Kesko’s Annual Report: Economic benefit generated by Kesko and K-retailers to Finnish regions over 8 billion euros

Kesko’s Annual Report 2018 describes the progress made in Kesko’s strategy execution and sustainability work, with comprehensive performance indicators. The report depicts how K Group creates value for the whole society and measures taken for the environment and for ensuring the responsibility of supply chains.

Kesko has published its Annual Report 2018 in Finnish and in English as PDF files.



The section on Kesko’s direction provides a review of Kesko’s strategy and its execution.

“In 2018, Kesko and K Group continued to transform intensely. All our businesses – the grocery trade, building and technical trade, and car trade – increased their sales and improved their profitability. Our strategy of profitable growth, sharper focus, and “One unified K” has paid off,” notes Mikko Helander, President and CEO of K Group, in his review.

Key figures:

• K Group’s (pro forma) sales totalled some €13 billion in 2018. K Group is the biggest trading sector operator in Finland and one the biggest in Northern Europe, and employs some 41,000 people.
• Kesko recorded its all-time best result in 2018: net sales grew in comparable terms by 3.5% and amounted to €10,383 million, comparable operating profit rose to a record €332.2 million.
• Kesko achieved its 14% target level for return on capital employed, set in 2015.
• Income taxes paid by Kesko in 2018 totalled €63.7 million in Finland and €8.3 million in other countries. The Group’s effective tax rate was 20.5%.

Our most important stakeholders are future generations

The Sustainability section of the report has been assured by an independent third party, and depicts key areas of sustainability for the company and its stakeholders and progress made in those areas.

“Our most important stakeholders are future generations. The decisions we make today will have an impact for decades to come. This includes our strategic objectives, climate work, human rights commitment, and long-term efforts to improve sustainability in our supply chain. We are committed to promoting the UN Sustainable Development Goals in our operations. Our sustainability strategy, established in spring 2018, focuses our sustainability efforts increasingly on our customers. We want to enable a sustainable lifestyle for our customers in terms of food, mobility and living,” says Matti Kalervo, Vice President of Corporate Responsibility at K Group.



Progress made in our responsibility programme in 2018:

Support for Finnish production:

  • K-retailers’ direct purchases from Finnish regions have grown by 37.2% in five years, and totalled €777.6 million in 2018.
  • Thank the Producer products support Finnish farmers: K Group will pay an additional sum of €650,000 directly to the food producers for 2018.
  • The number of Pirkka products with a label indicating Finnish origin grew by 23.6% on the year before. In 2018, the Pirkka range had 286 Hyvää Suomesta - Produce of Finland products, 153 Key Flag symbol products, and 111 Seed leaf label products.

Supply chain and selections:

  • K Group encourages its customers to increase their use of vegetables. In 2018, approximately 400 K-food stores had a dedicated “veggie shelf”; we organised 270 vegetable campaigns at the stores; and we added 42 new fruit and vegetable products to our selections.
  • K Group monitors and develops the responsibility of its supply chains with suppliers' factory audits and responsibility trainings. At the beginning of 2019, Kesko’s suppliers in high-risk countries had a total of 585 valid social responsibility audits.
  • K Group offers an extensive selection of own brand products with responsibility labelling. In 2018, Fairtrade products sold by Kesko’s grocery trade generated a total Fairtrade premium of €915,909 for social development projects.
  • K Group’s products are well researched, safe and responsibly manufactured. K Group’s own Product Research unit analysed a total of 7,678 product samples and 2,300 own control samples in 2018.


Working community:

  • Our aim is to increase the proportion of women in management. Over the past two years, the percentage of women in Kesko’s top management has risen from 24.1% to 28.6%, and in middle management from 20.0% to 23.3%.
  • A permanent operating model for employing young people and people from special groups: more than 4,700 young people have been hired by K Group through work trials, salary support and apprenticeship training.

Environment:

  • All electricity purchased by Kesko for use in K-stores and other Kesko properties in Finland is produced with renewable energy, with Renewable Energy Guarantees of Origin (REGOs). In 2018, 58% of the renewable electricity purchased was based on hydropower and 42% on bioenergy.
  • K Group is building a nationwide network for electric car charging in Finland: by the end of 2019, the K Charge network will consist of more than 70 charging stations with nearly 400 charging points.
  • By the end of 2018, 27 solar power plants had been installed on K-store rooftops. Investments will continue this year, with four new solar power plants to be completed during spring 2019. With more than 30 solar power plants, K Group is the biggest producer and user of solar power in Finland.

Kesko's Annual Report contains Kesko’s financial statements, Report by the Board of Directors, Corporate Governance Statement, and Remuneration Statement for 2018. The review of non-financial information is included in the Report by the Board of Directors.

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