Building and technical trade strategy

In the building and technical trade division, Kesko will continue to strengthen its leading position in Northern Europe. The business division serves professional builders and technical wholesale customers as well as consumers. It strives to offer them a seamless customer experience in physical stores and digital channels. The division will continue to execute country-specific growth strategies, seeking growth both organically and via acquisitions.

The building and technical trade division operates in 7 countries: Finland, Sweden, Norway, Estonia, Latvia, Lithuania and Poland. In the Baltics and Belarus, building and home improvement trade operations are handled by the joint venture Kesko Senukai. The division has some 500 stores and offers extensive online services via its chains: Onninen serves technical wholesale customers, while K-Rauta, Byggmakker and K-Bygg serve professional builders and consumers. The division previously also included sports trade, which is part of the car trade division from 1 April 2023.

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Strategic focus areas 

Our strategic objective is to gain an even stronger position in building and technical trade in Northern Europe.

Business environment in Northern Europe 

  • Market consolidation
  • Green transition and energy-efficiency requirements growing the market
  • Outsourcing construction to professionals
  • Growing need for renovation and infrastructure investment debt 
  • Technology and digital becoming increasingly important for the customer journey

Strategic objectives 

  • Country focus with country-specific strategic actions, serving three customer segments according to their specific needs
  • Proactive sales work and sales management
  • Improving the digital customer experience
  • Utilising synergies within and between countries
  • Organic growth and profitability improvement, targeted acquisitions
  • Measures to meet our ambitious sustainability goals

Year 2022

High activity in B2B trade

In the building and technical trade division, Kesko continues to strengthen its leading position in Northern Europe by executing country-specific strategies. In 2022, the division’s net sales grew by 9.4% in comparable terms, totalling €4,805,1 million, with a comparable operating margin of 7.1%. International operations account for 46% of net sales.

The business is divided into technical wholesale and building and home improvement trade. In 2022, growth continued in all countries in technical wholesale, while sales in building and home improvement trade stayed at a good level.

Net sales for technical wholesale, i.e. Onninen, totalled €2,286.2 million, and operating profit grew in all operating countries. The technical wholesale business is 100% directed at professionals, with the customer base comprising technical contractors, industry, infrastructure builders, and retailers. Onninen’s business is Kesko’s own retailing.

Combined, B2B customers in technical wholesale and building and home improvement trade accounted for over 80% of the division’s sales. Sales growth in B2B trade continued strong, underpinned by good construction activity. Demand was very strong in products related to the green transition and to improving energy efficiency, which is approximately 36% of the division’s products. Strong demand in renovation building also underpinned the good performance. Renovation building accounts for over half of the division’s sales.

Net sales for building and home improvement trade totalled €2,377.2 million, and comparable operating profit increased. Building and home improvement trade serves both B2B customers (some 68%) and consumers (32%). Kesko’s building and home improvement chains are K-Rauta, K-Bygg and Byggmakker. Kesko also owns half of the company Kesko Senukai, which operates in the Baltic countries and Belarus. The K-Rauta stores in Finland are run by K-retailer entrepreneurs.

The key to our strategy execution is to address the differing needs of our three customer segments –B2B customers in technical wholesale, and B2B and B2C customers in building and home improvement trade – in all channels. We strive to offer a seamless customer experience in physical stores and digital channels. We actively seek synergies within and between our operating countries, for example, in concept, digital service and own brand development.

We continued acquisitions in line with our strategy in 2022 by acquiring the B2B building and home improvement trade companies Djurbergs Järnhandel, Föllinge Såg and XL-BYGG Bergslagen in Sweden, and Seljord Elektriske in Norway. The acquisitions in Sweden strengthen our position in growth centres in northern and central parts of the country, and were merged as part of the growing K-Bygg chain for B2B customers. We continue to see further potential for growth in both Sweden and Norway especially in B2B trade.

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Read more about the country specific achievements and strategy in Kesko's 2022 Annual Report. 

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Market

Outlook for the building and technical trade division weakened during 2022 due to the rise in inflation. However, renovation building grew in all operating countries, thus supporting good demand in B2B trade. B2C trade remained at a good level, but at a more normal level than during the peak pandemic consumer construction boom.

Market growth varied between countries.

Construction related to energy efficiency and the green transition, as well as urbanisation and changes in population structure will continue to support the construction market in Northern Europe. The renovation needs of homes and other properties, building becoming increasingly technical, and growing infrastructure investment debt also support construction.

Growth potential through acquisitions

The Northern European market continues to offer good possibilities for growth also in the form of acquisitions. The building and technical trade markets are fragmented in many of our operating countries, and thus there is excellent potential to continue active sector consolidation. The total potential market with our strategy amounts to over €46 billion in Northern Europe. Currently our market shares are still relatively low in e.g. Norway, Sweden and Poland, which means excellent potential for continued growth also via acquisitions in line with our strategy.

Kesko’s own estimates. Market excluding sports trade.

K Group’s building and technical trade

Number of stores

Retail and B2B sales, VAT 0%, € million

 

2022

2022

Change, %*

K-Rauta, Finland

123

1,279.6

0.3

Rautakesko B2B Service, Finland

-

331.9

17.8

Onninen, Finland

57

1,289.2

17.5

Leisure trade, Finland

62

274.8

-3.7

Finland, total

242

3,175.6

8.0

K-Rauta, Sweden

17

189.8

-5.7

K-Bygg, Sweden

50

382.4

0.9

Onninen and MIAB, Sweden

5

142.4

21.6

Byggmakker, Norway

89

817.3

-3.0

Onninen, Norway

19

374.0

19.6

Onninen, Baltics

18

130.7

37.9

Onninen, Poland

36

350.1

15.1

Other countries, total

234

2,386.7

6.0

Kesko Senukai

60

1,220.5

11.7

Building and technical trade, total

536

6,782.7

7.9

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

* The Change, % compared to the year before has been calculated to illustrate a situation in which the acquisition of Byggarnas Partner i Sverige AB on 1 September 2021, the acquisition of Kungälvs Trävaruaktiebolag on 1 March 2022, the acquisition of Seljord Elektriske AS in Norway on 1 June 2022, the acquisitions of Föllinge Såg AB and Djurbergs Järnhandel Aktiebolg in Sweden on 1 September 2022, and the acquisition of XL Bygg Bergslagen AB on 1 October 2022, had been completed on 1 January 2021.

       

Key figures

2022

2021

Net sales, € million

 

4,805.1

4,387.7

Building and technical trade excl. speciality goods trade

 

4,591.1

4,164.0

Building and home improvement trade

 

2,377.2

2,292.3

Onninen

 

2,286.2

1,930.3

Speciality goods trade

 

214.0

223.7

Operating profit, comparable, € million

 

339.8

318.0

Building and technical trade excl. speciality goods trade

 

302.8

275.4

Building and home improvement trade

 

127.5

154.2

Onninen

 

173.7

122.3

Speciality goods trade

 

16.1

21.2

Kesko Senukai

 

20.9

21.5

Operating margin, comparable, %

 

7.1

7.2

Building and technical trade excl. speciality goods trade

 

6.6

6.6

Building and home improvement trade

 

5.4

6.7

Onninen

 

7.6

6.3

Speciality goods trade

 

7.5

9.5

Return on capital employed, comparable, %

 

19.4

19.0

Capital expenditure, € million

 

108.7

43.1

Personnel, average

 

6,155

5,977

Properties

2022

2021

Owned properties, capital, € million

175

166

Owned properties, area, 1,000 m²

252

241

Leased properties, area, 1,000 m²

883

886

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