Strategy, value, vision and mission

The core of Kesko's strategy is profitable growth in three strategic areas: the grocery trade, the building and technical trade, and the car trade. We differentiate ourselves from the competition with quality and customer orientation.

The customer and quality – in everything we do

 

Kesko and K-stores are working increasingly strongly as a unified K Group, so we can offer our customers even better services and operate efficiently. Our strategic objective is to strengthen the customer experience for consumers and companies both in stores and in digital channels. We modernise the chain concepts, build the best digital services in the trading sector and reform the K-Plussa customer loyalty system.

 

 

In the grocery trade, our strategic objective is good profitability and a stronger market share in Finland. We want to offer the most inspiring food stores and digital services in the market. The growth strategy is underpinned by the acquisition of Suomen Lähikauppa completed in early 2016. In consequence of the acquisition, at least 400 Valintatalo and Siwa stores will be renewed into K-Markets by spring 2017. In addition, the current approximately 400 K-Market chain stores and 60 Neste K stations will be modernised by the end of 2017. We will carry out a modernisation of the K-Citymarket chain by the end of 2018 and create 81 different stores with product selections and services that reflect their customer bases. We are refining the K-Supermarket concept and expanding the network with new store sites. In addition, we are strengthening our digital approach and improving the level of quality and service in K-food stores, and renewing the marketing model. We disposed of the Russian grocery trade towards the end of 2016. 

Kesko operates in the building and technical trade in nine countries and is the fifth largest operator in the European building and home improvement trade market. The strategic objective is growth and a stronger position in Europe. The acquisition of Onninen, a company specialising in HEPAC and electrical products, in the first half of 2016 will significantly support this. The combination of Onninen and Kesko's building and home improvement trade has enabled us to create a unique B2B trade entity on the market. We are making major developments in digital services and e-commerce. In Finland, K-Rauta and Rautia stores will be combined under the renewed K-Rauta brand. The brand renewal in other operating countries will take place in phases.

 

In the car trade, Kesko is the market leader in Finland, and our objective is to increase our market share in the car trade, particularly in Finland. We are actively developing new business models and improving the multi-channel customer experience. Towards the end of the year, we acquired the rights to represent and import Porsche vehicles in Finland.

In addition, we are developing Kesko's other businesses, which include the furniture trade, the sports trade, the agricultural trade, the machinery trade and the shoe trade, with the aim of increasing their value.

To ensure competitiveness and improve profitability, we have realised savings of €50 million in fixed costs. We estimate that the acquisitions will generate over €30 million in synergies at the EBITDA level from 2018 onwards and over €60 million from 2020 onwards.

In 2015 and 2016, we made capital expenditure of €500 million in business operations, excluding acquisitions. As of 2018, we estimate that the annual capital expenditure will be less than €200 million.
 

Strategic objectives

 

  • Growth in grocery trade
  • Growth and expansion of the building and technical trade in Europe
  • Growth of the car trade, particularly in Finland
  • The best customer experience in the trading sector in all channels
  • A single, unified Kesko, seeking synergies and efficient common functions

Financial targets and capital expenditure

Indicator

Target

Return on capital employed*

14%

Return on equity*

12%

Interest-bearing net liabilities / EBITDA

<2.5

Capital expenditure in 2015-2017

c. €750 million**

*  Excluding non-recurring items.
** Excluding possible acquisitions.

Value

Customer and quality – in everything we do

Vision

We are the customer's choice and the quality leader in the European trading sector.

Mission

We create welfare responsibly for all our stakeholders and the whole society.

 

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