FINANCIAL STATEMENTS: PROFIT AT THE LEVEL OF THE PREVIOUS YEAR, EUR 125.8 MILLION
Kesko Group’s net sales for 2000 totalled EUR 6,308 million, which is 3.2 percent more than in the previous year (EUR 6,111 million). The Group’s profit before extraordinary items and taxes was EUR 125.8 million (EUR 128.4 million). Earnings per share were EUR 1.00 (EUR 0.98). The Board of Directors proposes that a dividend of EUR 0.50 per share and an additional dividend of EUR 0.50 per share be paid (EUR 0.50 per share + additional dividend of EUR 1.00 per share). The information is unaudited.
Market review
This was the seventh successive year of growth in the Finnish trading sector. According to advance information, the volume of wholesale sales, excluding the car trade, increased by 4.6 percent from January to November 2000 compared with the previous year, and retail sales also grew by 4.6 percent. The car trade increased by 0.4 percent.
The product groups recording the best growth in the wholesale trade were machines, equipment and accessories. In the retail trade, sales of computers and data communication systems and furniture recorded the highest increases. The trade in footwear and sports goods remained at the level of the previous year.
According to the estimate of the Research Institute of the Finnish Economy, private consumption grew by 3.9 percent in 2000 and private investments increased by 8.4 percent. Building investments were up by about 6 percent.
In 2000, consumer prices were 3.4 percent higher on average than a year earlier, representing the greatest growth since 1991.
In Sweden, the construction market, which is important to Kesko, expanded by 6-7 percent. The growth of the retail trade was 5 percent and the increase in the gross domestic product slightly more than 4 percent.
The Estonian economy improved more than expected. The gross domestic product grew by over 6 percent. The growth was hastened by the government’s decision to discontinue the collection of income taxes from companies, which increased foreign investments in the country. The number of importers and wholesalers decreased due to a strong trend to form chains in the retail trade.
Net sales
Kesko Group’s net sales for 2000 totalled EUR 6,308 million, which is 3.2 percent more than in the previous year (EUR 6,111 million). Sales of leisure goods, interior decoration products and cars and machinery developed best, whereas sales of clothing and shoes did not meet expectations. In 2000, Kesko withdraw from the speciality clothing business carried out by the Vaatehuone, Aleksi 13 and Nicky&Nelly store chains in accordance with the decisions made in 1999.
At the end of the year, there were over 1.4 million households and about 2.4 million cardholders included in the Plussa customer loyalty programme. Starting from 1 November 2000, the Plussa cardholders have been able to attach an interest-bearing deposit account feature to their cards. A Plussa account gives customers an opportunity to pay for their purchases directly from the account and to withdraw cash at the Plussa stores in question.
Net sales by profit division
|
1-12/2000 |
1-12/1999 |
Change |
|
|
EUR million |
EUR million |
% |
|
|
Foodstuffs Division |
3,453 |
3,228 |
7.0 |
|
Hardware and Builders’ Supplies Division |
786 |
702 |
12.0 |
|
Home and Speciality Goods Division |
726 |
869 |
-16.4 |
|
Agriculture and Machinery Division |
625 |
564 |
10.7 |
|
Kaukomarkkinat |
294 |
268 |
10.0 |
|
VV-Auto |
482 |
439 |
9.7 |
|
Other units - eliminations |
-58 |
41 |
|
|
Group total |
6,308 |
6,111 |
3.2 |
Kesko’s sales of groceries to Anttila department store grocers were transferred from the Home and Speciality Goods Division to the Foodstuffs Division at the beginning of 2000. The transferred sales were EUR 120.5 million in 1999. Taking the transferred sales into account, the comparable change in net sales in the Foodstuffs Division was 1.6 percent and in the Home and Speciality Goods Division -7.5 percent.
Performance
The Group’s profit before extraordinary items and taxes was EUR 125.8 million (EUR 128.4 million), which is 2.0 percent of net sales (2.1%). The Group’s operating profit was EUR 116.7 million (EUR 116.5 million). The operating profit includes a total of EUR 22.9 million from profits on the sale of shares and real estate, from value adjustment and from profits on the sale of business operations. In 1999, the corresponding income was EUR 21.8 million. Pension costs decreased by EUR 7.8 million over the previous year. The saving in pension costs resulted from the good income from investments by the Kesko Pension Fund during the past two years.
The parent company’s profit before extraordinary items and taxes was EUR 80.8 million (EUR 76.5 million).
The Group’s net financial income was EUR 9.1 million (EUR 11.9 million).
The earnings per share were EUR 1.00 (EUR 0.98). The equity per share was EUR 15.31 (EUR 15.87).
The return on equity was 6.4 percent (6.1%) and the return on invested capital was 8.5 percent (8.0%).
Operating profit by profit division
|
1-12/2000 |
1-12/1999 |
|
|
EUR million |
EUR million* |
|
|
Foodstuffs Division |
65.4 |
64.9 |
|
Hardware and Builders’ Supplies Division |
10.5 |
10.0 |
|
Home and Speciality Goods Division |
0.4 |
-7.6 |
|
Agriculture and Machinery Division |
5.2 |
7.7 |
|
Kaukomarkkinat |
1.1 |
7.2 |
|
VV-Auto |
17.6 |
20.5 |
|
Common operations |
16.5 |
13.8 |
|
Group’s operating profit |
116.7 |
116.5 |
|
Net financial income |
8.5 |
10.8 |
|
Associated companies |
0.6 |
1.1 |
|
Profit before extraordinary items |
125.8 |
128.4 |
Common operations include the Resource Management and the Finance and Administration operations. Their results, including profits and losses on the sale of shares and real estate and profits on the sale of business operations, have not been allocated to the profit divisions engaged in commercial operations. Other expenses resulting from corporate administration and the amortisation of goodwill on consolidation have been allocated to the profit divisions in the above table.
*) The figures for 1999 have been converted to be fully comparable with the new organisation.
Investments
In Finland, investments were made in the trade of foodstuffs, home and speciality goods and hardware and builders’ supplies. In Estonia, investments mainly focused on the foodstuffs trade. In Sweden, investments in the K-rauta department stores continued. In Estonia, a majority shareholding was acquired in AS Fanaal, the largest company operating in the field of hardware and builders’ supplies. Kaukomarkkinat Oy acquired the business operations of Telko Oy, a company that had carried on wholesale trade and importing.
The Group’s investments totalled EUR 246.9 million (EUR 202.1 million), which is 3.9 percent (3.3%) of net sales. The investments in shares and in the real estate, information technology and fixtures of Kesko’s wholesale operations and subsidiaries amounted to EUR 88.2 million, while investments in the buildings, fixtures and information technology of retail stores were EUR 158.7 million.
Finance
Cash flow from operating activities amounted to EUR 128.9 million and the net cash used in investing activities to EUR 167.7 million. The dividend paid on 20 April 2000 was EUR 1.50 per share, making a total of EUR 135.3 million (FIM 804.6 million), including EUR 90.2 million paid as an additional dividend. The net investments and dividends were paid by funds generated from operations and by liquid assets. Interest-bearing debt increased by EUR 4.4 million. Liquid assets were EUR 77.4 million (EUR 270.5 million) at the end of the year. Due to the decrease in liquid assets, the interest-bearing net debt increased to EUR 227.3 million (EUR 18.4 million). The Group’s financial position remained stable. On 31 December 2000, the equity ratio was 54.7 percent (56.6 %).
Group administration and structure
On 30 October 2000, Kesko’s Extraordinary General Meeting decided to amend Kesko’s Articles of Association to correspond to the new Group structure and corporate governance model, in which Kesko is governed by a Board of Directors and a President and CEO, without a Supervisory Board.
The General Meeting elected the following eight persons to Kesko’s Board of Directors for a term starting on 1 January 2001, when the new Articles of Association became effective, and expiring at the close of the Annual General Meeting in 2003: Matti Honkala, B.Sc.(Econ.); Matti Kallio, retailer; Eero Kasanen, Dr.Sc.(Econ.); Maarit Näkyvä, M.Sc.(Econ.); Kalevi Sivonen, retailer; Keijo Suila, B.Sc.(Econ.); Heikki Takamäki, retailer; and Jukka Toivakka, retailer. The Board of Directors elected Matti Kallio as its Chairman and Keijo Suila as its Deputy Chairman at the Board meeting held on 3 January 2001.
On 1 January 2001, a Corporate Management Board was established in the Kesko Group. Its members represent the company’s top management. President and CEO Matti Honkala acts as the Board’s Chairman, and the other members appointed are Kalervo Haapaniemi, Matti Halmesmäki, Erkki Heikkinen, Juhani Järvi, Matti Laamanen, Riitta Laitasalo and Jouko Tuunainen.
On 24 August 2000, Kesko’s Supervisory Board made a decision to incorporate Kesko’s profit divisions that have responsibility for goods trade. On 8 December 2000, the Presidents and internal Boards of Directors were appointed for the companies to be established. According to the plan, Kesko Food Ltd, responsible for the foods trade, and Keswell Ltd, responsible for the home and speciality goods trade, will start business operations on 1 April 2001, while Rautakesko Ltd, responsible for the hardware and builders’ supplies trade, and Kesko Agro Ltd, responsible for the agricultural and machinery trade, and its subsidiary Kesko Machinery Ltd, will start business operations on 1 October 2001.
Personnel
The average number of personnel in the Group was 11,099 (10,993) persons, divided by profit division as follows:
|
average |
average |
||
|
1-12/2000 |
1-12/1999 |
31.12.2000 |
|
|
Foodstuffs Division |
4,896 |
4,766 |
6,163 |
|
Hardware and Builders’ Supplies Division |
1,040 |
718 |
1,125 |
|
Home and Speciality Goods Division |
2,639 |
3,049 |
3,493 |
|
Agriculture and Machinery Division |
664 |
629 |
720 |
|
Kaukomarkkinat |
799 |
779 |
857 |
|
VV-Auto |
107 |
102 |
106 |
|
Others |
954 |
950 |
897 |
|
Total |
11,099 |
10,993 |
13,361 |
(The comparative figures have been converted to correspond to the new organisation)
The total number of Kesko Group personnel has remained at the level of the previous year. The opening of Kodin Ykkönen department stores for interior decoration by Anttila Oy and new hypermarkets by Citymarket Oy caused an increase in their personnel. The number of personnel also increased in the following companies and operations - in Kesko Svenska AB by 103 persons due to an expansion of the hardware trade in Sweden, in Kesko Eesti AS by 100 persons due to an expansion of cash & carry and retail operations in Estonia, and by 273 persons in Estonian hardware operations due to the acquisition of AS Fanaal. On the other hand, the number of personnel was reduced by 392 persons by the sale of Aleksi 13 Oy and the conversion of some of Carrols Oy’s outlets into franchise-run businesses. On 31 December 2000, the Group employed 938 persons (475) abroad.
Development by profit division
Foodstuffs Division
The increase of 7.0 percent in net sales was lower than expected. The larger retail stores have continued to draw more customers. With regard to the Division’s chain units, the sales of the Supermarket Chain Unit to the K-superstores developed best. The sales of Kesko Eesti AS also exceeded expectations.
The operating profit of Citymarket Oy, which carries on non-food trade in the Citymarket hypermarkets, amounted to EUR 11.2 million (EUR 9.0 million). A heavy investment programme and the renovation of retail outlets affected the performance during the year under review.
The Division’s investments were EUR 129.3 million. Investments in the retail store network amounted to EUR 83.6 million. The introduction of new business control systems in Carrols Oy and Kesko Eesti AS was started towards the end of the year. Kesko acquired a shareholding of 9.99 percent in Rautakirja Oy.
In 2000, ten new K-grocery stores were opened, with the Citymarkets in Pirkkala and Lappeenranta and the K-superstores in Lahti, Nokia, Turku, Kokemäki and Lempäälä being the most significant.
At the beginning of June, a new Pikkolo urban convenience store was opened in Helsinki. In this store, take away products have an important role. There are now three pilot stores operating, of which the latest, a store in Tampere, was opened in January 2001. The aim is to build a nationwide chain of around 100 stores within the next few years.
The expansion of the Foodstuffs Division’s operations has progressed according to plan in the Baltic countries. A logistical centre of 15,000 square metres near Tallinn, Estonia, started operations in January 2001. It represents a total investment of about EUR 7.5 million. A new SuperNetto store of 4,000 square metres was opened in Western Tallinn in May. The next SuperNetto stores will be opened in Tartu next spring and in Pärnu next autumn. Kesko aims to build a retail network covering the whole of Estonia and to provide wholesale delivery and logistical services to other catering and retailing customers.
Next summer, a SuperNetto store of about 6,000 square metres will be opened in the largest shopping centre of Riga, the capital of Latvia. The objective is to open 4-5 superstores and hypermarkets in Riga during the next two years. The overall target in the Baltic countries is to gain a share of about 20-25 percent of their total grocery market, which is about EUR 3.4 billion.
The sales of the Carrols hamburger chain in Finland amounted to EUR 62.2 million, representing an increase of 14 percent. In 2000, seven new Carrols restaurants were opened, and at the end of the year their total number was 70. The number of franchise-run restaurants increased to 46. In early autumn, a franchise agreement between Carrols Oy and a St. Petersburg entrepreneur was terminated, which ended the operations of the five Carrols restaurants in St. Petersburg.
Kesko’s wholesale delivery operations were transferred in the Group to Kespro Ltd, starting from 1 October 2000. On 20 December 2000, an ISO 9002 quality certificate was awarded to the wholesale delivery operations of Kespro Ltd, which is the first Finnish grocery wholesaler to receive this internationally valued quality certificate.
Hardware and Builders’ Supplies Division
The net sales of the Hardware and Builders’ Supplies Division totalled EUR 786 million. The operating profit was EUR 10.5 million (EUR 10.0 million). The profit of the Industrial and Constructor Sales unit improved, whereas the result of the strongly growing Kesko Svenska did not yet achieve the target and showed a loss. The performance of Fanaal AS in Estonia met expectations. The Division’s return on capital employed was 7 percent (7%). Investments were EUR 20.4 million.
Net sales grew by 12.0 percent. Sales to the K-rauta chain increased by 5.2 percent and to the Rautia chain by 3.0 percent. Timber and products for landscaping recorded the best sales development.
The operations of the Industrial and Constructor Sales unit were joined to Kesko Hardware and Builders’ Supplies at the end of the year.
In Sweden, the net sales of the eight K-rauta stores of Kesko Svenska AB were EUR 44 million, an increase of 85.6 percent. New K-rauta stores were opened in Örebro and Haninge, Stockholm. The aim is to build a network of around 25 K-rauta stores in Sweden.
In April, Kesko acquired the majority shareholding in AS Fanaal. This Estonian company has five hardware stores operating under the name Ehitusmaailm in Estonia. The chain also includes one store in Riga, Latvia. In Estonia, AS Fanaal is the market leader in the hardware trade with a market share of about 20 percent. AS Fanaal’s net sales for May-December were EUR 29 million in Estonia and A/S Fanaal’s net sales were EUR 12 million in Latvia.
New K-rauta stores were opened in Oulu, Seinäjoki, Lappeenranta and Pakkala, Vantaa. The K-rauta stores in Tampere, Espoo and Lahti were refurbished and extended. New K-rauta stores are under construction in Ruoholahti, Helsinki and in Helsingborg and Göteborg in Sweden.
Home and Speciality Goods Division
The Division’s net sales were 16.4 percent less than in the comparison year. Net sales were decreased by an organisational change in which sales to Anttila department store grocers were transferred from the Home and Speciality Goods Division to the Foodstuffs Division at the end of 1999, and by the disposal of the speciality clothing business operations. In accordance with a preliminary agreement signed in December 1999, Kesko Corporation sold the whole of Aleksi 13 Oy’s share capital and the Vaatehuone chain logo to L-Fashion Group in February 2000. The actual withdrawal from the Vaatehuone chain operations took place on 31 July 2000.
Net sales diminished by 0.2 percent in comparable figures.
Anttila concentrates as a chain company on speciality goods trading, with its concepts being the Anttila department store, the Kodin Ykkönen department store, the mail order business and e-commerce. Anttila Group’s net sales were EUR 451 million, an increase of 1.5 percent. The sales of Kodin Ykkönen stores increased by 31.0 percent and the mail order business by 8.8 percent, whereas the sales of Anttila department stores decreased by 1.6 percent.
Sports trade sales slightly decreased compared with the previous year, because clothing sales fell short of target. The new division of the sports trade by store format has proved successful. The stores are now divided into Intersport and Kesport stores according to their size and product selection.
The trade in home technology developed favourably. Mobile phones and wide screen television sets recorded the best sales increases.
Targets were not achieved in the shoe business and the sales did not reach the 1999 level. The overall shoe trade did not grow.
New Kodin Ykkönen department stores for interior decoration and new Musta Pörssi Maailma stores were opened in Tampere and Jyväskylä. Additionally, a new Anttila department store replacing the previous downtown store was opened in Turku. Finland’s biggest Intersport Megastore was opened in the centre of Helsinki. The Anttila department stores located in Iisalmi and Rauma were closed down in February 2000.
Kesko Corporation signed a preliminary agreement in May on the building of a Kodin Ykkönen store and a Musta Pörssi Maailma store in a business centre due to be opened in Roihupelto, Helsinki in autumn 2002. An agreement was also made in August to establish a Musta Pörssi Maailma store in Länsikeskus, Turku due to be opened in spring 2001.
Agriculture and Machinery Division
With regard to the Division’s units, the sales of Kesko Agriculture increased by 4.6 percent. Last autumn the grain harvest was the second best in Finland’s history, which increased the volume of the grain trade towards the end of the year. Heavy investments in agricultural machinery and buildings continued. Kesko Agriculture started to import and market Same tractors in autumn 2000.
The sales of Kesko Machinery grew by 20 percent. Its market position strengthened in nearly all product lines. Construction machinery, boats and outboard motors were the product groups that recorded the best sales development. The market share of Yamaha outboard motors increased to over 40 percent. Towards the end of the year, the market share of Lynx and Ski-Doo snowmobiles increased to over 50 percent.
In Latvia, an agricultural store will be opened in Riga in spring 2001. It is also intended to open an agricultural store in newly constructed premises in Tallinn, Estonia during 2001.
The operating loss of K-Maatalousyhtiöt Oy was EUR 1.0 million (EUR -0.0 million). During the year, two stores that were previously operated by independent retailers in Orimattila and Lappeenranta were transferred to the company. The store in Rauma was closed down.
Kaukomarkkinat
Net sales increased by 10.0 percent. The increase resulting from the acquisition of the Telko company and the decrease resulting from the changes in the adidas representation were of nearly equal value. The trade in adidas products was transferred, from 1 January 2000, to Adidas Suomi Oy, a company owned 50-50 by Kaukomarkkinat and the principal. Consequently, only 50 percent of the adidas sales are recorded in the Group’s net sales.
The Panasonic Division suffered from the delivery problems of its suppliers, due to component shortages in their manufacturing plants, and from a contraction in the product range. The Division’s net sales decreased by 6.3 percent compared with the previous year. The Leipurien Tukku Division’s net sales increased by 11.1 percent.
The net sales of the Kauko East-West Trade Division, which is mainly engaged in international trade and export, increased by 25.5 percent. The areas where trading grew the most strongly were Russia and China.
In domestic trading, the Tähti Optikko chain continued to substantially strengthen its market position, since the Group’s net sales in the optical sector grew by 17.2 percent. On 31 December 2000, a total of 117 stores operated in the chain. The chain’s net sales were EUR 26.9 million.
Under an agreement signed in August, Kaukomarkkinat Oy purchased the business operations of Telko Oy, a technical wholesaler. The new Telko Oy started operations as Kaukomarkkinat Oy’s subsidiary on 1 September 2000. As Telko Oy’s net sales for 1999 were EUR 53 million, it will make a substantial addition to Kaukomarkkinat’s operations. Telko’s business lines are packaging technology, plastics, chemicals, industrial machinery, tapes and marking, safety products, raw materials for the food industry, and paper trading. Telko has a staff of 70 persons.
VV-Auto
The net sales of the VV-Auto Group increased by 9.7%. The overall car market started to decline towards the end of the year after several years of strong growth. The registration of new cars decreased by 1.1 percent.
The total market share of the cars imported by the VV-Auto Group was 15.1 percent. All car makes expanded their market share, with Volkswagen’s share being 10.7 percent. Audi recorded the highest sales increase of 52 percent, while sales of Seat also continued their favourable trend, growing by 24 percent. The trade in VW commercial vehicles, including vans and mini buses, was buoyant and their market share expanded to 21.3 percent, making VW the market leader.
The Volkswagen importing operations of VV-Auto were awarded an ISO 9002 quality certificate in June.
Shares and equity market
Kesko Corporation's share capital was EUR 180,426,800 on 31 December 2000, with 35.2% of the share capital consisting of A shares and 64.8% of B shares.
The price of Kesko’s A share was EUR 13.60 at the end of 1999, and EUR 16.95 at the end of 2000, an increase of 24.6 percent. The price of Kesko’s B share was EUR 12.60 at the end of 1999 and EUR 10.75 at the end of 2000, a decrease of 14.7 percent. During the year, the lowest price of the A share was EUR 13.50, while its highest price was EUR 19.90. The lowest price of the B share was EUR 9.61, while its highest price was EUR 14.99. During the year, the trade sector price index dropped by 19.2 percent, the HEX general index by 10.6 percent, and the HEX portfolio index by 24.9 percent.
The market value of A shares was EUR 538 million and that of B shares EUR 629 million, i.e. the total market value of all shares amounted to EUR 1,167 million.
During the year, 2.0 million of Kesko’s A shares with a total value of EUR 33.2 million and 15.2 million of Kesko’s B shares with a total value of EUR 176.6 million were traded on the Helsinki Exchanges.
Kesko and the euro
According to the transition plan, Kesko will prepare its financial statements for 2001 in markkas and will start to use the euro as its accounting currency from 1 January 2002. During the transition period, the markka-denominated figures will be converted into euros by using the conversion rate. When the decisions on Kesko’s euro schedule were made, they were based on the premise that the majority of Kesko’s customers operate in Finland. The majority of Kesko’s purchases and sales will be made in markkas during the transition period. The prices of Kesko’s stock items will remain in markkas until 31 December 2001. Based on the agreements made with customers, some invoicing has been carried out in euros right from the beginning of the transition period.
The transfer to the euro has been managed by a special euro committee. The necessary information system changes have been scheduled. The Group is expected to be ready well before the changes are implemented in the early autumn of 2001.
Main events in 2000
On 5 January 2000, Kesko purchased some of the stock of Rautakirja Oyj. As a result of this deal, Kesko Corporation now holds 9.99% of Rautakirja Oyj’s share capital and 11.87% of its voting rights.
On 5 April 2000, Kesko published ethical principles for its purchasing, based on the rules agreed by the International Labour Organisation and the United Nations. The tool used for ethical quality control is the international SA 8000 standard on Social Accountability.
On 28 April 2000, Kesko acquired 98.4 percent of AS Fanaal. AS Fanaal owns Estonia’s largest hardware store chain that operates under the name Ehitusmaailm. AS Fanaal owns five hardware stores in Estonia and one in Latvia. Later Kesko purchased most of the remaining shares from the small shareholders.
On 26 May 2000, Kesko Musta Pörssi joined the international Electronic Partner:International purchasing and service organisation.
Kesko was the first Finnish company to join the international WorldWide Retail Exchange marketplace on 14 June 2000. WWRE is a business-to-business marketplace to be opened on the Internet, which already includes over 50 international trading companies. The aim is to start marketplace operations this year.
In accordance with an agreement signed on 4 August 2000, Kesko sold the business operations of its subsidiary, Kestra Kiinteistöpalvelut Oy, to ABB Kiinteistöpalvelut Oy, to take effect on 1 January 2001. A co-operation and service agreement has been signed between Kesko and ABB Kiinteistöpalvelut Oy concerning maintenance services for Kesko’s real estate.
On 2 October 2000, Kesko sold the business operations of MK-mainos, a Kesko subsidiary, to Publicis International Oy. The net sales of MK-mainos for 1999 amounted to about EUR 29 million.
On 14 October 2000, sixty years had passed from the foundation of Kesko Ltd. Kesko’s business operations were started at the beginning of 1941, with the company’s head office and import warehouses being located in Kesko’s present premises at Katajanokka, Helsinki.
By an agreement signed on 20 November 2000, Kespro Ltd sold the business operations of its cash & carry outlets in Kajaani, Kemi and Salo to Wihuri Oy from the beginning of 2001.
On 4 December 2000, Kesko chose the mySAP.com software as the platform for its new enterprise resource planning systems. The software will used to implement the basic applications for the business areas in 2001-2004.
On 15 December 2000, Kesko sold the business operations of its subsidiary Kauppiaiden Komedia and those of Kauppiaiden Komedia’s subsidiary Proidea to Metronome Film & Television Oy. The K-chains will continue their in-store television operations as Metronome Film & Television Oy’s customers.
On 28 December 2000, Kesko Corporation, its subsidiary Hämeenkylän Kauppa Oy and Kesko Pension Fund sold seven retail properties mainly used by Citymarket Oy and Anttila Oy to Nordisk Renting Oy. The value of the deal amounted to EUR 67.3 million. Kesko will rent the sold retail properties from Nordisk Renting and sub-let them for the use of K-retailers and external tenants.
On 29 December 2000, Kesko signed an agreement to transfer the publishing operations of its subsidiary Kauppiaitten Kustannus Oy to Kynämies Oy, a subsidiary of United Magazines Ltd. The deal transfers the publishing operations of the Pirkka, Birka, Maatilan Pirkka and Åker Birka magazines to Kynämies Oy. The net sales of Kauppiaitten Kustannus Oy for 2000 amounted to EUR 12 million.
The reformed chain operation between Kesko and the K-retailers was introduced at the beginning of 2001. Joint operation will be intensified throughout the entire chain - in the development of chain concepts, in category management, marketing, purchasing operations and logistics. The new operating system will be adopted gradually over about two years. The reformed chain operation will significantly strengthen Kesko’s competitiveness and the K-stores’ ability to meet customer requirements in the quickly changing markets. By the 31 January 2001 deadline, a total of 1,403 K-retailers had approved the new chain agreement or a customer agreement. This is more than 95 percent of the retailers to whom the agreement was offered. 71 retailers had not approved the agreement by 31 January 2001. Those retailers who felt that they were not able to approve the proposed agreement were notified of possible termination of their present agreements.
Future outlook
According to Statistics Finland’s consumer survey, the confidence of households in favourable economic development increased in December 2000, after the weaker confidence expressed in autumn 2000. In particular, the outlook for the Finnish economy has improved, which will provide a good basis for growth in domestic trade. According to an estimate of the Research Institute of the Finnish Economy, private consumption will increase by about 4 percent this year. The favourable economic trends will also increase Kesko’s sales opportunities to manufacturing and other companies.
Kesko will continue to invest actively in Finland, Sweden and the Baltic area.
In 2001, Kesko Group’s net sales are expected to increase at least at the same rate as the market growth. The Group’s operating profit target, excluding non-recurring items, is at the same level as for 2000, provided that overall demand remains as forecast and the chain reform will start according to plan. The chain reform, when fully implemented, will provide a good basis for the improvement of Kesko’s profitability within the next few years.
Proposed distribution of profit
The Group’s distributable reserves are EUR 860,047,636.35
The parent company’s distributable reserves are EUR 752,221,942.93
of which the net profit for the year is EUR 80,338,965.25
The Board of Directors proposes that the
distributable reserves be used as follows:
A dividend of EUR 0.50 per share be paid EUR 45,106,700.00
and an additional dividend of EUR 0.50
per share be paid EUR 45,106,700.00
An amount be reserved for donations at the
discretion of the Board of Directors EUR 252,281.89
An amount be carried forward
as retained earnings EUR 661,756,261.04
Helsinki, 14 February 2001
Kesko Corporation
Board of Directors
Further information: Juhani Järvi, Executive Vice President and CFO, telephone +358 1053 22209 and Vice President Paavo Rönkkö, telephone +358 1053 22569.
KESKO CORPORATION
Corporate Communications
Erkki Heikkinen
Senior Vice President
ENCLOSURES
Income statement and balance sheet
Contingent liabilities
The Board of Directors has decided to invite the Annual General Meeting to assemble at the Helsinki Fair Centre at 1 p.m. on 9 April 2001 to handle the matters assigned to it by the Articles of Association and to make a decision on the proposal of the Board of Directors to amend subsection 2 of section 11 of the Articles of Association as follows:
"In order to participate in a General Meeting a shareholder must register his intention to attend no later than the date mentioned in the Invitation to the Meeting, which may be at the earliest ten (10) days prior to the Meeting."
The record date for payment of the proposed dividends is 12 April 2001. The Board of Directors proposes to the Annual General Meeting that the dividend payment date be set at 23 April 2001.
Kesko Corporation’s interim report for the first three months of 2001 will be published on 9 May 2001, for the first six months of 2001 on 8 August 2001 and for the first nine months of 2001 on 14 November 2001.
In addition, Kesko Group’s sales figures are published each month. Releases and other company information are available on Kesko’s Internet pages, at Investor information, www.kesko.fi
DISTRIBUTION
Main news media
TABLES
|
Group’s net sales by profit division |
||||||
|
EUR million |
Change, % |
|||||
|
Foodstuffs Division |
||||||
|
Neighbourhood Chain Unit |
1,092 |
-0.4 |
||||
|
Supermarket Chain Unit |
1,121 |
14.4 |
||||
|
Citymarket Oy |
364 |
7.5 |
||||
|
Kespro |
1,094 |
16.0 |
||||
|
Carrols |
29 |
-19.4 |
||||
|
Other subsidiaries |
36 |
-3.0 |
||||
|
./. Division’s internal sales |
-283 |
|||||
|
Total |
3,453 |
7.0 |
||||
|
Hardware and Builders’ Supplies Division |
||||||
|
Kesko Hardware and Builders’ Supplies |
519 |
3.4 |
||||
|
Industrial and Constructor Sales |
173 |
-2.7 |
||||
|
Kesko Svenska AB |
44 |
85.6 |
||||
|
AS Fanaal |
29 |
- |
||||
|
A/S Fanaal |
12 |
- |
||||
|
Other subsidiaries |
8 |
1.8 |
||||
|
./. Division’s internal sales |
1 |
|||||
|
Total |
786 |
12.0 |
||||
|
Home and Speciality Goods Division |
||||||
|
Anttila |
451 |
1.5 |
||||
|
Kesko Shoes |
29 |
-13.8 |
||||
|
Kesko Sports |
99 |
-1.9 |
||||
|
Kesko Musta Pörssi |
104 |
1.4 |
||||
|
Other units - Division’s internal sales |
43 |
|||||
|
Total |
726 |
-16.4 |
||||
|
Agriculture and Machinery Division |
||||||
|
Kesko Agriculture and Machinery |
581 |
7.2 |
||||
|
K-maatalousyhtiöt Oy |
133 |
14.0 |
||||
|
Other subsidiaries |
22 |
61.7 |
||||
|
./. Division’s internal sales |
-111 |
|||||
|
Total |
625 |
10.7 |
||||
|
Kaukomarkkinat Group |
294 |
10.0 |
||||
|
VV-Auto Group |
482 |
9.7 |
||||
|
Other subsidiaries - eliminations |
-58 | |||||
|
GROUP TOTAL |
6,308 |
3.2 |
||||
|
|
||||||
|
Consolidated income statement (EUR million) |
||||||
|
1-12/2000 |
1-12/1999 |
Change, % |
||||
|
Net sales |
6,308 |
6,111 |
3.2 |
|||
|
Other operating income |
336 |
292 |
14.7 |
|||
|
Materials and services |
-5,553 |
-5,359 |
3.6 |
|||
|
Personnel expenses |
316 |
-317 |
-0.6 |
|||
|
Depreciation and reduction in value |
-119 |
-113 |
5.4 |
|||
|
Other operating expenses Share of associated companies’ profit (loss) |
-540 1 |
-496 -2 |
8.7 - |
|||
|
Operating profit |
117 |
116 |
0.2 |
|||
|
Financial income and expenses |
9 |
12 |
-24.6 |
|||
|
Profit before extraordinary items |
126 |
128 |
-2.1 |
|||
|
Extraordinary income |
||||||
|
Extraordinary expenses |
-4 |
- |
||||
|
Profit before taxes |
126 |
124 |
1.5 |
|||
|
Income taxes |
-34 |
-39 |
-11.2 |
|||
|
Minority interest |
-1 |
0 |
- |
|||
|
Profit |
91 |
85 |
6.6 |
|||
|
Consolidated balance sheet (EUR million) |
||||||
|
1-12/2000 |
1-12/1999 |
Change, % |
||||
|
Assets |
|
|||||
|
Non-current assets |
|
|||||
|
Intangible assets |
149 |
133 |
11.8 |
|||
|
Tangible assets |
883 |
865 |
2.1 |
|||
|
Investments |
153 |
126 |
21.0 |
|||
|
Current assets |
||||||
|
Stocks |
536 |
492 |
8.9 |
|||
|
Receivables |
||||||
|
Long-term |
92 |
89 |
3.3 |
|||
|
Short-term |
680 |
594 |
14.5 |
|||
|
Marketable securities |
30 |
232 |
-87.0 |
|||
|
Cash in hand and at banks |
47 |
39 |
22.1 |
|||
|
Total |
2,570 |
2,570 |
0.0 |
|||
|
Liabilities |
||||||
|
Shareholders’ equity |
||||||
|
Share capital |
180 |
180 |
0.0 |
|||
|
Other shareholders’ equity |
1,200 |
1,252 |
-4.1 |
|||
|
Minority interest |
16 |
16 |
-0.2 |
|||
|
Provisions |
12 |
16 |
-24.8 |
|||
|
Liabilities |
||||||
|
Deferred tax liability |
61 |
70 |
-13.3 |
|||
|
Non-current debt |
64 |
69 |
-7.7 |
|||
|
Current debt |
1,037 |
967 |
7.2 |
|||
|
Total |
2,570 |
2,570 |
0.0 |
|||
|
Group’s key indicators |
||||||
|
12/2000 |
12/1999 |
Change, % |
||||
|
Earnings/share, EUR |
1.00 |
0.98 |
2.3 |
|||
|
Equity/share, EUR |
15.31 |
15.87 |
-3.6 |
|||
|
Return on invested capital, % |
8.5 |
8.0 |
||||
|
Return on equity, % |
6.4 |
6.1 |
||||
|
Equity ratio, % |
54.7 |
56.6 |
||||
|
Investments, EUR million |
246.9 |
202.1 |
22.2 |
|||
|
Personnel, average |
11,099 |
10,993 |
1.0 |
|||
|
Group’s contingent liabilities (EUR million) |
12/2000 |
12/1999 |
Change,% |
|
|
For own debt |
176 |
147 |
20.5 |
|
|
For associated companies |
||||
|
For shareholders |
1 |
1 |
0.0 |
|
|
For others |
2 |
3 |
-21.3 |
|
|
Leasing liabilities |
23 |
16 |
42.4 |
|
|
Liabilities arising from |
||||
|
derivative instruments |
||||
|
Market value |
||||
|
Value of underlying instruments 31.12. |
12/2000 |
12/1999 |
31.12.2000 |
|
|
Interest rate derivatives |
||||
|
Forward and future contracts |
4 |
1 |
-0.0 |
|
|
Option agreements |
||||
|
Bought |
||||
|
Written |
||||
|
Interest rate swaps |
||||
|
Currency derivatives |
||||
|
Forward and future contracts |
57 |
28 |
0.4 |
|
|
Option agreements |
||||
|
Bought |
10 |
-0.2 |
||
|
Written |
1 |
0.0 |
||
|
Currency swaps |
||||
|
Equities derivatives |
||||
|
Forward and future contracts |
||||
|
Option agreements |
||||
|
Bought |
2 |
-0.1 |
||
|
Written |
The figures are unaudited. The figures for 1999 have been converted to comparable ones. The figures in this report are based on accounting in markkas, converted into euros by using the conversion rate 5.94573. The Finnish-language report, denominated in markkas, is available from Kesko Corporate Communications.
