -26.4 137 115 19.7
Cash flows from investing activities
Investing activities -194 -174 11.2 -43 -44 -2.9
Sales of fixed assets 11 22 -48.6 3 5 -35.7
Increase in non-current receivables 0 0 48.4 1 0 (..)
Net cash used in investing activities -182 -152 19.8 -38 -39 -0.6
Cash flows from financing activities
Interest-bearing liabilities, increase
(+)/decrease (-) -46 -47 -3.2 4 -11 (..)
Current interest-bearing
receivables, increase (-)/
decrease (+) -1 78 (..) 0 77 -99.7
Dividends paid -143 -122 17.2 -1 - -
Equity increase 2 20 -89.0 - 2 -100
Acquisition of own shares -16 - - - - -
Short-term money market investments,
increase (-)/ decrease (+) -57 -91 -37.3 -21 -29 -26.1
Other items 7 5 49.0 1 1 -26.5
Net cash used in financing activities -254 -159 60.0 -17 40 (..)
Change in cash and cash equivalents -131 103 (..) 81 116 -29.8
Cash and cash
equivalents and current
portion of available-for-sale
financial assets at 1 Jan. 453 352 28.7 239 338 -29.3
Currency translation difference
adjustment and revaluation -8 -2 (..) -7 -1 (..)
Cash and cash
equivalents and current
portion of available-for-sale
financial assets at 31 Dec. 313 453 -30.8 313 453 -30.8
(..) change over 100%
Group's performance indicators
1-12/2014 1-12/2013 Change, pp
Return on capital employed, % 6.4 10.2 -3.8
Return on capital employed
excl. non-recurring items, % 9.9 9.8 0.1
Return on equity, % 4.7 8.0 -3.3
Return on equity excl. non-
recurring items, % 7.6 7.7 -0.1
Equity ratio, % 54.5 54.5 0.0
Gearing, % -4.4 -5.4 1.0
Change, %
Capital expenditure, € million 194.0 171.5 13.1
Capital expenditure, % of net
sales 2.1 1.8 16.2
Earnings per share, basic, € 0.97 1.75 -44.7
Earnings per share, diluted, € 0.97 1.75 -44.5
Earnings per share excl. non-
recurring items, basic, € 1.65 1.68 -2.1
Cash flow from operating
activities,
€ million 304 414 -26.4
Cash flow from investing
activities,
€ million -182 -152 19.8
Equity per share, € 22.05 22.96 -3.9
Interest-bearing net
liabilities, € million -99 -126 -21.5
Diluted number of shares,
average for the reporting
period, 1,000 pcs 99,161 99,136 0.0
Personnel, average 19,976 19,489 2.5
Group's performance 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
indicators 2013 2013 2013 2013 2014 2014 2014 2014
by quarter
Net sales, € million 2,159 2,420 2,374 2,362 2,129 2,371 2,304 2,267
Change in net sales,
% -6.9 -1.6 -3.1 -3.9 -1.4 -2.1 -2.9 -4.0
Operating profit, €
million 19.2 77.0 84.1 68.0 -13.0 69.4 63.4 31.7
Operating margin, % 0.9 3.2 3.5 2.9 -0.6 2.9 2.7 1.4
Operating profit
excl. non- recurring
items, € million 18.6 69.8 83.6 66.8 19.1 67.6 84.0 61.9
Operating margin
excl. non-recurring
items, % 0.9 2.9 3.5 2.8 0.9 2.9 3.6 2.7
Finance
income/costs,
€ million -3.3 0.4 -2.6 -0.4 -1.6 2.2 -1.8 -5.0
Profit before tax, €
million 15.8 77.2 81.5 67.9 -14.4 71.4 61.7 26.4
Profit before tax, % 0.7 3.2 3.4 2.9 -0.7 3.0 2.7 1.2
Return on capital
employed, % 3.1 12.3 14.2 11.5 -2.2 11.5 10.9 5.5
Return on capital
employed, excl. non-
recurring items, % 3.0 11.1 14.1 11.3 3.2 11.2 14.4 10.7
Return on equity, % 1.9 9.5 10.2 10.8 -2.0 9.4 8.1 3.7
Return on equity,
excl.
non-recurring items,
% 1.8 8.6 10.1 10.6 2.3 9.1 11.3 8.0
Equity ratio, % 51.7 50.5 52.9 54.5 53.2 52.3 54.2 54.5
Capital expenditure,
€ million 41.5 48.1 35.4 46.6 43.4 55.7 51.7 43.2
Earnings per share,
diluted, € 0.11 0.50 0.53 0.60 -0.11 0.51 0.41 0.17
Equity per share, € 22.62 21.79 22.39 22.96 22.83 21.86 22.25 22.05
Segment information
Net sales by segment 1-12/ 1-12/ Change% 10-12/ 10-12/ Change
(€ million) 2014 2013 2014 2013 %
Food trade, Finland 4,213 4,316 -2.4 1,092 1,120 -2.4
Food trade, other countries* 103 71 46.7 27 28 -5.6
Food trade total 4,316 4,387 -1.6 1,119 1,148 -2.5
- of which intersegment trade 173 172 0.4 46 45 1.6
Home and speciality goods trade,
Finland 1,287 1,424 -9.6 386 430 -10.4
Home and speciality goods trade, other
countries* 29 33 -10.8 7 8 -10.0
Home and speciality goods trade total 1,316 1,457 -9.6 393 439 -10.4
- of which intersegment trade 15 17 -12.6 5 5 -14.3
Building and home improvement trade,
Finland 1,157 1,173 -1.3 244 257 -5.0
Building and home improvement trade,
other countries* 1,441 1,435 0.4 341 339 0.5
Building and home improvement trade
total 2,598 2,607 -0.4 585 596 -1.9
- of which intersegment trade -1 -1 -18.1 0 0 0.2
Car and machinery trade, Finland 916 921 -0.6 202 212 -4.6
Car and machinery trade, other
countries* 96 116 -17.5 14 14 -5.6
Car and machinery trade
total 1,011 1,037 -2.5 216 226 -4.7
- of which intersegment trade 1 1 -34.4 0 0 -34.6
Common operations and
eliminations -171 -173 -0.8 -45 -46 -2.1
Finland total 7,401 7,661 -3.4 1,878 1,972 -4.7
Other countries total* 1,669 1,654 0.9 389 390 -0.3
Group total 9,071 9,315 -2.6 2,267 2,362 -4.0
* net sales in countries other than Finland
Operating profit by segment (€ million) 1-12/ 1-12/ 10-12/ 10-12/
2014 2013 Change 2014 2013 Change
Food trade 196.0 208.0 -12.0 44.2 48.3 -4.1
Home and speciality goods trade -85.0 -2.1 -82.9 7.1 23.3 -16.2
Building and home improvement trade 52.4 24.8 27.6 10.1 -1.0 11.1
Car and machinery trade 29.4 33.9 -4.5 1.6 3.3 -1.7
Common operations and eliminations -41.5 -16.3 -25.2 -31.3 -5.9 -25.4
Group total 151.4 248.4 -97.1 31.7 68.0 -36.4
Operating profit excl.
non-recurring items 1-12/ 1-12/ 10-12/ 10-12/
by segment (€ million) 2014 2013 Change 2014 2013 Change
Food trade 202.4 203.3 -0.8 46.7 48.3 -1.6
Home and speciality goods trade -37.4 -8.3 -29.0 11.0 21.6 -10.6
Building and home improvement trade 57.7 25.7 32.0 11.9 -1.1 12.9
Car and machinery trade 29.6 33.9 -4.3 1.8 3.3 -1.5
Common operations and eliminations -19.7 -15.8 -4.0 -9.5 -5.4 -4.2
Group total 232.6 238.8 -6.2 61.9 66.8 -4.9
Operating margin
excl. non-recurring items by 1-12/ 1-12/ 10-12/ 10-12/
segment, % 2014 2013 Changepp 2014 2013 Change pp
Food trade 4.7 4.6 0.1 4.2 4.2 -0.0
Home and speciality goods trade -2.8 -0.6 -2.3 2.8 4.9 -2.1
Building and home improvement trade 2.2 1.0 1.2 2.0 -0.2 2.2
Car and machinery trade 2.9 3.3 -0.3 0.8 1.5 -0.6
Group total 2.6 2.6 0.0 2.7 2.8 -0.1
Capital employed by
segment, cumulative 1-12/ 1-12/ 10-12/ 10-12/
average (€ million) 2014 2013 Change 2014 2013 Change
Food trade 772 821 -49 765 790 -26
Home and speciality goods trade 395 445 -50 383 403 -20
Building and home improvement trade 716 732 -16 703 692 11
Car and machinery trade 162 161 1 167 172 -5
Common operations and eliminations 309 278 31 305 312 -8
Group total 2,354 2,438 -83 2,323 2,370 -47
Return on capital employed excl.
non-recurring items 1-12/ 1-12/ Change pp 10-12/ 10-12/ Change pp
by segment, % 2014 2013 2014 2013
Food trade 26.2 24.8 1.5 24.4 24.4 0.0
Home and speciality goods trade -9.5 -1.9 -7.6 11.5 21.4 -10.0
Building and home improvement
trade 8.1 3.5 4.5 6.8 -0.6 7.4
Car and machinery trade 18.3 21.1 -2.8 4.3 7.8 -3.4
Group total 9.9 9.8 0.1 10.7 11.3 -0.6
Capital expenditure 1-12/ 1-12/ 10-12/ 10-12/
by segment (€ million) 2014 2013 Change 2014 2013 Change
Food trade 91 92 0 19 24 -4
Home and speciality goods trade 17 23 -6 5 6 -1
Building and home improvement trade 60 38 22 16 11 5
Car and machinery trade 14 15 -1 3 3 -1
Common operations and eliminations 11 4 7 0 2 -2
Group total 194 171 23 43 47 -3
Segment information by quarter
Net sales by segment 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
(€ million) 2013 2013 2013 2013 2014 2014 2014 2014
Food trade 1,045 1,099 1,095 1,148 1,007 1,106 1,085 1,119
Home and speciality goods
trade 345 322 351 439 312 288 323 393
Building and home improvement
trade 562 740 710 596 581 736 696 585
Car and machinery trade 249 301 260 226 272 283 240 216
Common operations and
eliminations -42 -41 -43 -46 -44 -42 -40 -45
Group total 2,159 2,420 2,374 2,362 2,129 2,371 2,304 2,267
Operating profit by segment (€
million) 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
(milj. e) 2013 2013 2013 2013 2014 2014 2014 2014
Food trade 48.2 55.1 56.5 48.3 45.4 52.0 54.4 44.2
Home and speciality goods trade -17.7 -5.6 -2.1 23.3 -54.5 -17.6 -20.0 7.1
Building and home improvement
trade -16.1 18.0 23.9 -1.0 -9.7 28.6 23.5 10.1
Car and machinery trade 7.8 13.0 9.8 3.3 8.2 10.9 8.7 1.6
Common operations and
eliminations -3.0 -3.4 -4.0 -5.9 -2.5 -4.5 -3.2 -31.3
Group total 19.2 77.0 84.1 68.0 -13.0 69.4 63.4 31.7
Operating profit excl.
non-recurring items 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
by segment (€ million) 2013 2013 2013 2013 2014 2014 2014 2014
Food trade 48.2 50.8 56.0 48.3 46.5 52.9 56.3 46.7
Home and speciality goods trade -17.8 -10.0 -2.2 21.6 -22.7 -18.3 -7.4 11.0
Building and home improvement
trade -16.6 19.5 23.9 -1.1 -10.4 26.6 29.6 11.9
Car and machinery trade 7.8 13.0 9.8 3.3 8.2 10.9 8.7 1.8
Common operations and
eliminations -3.0 -3.4 -4.0 -5.4 -2.5 -4.5 -3.2 -9.5
Group total 18.6 69.8 83.6 66.8 19.1 67.6 84.0 61.9
Operating margin excl.
non-recurring items 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
by segment, % 2013 2013 2013 2013 2014 2014 2014 2014
Food trade 4.6 4.6 5.1 4.2 4.6 4.8 5.2 4.2
Home and speciality goods trade -5.2 -3.1 -0.6 4.9 -7.3 -6.3 -2.3 2.8
Building and home improvement trade -3.0 2.6 3.4 -0.2 -1.8 3.6 4.3 2.0
Car and machinery trade 3.1 4.3 3.8 1.5 3.0 3.8 3.6 0.8
Group total 0.9 2.9 3.5 2.8 0.9 2.9 3.6 2.7
Change in tangible and intangible assets (€ million)
31.12.2014 31.12.2013
Opening net carrying amount 1,840 1,870
Depreciation, amortisation and impairment -195 -153
Investments in tangible and intangible assets 204 210
Disposals -18 -64
Currency translation differences -29 -22
Closing net carrying amount 1,802 1,840
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 and joint ventures as well as
Kesko Pension Fund.
The following transactions were carried out with related parties:
1-12/2014 1-12/2013
Sales of goods and services 79 83
Purchases of goods and services 21 19
Other operating income 10 10
Other operating expenses 29 28
Finance income and costs 0 0
31.12.2014 31.12.2013
Receivables 8 8
Liabilities 20 19
Fair value hierarchy of financial assets and liabilities (€ million)
Level Level 2 Level 3 31.12.2014
1
Financial assets at fair value through profit
or loss 24 196 219
Derivative financial instruments at fair value
through profit or loss
Derivative financial assets 32 32
Derivative financial liabilities 16 16
Available-for-sale financial assets 65 206 13 285
Fair value hierarchy of financial assets and liabilities (€ million)
Level Level 2 Level 3 31.12.2013
1
Financial assets at fair value through profit
or loss 14 157 171
Derivative financial instruments at fair value
through profit or loss
Derivative financial assets 3 3
Derivative financial liabilities 22 22
Available-for-sale financial assets 57 341 17 415
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 31.12.
Personnel average by
segment 1-12/2014 1-12/2013 Change
Food trade 3,444 3,143 301
Home and speciality goods trade 5,480 5,751 -271
Building and home improvement trade 9,357 8,910 447
Car and machinery trade 1,244 1,252 -8
Common operations 451 433 18
Group total 19,976 19,489 487
Personnel at 31.12.*
by segment 2014 2013 Change
Food trade 3,833 3,570 263
Home and speciality goods trade 7,817 8,483 -666
Building and home improvement trade 10,375 10,066 309
Car and machinery trade 1,241 1,261 -20
Common operations 528 483 45
Group total 23,794 23,863 -69
* total number incl. part-time employees
Group's commitments (€ million)
31.12.2014 31.12.2013 Change, %
Own commitments 202 198 2.3
For associates and joint ventures 65 65 0.0
For others 11 10 4.8
Lease liabilities for machinery and equipment 25 25 -1.4
Lease liabilities for real estate 2,276 2,368 -3.9
Liabilities arising from derivative instruments
(€ million)
Fair value
Values of underlying instruments at 31.12. 31.12.2014 31.12.2013 31.12.2014
Interest rate derivatives
Interest rate swaps 101 202 -0.50
Currency derivatives
Forward and future contracts 328 308 22.63
Option agreements - 3 -
Currency swaps 50 100 -0.79
Commodity derivatives
Electricity derivatives 21 31 -5.35
Calculation of performance indicators
Operating profit x 100 / (Non-current
assets + Inventories + Receivables +
Return on capital employed, % Other current assets - Non-interest-
bearing liabilities) on average for
the reporting period
Operating profit excl. non-recurring
items x 100 / (Non-current assets +
Return on capital employed excl. non- Inventories + Receivables + Other
recurring items, % current assets - Non-interest-bearing
liabilities) on average for the
reporting period
(Profit/loss before tax - Income tax)
Return on equity, % x 100 /
Shareholders' equity
(Profit/loss adjusted for non-
Return on equity excl. non-recurring recurring items before tax - Income
items, % tax adjusted for the tax effect of
non-recurring items) x 100 /
Shareholders' equity
Equity ratio, % Shareholders' equity x 100 /
(Total assets - 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
K-Group's retail and B2B sales, VAT 0% (preliminary data):
1.1.-31.12.2014 1.10.-31.12.2014
K-Group's retail and € million Change,% € million Change,%
B2B sales
K-Group's food trade
K-food stores, Finland 4,604 -2.3 1,183 -2.7
Kespro 783 -1.7 199 -1.5
K-ruoka, Russia 103 46.9 27 -5.4
Food trade total 5,491 -1.6 1,409 -2.6
K-Group's home and speciality goods trade
Home and speciality goods stores, Finland 1,404 -9.0 418 -9.0
Home and speciality goods stores, other
countries 29 -11.2 7 -9.5
Home and speciality goods trade total 1,433 -9.1 425 -9.1
K-Group's building and home improvement
trade
K-rauta and Rautia 1,003 -2.1 218 -7.3
Rautakesko B2B Service 187 -0.2 45 -2.6
K-maatalous 463 0.6 108 -0.8
Finland total 1,653 -1.1 371 -4.9
Building and home improvement stores,
other Nordic countries 868 -6.4 200 -6.6
Building and home improvement stores,
Baltic countries 448 16.1 120 16.1
Building and home improvement stores,
other countries 375 -0.8 88 -5.3
Building and home improvement trade total 3,344 -0.6 779 -2.7
K-Group's car and
machinery trade
VV-Autotalot 389 2.0 94 1.0
VV-Auto, import 387 1.3 82 -7.2
Konekesko, Finland 161 -9.1 29 -17.6
Finland total 936 -0.4 206 -5.4
Konekesko, other countries 101 -15.4 14 -1.3
Car and machinery trade
total 1,037 -2.1 220 -5.1
Finland total 9,381 -2.9 2,377 -4.4
Other countries total 1,924 0.5 456 -1.1
Retail and B2B sales
total 11,305 -2.4 2,832 -3.8
[HUG#1893071]
Kesko's financial statements release for the period 1 Jan. 2014 to 31 Dec. 2014: Profitability and balance sheet remained strong, profit was adversely affected by non-recurring items
| Source: Kesko Oyj
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