Building and technical trade strategy

The building and technical trade division achieved a record result in 2020 thanks to systematic execution of country-specific strategies and a favourable market. Net sales grew forcefully and profit rose to a new level. During the year, we continued the determined execution of our growth strategy both organically and via acquisitions. Our strategic objective is to become an even stronger operator in Northern Europe.

K Group’s building and technical trade division is the leading operator in Northern Europe. Despite the exceptional circumstances, we continued the execution of our country-specific strategies in 2020, and the division’s profitability rose to a new level. The Covid-19 pandemic and related restrictions impacted our operations across Northern Europe. With people working from and spending more time at home and spending money domestically, consumer demand grew, especially in Finland, Sweden and Norway. Sales stayed at a good level also in B2B trade, as most construction sites remained open as usual.

The key to our strategy execution is to acknowledge the differing needs of our three customer segments – technical professionals, professional builders, and consumers – in all channels. B2B operations account for nearly 70% of our net sales. Less than half of our profit improvement was attributable to the construction and renovation boom caused by the pandemic. We have also sought synergies within and between the operating countries in areas such as concept, digital service and own brand development. In 2020, we continued targeted acquisitions in line with our strategy in Norway and Sweden, as well as the integration of previously acquired businesses.  

Business environment

  • Market consolidation
  • Outsourcing of construction to professionals
  • Growth in renovation building
  • Non-traditional players entering the market
  • Digital becoming increasingly important for the customer journey

STRATEGIC OBJECTIVE

WHAT WE ARE DOING

  • Country focus, with country-specific strategic actions
  • Serving three different customer segments according to their specific customer needs
  • Seeking synergies 
  • Organic growth and profitability improvement
  • Targeted acquisitions

Technical trade customers
 > Building, infrastructure, resellers, industry

  • 1,500 technical sales professionals
  • Distribution centres deliver almost 40,000 order lines a day, some 50% via an automated process
  • Customer-tailored logistic services
  • Comprehensive store network of 131 Onninen Express stores
  • Multiple digital channels with combined sales of €400 million

DIY and professional builders
 > B2C and B2B

  • A comprehensive network of 331 stores in prime locations with near-by deliveries
  • Over 160 million customer visits annually on our online sites
  • Strong multichannel customer experience with growing online sales
  • Strong B2B sales – 185,000 professional builder customers
  • Differentiating own brands, with sales of around €200 million

Building and technical trade net sales and operating profit for 1-12/2020

The building and technical trade strategy review can be read in Kesko's 2020 Annual Report. 

Information on the impacts of the Covid 19 pandemic on Kesko’s businesses can be found under the Operating environment section.

K Group’s building and technical trade Number of stores

Retail and B2B sales,
VAT 0%,
€ million

  2020   2020 Change, %
K-Rauta, Finland 130   1,172.3 9.0
Rautakesko B2B Service  -    249.1 -2.5
Onninen, Finland 57   961.4 8.2
Leisure trade, Finland 103   264.2 -5.9
Finland, total 290   2,647.1 5.9
K-Rauta, Sweden 17   186.3 14.1
K-Bygg, Sweden 36   240.9 10.8
Onninen and MIAB, Sweden 3   108.3 -0.8
Byggmakker and Carlsen Fritzoe, Norway 86   717.2 1.0
Onninen, Norway 18   243.6 -3.9
Onninen, Baltic countries 17   79.9 -5.7
Onninen, Poland 36   235.1 -1.3
Other countries, total 213   1,811.4 2.0
Building and technical trade exl. Kesko Senukai, total  503   4,458.4 4.3
Kesko Senukai 59    922.4 6.9 
Building and technical trade incl. Kesko Senukai, total  562    5,380.8  4.7 

In addition, building and technical trade stores offer e-commerce services to their customers.
Two Onninen stores in Finland operate on the same store premises with K-Rauta.   

         
Key figures   2020 2019
Net sales, € million     3,639.5 3,472.8
Building and technical trade excl. speciality goods trade and Kesko Senukai     3,424.3 3,1261
Speciality goods trade     215.2 346.7
Operating profit, comparable, € million     187.7 115.9
Building and technical trade excl. speciality goods trade and Kesko Senukai     169.4 98.5
Speciality goods trade     7.4 9.5
Kesko Senukai     11.0 7.8
Operating margin, comparable, %     5.2 3.3
Building and technical trade excl. speciality goods trade and Kesko Senukai     4.9 3.2
Speciality goods trade     3.4 2.7
Return on capital employed, comparable, %, rolling 12 months     11.2 7.4
Capital expenditure, € million     186.3 332.7
Personnel, average     9,308 12,630
 The change in Kesko Senukai’s consolidation method from a subsidiary to a joint venture as of 1 July 2020 has impacted the performance indicators for the building and technical trade in the segment information. In the segment information for the building and technical trade, performance indicators are illustrative except for the balance sheet indicators and personnel numbers.
Properties   2020 2019
Owned properties, capital, € million   159 222
Owned properties, area, 1,000 m²   230 235
Leased properties, area, 1,000 m²   865 1,253
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