FINANCIAL STATEMENTS FOR 2002: PROFIT BEFORE EXTRAORDINARY ITEMS EUR 110 MILLION, AN INCREASE OF 28.0%

The Group's net sales in 2002 totalled EUR 6,466 million, which is 4.1% more than in the previous year (EUR 6,214 million). The Group's profit before extraordinary items was EUR 109.7 million (EUR 85.7 million). Earnings per share were EUR 0.75 (EUR 0.60). Equity per share was EUR 15.02 (EUR 14.78). The figures are unaudited. The Board proposes to the Annual General Meeting that EUR 1.00 per share be paid as dividends for 2002.

Market review
According to advance information, the volume of wholesale trade in Finland in January-November 2002, adjusted for the number of trading days, increased by 1.1% over the corresponding period in the previous year. The increase in the retail trade was 2.3%. (Statistics Finland)

In 2002, the retail trade grew almost as expected. The growth of the wholesale trade remained slightly smaller than what had been forecast. In 2003, both the wholesale and retail trade are anticipated to increase by about 3%. (The Research Institute of the Finnish Economy)

The Research Institute of the Finnish Economy estimates that the Finnish GDP increased by 1.7% in 2002, and that the figure will go up to 2.7% during 2003. In 2002, consumer prices rose by 1.6% and this trend is estimated to increase to about 2% this year. Private consumption grew in 2002 by about 2.5% as expected. No big changes are expected in this trend during the year. Private investments declined in 2002, but this year they are forecast to pick up by nearly 3%.

According to Statistic Finland's consumer survey of January, the Finnish consumers' confidence in the economic situation strengthened slightly in January. Consumers were particularly optimistic about their own finances, whereas they felt pessimistic about the Finnish economy and any improvement in the employment situation.

The Estonian, Latvian and Lithuanian economies continued to grow at the rate of around 6% in 2002. According to forecasts, the growth rate will be almost the same in 2003 (BOFIT). Despite their strong growth, the income level and purchasing power of the Baltic countries will remain below the EU average for a long time. In 2001, the Estonian GDP per capita was 40%, the Latvian 33% and the Lithuanian 38% of the EU average (Finland 104%). Trade in the Baltic countries will continue to grow along with the growth of their national economies. The structural change of trade will progress while the share of retail chains of the total sales will continue to grow.

The Swedish GDP is estimated to increase by about 2% this year, private consumption by about 1.2% and consumer prices by about 2%. The future outlook for industry and the building sector is still gloomy. Investments in housing production, however, have contributed to the economic growth.  It is estimated that the total investments will take a slight upward turn during 2003. (Konjunkturinstitutet)

Net sales and profit

Net sales
The Group's net sales for 2002 totalled EUR 6,466 million, which is 4.1% more than in the previous year (EUR 6,214 million). This is particularly attributable to the positive development of Kesko Food's operations in Finland and abroad. The Group's net sales grew by 1.8% in the domestic business operations and 37.6% in the foreign business operations.

In 2002, the share of exports and foreign operations in net sales was 8.3% (6.3%). The increased percentage of foreign operations in the Group's net sales is mainly attributable to the expansion of Kesko Food's operations in Estonia and Latvia, the favourable sales development of the K-rauta stores in Sweden, and the growth of Kesko Agro's operations in the Baltic countries.

Profit
All Group divisions improved their performance in 2002. The Group's profit before extraordinary items and taxes was EUR 109.7 million (EUR 85.7 million), which represents 1.7% of net sales (1.4%). The operating profit was EUR 98.8 million (EUR 76.8 million). The operating profit includes profits and losses from sales of fixed assets and business operations and value adjustments to a total value of EUR 8.1 million (EUR 13.2 million). A provision of EUR 9.2 million was made for certain unprofitable rent agreements related to real estate operations. The increase in the operating profit is mainly attributable to the favourable development in Kesko Food's sales, the progress of chain operations and the cost savings implemented.

The Group's financial income and expenses were EUR 10.9 million (EUR 8.9 million).

Earnings per share were EUR 0.75 (EUR 0.60). Equity per share was EUR 15.02 (EUR 14.78).

The operating profit from real estate is included in the operating profit of common operations. Common operations also include the net expenses or income of other common operations, as well as Group items such as corporate management expenses and amortisation on consolidation.

Net sales and profit in October-December

For the fourth quarter of 2002, the Group's net sales were EUR 1,695 million, which is 2.0% more than in the corresponding period in 2001 (EUR 1,661 million). The Group's profit before extraordinary items in October-December totalled EUR 24.9 million (EUR 29.7 million). The Group's operating profit was EUR 23.7 million (EUR 27.8 million). During the last quarter, there was a large amount of development costs of retail stores and retail concepts, as well as investments in the expansion of the Baltic business operations. The profit for the year of comparison includes EUR 7.7 million of VAT refunded. Earnings per share were EUR 0.11 (EUR 0.14). Other key indicators by quarter are shown in the attachment.

Investments
The Group’s investments totalled EUR 185.1 million (EUR 206.4 million), which is 2.9% (3.3%) of net sales. Investments in the buildings, fixtures and information technology of retail stores amounted to EUR 137.2 million. A total of EUR 10.7 million was invested in company acquisitions. Investments in the real estate, fixtures and information technology used by Kesko and its subsidiaries for wholesale operations amounted to EUR 37.2 million. Investments in foreign business operations accounted for 36.9% of total investments.

Finance
Cash flow from business operations was EUR 145.8 million (EUR 209.0 million) and from investing activities EUR -110.4 million (EUR -118.7 million). At the end of the period, the equity ratio was 53.3% (53.6%). The interest-bearing net debt was EUR 192.8 million (EUR 172.8 million). The liquid assets were EUR 173.2 million (EUR 126.9 million).

Personnel
The Group's average number of employees was 12,217 (11,544), divided between the divisions as follows:

(The comparable figures have been adjusted to correspond to the new organisation. In calculating the average number of employees, part-time employees have been converted to full-time employees in relation to their working hours.)

The expansion of operations in the Baltic countries increased the number of personnel of Kesko Food, Rautakesko and Kesko Agro. The number of Rautakesko personnel also grew in Sweden. The opening of new K-citymarket hypermarkets increased Kesko Food's personnel in Finland.

During the past year, outsourcing of service and support activities has reduced the number of the Group's personnel. The number of Rautakesko employees in Finland declined due to the establishment of a logistical joint venture with the Finland Post Corporation at the beginning of the year. At the beginning of March, Kesko Food sold the Carrols hamburger restaurant chain, which decreased the average number of Kesko Food employees by 223.

At the end of 2002, the Group empolyed a total of 3,060 (2,193) persons abroad.

Divisions

Kesko Food
Kesko Food’s net sales amounted to EUR 3,628 million, an increase of 5.7%. The net sales from Baltic operations totalled EUR 177 million, representing 4.9% of net sales. Kesko Food's operating profit was EUR 60.5 million (EUR 40.0 million). The main factors contributing to the improved operating profit were the strengthening of chain operations and cost savings. On the other hand, investments in the expansion of business operations in the Baltic countries, the costs of developing new store concepts, and the costs of building new systems for operations control reduced the operating profit. Kesko Food's total investments were EUR 71.2 million, including investments of EUR 65.0 million in the retail store network. About 41% of the investments were made in Baltic business operations.

In Finland, chain operations have become well-established in the K-food stores and their positive consequences are visible in the chains' sales, cost savings and thereby their results. Owing to different local and regional market and competition situations, there are great differences in the retail sales development of the chains and individual K-stores. The sales of the K-citymarket chain progressed best, recording a growth of 10.4%.

The total retail sales of the K-food stores in Finland grew by slightly less than 4%. It is estimated that in 2002, the overall market grew by 4.2%, which is slightly more than the sales of the K-food stores. At the end of the year, there were a total of 1,124 (1,157) K-food stores in Finland. During the year, exceptionally many new K-citymarkets were opened: in Lohja, Vaasa, Helsinki, Vihti, Keminmaa and Kaarina.

Kesko Food also invested heavily in the food trade in the Baltic countries, which is why the operations were still loss-making. At the end of the year, the Säästumarket chain included 44 outlets in Estonia. Three Citymarkets were opened in Estonia during the year, of which the large outlet opened before Christmas at Haabersti, Tallinn was the first Citymarket hypermarket in the Baltic countries. There are two Citymarkets in Riga, Latvia. One unprofitable outlet was closed. In June, the first Supernetto hard discounter was opened in Riga.

The net sales of Kespro Ltd, which provides services to the catering, kiosk, service station and restaurant trade, amounted to EUR 756 million, representing a growth of 2.8%. Sales to catering customers developed particularly well. The hotel, restaurant and catering (horeca) market declined towards the end of the year. However, Kespro's sales growth exceeded the business average.

The overall growth of the Finnish food market is expected to slow down in 2003. The Baltic markets are anticipated to continue the development of 2002.

Rautakesko

Rautakesko’s net sales in 2002 totalled EUR 735 million, a drop of 1.5% over the previous year. In Finland, the volume of new housing construction declined by 5.3% in comparison with the previous year (Statistics Finland), which also reduced Rautakesko's sales. Another factor reducing the net sales by approximately 5% was the fact that some hardware stores remained outside chain operations. The sales of yard and gardening products and building supplies, as well as houses and holiday houses progressed best. Repair construction currently accounts for as much as one third of the total volume.

At the end of 2002, 44 stores were included in the K-rauta chain and 102 stores in the Rautia chain. A new K-rauta store was opened in Helsinki. New Rautia stores were opened in Helsinki, Kaarina and Kaustinen. Particular attention was paid to developing the sales of yard and garden products and the sales to business customers in these store concepts. The retail sales of the K-Alliance's hardware and building supplies stores operating in Finland increased by 2.7%, those of the K-rauta stores by 3.8% and those of the Rautia stores by 1.4%. As a whole, the hardware and building supplies sector recorded a growth of 1.3%, but this development was not uniform. (Finnish Hardware Association)

The net sales of Rautakesko's foreign subsidiaries increased in 2002 by 25.0% reaching a total of EUR 129.1 million. Two new K-rauta stores were opened in Sweden and one in both Latvia and Estonia. In Sweden, the net sales of K-rauta AB totalled EUR 67.7 million, representing a growth of 39.4%. Rautakesko's foreign subsidiaries accounted for over 17% of its net sales. In October-December, their net sales were EUR 32.3 million, a growth of 21.7%.

Rautakesko's operating profit in 2002 was EUR 9.0 million (EUR 4.3 million). In Finland, the operating profit increased owing to enhanced chain operations and savings gained through reorganised logistics. Towards the end of the year, Rautakesko signed a timber trade co-operation agreement with Puukeskus Oy. Rautakesko's profit is burdened by costs related to changes in information systems. The profits of subsidiaries are affected by the opening costs of four new K-rauta stores. The performance in Sweden improved markedly, but remained loss-making. Rautakesko's operating profit includes EUR 2.8 million in profits from store real estate sales.

Rautakesko's total investments were EUR 14.2 million, of which EUR 11.8 million were made in the store network. The share of foreign investments was about 48.2%.

In June, Rautakesko signed a letter of intent to acquire the majority shareholding in UAB Senuku Prekybos Centras, which is Lithuania's largest hardware and builders' supplies company (net sales in 2001 EUR 100 million). A due diligence audit has been performed in the company and the parties intend to conclude the deal during the first half of 2003.

Kesko Agro
The net sales of the Kesko Agro Group were EUR 715 million, an increase of 2.3%. The foreign subsidiaries’ net sales amounted to EUR 69.8 million, which was 9.8% of the total net sales. The operating profit of the Kesko Agro Group was EUR 7.4 million (EUR 6.2 million). The result was affected by the costs arising from the development of information systems and by the initiation and expansion costs in Latvia and Lithuania. The operating profit of Kesko Machinery Ltd was clearly better than in the previous year and better than expected. Investments totalled EUR 4.4 million, 52% of which were made in foreign projects.

Kesko Agro Ltd's net sales were EUR 464.8 million. In August, Kesko Agro started the sales and after sales operations of Massey Ferguson tractors. Additionally in the autumn, the import and marketing operations of the Danish He-Va agricultural implements were started. The crop harvest of the year equalled the level of the previous year, but the amount of grain offered for sale was 10% smaller.

At the end of 2002, there was a total of 102 K-agriculture stores, 21 of which were operated by K-maatalousyhtiöt Oy, a Kesko Agro subsidiary. The first store operating under the new K-agriculture store concept is to be opened in February 2003 in Oulu.

Kesko Machinery Ltd's net sales totalled EUR 159.3 million, representing a growth of 13.7% over the previous year, regardless of the partly declining overall market. In June, Kesko Machinery started to market Hyster forklifts, and in July, Fiat Kobelco construction machines in Finland and the Baltic countries. Kesko Machinery signed an agreement with Selva S.p.A. on the import, sale and after sales operations of Selva marine products in Finland and Estonia as from 1 January 2003. The Yamaha business operations of Oy Arwidson Ab will be transferred to Kesko Machinery as from 1 July 2003.

The agricultural and machinery sales in the Baltic countries have progressed according to plan. New agriculture-machinery centres were opened in Tallinn and Vilnius, and a new district centre in Paide, Estonia. In 2002, Kesko Agro became the biggest agricultural business company in the Baltic countries. Investments necessitated by rapid growth, the effects of which were felt during the last quarter in particular, kept the operations loss-making. In 2003, new stores will be opened in Tartu, Estonia and Kaunas, Lithuania.

Keswell
Keswell's net sales in 2002 totalled EUR 687 million, a decrease of 1.3%. The net sales of foreign operations totalled EUR 21.5 million representing 3.1% of the net sales. Keswell's operating loss was EUR 2.9 million, which is EUR 3.0 million smaller than in the previous year. In October-December, the company registered an operating profit of EUR 12.3 million. Total investments were EUR 7.5 million.

The net sales of the Anttila Group were EUR 437.3 million, a decrease of 5.8%. The sales of the Kodin Ykkönen department stores for home goods and interior decoration grew by 2.7%, while the sales of the Anttila department stores dropped by 9.6%. The main reasons for the decrease in sales are the winding up of the Raisio department store and the Lohja and Kaarina department stores being transferred to the K-citymarket hypermarket chain. NetAnttila's sales increased by 86.8%. Mail order sales decreased by 5.7%, mainly due to the poor development at the beginning of the year. The Anttila Group's operating profit was EUR 0.6 million, including EUR 1.6 million in VAT refunds. The operating profit was EUR 2.0 million bigger than in the previous year. Both Anttila and the Kodin ykkönen department stores made an operating profit.

The net sales of Kesko Sports increased by 2.1% to EUR 109.0 million. However, the retail sales of the Intersport store chain dropped by 1.0%, which is mainly due to the sluggish clothes trade at the beginning of the year. The chain's sales developed favourably for the rest of the year. The sales of the Kesport stores increased by 13.4%. The net sales of Kesko Musta Pörssi totalled EUR 101.7 million, a growth of 21.5%. The retail sales of the Musta Pörssi home technology chain increased by 4.9% owing to the excellent development towards the end of the year, regardless of the fact that the number of the chain's stores has decreased.

The net sales of Kesko Shoes decreased by 1.9%, totalling EUR 26.9 million. The retail sales of the K-kenkä chain dropped by 0.6% due to poor sales in November-December. The sales of the Andiamo chain decreased by 8.1%. This is mainly attributable to the decrease in the number of stores in the previous year. The sales of the Kenkäexpertti stores increased by 9.7%.

VV-Auto
In 2002, the net sales of the VV-Auto Group totalled EUR 450 million, representing a growth of 15.1%. The operating profit was EUR 14.4 million (EUR 14.2 million). Investments totalled EUR 7.6 million.

The Finnish car market experienced a positive mood in 2002. The number of new cars registered was 7.0% higher and that of vans 0.2% higher than in the previous year.

The market share of the cars imported by the VV-Auto Group totalled 14.1%, an increase  of 0.8 percentage points over the previous year. Volkswagen and Audi increased their market shares, whereas that of Seat decreased slightly. Volkswagen's market share in the van trade was 17.7%.

The government bill submitted to Parliament for the enactment of new car tax is expected to boost the car trade in 2003.

Kaukomarkkinat
In 2002, the Kaukomarkkinat Group's net sales amounted to EUR 285 million, which is 1.8% less than in the previous year. The Group's operating profit was EUR 7.7 million (EUR 6.8 million), a growth of 12.7% over the previous year. Investments totalled EUR 9.6 million.

The drop of net sales is mainly attributable to the winding up of Leitok, a company active in the clothes wholesale trade, towards the end of 2001. Its effect was -4.5%. The net sales of consumer electronics decreased too. The net sales of Leipurien Tukku registered the biggest growth. The companies acquired during the year also increased the Group's net sales.

The increase in the operating profit is mostly attributable to company acquisitions, growth of the Russian trade and cutting of costs.

Kaukomarkkinat increased its technical trade through the acquisition of Glastech Oy, a company operating in Finland, the Baltic countries, the Ukraine and Russia, and Nordica AS, which operates in Denmark, Sweden and Norway. The total annual sales of these companies are about EUR 20 million.

Shares and equities market
Kesko Corporation’s share capital is EUR 182,240,800, with 34.8% of the share capital consisting of A shares and 65.2% of B shares.

The price of the company’s A share was EUR 15.00 at the end of 2001 and EUR 16.40 at the end of 2002, an increase of 9.3%. The price of the B share was EUR 10.30 at the end of 2001 and EUR 12.10 at the end of 2002, an increase of 17.5%.

In 2002, the HEX general index dropped by 34.4% and the HEX portfolio index by 16.7%, while the trading sector price index increased by 8.4%.

At the end of 2002, the market capitalisation of A shares was EUR 520 million and that of B shares EUR 718 million, i.e. the total market capitalisation for all shares was EUR 1,239 million.

During 2002, 0.9 million of Kesko’s A shares with a total value of EUR 15.4 million and 22.8 million B shares with a total value of EUR 248.8 million were traded on the Helsinki Exchanges.

At the end of 2002, a subsidiary of Kesko Corporation owned 33,400 Kesko Corporation's A shares with a total counter value of EUR 66,800 representing less than 0.04 percent of all shares and 0.09 percent of all voting rights.

Main events
Carrols Oy, a Kesko Food subsidiary, sold the business operations of the Carrols hamburger chain to a subsidiary owned by the Burger-In Group. The deal came into force on 1 March 2002.

In April 2002, Kesko Corporation was served summons by four Musta Pörssi retailers who had been given notice by Kesko in March 2001, and by one K-market retailer who had been given notice. In their summons the former Musta Pörssi retailers primarily demand that Kesko be obliged to pay a total of about EUR 1.66 million in compensation for notices they claim to be contrary to their contracts, and the former K-market retailer claims about EUR 0.2 million. The summons relate to the reform of chain operations implemented within the K-Alliance at the beginning of 2001. The claims made to Kesko in relation to the reform of chain operations, pending at the court of first instance, amount to a total of about EUR 18 million. Kesko contests all claims made against it as groundless seeing that it has been legally justified to give the notices.

Kesko Corporation's Annual General Meeting held on 22 April 2002 adopted the financial statements for 2001, discharged those accountable from their responsibilities and decided to distribute a dividend of EUR 0.60 per share, as proposed by the Board.

The 907,000 new Kesko Corporation B shares subscribed between 1.12.1999-30.4.2002 under the 1996 stock option scheme were entered in the Trade Register. The book counter value of B share is EUR 2.00 and its price, when subscribed under the stock option scheme, was EUR 10.01. As a result of this subscription, Kesko Corporation's registered share capital increased by EUR 1,814,000 to a total of EUR 182,240,800.

B warrants, to be subscribed for during the period 1.11.2002 - 31.3.2006, were included on the main list of the Helsinki Exchanges on 1 November 2002. The total number of the B warrants is 3,825,000. Each B warrant entitles its holder to subscribe for one Kesko B share.

In October Kesko was awarded for the second time in succession as the best Finnish company in reporting on environmental and corporate responsibility. In addition, Kesko received top level recognition for its environmental actions when the United Nations' Environmental Programme UNEP and the International Chamber of Commerce (ICC) selected the K-environmental store diploma among the ten best partnership programmes in the world.

In September and October 2002, the Tax Office for Major Corporations reassessed the tax liability for 1999 and 2000 of K-Plus Oy, a company in the Kesko Group, with the result that an income tax bill of about EUR 4.9 million was imposed to the company. In addition, K-Plus Oy was ordered in May 2002 to pay income tax of about EUR 1.9 million for 1999, including consequences for default. On the other hand, value added taxes totalling EUR 3.9 million were returned to Citymarket Oy and Anttila Oy.

Future outlook
Leading Finnish research institutes estimate that the Finnish GDP will grow this year by nearly three percent on average. Global uncertainty adds to the difficulty of preparing economic forecasts, particularly for the latter part of the year. The positive forecast for economic development in Finland provides our domestic wholesale customers with favourable operating conditions particularly in the manufacturing industry and the building sector. Consumers' opinions about the development of their own finances have remained positive. The consumer demand is anticipated to remain at no less than the level of the previous year.

International competition is establishing itself in all product lines in Finland. The chain operations of Kesko and the K-retailers have started according to plan and the positive consequences have become visible in the chains' sales and cost savings. Chain operations are developed further, particularly in purchasing and marketing.

Major investments in the modernisation of the retail store network and in information systems will continue in Finland, Sweden and the Baltic countries.

During the first half of 2003, the net sales of the Group's divisions and that of the Kesko Group are anticipated to grow in Finland at no less than the growth rate of the market. Foreign sales are estimated to grow faster than domestic sales. The profit development of the Kesko Group will continue to be steady although it will be affected by intensive investments in marketing and retail stores during the first six months of the year.

Proposed distribution of profit
The Group’s distributable reserves are           EUR 861,100,416.09
The parent company’s distributable reserves are                  EUR 763,071,738.02
of which the net profit for the financial year isEUR   74,715,724.35

The Board of Directors proposes to the Annual General Meeting that the distributable reserves be used as follows:
To be paid to shareholders as dividends

(at EUR 1.00 per share)                                                     EUR   91 120 400,00

To be reserved for donations at the
discretion of the Board of Directors                                     EUR        250 000,00

To be carried forward as retained

earnings                                                                           EUR 671 701 338,02

Annual General meeting
The Board of Directors decided to convene the Annual General Meeting on 31 March 2003, at 13.00 hrs at the Helsinki Fair Centre to handle the matters determined for it by the Articles of Association.

Helsinki, 5 February 2003
Kesko Corporation
Board of Directors

Further information:Juhani Järvi, Executive Vice President and CFO, telephone +358 1053 22209 and Teemu Kangas-Kärki, Vice President, Corporate Controller, telephone +358 1053 22113. A web conference about Kesko's financial results for 2002 will be held in English at 14.30 hrs (Finnish time). Login to the conference at www.kesko.fi.

KESKO CORPORATION
Corporate Communications

Erkki Heikkinen
Senior Vice President

ATTACHMENTS
Group net sales by division
Consolidated income statement and balance sheet
Group key indicators

Group cash flow
Group contingent liabilities
Group key indicators by quarter
Divisions' net sales and operating profit by quarter

Kesko Corporation’s interim report for the first three months of 2003 will be published on 7 May 2003, for the first six months of 2003 on 6 August 2003 and for the first nine months of 2003 on 5 November 2003. In addition, Kesko Group’s sales figures are published each month. Releases and other company information are available on Kesko’s Internet pages, at www.kesko.fi.

DISTRIBUTION
HEX Helsinki Exchanges
Main news media

ATTACHMENTS: