Kesko and five other Finnish companies have been included on the Global 100 list of the most sustainable companies in the world, announced today at the World Economic Forum in Davos.
FINANCIAL PERFORMANCE IN BRIEF, CONTINUING OPERATIONS:
KEY PERFORMANCE INDICATORS
|Net sales, € million||5,182.2||5,085.9||2,781.4||2,672.7|
|Operating profit, comparable, € million||179.9||177.0||122.5||113.2|
|Operating margin, comparable||3.5||3.5||4.4||4.2|
|Operating profit, € million||171.5||166.1||119.9||105.8|
|Profit before tax, comparable, € million||133.8||123.3||99.2||85.0|
|Profit before tax, € million||142.8||112.4||114.1||77.5|
|Cash flow from operating activities, € million||428.3||331.7||271.4||215.7|
|Capital expenditure, € million||470.7||128.7||373.4||74.2|
|Earnings per share, €, basic and diluted|
|Earnings per share, comparable, €, basic|
|Return on capital employed, comparable, %, rolling 12 months||9.5||9.8|
|Return on equity, comparable, %, rolling 12 months||14.4||12.5|
|Equity ratio, %||27.9||29.3|
|Equity per share, €||18.44||18.14|
ADOPTION OF IFRS 16 LEASES
At the start of the financial year, the Group adopted the new standard IFRS 16 Leases, which took effect on 1 January 2019. The Group adopted the standard using a retrospective method, and reporting for the 2018 comparison period has been restated to be comparable. The change increases the comparable operating profit and capital employed for the first year-half, and weakens the return on capital employed. At Group level, the change increases the Group’s net finance costs and interest-bearing liabilities. The change has a significant impact on the presentation of the Group’s cash flows, as cash flow-based lease expenditure is partly presented under cash flow from operating activities and partly under cash flow from financing activities. The change does not have an impact on the Group’s cash flows overall.
|1-6/2019, reported||Impact of IFRS 16||1-6/2019excluding the impact of IFRS 16||1-6/2018,reported comparison period||Impact of IFRS 16||1-6/2018excluding the impact of IFRS 16|
|EBITDA, comparable, € million||415.6||+206.5||209.1||392.7||+198.2||194.5|
|Operating profit, comparable, € million||179.9||+45.3||134.6||177.0||+47.9||129.1|
|Profit before tax, comparable, € million||133.8||-3.5||137.3||123.3||-2.6||125.9|
|Cash flow from operating activities, € million||428.3||+159.7||268.6||331.7||+152.5||179.1|
|4-6/2019, reported||Impact of IFRS 16||4-6/2019excluding the impact of IFRS 16||4-6/2018,reported comparison period||Impact of IFRS 16||4-6/2018excluding the impact of IFRS 16|
|EBITDA, comparable, € million||242.2||+104.2||138.0||221.9||+99.3||122.6|
|Operating profit, comparable, € million||122.5||+22.7||99.7||113.2||+24.2||89.0|
|Profit before tax, comparable, € million||99.2||-1.5||100.7||85.0||-1.0||86.0|
|Cash flow from operating activities, € million||271.4||+80.7||190.7||215.7||+75.9||139.8|
Kesko Corporation has provided information on the implementation of IFRS 16 Leases in a 19 December 2018 release containing comparison figures for January-September 2018, in the 2018 financial statements release published on 6 February 2019, in the 2018 financial statements published on 8 March 2019, and in a 25 March 2019 release which comprised comparison figures for the full financial year 2018. Detailed information regarding the impacts of IFRS 16 Leases is provided in the Tables section of this release: information on impacts on the consolidated financial statements on page 37, and on operating profit and EBITDA by segment on page 31 and onwards.
PRESIDENT AND CEO MIKKO HELANDER:
Kesko’s strong growth strategy execution increased our net sales and further improved our profit. The comparable operating profit amounted to €122.5 million, and comparable profit before tax totalled €99 million, representing an increase of €14 million. The Group’s cash flow also strengthened further.
Growth in grocery trade division continued to outpace the market in all our chains. Profitability was boosted by growth in sales and continued improvements in cost-efficiency. Customer numbers rose in all K-store chains thanks to successful store redesigns. Online sales of groceries also continued to grow, at a pace of 119%. During the reporting period, we agreed to acquire Heinon Tukku. Once completed, the acquisition will be an excellent addition to complement Kespro’s current service offering and will significantly improve our customer service in the greater Helsinki area.
In the building and technical trade division, sales grew and profit improved. The growth was the strongest in the Baltic countries, Sweden and Norway. Growth also continued in Finland. The division’s sales growth was reduced by the timing of Easter, which fell on April, and the fact that the period had fewer selling days than the comparison period last year. The division’s comparable operating profit totalled €48 million, representing an increase of €8 million. The strengthening of our operations in Sweden is proceeding according to plans. During the period, we completed the acquisition of the Fresks building and home improvement trade chain and the divestment of Onninen AB’s loss-making HEPAC contractor business in Sweden.
The market remained challenging for the car trade division. The implementation of WLTP emissions testing, uncertainties regarding car taxation as well as public discussion on motive power choices have slowed down new car sales. We expect the market to improve in the latter half of the year. We have completed the acquisitions related to the strategic expansion and increased efficiency of our sales and service network, and the integration of these acquisitions is proceeding according to plans.
Our results show that the strategy we first established in 2015 is working. We will continue the determined execution of that strategy, and we expect our net sales to grow and profitability to improve further. In addition to profitable growth, we are strengthening our corporate responsibility efforts in all areas, and actively work together with others in mitigating climate change.
This summer, more than 1,800 Kesko employees in the greater Helsinki area moved into K-Kampus, our new main office building. Working under one roof will enable increased collaboration across organisational boundaries, in the spirit of “one unified K”.