KESKO’S FINANCIAL STATEMENTS: PROFIT FIM 690 MILLION, PROPOSED DIVIDEND FIM 3.00 PER SHARE
In 1997, Kesko Corporation’s net sales amounted to FIM 34,824 million, an increase of 18.9% compared with the previous year. The net sales of the Foodstuffs Division grew by 2.4%, Builders’ and Agricultural Supplies Division by 13.1% and International Division by 13.9%. The net sales of the Home and Speciality Goods Division increased to 2.3-fold when the business operations of Anttila Oy were merged with the Corporation. The K-Plussa loyal customer system introduced in November was well received by customers and increased sales towards the end of the year. When taking the Corporation’s structural changes into account, the comparable rise in net sales was 5.6%.
Gross profit increased by FIM 1,641 million and fixed expenses by FIM 1,264 million. The growth was mainly due to changes in the corporate structure. Operating profit rose to FIM 644 million (FIM 485 million). Corporation’s profit before extraordinary items and taxes was FIM 690 million (FIM 740 million). Other operational income includes profits of FIM 122 million from the sale of shares and real estate. Financial income dropped to FIM 46 million (FIM 255 million). Due to the sale of Suomen Spar Oy’s and TukoSpar Oy’s shares, as well as the real estate used for Tuko Oy’s daily consumer goods business, the share of associated companies profits/losses included in financial income decreased to FIM 35 million from the previous year’s FIM 133 million.
Kaukomarkkinat Group, VV-Auto Oy and K-Cash & Carry Ltd of major subsidiaries achieved good results. Anttila Oy’s operations were clearly better than before and became profitable. The wholesale business operations of Rautia Oy were transferred to Kesko Hardware and Builders’ Supplies from 1 September 1997.
Corporation’s total investments were FIM 923 million, of which investments in stores sites and premises were FIM 405 million and in wholesale operations FIM 518 million.
Return on capital invested was 8.2% (9.0%) and return on equity 6.7% (7.3%). Equity ratio was 53.2%(51.9%). At the end of 1997, Corporation’s interest-bearing net debt amounted to FIM 1,062 million (FIM 2,153 million.
Corporation’s earnings per share were FIM 5.87. Kesko’s Board of Directors proposes to the Annual General Meeting that a dividend of FIM 3.00 per share be distributed for 1997.
During the year, the average number of personnel in the Corporation was 10,672 persons and in the parent company 3,289 persons. The average increase was 4,169 persons, of which the share of Anttila Oy, Rautia Oy and Hämeenkylän Kauppa Oy was nearly 3,100 persons. The number of personnel was also increased significantly by the transfer of Carrols Companies to the Corporation.
2 (6)
The average number of personnel in the parent company increased by 381, which was mainly due to the transfer of Anttila Oy’s central warehouse and administration personnel to the parent company.
By autumn 1997, Kesko had fulfilled all the obligations imposed on it by the EU Commission in connection with the Tuko deals.
After Kesko had sold the whole daily consumer goods business of Tuko in accordance with the agreement made on 7 February 1997, Anttila Oy and Rautia Oy, which remained in Kesko’s ownership, were merged with the Corporation from 1 January 1997, and Carrols Companies from 1 May 1997. Suomen Spar Oy and TukoSpar Oy, which were temporarily owned and resold, have been dealt with as associated companies until 30 April 1997. The real estate with related shares used for Tuko’s daily consumer goods business was transferred to the buyers on 30 June 1997.
FOODSTUFFS DIVISION
Net sales of the Foodstuffs Division were FIM 17,364 million, a growth of 2.4% on the previous year. Sales developments were affected by the contradiction of the store network when about a hundred of mainly small customer K-stores closed down during the year. The sales of HoReCa Wholesale and K-Cash & Carry Ltd to restaurants, institutional kitchens and service stations developed favourably, which increased sales in this sector.
Net sales of major business units were as follows:
Net sales, FIM million 1997 Change, %
Rimi Chain Unit 137 18.8
Neighbourhood Store Chain Unit 3,045 - 2.1
Supermarket Chain Unit 3,000 - 1.2
Superstore Chain Unit 2,815 1.8
Citymarket Chain Unit 3,317 - 4.1
HoReCa Wholesale 2,285 9.2
K-Cash & Carry Ltd 1,819 6.7
K-yhtiöt Oy Citymarkets 1,659 3.4
Kesped Ltd 402 10.8
Carrols Companies 138 -
Kesko Eesti A/S 67 45.7
K-Plus Oy 85 -
K-Luotto Oy 22 -
HOME AND SPECIALITY GOODS DIVISION
Net sales of the Home and Speciality Goods Division amounted to FIM 5,191 million, which was nearly 2.3-fold compared with the previous year. The growth mainly resulted from the merging of Anttila Oy’s business operations with the Corporation. Net sales of Kesko Shoes, Home Technology and Sports increased more than average in their sectors. Net sales of major business units were as follows:
Net sales, FIM million 1997 Change, %
Kesko Shoes 282 35.6
Kesko Home Technology 564 16.9
Kesko Clothing 284 - 1.1
Kesko Sports 568 18.7
Anttila Group 3,370 -
Aleksi 13 Oy 177 24.8
Motorfeet Ltd 25 15.6
Academica Oy 24 -
BUILDERS’ AND AGRICULTURAL SUPPLIES DIVISION
Net sales of the Builders’ and Agricultural Supplies Division amounted to FIM 7,548 million, representing a rise of 13.1%. The good investment rate of farms increased sales of agricultural machines and implements.
The picking up of new construction activities and a wide network of K-hardware stores in growth areas increased the sales of Kesko Hardware and Builders’ Supplies. This was reflected particularly well in sales developments of basic building products and timber. The transfer of Rautia Oy’s wholesale operations to Kesko Hardware and Builders’ Supplies in September increased sales.
Net sales of major business units were as follows:
Net sales, FIM million 1997 Change, %
Kesko Hardware and
Builders’ Supplies 3,378 12.2
Kesko Agriculture and Machinery 3,352 13.1
K-maatalousyhtiöt Oy 751 25.5
Rautia Oy 738 -
Kesko Svenska AB/K-rauta 32
ZAO Kestroi Moskva 1 25
INTERNATIONAL DIVISION
Net sales of the International Division were FIM 4,575 million, a growth of 13.9%.
Net sales of Kaukomarkkinat Group amounted to FIM 2,598 million. The transfer of the Russian trade in Panasonic products to its principal decreased net sales. The comparable increase in Kaukomarkkinat Group’s sales was 13.0%.
Net sales of VV-Auto Group were FIM 2,045 million, a growth of 13.4%. Sales of cars continued to show a good increasing trend. In the fourth successive year Volkswagen the best selling car make in Finland.
Net sales of major business units were as follows:
Net sales, FIM million 1997 Change, %
Kaukomarkkinat Group 2,598 -
VV-Auto Group 2,045 13.4
MK-mainos Oy 158 25.5
Kesko Export Ltd 13 - 32.1
Viking Coffee Ltd 321 -
Kauppiaitten Kustannus Oy 21 -
OTHER SUBSIDIARIES
Other major subsidiaries include: Tietokesko Oy, which produces information technology services for Kesko’s business units, net sales FIM 162 million; K-linkki Oy, which produces information system services to retailers, net sales FIM 77 million; Kestra Kiinteistöpalvelut Oy, which produces real estate maintenance services, net sales FIM 147 million; and the real estate company Hämeenkylän Kauppa Oy (former Tuko Oy), net sales FIM 139 million.
The information is based on the financial statements signed by the Board of Directors and the figures are unaudited.
For further information, please contact Vice President Riitta Laitasalo, telephone +358 1053 22060.
Kesko Ltd
Corporate Communications
Erkki Heikkinen
Director
Kesko Corporation’s financial statements at 31 December 1997
CONSOLIDATED INCOME STATEMENT(FIM million)1-12/97 1-12/96 Change, %
NET SALES 34,824 29,279 18.9
Costs -33,593 -28,415 18.2
OPERATING PROFIT BEFORE
DEPRECIATION 1,231 864 42.6
Plan depreciation -587 -379 54.9
OPERATING PROFIT 644 485 32.9
Financial income and expenses 46 255 -82.2
PROFIT BEFORE EXTRAORDINARY
ITEMS AND TAXES 690 740 -6.8
Extraordinary income 7 322 -97.8
Extraordinary expenses -12 -411 -97.0
PROFIT BEFORE TAXES 685 651 5.1
NET PROFIT 526 481 9.3
CONSOLIDATED BALANCE SHEET(FIM million)
1-12/97 1-12/96 Change, %
ASSETS
FIXED ASSETS AND OTHER
NON-CURRENT INVESTMENTS 7,065 7,417 -4.7
STOCKS 2,739 2,403 14.0
OTHER CURRENT ASSETS 5,565 4,989 11.5
TOTAL 15,369 14,809 3.8LIABILITIES AND SHAREHOLDERS’ EQUITY
SHAREHOLDERS’ EQUITY
Share capital 902 902 0.0
Other shareholders’ equity 7,053 6,699 5.3
MINORITY INTEREST 179 45 301.0
PROVISIONS
Obligatory provisions 127 53 138.2
LIABILITIES
Long-term liabilities 1,265 1,604 -21.1
Current liabilities 5,843 5,506 6.1
TOTAL 15,369 14,809 3.8
KESKO CORPORATION’S KEY FIGURES
12/97 12/96 Change, %
Earnings per share, FIM 5.87 6.05 -3.0
Equity per share, FIM 88.18 84.26 4.7
Return on capital invested, % 8.2 9.0
Return on equity, % 6.7 7.3
Equity ratio, % 53.2 51.9
Investments, FIM million 923 1,067 -13.5
Average number of personnel 10,672 6,503 64.1
Proposed dividend per
share, FIM 3.00 2.00 -CONTINGENT LIABILITIES (FIM million) 31.12.1997
12/97 12/96
PLEDGES
On behalf of own debt 488 598
On behalf of associated companies - -
On behalf of shareholders - -
On behalf of management - -
On behalf of others - -
MORTGAGES
On behalf of own debt 453 472
On behalf of associated companies - -
On behalf of shareholders - -
On behalf of management - -
On behalf of others - -
GUARANTEES
On behalf of own debt - -
On behalf of associated companies - -
On behalf of shareholders 5 2
On behalf of management - -
On behalf of others 32 14
OTHER CONTINGENT LIABILITIES
On behalf of own debt 25 2
On behalf of associated companies - -
On behalf of shareholders - -
On behalf of management - -
On behalf of others - -
Leasing liabilities 7 3
LIABILITIES ARISING FROM
DERIVATIVE INSTRUMENTS Market value
Value of underlying instruments 31.12. 12/97 12/96 12/97
Interest rate derivative instruments
Forward rate agreements 560 1,900 -7.4
Option agreements
Bought 150 - 0.1
Written - -
Interest rate swaps 50 - -0.3Currency derivative instruments
Forward exchange contracts 550 405 7.2
Option agreements
Bought 57 47 1.2
Written 8 13 -0.2Currency swaps - - -
