Kesko interim report for the period 1 Jan. - 30 Sept. 2018: improved comparable operating profit and all-time-best quarterly performance in Q3

FINANCIAL PERFORMANCE IN BRIEF, CONTINUING OPERATIONS:

  • The Group's net sales in January-September totalled €7,728 million (€7,917 million), an increase of 3.6% in comparable terms
  • Comparable operating profit was €241.7 million (€215.8 million)
  • Operating profit was €228.2 million (€267.8 million)
  • Cash flow from operating activities was €309.6 million (€181.2 million).
  • Comparable return on capital employed was 13.8% (12.4%) (rolling 12 months)
  • Comparable profit before tax was €237.7 million (€218.7 million)
  • Comparable earnings per share were €1.77 (€1.64)
  • In comparable terms, the net sales for continuing operations for the next 12 months are expected to exceed the level of the previous 12 months. The comparable operating profit for continuing operations for the next 12-month period is expected to exceed the level of the preceding 12 months. However, investments in the expansion of logistics operations and in information systems and digital services will burden profitability during the period. Furthermore, in the car trade, profitability is burdened by the shift to WLTP emissions testing, which postpones car delivery times.

KEY PERFORMANCE INDICATORS

  1-9/2018 1-9/2017 7-9/2018 7-9/2017
Continuing operations        
Net sales, € million 7,728 7,917 2,642 2,596
Operating profit, comparable, € million 241.7 215.8 112.6 100.5
Operating margin, comparable 3.1 2.7 4.3 3.9
Operating profit, € million 228.2 267.8 110.0 96.7
Profit before tax, comparable, € million 237.7 218.7 111.8 100.3
Profit before tax, € million 224.2 270.7 109.1 96.5
Cash flow from operating activities, € million 309.6 181.2 130.5 97.8
Capital expenditure, € million 349.9 216.4 221.2 62.9
Return on capital employed, comparable, %, rolling 12 months 13.8 12.4 13.8 12.4
Group        
Return on equity, comparable, %, rolling 12 months 11.6 9.9 11.6 9.9
         
Earnings per share, €, basic and diluted        
Continuing operations 1.63 2.18 0.79 0.67
Discontinued operations -0.54 -0.01 -0.03 0.01
Group, total 1.09 2.16 0.77 0.69
Earnings per share, comparable, €, basic        
Continuing operations 1.77 1.64 0.81 0.71
  30.9.2018 30.9.2017  
Group      
Equity ratio, % 48.5 49.1  
Equity per share, € 20.78 20.89  

PRESIDENT AND CEO MIKKO HELANDER:

Kesko’s net sales continued to grow in the third quarter, in line with our growth strategy. Our operating profit also improved and we delivered our best quarterly result ever. Our cash flow development was also good and our financial position remained strong. Return on capital employed nearly met our target level.

Performance in the grocery trade continued strong: our sales, market share and profitability all improved in the third quarter. The importance of quality, selections and good online services continues to grow. Our objective is to offer the most inspiring and customer-oriented physical and online grocery stores. We were pleased with the growth in our customer numbers and sales in all chains, and our online food sales also grew considerably. We have nearly doubled the number of stores across Finland offering online food sales: the number will near 150 by the end of this year. Kespro continued to perform well in the foodservice market. We continued investments in store redesigns, logistics operations, information systems and digital services.

The operating environment for the building and technical trade has continued to be positive, although the growth pace is expected to slow down and share of renovation building to grow. In our building and technical trade division, we continued the implementation of country-specific strategies and strengthened our business through acquisitions. Net sales for the division grew and the operating profit excluding the speciality goods trade improved by €7 million. K-Rauta in Finland performed well, and Onninen’s growth and profitability also strengthened further. In Norway, sales and profit increased thanks to the acquisitions made to strengthen the Byggmakker chain. In Sweden, we continued efforts to improve the profitability of K-Rauta and Onninen.

Development in the car trade was in line with our expectations. The division’s net sales and operating profit were at a good level even though the implementation of the new WLTP emissions testing at the beginning of September had a weakening impact on performance in the short term. The situation is expected to return to normal during the first half of 2019.

Kesko was again included in the prestigious Dow Jones Sustainability Indices, the DJSI World and DJSI Europe. We received the industry best overall score in the Environmental Dimension.
 

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