Kesko interim report for 1 Jan.- 30 Sept. 2022: Sales growth improved profit

FINANCIAL PERFORMANCE IN BRIEF:

7-9/2022

  • Group net sales in July-September totalled €3,009.8 million (€2,902.4 million), an increase of 3.4% in comparable terms, reported net sales grew by 3.7%
  • Comparable operating profit totalled €242.8 million (€236.4 million), up by €6.4 million
  • Operating profit totalled €242.4 million (€236.5 million)
  • Comparable earnings per share €0.47 (€0.43)
  • Reported Group earnings per share €0.47 (€0.43)

1-9/2022

  • Group net sales in January-September totalled €8,825.5 million (€8,429.9 million), an increase of 4.5% in comparable terms, reported net sales grew by 4.7%
  • Comparable operating profit totalled €622.5 million (€572.0 million), up by €50.5 million
  • Operating profit totalled €625.3 million (€570.3 million)
  • Comparable earnings per share €1.18 (€1.03)
  • Reported Group earnings per share €1.18 (€1.03)

 
KEY PERFORMANCE INDICATORS

  7-9/2022 7-9/2021 1-9/2022 1-9/2021 1-12/2021
Net sales, € million 3,009.8 2,902.4 8,825.5 8,429.9 11,300.2
Operating profit, comparable, € million 242.8 236.4 622.5 572.0 775.5
Operating margin, comparable, % 8.1 8.1 7.1 6.8 6.9
Operating profit, € million 242.4 236.5 625.3 570.3 775.2
Profit before tax, comparable, € million 231.7 219.3 584.7 522.5 710.4
Profit before tax, € million 231.3 220.0 583.9 523.7 712.9
Cash flow from operating activities, € million 318.8 381.2 652.2 882.8 1,152.0
Capital expenditure, € million 89.9 69.1 340.7 196.0 276.6
           
Earnings per share, €, basic and diluted 0.47 0.43 1.18 1.03 1.44
Earnings per share, comparable, €, basic 0.47 0.43 1.18 1.03 1.43
  1-9/2022 1-9/2021 1-12/2021
Return on capital employed, comparable, %, rolling 12 months 17.6 16.3 17.2
Return on equity, comparable, %, rolling 12 months 25.3 24.3 24.1

In this interim report release, the comparable change % in net sales has been calculated in local currencies and excluding the impact of acquisitions and divestments completed in 2021 and 2022. The comparable operating profit has been calculated by deducting items affecting comparability from the reported operating profit.

GUIDANCE 2022

Kesko Group’s guidance is given for the year 2022, in comparison with the year 2021. Kesko estimates that its comparable operating profit in 2022 will be in the range of €790 – 840 million. Before, the company estimated that the comparable operating profit would be in the range of €750 – 840 million. In 2021, Kesko’s comparable operating profit totalled €775.5 million.

OUTLOOK FOR 2023

Kesko’s net sales and operating profit are expected to remain at a good level also in 2023 despite the challenges in the company’s operating environment.

The grocery trade market is expected to remain stable as a whole, in part supported by price inflation. Kesko is a strong operator in all areas of food trade. Consequently, operating profit is expected to remain at a good level despite rising costs.

The construction market is expected to decrease somewhat compared to 2022. New building construction is expected to decrease, but renovation building and construction related to the green transition are expected  to continue to grow. B2B trade accounts for over 80% of the sales for Kesko’s building and technical trade division. Good profit levels in building and technical trade are underpinned by the significant share of renovation building and the strong demand for products related to saving energy and the green transition.

In the car trade market, the availability and demand for cars are expected to remain below their long-term average in 2023. Despite the market situation, profitability in Kesko’s car trade division is expected to remain at a good level thanks to the transformation and efficiency measures carried out.


PRESIDENT AND CEO MIKKO HELANDER:

Kesko’s Q3 result in 2022 was the best quarter result in the company’s history. Our quarter-result has now improved on its comparison period for 14 consecutive quarters. Net sales grew by 3.4% in comparable terms, totalling €3,010 million. Our comparable operating profit totalled €243 million, representing an increase of €6.4 million. The results achieved act as strong proof of Kesko’s uniqueness as a trading sector operator and the effectiveness of our strategy also in a post-pandemic market. 

In food trade, profit improved thanks to good performance in Kespro and our grocery stores. The division’s sales continued to grow, and its net sales totalled €1,574 million and operating profit €133.4 million. The operating profit improved thanks to sales growth in both Kespro and the grocery stores. Kespro’s performance was particularly strong, with sales growth of over 15%. Consumer online grocery sales also grew by 3.4%. Online growth is also supported by the extensive collaboration we have launched with Wolt. We have focused more on the price-competitiveness of our grocery stores and have ranked well in price comparisons in the media. K Group grocery stores are the only ones on the market that offer both bargains and premium under one roof. 

In the building and technical trade division, all businesses delivered good results. Growth continued and profit strengthened in B2B trade. The division’s net sales grew by €70 million and totalled €1,203 million. The growth was attributable to good performance in B2B trade. Sales growth was particularly strong in technical wholesale, where volumes grew especially robustly in the heating and energy product categories. In Finland, both Onninen and K-Rauta recorded strong results. In Norway, profitability was good for both Onninen and Byggmakker. The result in Sweden was good thanks to B2B-focused K-Bygg, Onninen and MIAB. B2B trade now accounts for over 80% of the division’s sales.

In the car trade division, profitability remained good despite availability issues. Net sales decreased due to issues with new car deliveries. Profitability was at a good level thanks to better sales margins and efficiency measures, and the operating margin stood at 5.5%. The share of electric cars is growing forcefully in passenger car sales. Our K Charge EV charging network is expanding, and charging has more than doubled in a year.

We estimate that the outlook for Kesko’s business will be positive also in 2023. All three business divisions are making a good profit. Kesko has an exceptionally strong position in all areas of Finnish food trade, and we are doing well also in a price-driven market. K Group is the leading operator in technical wholesale and building and home improvement trade in Northern Europe, with total retail and B2B sales of over €6.7 billion. The green transition, efforts to improve energy-efficiency, and growing renovation building are set to keep up demand also going forward. Kesko estimates that its comparable operating profit in 2022 will be in the range of €790 – 840 million. Kesko’s net sales and operating profit are expected to remain at a good level also in 2023 despite the challenges in our operating environment.

 

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