Kesko Q1 2020: Record Q1 result, impact of coronavirus epidemic seen from mid-March onwards


  • Net sales for the Group's continuing operations in January-March totalled €2,540.4 million (€2,400.8 million), an increase of 4.0% in comparable terms, reported net sales up by 5.8%
  • Comparable operating profit totalled €65.1 million (€57.5 million)
  • Operating profit totalled €65.9 million (€51.6 million)
  • Cash flow from operating activities totalled €135.7 million, and it grew operatively by €27.0 million
  • Comparable return on capital employed was 9.6% (9.5%) (rolling 12 months)
  • Comparable profit before tax totalled €32.7 million (€34.6 million)
  • Comparable earnings per share were €0.33 (€0.33)



  1-3/2020 1-3/2019 1-12/2019
Continuing operations      
Net sales, € million 2,540.4 2,400.8 10,720.3
Operating profit, comparable, € million 65.1 57.5 461.6
Operating margin, comparable 2.6 2.4 4.3
Operating profit, € million 65.9 51.6 447.8
Profit before tax, comparable, € million 32.7 34.6 370.7
Profit before tax, € million 33.1 28.8 403.3
Cash flow from operating activities, € million 135.7 157.0 893.1
Capital expenditure, € million 99.0 97.3 686.1
Earnings per share, €, basic and diluted      
Continuing operations 0.35 0.28 3.31
Discontinued operations - 0.00 0.12
Group, total 0.35 0.27 3.42
Earnings per share, comparable, €, basic      
Continuing operations 0.33 0.33 2.97
  1-3/2020 1-3/2019 1-12/2019
Continuing operations      
Return on capital employed, comparable, %, rolling 12 months 9.6 9.5 9.6
Return on equity, comparable, %, rolling 12 months 15.0 12.3 15.1
  31.3.2020 31.3.2019 31.12.2019
Equity ratio, % 30.0 31.8 31.2
Equity per share, € 20.09 19.79 20.44


Outlook for Kesko Group's continuing operations is given for year 2020, in comparison with year 2019. 

Due to the COVID-19 pandemic and global economic uncertainty, the company estimates that its comparable operating profit for continuing operations will amount to €400450 million in 2020, thus falling somewhat short of the 2019 comparable operating profit of €461.6 million. The company does not issue a guidance regarding net sales.

Kesko estimates that consumer demand for food will remain good despite the exceptional circumstances brought on by the COVID-19 pandemic. Sales are expected to grow in grocery stores and especially in the online sales of groceries. In the foodservice business and home and speciality goods trade, sales are expected to decrease. Under the current circumstances, it is difficult to provide assessments on sales development in the building and technical trade. A weakening in the overall economy is expected to be reflected in sales to B2B customers. In addition, restrictions on store opening hours affect country-specific sales development in the building and technical trade division. In the car trade, both new and used car sales are expected to decrease compared to 2019.

Due to the weakened economic situation, Kesko has initiated extensive cost adjustment measures to ensure profitability and secure cash flow. The measures include temporary personnel lay-offs and extensive adjustment of other costs.


Despite the exceptional circumstances, Kesko recorded its all-time-best first-quarter comparable operating result. Our net sales increased by 5.8%, totalling €2,540.4 million. Our comparable operating profit totalled €65.1 million, representing an increase of €7.6 million.

At the start of the quarter, sales were strong in all divisions. In the grocery trade, net sales grew by 4.6%, and comparable operating profit rose to €60.4 million. Growth continued in the building and technical trade, both in the building and home improvement trade and Onninen’s technical wholesale. Net sales increased by 6.8% and comparable operating profit rose to €9.3 million. In the car trade, net sales increased by 11.0% due to acquisitions, but decreased by 4.6% in comparable terms. The comparable operating profit for the car trade decreased to €6.1 million.

The COVID-19 epidemic began to affect our operations significantly from mid-March onwards.

In the grocery trade division, the impacts vary. Thanks to our retailer business model, Kesko has been able to respond to the situation in an agile manner. Growth in food retail has been strong both in K-food stores and the online service. K-food store grocery sales grew in all chains in March with a total rate of 9.8%. We have been able to quickly increase capacity for online grocery sales, and has become the biggest online grocery store in Finland. At their highest, our online grocery sales have grown at a pace of over 800% a week. The closures of restaurants, schools and workplaces have pressed Kespro’s sales to approximately 50% of normal levels in recent weeks. 

So far, the epidemic has impacted sales in the building and technical trade division only slightly. Development in B2C sales in the building and home improvement trade has been good in Finland and Sweden. Sales levels have also stayed good in B2B trade. Onninen’s sales development has been very good so far. However, sales in the Baltics have decreased, primarily due to restrictions in Lithuania causing stores to stay closed. In the car trade, demand has weakened significantly. Sales of new and used cars are down, while servicing and spare part sales have remained at almost normal levels.

Although there are ongoing efforts worldwide to stop the epidemic, we must prepare for the possibility that these exceptional circumstances will last for some time. We have taken necessary actions in all our functions at Kesko. Our key priority is to ensure the safety of our customers and personnel. We have also focused on securing our purchasing and supply chains. To secure our cash flow, we have adjusted costs with e.g. temporary personnel lay-offs, we will adjust cash flow from investing activities below €200 million in 2020, and we have increased the availability of financing. We have also paid special attention to securing trade receivables and to ensuring financing.

During the reporting period, Kesko initiated a strategic review concerning the business operations in the Baltics and Belarus.   

Kesko’s financial position is strong. The Annual General Meeting originally convened for 30 March 2020 will be held today, 28 April 2020, at 10.30 am. In line with the Board of Directors’ original proposal, the proposed dividend is €2.52 per share, to be paid in two instalments. The Board also repeats its proposal for a share split in which three new shares are issued to shareholders for each current one held.

Due to the COVID-19 epidemic and global economic uncertainty, we estimate that Kesko’s comparable operating profit for continuing operations will amount to €400–450 million in 2020, thus falling somewhat short of the 2019 comparable operating profit of €461.6 million. Under these exceptional circumstances, we can be happy with this profit level.


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