Kesko's interim report for the period 1 Jan. to 31 Mar. 2013
KESKO CORPORATION STOCK EXCHANGE RELEASE 25.04.2013 AT 09.00 1(28)
Financial performance in brief:
*The Group's net sales for January-March decreased by 6.9%.
* The retail and B2B sales (excl. VAT) of the K-Group (i.e. Kesko and chain stores) for January-March decreased by 7.4%.
*The operating profit excluding non-recurring items was 18.6 million (22.3 million).
*The Kesko Group's net sales for the next twelve months are expected to match the level of the preceding twelve months. As a result of measures taken to enhance business operations and cost savings, the operating profit excluding non-recurring items for the next twelve months is expected to exceed the operating profit excluding non-recurring items for the preceding twelve months, unless the overall consumer demand significantly weakens. Capital expenditure is expected to be lower compared to the capital expenditure for the preceding twelve months.
Key performance indicators
| 1-3/2013 | 1-3/2012 | |||
| Net sales, million | 2,159 | 2,318 | ||
| Operating profit excl. non- recurring items, million | 18.6 | 22.3 | ||
| Operating profit, million | 19.2 | 25.1 | ||
| Profit before tax, million | 15.8 | 25.0 | ||
| Capital expenditure, million | 41.5 | 104.1 | ||
| Earnings per share, diluted, | 0.11 | 0.16 | ||
| Earnings per share excl. non-recurring items, basic, | 0.11 | 0.14 | ||
| 31.3.2013 | 31.3.2012 | |||
| Equity ratio, % | 51.7 | 52.8 | ||
| Equity per share, | 22.62 | 22.56 |
FINANCIAL PERFORMANCE
Net sales and profit for January-March 2013
The Group's net sales in January-March 2013 were 2,159 million, which is 6.9% down on the corresponding period of the previous year (2,318 million). In Finland, net sales decreased by 6.1% and in other countries by 11.0%. International operations accounted for 14.7% (15.4%) of net sales. Net sales grew in the food trade and declined in the other divisions.
| 1-3/2013 | Net sales, million | Change, % | Operating profit excl. non- recurring items, million | Change, million |
| Food trade | 1,045 | +3.5 | 48.2 | 13.5 |
| Home and speciality goods trade | 345 | -6.5 | -17.8 | -4.8 |
| Building and home improvement trade | 562 | -10.7 | -16.6 | -7.6 |
| Car and machinery trade | 249 | -29.3 | 7.8 | -7.7 |
| Common operations and eliminations | -42 | -0.5 | -3.0 | 2.9 |
| Total | 2,159 | -6.9 | 18.6 | -3.7 |
The operating profit excluding non-recurring items for January-March was 18.6 million (22.3 million), negatively affected by sales decrease in the car trade, the building and home improvement trade and the department store trade. Enhancement measures had a significant positive impact on profitability performance. Operating expenses decreased by 18 million compared to the previous year.
Operating profit was 19.2 million (25.1 million). The operating profit includes non-recurring gains on disposal of real estate in the amount of 0.6 million (2.8 million). The Group's profit before tax for January-March was 15.8 million (25.0 million).
The Group's earnings per share were 0.11 (0.16). The Group's equity per share was 22.62 (22.56).
In January-March, the K-Group's (i.e. Kesko's and the chain stores') retail and B2B sales (VAT 0%) were 2,573 million, down 7.4% compared to the previous year. The K-Plussa customer loyalty programme gained 19,906 new households in January-March. At the end of March, there was 2,228,234 K-Plussa households and 3.8 million K-Plussa cardholders.
Finance
In January-March, the cash flow from operating activities was -58.7 million (-5.2 million). The cash flow from investing activities was -41.9 million (-91.8 million). It included a 2.5 million (19.5 million) amount of proceeds from the sale of fixed assets.
The Group's liquidity remained at an excellent level in January-March. At the end of the period, liquid assets totalled 411 million (293 million). Interest-bearing liabilities were 644 million (446 million) and interest-bearing net debt 233 million (154 million) at the end of March. Equity ratio was 51.7% (52.8%) at the end of the period.
In January-March, the Group's net finance costs were 3.3 million (0.1 million). Interest expense was increased by the 250 million bond taken out in September 2012 adding to the gross debt.
Taxes
The Group's taxes for January-March were 4.8 million (7.3 million). The effective tax rate was 30.3% (29.2%), affected by loss-making foreign operations.
Capital expenditure
In January-March, the Group's capital expenditure totalled 41.5 million (104.1 million), or 1.9% (4.5%) of net sales. Capital expenditure in store sites was 31.7 million (90.3 million), in IT 5.6 million (6.6 million) and other capital expenditure was 4.2 million (7.2 million). Capital expenditure in foreign operations represented 36.5% (8.4%) of total capital expenditure.
Kesko's strategic focus areas and profitability programme
The key focus areas in Kesko's business operations are to strengthen sales growth and the return on capital in all divisions, to exploit business opportunities in e-commerce and in Russia, and to maintain good solvency and dividend payment capacity.
As a result of a weakened general economic situation, tightened competition and an increase in the level of costs, Kesko is implementing the profitability programme announced previously, which aims to ensure price competitiveness and to improve profitability. The profitability programme includes significant measures aimed to increase sales, to enhance purchasing operations and to adjust costs, working capital and capital expenditure.
The Group level cost saving target is a total of around 100 million. Cost savings are implemented in all divisions and in all operating countries. Most of the cost savings are expected to be achieved in 2013. Kesko's operating expenses for the first quarter of 2013 were 438 million, down -18 million (-4.0%) on the previous year regardless of store site network expansion and cost inflation.
The measures for staff cost enhancement were implemented as announced previously. In addition to terminations, the reductions included reduced working hours and retirement arrangements. In the first quarter, the increasing effect of new store sites on the number of personnel was around 900 person-years compared to the previous year.
Other significant savings are implemented by adjusting especially marketing and store site expenses and by centralising ICT purchases. In addition, special enhancement measures are targeted at operations with low profitability. Anttila's chain concepts are reformed and costs are adjusted, an e-commerce based operating model is implemented in Musta Pörssi and its store site network is strongly adjusted. The chain concept of Intersport's business operations in Russia is reformed and unprofitable store sites are closed. At the end of the reporting period, the store site network of Intersport Russia comprised 21 (35) stores.
In the next few years, capital expenditure will be aligned with funds generated from operations to some 200-300 million per year.
Personnel
In January-March, the average number of employees in the Kesko Group was 19,126 (19,143) converted into full-time employees. In Finland, the average decrease was 239 people, while outside Finland, there was an increase of 221 people.
At the end of March 2013, the total number of employees was 22,881 (22,909), of whom 12,298 (12,522) worked in Finland and 10,583 (10,387) outside Finland. Compared to the end of March 2012, there was a decrease of 224 people in Finland and an increase of 196 people outside Finland.
In January-March, the Group's staff cost was 153.3 million, an increase of 0.6% compared to the previous year.
SEGMENT INFORMATION
Seasonal nature of operations
The Group's operating activities are affected by seasonal fluctuations. The net sales and operating profits of the reportable segments are not earned evenly throughout the year. Instead, they vary by quarter depending on the characteristics of each segment.
Food trade
| 1-3/2013 | 1-3/2012 | |
| Net sales, million | 1,045 | 1,010 |
| Operating profit excl. non- recurring items, million | 48.2 | 34.7 |
| Operating margin excl. non-recurring items, % | 4.6 | 3.4 |
| Capital expenditure, million | 16.5 | 60.2 |
| Net sales, million | 1-3/2013 | Change, % |
| Sales to K-food stores | 804 | +3.1 |
| Kespro | 188 | +3.9 |
| Others | 54 | +9.1 |
| Total | 1,045 | +3.5 |
January-March 2013
In the food trade, the net sales for January-March were 1,045 million (1,010 million), up 3.5%. During the same period, the grocery sales of K-food stores increased by 1.5% (VAT 0%). In the grocery market, retail prices are estimated to have changed by some 4% compared to the previous year (VAT 0%, Kesko's own estimate based on the Consumer Price Index of Statistics Finland), and the total market (VAT 0%) is estimated to have grown by some 3.5% in January-March compared to the previous year (Kesko's own estimate).
In January-March, the operating profit excluding non-recurring items of the food trade was 48.2 million (34.7 million), or 13.5 million up on the previous year. Profitability was improved by significant savings achieved from enhanced operations. In addition, operating profit was increased by a 2.3 million (-1.6 million) gain on measurement of derivatives used for hedging electricity purchases. Operating profit was 48.2 million (37.4 million). In the comparative year, non-recurring income included 2.7 million of gains on disposals of properties.
The capital expenditure of the food trade was 16.5 million (60.2 million), of which 14.6 million (56.5 million) in stores sites.
In January-March 2013, two new K-supermarkets and one K-market were opened. Renovations and extensions were carried out in a total of five stores.
The most significant store sites being built are a K-citymarket in the Puuvilla shopping centre in Pori and a K-supermarket in Espoo, in Pohjois-Haaga, Helsinki, in Jyväskylä, Säkylä and Ikaalinen. The objective in Russia is to open three new food stores in 2013.
| Numbers of stores as at 31 March | 2013 | 2012 |
| K-citymarket | 80 | 76 |
| K-supermarket | 215 | 210 |
| K-market (incl. service station stores) | 450 | 456 |
| K-ruoka, Russia | 1 | 0 |
| Others | 181 | 204 |
Home and speciality goods trade
| 1-3/2013 | 1-3/2012 | |
| Net sales, million | 345 | 369 |
| Operating profit excl. non-recurring items, million | -17.8 | -12.9 |
| Operating margin excl. non-recurring items, % | -5.2 | -3.5 |
| Capital expenditure, million | 8.0 | 18.5 |
| Net sales, million | 1-3/2013 | Change, % |
| K-citymarket home and speciality goods | 140 | -4.6 |
| Anttila | 89 | -17.4 |
| Intersport, Finland | 51 | +14.1 |
| Intersport, Russia | 6 | -23.6 |
| Indoor | 44 | -0.1 |
| Musta Pörssi | 10 | -22.8 |
| Kenkäkesko | 6 | -4.7 |
| Total | 345 | -6.5 |
January-March 2013
In the home and speciality goods trade, the net sales for January-March were 345 million (369 million), down 6.5%. Consumer demand in the home and speciality goods trade weakened during the first months of the year and sales declined especially in the department store trade. The first quarter of the year had three retail selling days less than in the previous year. Sales performance was also impacted by the change in Musta Pörssi's business model and the adjustment of the Intersport store site network in Russia.
The operating profit excluding non-recurring items of the home and speciality goods trade for January-March was -17.8 million (-12.9 million). Profitability was negatively impacted by a decrease in the sales and gross margin of Anttila and K-citymarket Oy. During the reporting period, significant cost savings were implemented. Operating profit was
-17.7 million (-12.9 million).
The capital expenditure of the home and speciality goods trade was 8.0 million (18.5 million) in January-March.
A new Budget Sport opened in Lielahti, Tampere in March.
| Numbers of stores as at 31 March | 2013 | 2012 |
| K-citymarket, home and speciality goods* | 81 | 75 |
| Anttila department stores* | 31 | 31 |
| Kodin1 department stores for home goods and interior decoration* | 13 | 11 |
| Intersport | 62 | 58 |
| Budget Sport* | 11 | 8 |
| Asko and Sotka | 84 | 82 |
| Musta Pörssi* | 25 | 34 |
| Kookenkä* | 48 | 47 |
| Anttila, Baltics (NetAnttila)* | 3 | 3 |
| Intersport, Russia | 21 | 35 |
| Asko and Sotka, Baltics* | 10 | 9 |
* incl. online stores
Building and home improvement trade
| 1-3/2013 | 1-3/2012 | |
| Net sales, million | 562 | 629 |
| Operating profit excl. non-recurring items, million | -16.6 | -9.0 |
| Operating margin excl. non-recurring items, % | -3.0 | -1.4 |
| Capital expenditure, million | 12.5 | 11.7 |
| Net sales, million | 1-3/2013 | Change, % |
| Rautakesko, Finland | 281 | -6.4 |
| K-rauta, Sweden | 38 | -13.9 |
| Byggmakker, Norway | 101 | -30.3 |
| Rautakesko, Estonia | 12 | +3.9 |
| Rautakesko, Latvia | 10 | +2.5 |
| Senukai, Lithuania | 48 | -4.7 |
| Stroymaster, Russia | 51 | -3.7 |
| OMA, Belarus | 21 | +35.0 |
| Total | 562 | -10.7 |
January-March 2013
In the building and home improvement trade, the net sales for January-March were 562 million (629 million), down 10.7%. The trend in construction activity was weak in all of Rautakesko's operating countries. Sales decreased especially in the B2B trade and in basic building materials.
In Finland, the net sales for January-March were 281 million (300 million), a decrease of 6.4%. The building and home improvement product lines contributed 191 million to the net sales in Finland, a decrease of 10.3%. The agricultural supplies trade contributed 90 million to net sales, up 3.1%.
The retail sales of the K-rauta and Rautia chains in Finland decreased by 8.8% to 170 million (VAT 0%). The sales of Rautakesko B2B Service were down 20.8%. The retail sales of the K-maatalous chain were 93 million (VAT 0%), up 4.3%.
In January-March, the net sales from the foreign operations of the building and home improvement trade were 281 million (329 million), a decrease of 14.6%. In Russia, net sales decreased by 2.2% in terms of roubles. In Norway, net sales decreased by 31.7% in terms of krones, which was partly attributable to the changes that took place in the Byggmakker chain last year. A decision has been made to introduce new chain agreements in Norway starting from 1 January 2014. In Sweden, net sales were down 17.3% in terms of kronas. Foreign operations contributed 50.0% (52.3%) to the net sales of the building and home improvement trade.
The operating profit excluding non-recurring items of the building and home improvement trade for January-March was -16.6 million (-9.0 million), down 7.6 million compared to the previous year. The fall is due to weak sales performance. Operating profit was -16.1 million (-9.0 million).
In January-March, the capital expenditure of the building and home improvement trade totalled 12.5 million (11.7 million), of which 49.2% (66.0%) abroad. Capital expenditure in store sites represented 97.0% of total capital expenditure.
| Numbers of stores as at 31 March | 2013 | 2012 |
| K-rauta* | 42 | 41 |
| Rautia* | 99 | 103 |
| K-maatalous* | 83 | 86 |
| K-rauta, Sweden | 21 | 22 |
| Byggmakker, Norway | 89 | 107 |
| K-rauta, Estonia | 8 | 9 |
| K-rauta, Latvia | 8 | 8 |
| Senukai, Lithuania | 17 | 17 |
| K-rauta, Russia | 14 | 14 |
| OMA, Belarus | 9 | 6 |
*In 2013, 1 K-rauta store and 48 Rautia stores also operated as K-maatalous stores,
in 2012, 1 K-rauta store and 49 Rautia stores also operated as K-maatalous stores.
Car and machinery trade
| 1-3/2013 | 1-3/2012 | |
| Net sales, million | 249 | 353 |
| Operating profit excl. non-recurring items, million | 7.8 | 15.5 |
| Operating margin excl. non-recurring items, % | 3.1 | 4.4 |
| Capital expenditure, million | 3.9 | 12.7 |
| Net sales, million | 1-3/2013 | Change, % |
| VV-Auto | 193 | -33.3 |
| Konekesko | 57 | -11.9 |
| Total | 249 | -29.3 |
January-March 2013
In January-March, the net sales of the car and machinery trade were 249 million (353 million), down 29.3%.
VV-Auto's net sales for January-March were 193 million (289 million), a decrease of 33.3%. In the previous year, sales were increased by the car tax change effective 1 April 2012. In January-March, the combined market performance of first time registered passenger cars and vans was -43.1%.
In January-March, the combined market share of passenger cars and vans imported by VV-Auto was 19.9% (19.9%).
Konekesko's net sales for January-March were 57 million (65 million), down 11.9% compared to the previous year. Net sales in Finland were 39 million, down 22.0%. The net sales from Konekesko's foreign operations were 19 million, up 17.2%.
In January-March, the operating profit excluding non-recurring items of the car and machinery trade was 7.8 million (15.5 million), down 7.7 million compared to the previous year. Regardless of the difficult market situation, profitability remained at a good level.
The operating profit for January-March was 7.8 million (15.5 million).
The capital expenditure of the car and machinery trade for January-March was 3.9 million (12.7 million).
| Numbers of stores as at 31 March | 2013 | 2012 |
| VV-Auto, retail trade | 10 | 10 |
| Konekesko | 1 | 2 |
Changes in the Group composition
No significant changes took place in the Group composition during the reporting period.
Shares, securities market and Board authorisations
At the end of March 2013, the total number of Kesko Corporation shares was 98,786,940, of which 31,737,007, or 32.1%, were A shares and 67,049,933, or 67.9%, were B shares. At 31 March 2013, Kesko Corporation held 608,591 own B shares as treasury shares. Treasury shares accounted for 0.91% of the number of B shares and 0.62% of the total number of shares, and 0.16% of votes carried by all shares of the company. The total number of votes carried by all shares was 384,420,003. Each A share entitles to ten (10) votes and each B share to one (1) vote. The company cannot vote with treasury shares and no dividend is paid on them. At the end of March 2013, Kesko Corporation's share capital was 197,282,584. During the reporting period, the number of B shares was increased once to account for the shares subscribed for with the options based on the 2007 option scheme. The increase was made on 11 February 2013 (74,600 B shares) and announced in a stock exchange notification on the same day. The shares subscribed for were listed for public trading on NASDAQ OMX Helsinki (Helsinki Stock Exchange) with the old B shares on 12 February 2013. The subscription price of 1,046,274 received by the company was recorded in the reserve of invested non-restricted equity.
The price of a Kesko A share quoted on NASDAQ OMX Helsinki was 24.39 at the end of 2012, and 25.11 at the end of March 2013, representing an increase of 3.0%. Correspondingly, the price of a B share was 24.77 at the end of 2012, and 24.37 at the end of March 2013, representing a decrease of 1.6%. In January-March, the highest A share price was 25.99 and the lowest was 24.35. For B share, they were 25.87 and 23.35 respectively. In January-March, the Helsinki stock exchange (OMX Helsinki) All-Share index was up by 5.8% and the weighted OMX Helsinki CAP index by 5.5%. The Retail Index was down by 2.0%.
At the end of March 2013, the market capitalisation of A shares was 797 million, while that of B shares was 1,619 million, excluding the shares held by the parent company. The combined market capitalisation of A and B shares was 2,416 million, a decrease of 2 million from the end of 2012. In January-March 2013, a total of 0.3 (0.6) million A shares were traded on the Helsinki stock exchange, down 55%. The exchange value of A shares was 7 million. The total number of B shares traded was 10.1 (20.6) million, down 51%. The exchange value of B shares was 248 million.
The company operates the 2007 option scheme for management and other key personnel, under which the share subscription period of 2007B share options runs from 1 April 2011 to 30 April 2013, and that of 2007C share options runs from 1 April 2012 to 30 April 2014. The share options have been included on the official list of the Helsinki stock exchange since the beginning of the share subscription periods. During the reporting period, a total of 294,347 2007B share options were traded at a total value of 749,548, and correspondingly, a total of 88,901 2007C share options were traded at a total value of 1,011,589. The share subscription period of 2007A share options under the option scheme and their trading on the official list ended in 2012.
The Board has the authority, granted by the Annual General Meeting of 16 April 2012 and valid until 30 June 2015, to issue a total maximum of 20,000,000 new B shares. The shares can be issued against payment for subscription by shareholders in a directed issue in proportion to their existing shareholdings regardless of whether they consist of A or B shares, or, deviating from the shareholder's pre-emptive right, in a directed issue, if there is a weighty financial reason for the company, such as using the shares to develop the company's capital structure, and financing possible acquisitions, investments or other arrangements within the scope of the company's business operations. The amount paid for the shares is recognised in the reserve of invested non-restricted equity. The authorisation also includes the Board's authority to decide on the share subscription price, the right to issue shares against non-cash consideration and the right to make decisions on other matters concerning share issuances.
In addition, the Board has the authority, granted by the Annual General Meeting of 8 April 2013 and valid until 30 September 2014 to decide on the acquisition of a maximum of 500,000 own B shares, and the authority, valid until 30 June 2017, to decide on the issuance of a maximum of 1,000,000 own B shares held as treasury shares by the company.
On 4 February 2013, the Board decided to grant own B shares held as treasury shares by the company to people included in the target group of the vesting period, based on the authority to issue own shares, valid prior to the Annual General Meeting held on 8 April 2013, and the fulfilment of the vesting criteria of the 2012 vesting period of Kesko's three-year share-based compensation plan. The issuance of 66,331 own B shares, referred to above, was announced in a stock exchange release on 5 February 2013 and on 5 April 2013. The latter release also announced that 866 own B shares had been returned to the company without consideration. Further information on the Board's authorisations is available at www.kesko.fi.
At the end of March 2013, the number of shareholders was 44,692, which was 138 more than at the end of 2012. At the end of March, foreign ownership of all shares was 19%. At the end of March, foreign ownership of B shares was 28%.
Flagging notifications
Kesko Corporation did not receive flagging notifications during the reporting period.
Key events during the reporting period
Changes, effective 5 February 2013, took place in Kesko's Corporate Management Board. Arja Talma, M.Sc. (Econ.), eMBA, 50, was appointed Senior Vice President responsible for the Kesko Group's store sites and investments. Terho Kalliokoski, M.S. (Econ.), 51, was appointed Rautakesko Ltd's President. Jorma Rauhala, M.Sc. (Econ.), 47, was appointed Kesko Food Ltd's President. Starting from 5 February 2013, Kesko's Corporate Management Board is composed of Matti Halmesmäki, Chair; Jorma Rauhala, food trade; Minna Kurunsaari, home and speciality goods trade and Kesko's customer information and e-commerce projects; Terho Kalliokoski, building and home improvement trade; Pekka Lahti, car and machinery trade; Arja Talma, store sites and investments; Jukka Erlund, CFO, accounting, finance and IT management; and Matti Mettälä, human resources and stakeholder relations. (Stock exchange release on 5 February 2013)
Events after the reporting period
On 5 April 2013, Kesko transferred a total of 66,331 own B shares (KESBV) held by the company as treasury shares to the about 150 Kesko management employees and other named key persons included in the target group of the 2012 vesting period of Kesko's three-year share-based compensation plan. In the same context, 866 B shares, originally transferred to a person included in the target group of the 2011 vesting period of the share-based compensation plan, were returned to Kesko. After the transfer and return of shares, Kesko holds 543,126 own B shares as treasury shares. (Stock exchange release on 5 April 2013)
With effect from 1 January 2013, the Kesko Group adopted the revised IAS 19 Employee benefits standard. The amendment had an impact on the Kesko Group's pension costs and profit, as well as the pension assets and equity on the balance sheet. Resulting from the amendment, the Kesko's consolidated income statement, consolidated statement of financial position and segment information for 2012 were updated in compliance with the requirements prescribed in the revised standard. (Stock exchange release on 11 April 2013)
Resolutions of the 2013 Annual General Meeting and decisions of the Board's organisational meeting
Kesko Corporation's Annual General Meeting, held after the reporting period of 8 April 2013, adopted the financial statements for 2012 and discharged the Board members and the Managing Director from liability. The General Meeting also resolved, as proposed by the Board, to distribute 1.20 per share, or a total of 117,892,576.80 as dividends. The dividend pay date was 18 April 2013. The General Meeting resolved that the number of Board members is unchanged at seven, elected PricewaterhouseCoopers Oy as the company's auditor, with APA Johan Kronberg as the auditor with principal responsibility, and approved the Board's proposals for amending Article 9 of the Articles of Association concerning the delivery of the notice of a General Meeting, for authorising the Board to acquire a maximum of 500,000 own B shares and to issue a maximum of 1,000,000 own B shares held as treasury shares by the company. The General Meeting also approved the Board's proposal that it be authorised to decide on the donations in a total maximum of 300,000 for charitable or corresponding purposes until the Annual General Meeting to be held in 2014.
The organisational meeting of the company's Board of Directors, held after the Annual General Meeting, kept the compositions of the Audit Committee and the Remuneration Committee unchanged. The Board's Audit Committee is composed of the Board members Maarit Näkyvä (Ch.), Seppo Paatelainen (Deputy Ch., Board Deputy Ch.) and Virpi Tuunainen elected by Kesko's Annual General Meeting of 16 April 2012, and correspondingly, the Remuneration Committee is composed of Board members Esa Kiiskinen (Ch., Board Ch.), Seppo Paatelainen (Deputy Ch., Board Deputy Ch.) and Ilpo Kokkila. In addition to the above, Board members elected by the said meeting include Tomi Korpisaari and Toni Pokela. The term of office of all Board members, provided by Kesko's Articles of Association, will end at the close of the Annual General Meeting of 2015. The Board elects the Board Chair and Deputy Chair for the whole three-year term of the Board members and the Committee Chairs, Deputy Chairs and members for one year at a time.
The resolutions of the Annual General Meeting and the decisions of the Board's organisational meeting were announced in more detail in stock exchange releases on 8 April 2013.
Responsibility
In January, Kesko was included on 'The Global 100 Most Sustainable Corporations in the World' list for the ninth time. Kesko was classified into the bronze class in the Food & Drug Retailers sector in RobecoSAM's Sustainability Yearbook 2013.
Kesko announced its updated responsibility programme, which contains both short-term objectives and objectives extending to 2020 for the operations of Kesko and the whole K-Group.
Kesko and K-stores will take active part in the social guarantee for young people initiative, with a view to promoting employment and preventing social exclusion among young people. A tailored programme will be built for the K-Group to employ young people in K-stores and Kesko.
In March, Kesko and K-stores took part in the Earth Hour 2013 event by turning off the illuminated signs and pylons in their remote controlled properties and stores across Finland for one hour.
In March, Kesko was awarded by World Finance Magazine for 'the Best Corporate Governance in Finland' in terms of corporate governance development and reporting, as in two previous years.
Risk management
The Kesko Group has an established and comprehensive risk management process. Risks and their management are assessed in the Group regularly and they are reported to the Group's management. Kesko's risk management and risks associated with business operations are described in more detail on Kesko's website in the section Corporate Governance.
The most significant near-future risks in Kesko's business operations are related to the general economic development, the financial market situation in the euro zone and low consumer confidence in Kesko's operating area and their impact on the Kesko Group's sales and profit performance. During the first months of the year, no material changes are estimated to have taken place in the risks described in the 2012 report by Kesko's Board of Directors and the financial statements, or in the risks described on Kesko's website.
The risks and uncertainties related to financial performance are described in the section future outlook of this release.
Future outlook
Estimates of the future outlook for the Kesko Group's net sales and operating profit excluding non-recurring items are given for the 12 months following the reporting period (4/2013-3/2014) in comparison with the 12 months preceding the reporting period (4/2012-3/2013).
Resulting from the problems of European national economies, the future prospects for the general economic situation and consumer demand continue to be characterised by significant uncertainty. In consequence of weakened employment and consumers' purchasing power, the growth prospects for the trading sector have deteriorated.
In the Finnish grocery trade, the market is expected to remain stable. As a result of the weakened economic situation, the markets for the home and speciality goods trade, the building and home improvement trade and the car and machinery trade in Finland are expected to fall.
The Kesko Group's net sales for the next twelve months are expected to match the level of the preceding twelve months. As a result of measures taken to enhance business operations and cost savings, the operating profit excluding non-recurring items for the next twelve months is expected to exceed the operating profit excluding non-recurring items for the preceding twelve months, unless the overall consumer demand significantly weakens. Capital expenditure is expected to be lower compared to the capital expenditure for the preceding twelve months.
Helsinki, 24 April 2013
Kesko Corporation
Board of Directors
The information in the interim report release are unaudited.
Further information is available from Jukka Erlund, Senior Vice President, Chief Financial Officer, telephone +358 1053 22113, and Eva Kaukinen, Vice President, Corporate Controller, telephone +358 1053 22338. A Finnish-language webcast from the media and analyst briefing on the interim report can be accessed at www.kesko.fi at 11.00. An English-language web conference on the interim report will be held today at 14.30 (Finnish time). The web conference login is available on Kesko's website at www.kesko.fi.
Kesko Corporation's interim report for January-June will be released on 24 July 2013. In addition, the Kesko Group's sales figures are published each month. News releases and other company information are available on Kesko's website at www.kesko.fi.
KESKO CORPORATION
Merja Haverinen
Vice President, Corporate Communications
ATTACHMENTS: TABLES SECTION
Accounting policies
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Group's performance indicators
Net sales by segment
Operating profit by segment
Operating profit excl. non-recurring items by segment
Operating margin excl. non-recurring items by segment
Capital employed by segment
Return on capital employed excl. non-recurring items by segment
Capital expenditure by segment
Segment information by quarter
Change in tangible and intangible assets
Related party transactions
Fair value hierarchy of financial assets and liabilities
Personnel average and at the end of the reporting period
Group's commitments
Calculation of performance indicators
K-Group's retail and B2B sales
DISTRIBUTION
NASDAQ OMX Helsinki
Main news media
www.kesko.fi
TABLES SECTION:
Accounting policies
This interim report has been prepared in accordance with the IAS 34 standard. The interim report has been prepared in accordance with the same accounting principles as the annual financial statements for 2012, with the exception of the following changes due to the adoption of new and revised IFRS standards and IFRIC interpretations:
The amendment to the IAS 19 Employee benefits standard changes the determination of the return on defined benefit pension plan assets. According to the revised standard, the rate used to discount the retirement benefit obligation is used as the return on assets in place of the expected long-term return on the assets used previously. Due to the amendment, the net return on defined benefit pension plans recognised in the consolidated income statement decreases. In addition, the amendment to the IAS 19 Employee benefits standard eliminates the possibility to apply the so-called "corridor approach" to the calculation of retirement benefits classified as defined benefit pension plans, which follows that the changes in the calculation assumptions used for measuring the pension obligation and the covering assets are recognised in pension assets and equity in the balance sheet. The impact of the amendment was announced in a separate stock exchange release on 11 April 2013.
In addition, the Group has adopted the following standards and amendments to standards issued for application:
-IAS 1 Presentation of financial statements (amendment)
-IFRS 13 Fair value measurement
-IFRS 7 Financial instruments: Disclosures (amendment)
| Consolidated income statement ( million), condensed | ||||||
| 1-3/ 2013 | 1-3/ 2012 | Change,% | 1-12/ 2012 | |||
| Net sales | 2,159 | 2,318 | -6.9 | 9,686 | ||
| Cost of goods sold | -1,875 | -2,007 | -6.6 | -8,367 | ||
| Gross profit | 284 | 311 | -8.6 | 1,319 | ||
| Other operating income | 173 | 170 | 1.6 | 747 | ||
| Staff cost | -153 | -152 | 0.6 | -608 | ||
| Depreciation and impairment charges | -37 | -36 | 3.2 | -158 | ||
| Other operating expenses | -248 | -268 | -7.5 | -1 088 | ||
| Operating profit | 19 | 25 | -23.2 | 212 | ||
| Interest income and other finance income | 3 | 5 | -37.4 | 21 | ||
| Interest expense and other finance costs | -5 | -4 | 39.2 | -17 | ||
| Exchange differences | -1 | -2 | -9.9 | -5 | ||
| Income from associates | 0 | 0 | (..) | -1 | ||
| Profit before tax | 16 | 25 | -36.8 | 210 | ||
| Income tax | -5 | -7 | -34.5 | -75 | ||
| Net profit for the period | 11 | 18 | -37.8 | 136 | ||
| Attributable to | ||||||
| Owners of the parent | 11 | 16 | -29.4 | 124 | ||
| Non-controlling interests | 0 | 2 | (..) | 11 | ||
| Earnings per share () for profit attributable to equity holders of the parent | ||||||
| Basic | 0.11 | 0.16 | -29.5 | 1.27 | ||
| Diluted | 0.11 | 0.16 | -29.6 | 1.26 | ||
| Consolidated statement of comprehensive income ( million) | ||||||
| 1-3/ 2013 | 1-3/ 2012 | Change,% | 1-12/ 2012 | |||
| Net profit for the period | 11 | 18 | -37,8 | 136 | ||
| Items that will not be reclassified to profit or loss | ||||||
| Actuarial gains and losses | - | 9 | - | 1 | ||
| Actuarial gains and losses, tax | - | -2 | - | 0 | ||
| Items that may be reclassified subsequently to profit or loss | ||||||
| Exchange differences on translating foreign operations | 3 | 4 | -20.8 | 0 | ||
| Adjustment for hyperinflation | 2 | 1 | (..) | 4 | ||
| Cash flow hedge revaluation | 0 | -2 | 83.5 | -3 | ||
| Revaluation of available-for- sale financial assets | 0 | 0 | (..) | 9 | ||
| Other items | - | - | - | 0 | ||
| Comprehensive income that may be reclassified subsequently to profit or loss, tax | 0 | 0 | -91.2 | 1 | ||
| Total other comprehensive income for the period, net of tax | 4 | 10 | -55.7 | 11 | ||
| Total comprehensive income for the period | 15 | 28 | -44.3 | 147 |
| Attributable to | ||||||
| Owners of the parent | 14 | 27 | -46.6 | 133 | ||
| Non-controlling interests | 1 | 1 | 1.1 | 14 |
(..) Change over 100%
| Consolidated statement of financial position ( million), condensed | ||||
| 31.3.2013 | 31.3.2012 | Change, % | 31.12.2012 | |
| ASSETS | ||||
| Non-current assets | ||||
| Tangible assets | 1,685 | 1,555 | 8.4 | 1,678 |
| Intangible assets | 190 | 190 | 0.0 | 192 |
| Investments in associates and other financial assets | 106 | 70 | 51.8 | 105 |
| Loans and receivables | 90 | 78 | 15.9 | 91 |
| Pension assets | 154 | 162 | -4.6 | 154 |
| Total | 2,225 | 2,054 | 8.4 | 2,220 |
| Current assets | ||||
| Inventories | 859 | 909 | -5.4 | 814 |
| Trade receivables | 805 | 804 | 0.1 | 703 |
| Other receivables | 198 | 289 | -31.6 | 153 |
| Financial assets at fair value through profit or loss | 98 | 75 | 31.3 | 137 |
| Available-for-sale financial assets | 218 | 163 | 33.1 | 249 |
| Cash and cash equivalents | 95 | 54 | 74.7 | 103 |
| Total | 2,273 | 2,294 | -0.9 | 2,160 |
| Non-current assets held for sale | 2 | 1 | 95.4 | 2 |
| Total assets | 4,500 | 4,349 | 3.5 | 4,382 |
| 31.3.2013 | 31.3.2012 | Change, % | 31.12.2012 | |
| EQUITY AND LIABILITIES | ||||
| Equity | 2,221 | 2,210 | 0.5 | 2,206 |
| Non-controlling interests | 68 | 59 | 14.2 | 67 |
| Total equity | 2,289 | 2,269 | 0.8 | 2,272 |
| Non-current liabilities | ||||
| Interest-bearing liabilities | 438 | 205 | (..) | 450 |
| Non-interest-bearing liabilities | 10 | 20 | -47.2 | 10 |
| Deferred tax liabilities | 78 | 91 | -14.0 | 81 |
| Pension obligations | 2 | 2 | -5.5 | 2 |
| Provisions | 20 | 11 | 76.0 | 21 |
| Total | 547 | 329 | 66.4 | 564 |
| Current liabilities | ||||
| Interest-bearing liabilities | 206 | 241 | -14.3 | 174 |
| Trade payables | 955 | 1,001 | -4.6 | 808 |
| Other non-interest-bearing liabilities | 463 | 486 | -4.8 | 524 |
| Provisions | 41 | 23 | 76.9 | 40 |
| Total | 1,664 | 1,751 | -5.0 | 1,546 |
| Total equity and liabilities | 4,500 | 4,349 | 3.5 | 4,382 |
(..) Change over 100%
Consolidated statement of changes in equity ( million)
| Share capi- tal | Reserves | Cur- rency trans- lation differ-ences | Revaluation reserve | Treasury shares | Re- tained earn- ings | Non- cont- rolling inter-ests | Total | |
| Balance at 1 Jan. 2012 | 197 | 441 | -3 | 3 | -22 | 1,567 | 58 | 2,241 |
| Shares subscribed with options | ||||||||
| Share-based payments | 0 | 0 | 0 | 1 | ||||
| Dividends | ||||||||
| Other changes | 0 | 0 | 0 | |||||
| Net profit for the period | 16 | 2 | 18 | |||||
| Other comprehen-sive income | ||||||||
| Items not classified to profit or loss | ||||||||
| Actuarial gains/losses | 9 | 9 | ||||||
| Actuarial gains and losses, tax | -2 | -2 | ||||||
| Items that may be reclassified subsequently to profit or loss | ||||||||
| Exchange differences on translating foreign operations | 0 | 5 | -1 | 4 | ||||
| Adjustment for hyperinflation | 0 | 1 | 1 | |||||
| Cash flow hedge revaluation | -2 | -2 | ||||||
| Revaluation of available-for-sale financial assets | 0 | 0 | ||||||
| Tax relating to other comprehen-sive income | 0 | 0 | ||||||
| Total other comprehen-sive income | 0 | 5 | -1 | 0 | 7 | -1 | 10 | |
| Balance at 31 Mar. 2012 | 197 | 441 | 1 | 1 | -22 | 1,600 | 59 | 2,269 |
| Balance at 1 Jan. 2013 | 197 | 442 | -2 | 10 | -19 | 1,578 | 67 | 2,272 |
| Shares subscribed with options | 1 | 1 | ||||||
| Share-based payments | 0 | 0 | 0 | |||||
| Dividends | ||||||||
| Other changes | 0 | 0 | ||||||
| Net profit for the period | 11 | 0 | 11 | |||||
| Other comprehen-sive income | ||||||||
| Items not classified to profit or loss | ||||||||
| Actuarial gains/losses | ||||||||
| Actuarial gains and losses, tax | ||||||||
| Items that may be reclassified subsequently to profit or loss | ||||||||
| Exchange differences on translating foreign operations | 0 | 3 | 0 | 3 | ||||
| Adjustment for hyperinflation | 0 | 2 | 2 | |||||
| Cash flow hedge revaluation | 0 | 0 | ||||||
| Revaluation of available-for-sale financial assets | 0 | 0 | ||||||
| Tax relating to other comprehen-sive income | 0 | 0 | ||||||
| Total other comprehen-sive income | 0 | 3 | 0 | 0 | 0 | 2 | 4 | |
| Balance at 31 Mar. 2013 | 197 | 443 | 1 | 10 | -19 | 1,590 | 68 | 2,289 |
Consolidated statement of cash flows ( million), condensed
| 1-3/ 2013 | 1-3/ 2012 | Change, % | 1-12/ 2012 | |||
| Cash flows from operating activities | ||||||
| Profit before tax | 16 | 25 | -36.8 | 210 | ||
| Planned depreciation | 37 | 36 | 3.2 | 155 | ||
| Finance income and costs | 3 | 0 | (..) | 1 | ||
| Other adjustments | -1 | 9 | (..) | 103 | ||
| Change in working capital | ||||||
| Current non-interest-bearing operating receivables, increase (-)/decrease (+) | -144 | -120 | 20.2 | 5 | ||
| Inventories, increase (-)/decrease (+) | -43 | -37 | 16.1 | 57 | ||
| Current non-interest-bearing liabilities, increase (+)/decrease (-) | 87 | 100 | -13.6 | -70 | ||
| Financial items and tax | -13 | -18 | -28.0 | -79 | ||
| Net cash from operating activities | -59 | -5 | (..) | 382 | ||
| Cash flows from investing activities | ||||||
| Investing activities | -44 | -111 | -59.8 | -411 | ||
| Sales of fixed assets | 2 | 20 | -87.4 | 24 | ||
| Increase in non-current receivables | 0 | -1 | (..) | -4 | ||
| Net cash used in investing activities | -42 | -92 | -54.4 | -391 | ||
| Cash flows from financing activities | ||||||
| Interest-bearing liabilities, increase (+)/decrease (-) | 22 | 49 | -54.9 | 230 | ||
| Current interest-bearing receivables, increase (-)/decrease (+) | 1 | -21 | (..) | 37 | ||
| Dividends paid | - | - | - | -123 | ||
| Equity increase | 1 | - | - | 1 | ||
| Short-term money market investments, increase (-)/ decrease (+) | 21 | 32 | -34.5 | -2 | ||
| Other items | -2 | -6 | -72.9 | -14 | ||
| Net cash used in financing activities | 43 | 53 | -20.3 | 130 | ||
| Change in cash and cash equivalents | -58 | -44 | 32.9 | 121 | ||
| Cash and cash equivalents and current portion of available-for-sale financial assets at 1 Jan. | 352 | 231 | 52.5 | 231 | ||
| Currency translation difference adjustment and revaluation | 0 | 0 | -17.6 | 0 | ||
| Cash and cash equivalents and current portion of available-for-sale financial assets at 31 Mar. | 294 | 187 | 57.0 | 352 |
(..) Change over 100%
| Group's performance indicators | ||||
| 1-3/2013 | 1-3/2012 | Change, pp | 1-12/2012 | |
| Return on capital employed, % | 3.1 | 4.1 | -1.0 | 8.3 |
| Return on capital employed, %, moving 12 mo | 8.0 | 12.0 | -4.0 | 8.3 |
| Return on capital employed excl. non-recurring items, % | 3.0 | 3.6 | -0.7 | 9.0 |
| Return on capital employed excl. non-recurring items, %, moving 12 mo | 8.8 | 11.9 | -3.1 | 9.0 |
| Return on equity, % | 1.9 | 3.1 | -1.2 | 6.0 |
| Return on equity, %, moving 12 mo | 5.7 | 8.4 | -2.8 | 6.0 |
| Return on equity excl. non-recurring items, % | 1.8 | 2.8 | -0.9 | 6.9 |
| Return on equity excl. non-recurring items, %, moving 12 mo | 6.6 | 8.3 | -1.7 | 6.9 |
| Equity ratio, % | 51.7 | 52.8 | -1.1 | 52.5 |
| Gearing, % | 10.2 | 6.8 | 3.4 | 6.0 |
| Change, % | ||||
| Capital expenditure, million | 41.5 | 104.1 | -60.2 | 378.3 |
| Capital expenditure, % of net sales | 1.9 | 4.5 | -57.2 | 3.9 |
| Earnings per share, basic, | 0.11 | 0.16 | -29.5 | 1.27 |
| Earnings per share, diluted, | 0.11 | 0.16 | -29.6 | 1.26 |
| Earnings per share excl. non-recurring items, basic, | 0.11 | 0.14 | -23.2 | 1.47 |
| Cash flow from operating activities, million | -59 | -5 | (..) | 382 |
| Cash flow from investing activities, million | -42 | -92 | -54.4 | -391 |
| Equity per share, | 22.62 | 22.56 | 0.2 | 22.48 |
| Interest-bearing net debt | 233.2 | 153.6 | 51.8 | 135.3 |
| Diluted number of | ||||
| shares, average for | ||||
| reporting period | 98,724 | 98,413 | 0.2 | 98,472 |
| Personnel, average | 19,126 | 19,143 | -0.1 | 19,741 |
| (..) Change over 100% |
| Group's performance indicators by quarter | 1-3/ 2012 | 4-6/ 2012 | 7-9/ 2012 | 10-12/ 2012 | 1-3/ 2013 | |||
| Net sales, million | 2,318 | 2,460 | 2,449 | 2,459 | 2,159 | |||
| Change in net sales, % | 10.2 | -0.5 | 1.9 | -0.9 | -6.9 | |||
| Operating profit, million | 25.1 | 57.7 | 77.4 | 51.8 | 19.2 | |||
| Operating margin, % | 1.1 | 2.3 | 3.2 | 2.1 | 0.9 | |||
| Operating profit excl. non- recurring items, million | 22.3 | 59.4 | 77.4 | 70.9 | 18.6 | |||
| Operating margin excl. non-recurring items, % | 1.0 | 2.4 | 3.2 | 2.9 | 0.9 | |||
| Finance income/costs, million | -0.1 | -0.3 | -1.3 | 1.1 | -3.3 | |||
| Profit before tax, million | 25.0 | 57.3 | 76.1 | 52.1 | 15.8 | |||
| Profit before tax, % | 1.1 | 2.3 | 3.1 | 2.1 | 0.7 | |||
| Return on capital employed, % | 4.1 | 8.9 | 11.9 | 8.0 | 3.1 | |||
| Return on capital employed excl. non-recurring items, % | 3.6 | 9.2 | 11.9 | 10.9 | 3.0 | |||
| Return on equity, % | 3.1 | 7.0 | 9.6 | 4.4 | 1.9 | |||
| Return on equity excl. non-recurring items, % | 2.8 | 7.3 | 9.6 | 8.0 | 1.8 | |||
| Equity ratio, % | 52.8 | 51.2 | 51.3 | 52.5 | 51.7 | |||
| Capital expenditure, million | 104.1 | 67.8 | 102.6 | 103.8 | 41.5 | |||
| Earnings per share, diluted, | 0.16 | 0.37 | 0.50 | 0.23 | 0.11 | |||
| Equity per share, | 22.56 | 21.72 | 22.33 | 22.48 | 22.62 |
Segment information
| Net sales by segment ( million) | 1-3/ 2013 | 1-3/ 2012 | Change % | 1-12/ 2012 | ||
| Food trade total | 1,045 | 1,010 | 3.5 | 4,311 | ||
| - of which intersegment trade | 43 | 45 | -4.9 | 172 | ||
| Home and speciality goods trade, Finland | 335 | 356 | -6.1 | 1,557 | ||
| Home and speciality goods trade, other countries* | 10 | 13 | -19.3 | 45 | ||
| Home and speciality goods trade total | 345 | 369 | -6.5 | 1,603 | ||
| - of which intersegment trade | 3 | 4 | -9.7 | 18 | ||
| Building and home improvement trade, Finland | 281 | 300 | -6.4 | 1,229 | ||
| Building and home improvement trade, other countries* | 281 | 329 | -14.6 | 1,598 | ||
| Building and home improvement trade total | 562 | 629 | -10.7 | 2,827 | ||
| - of which intersegment trade | 0 | 0 | 37.0 | 0 | ||
| Car and machinery trade, Finland | 231 | 337 | -31.5 | 998 | ||
| Car and machinery trade, other countries* | 19 | 16 | 17.8 | 116 | ||
| Car and machinery trade total | 249 | 353 | -29.3 | 1,114 | ||
| - of which intersegment trade | 0 | 0 | -31.2 | 1 | ||
| Common operations and eliminations | -42 | -42 | -0.5 | -169 | ||
| Finland total | 1,841 | 1,961 | -6.1 | 7,924 | ||
| Other countries total* | 318 | 357 | -11.0 | 1,762 | ||
| Group total | 2,159 | 2,318 | -6.9 | 9,686 |
* net sales in countries other than Finland
| Operating profit by segment ( million) | 1-3/ 2013 | 1-3/ 2012 | Change | 1-12/ 2012 | ||
| Food trade | 48.2 | 37.4 | 10.8 | 170.2 | ||
| Home and speciality goods trade | -17.7 | -12.9 | -4.8 | 0.0 | ||
| Building and home improvement trade | -16.1 | -9.0 | -7.0 | 11.6 | ||
| Car and machinery trade | 7.8 | 15.5 | -7.7 | 41.9 | ||
| Common operations and eliminations | -3.0 | -5.9 | 2.9 | -11.8 | ||
| Group total | 19.2 | 25.1 | -5.8 | 212.0 |
| Operating profit excl. non-recurring items by segment ( million) | 1-3/ 2013 | 1-3/ 2012 | Change | 1-12/ 2012 | ||
| Food trade | 48.2 | 34.7 | 13.5 | 167.5 | ||
| Home and speciality goods trade | -17.8 | -12.9 | -4.8 | 19.6 | ||
| Building and home improvement trade | -16.6 | -9.0 | -7.6 | 13.3 | ||
| Car and machinery trade | 7.8 | 15.5 | -7.7 | 41.9 | ||
| Common operations and eliminations | -3.0 | -5.9 | 2.9 | -12.2 | ||
| Group total | 18.6 | 22.3 | -3.7 | 230.0 |
| Operating margin excl. non-recurring items by segment | 1-3/ 2013 | 1-3/ 2012 | Change, pp | 1-12/ 2012 | Moving 12 mo 3/2013 |
| Food trade | 4.6 | 3.4 | 1.2 | 3.9 | 4.2 |
| Home and speciality goods trade | -5.2 | -3.5 | -1.6 | 1.2 | 0.9 |
| Building and home improvement trade | -3.0 | -1.4 | -1.5 | 0.5 | 0.2 |
| Car and machinery trade | 3.1 | 4.4 | -1.3 | 3.8 | 3.4 |
| Group total | 0.9 | 1.0 | -0.1 | 2.4 | 2.4 |
| Capital employed by segment, cumulative average ( million) | 1-3/ 2013 | 1-3/ 2012 | Change | 1-12/ 2012 | ||
| Food trade | 854 | 706 | 148 | 763 | ||
| Home and speciality goods trade | 477 | 479 | -3 | 514 | ||
| Building and home improvement trade | 762 | 754 | 8 | 760 | ||
| Car and machinery trade | 170 | 199 | -29 | 188 | ||
| Common operations and eliminations | 258 | 315 | -57 | 327 | ||
| Group total | 2,520 | 2,453 | 67 | 2,552 |
| Return on capital employed excl. non- recurring items by segment, % | 1-3/ 2013 | 1-3/ 2012 | Change, pp | 1-12/ 2012 | Moving 12 mo 3/2013 |
| Food trade | 22.6 | 19.6 | 2.9 | 21.9 | 22.7 |
| Home and speciality goods trade | -14.9 | -10.8 | -4.1 | 3.8 | 2.9 |
| Building and home improvement trade | -8.7 | -4.8 | -3.9 | 1.7 | 0.7 |
| Car and machinery trade | 18.3 | 31.2 | -12.9 | 22.3 | 18.9 |
| Group total | 3.0 | 3.6 | -0.7 | 9.0 | 8.8 |
| Capital expenditure by segment ( million) | 1-3/ 2013 | 1-3/ 2012 | Change | 1-12/ 2012 | ||
| Food trade | 17 | 60 | -44 | 200 | ||
| Home and speciality goods trade | 8 | 18 | -10 | 61 | ||
| Building and home improvement trade | 13 | 12 | 1 | 63 | ||
| Car and machinery trade | 4 | 13 | -9 | 27 | ||
| Common operations and eliminations | 1 | 1 | 0 | 28 | ||
| Group total | 41 | 104 | -63 | 378 |
Segment information by quarter
| Net sales by segment ( million) | 1-3/ 2012 | 4-6/ 2012 | 7-9/ 2012 | 10-12/ 2012 | 1-3/ 2013 | |||
| Food trade | 1,010 | 1,091 | 1,078 | 1,132 | 1,045 | |||
| Home and speciality goods trade | 369 | 352 | 395 | 487 | 345 | |||
| Building and home improvement trade | 629 | 782 | 759 | 657 | 562 | |||
| Car and machinery trade | 353 | 274 | 259 | 227 | 249 | |||
| Common operations and eliminations | -42 | -41 | -41 | -45 | -42 | |||
| Group total | 2,318 | 2,460 | 2,449 | 2,459 | 2,159 |
| Operating profit by segment ( million) | 1-3/ 2012 | 4-6/ 2012 | 7-9/ 2012 | 10-12/ 2012 | 1-3/ 2013 | |||
| Food trade | 37.4 | 38.6 | 49.4 | 44.8 | 48.2 | |||
| Home and speciality goods trade | -12.9 | -0.7 | 0.9 | 12.8 | -17.7 | |||
| Building and home improvement trade | -9.0 | 13.5 | 17.9 | -10.8 | -16.1 | |||
| Car and machinery trade | 15.5 | 10.3 | 11.4 | 4.7 | 7.8 | |||
| Common operations and eliminations | -5.9 | -4.0 | -2.2 | 0.3 | -3.0 | |||
| Group total | 25.1 | 57.7 | 77.4 | 51.8 | 19.2 |
| Operating profit excl. non-recurring items by segment ( million) | 1-3/ 2012 | 4-6/ 2012 | 7-9/ 2012 | 10-12/ 2012 | 1-3/ 2013 | |||
| Food trade | 34.7 | 38.6 | 49.4 | 44.8 | 48.2 | |||
| Home and speciality goods trade | -12.9 | -0.7 | 0.9 | 32.3 | -17.8 | |||
| Building and home improvement trade | -9.0 | 15.2 | 17.9 | -10.8 | -16.6 | |||
| Car and machinery trade | 15.5 | 10.3 | 11.4 | 4.7 | 7.8 | |||
| Common operations and eliminations | -5.9 | -4.0 | -2.2 | -0.1 | -3.0 | |||
| Group total | 22.3 | 59.4 | 77.4 | 70.9 | 18.6 |
| Operating margin excl. non-recurring items by segment | 1-3/ 2012 | 4-6/ 2012 | 7-9/ 2012 | 10-12/ 2012 | 1-3/ 2013 | |||
| Food trade | 3.4 | 3.5 | 4.6 | 4.0 | 4.6 | |||
| Home and speciality goods trade | -3.5 | -0.2 | 0.2 | 6.6 | -5.2 | |||
| Building and home improvement trade | -1.4 | 1.9 | 2.4 | -1.6 | -3.0 | |||
| Car and machinery trade | 4.4 | 3.7 | 4.4 | 2.1 | 3.1 | |||
| Group total | 1.0 | 2.4 | 3.2 | 2.9 | 0.9 |
Change in tangible and intangible assets ( million)
| 31.3.2013 | 31.3.2012 | |
| Opening net carrying amount | 1,870 | 1,680 |
| Depreciation, amortisation and impairment | -37 | -36 |
| Investments in tangible and intangibe assets | 43 | 106 |
| Disposals | -6 | -18 |
| Currency translation differences | 5 | 13 |
| Closing net carrying amount | 1,875 | 1,745 |
Related party transactions
The Group's related parties include its key management (the Board of Directors, the President and CEO and the Corporate Management Board), subsidiaries, associates and the Kesko Pension Fund.
The following transactions were carried out with related parties:
| 1-3/2013 | 1-3/2012 | |
| Sales of goods and services | 22 | 18 |
| Purchases of goods and services | 7 | 3 |
| Other operating income | 0 | 0 |
| Other operating expenses | 7 | 6 |
| Finance costs | 0 | 0 |
| Receivables | 9 | 67 |
| Liabilities | 28 | 38 |
Fair value hierarchy of financial assets and liabilities ( million)
| Level 1 | Level 2 | Level 3 | 31.3.2013 | |
| Financial assets at fair value through profit or loss | 98 | 98 | ||
| Derivative financial instruments at fair value through profit or loss | ||||
| Derivative financial assets | 3 | 3 | ||
| Derivative financial liabilities | 12 | 12 | ||
| Available-for-sale financial assets | 18 | 199 | 7 | 225 |
| Level 1 | Level 2 | Level 3 | 31.3.2012 | |
| Financial assets at fair value through profit or loss | 75 | 75 | ||
| Derivative financial instruments at fair value through profit or loss | ||||
| Derivative financial assets | 4 | 4 | ||
| Derivative financial liabilities | 21 | 21 | ||
| Available-for-sale financial assets | 30 | 133 | 7 | 170 |
Level 1 instruments are traded in active markets and their fair values are directly based on quoted market prices. The fair values of level 2 instruments are derived from market data. The fair values of level 3 instruments are not based on observable market data.
Personnel, average and at 31 March
| Personnel average by segment | 1-3/2013 | 1-3/2012 | Change |
| Food trade | 2,856 | 2,652 | 204 |
| Home and speciality goods trade | 5,786 | 5,983 | -197 |
| Building and home improvement trade | 8,836 | 8,869 | -33 |
| Car and machinery trade | 1,223 | 1,210 | 13 |
| Common operations | 425 | 429 | -4 |
| Group total | 19,126 | 19,143 | -18 |
| Personnel at 31 March* by segment | 2013 | 2012 | Change |
| Food trade | 3,183 | 3,007 | 176 |
| Home and speciality goods trade | 8,030 | 8,128 | -98 |
| Building and home improvement trade | 9,931 | 10,008 | -77 |
| Car and machinery trade | 1,263 | 1,280 | -17 |
| Common operations | 474 | 486 | -12 |
| Group total | 22,881 | 22,909 | -28 |
* total number incl. part-time employees
| Group's commitments ( million) | |||
| 31.3.2013 | 31.3.2012 | Change, % | |
| Own commitments | 181 | 181 | -0.1 |
| For associates | 65 | - | - |
| For others | 10 | 8 | 33.2 |
| Lease liabilities for machinery and equipment | 25 | 26 | -3.9 |
| Lease liabilities for real estate | 2,274 | 2,265 | 0.4 |
| Liabilities arising from derivative instruments | |||
| Values of underlying instruments at 31 March | 31.3.2013 | 31.3.2012 | Fair value 31.3.2013 |
| Interest rate derivatives | |||
| Interest rate swaps | 203 | 205 | 1.24 |
| Currency derivatives | |||
| Forward and future contracts | 234 | 334 | -1.81 |
| Option agreements | 10 | 7 | -0.02 |
| Currency swaps | 100 | 100 | -6.71 |
| Commodity derivatives | |||
| Electricity derivatives | 40 | 30 | -2.09 |
Calculation of performance indicators
| Return on capital employed*, % | Operating profit x 100 / (Non-current assets + Inventories + Receivables + Other current assets - Non-interest-bearing liabilities) on average for the reporting period |
| Return on capital employed, %, moving 12 mo | Operating profit for prior 12 months x 100 / (Non-current assets + Inventories + Receivables + Other current assets - Non-interest-bearing liabilities) on average for 12 months |
| Return on capital employed excl. non- recurring items*, % | Operating profit excl. non-recurring items x 100 / (Non-current assets + Inventories + Receivables + Other current assets - Non-interest-bearing liabilities) on average for the reporting period |
| Return on capital employed excl. non- recurring items, %, moving 12 months | Operating profit excl. non-recurring items for prior 12 months x 100 / (Non-current assets + Inventories + Receivables + Other current assets - Non-interest-bearing liabilities) on average for 12 months |
| Return on equity*, % | (Profit/loss before tax - income tax) x 100 / Shareholders' equity |
| Return on equity, %, moving 12 months | (Profit/loss for prior 12 months before tax - income tax for prior 12 months) x100 / Shareholders' equity |
| Return on equity excl. non-recurring items*, % | (Profit/loss adjusted for non-recurring items before tax - income tax adjusted for the tax effect of non-recurring items) x 100 / Shareholders' equity |
| Return on equity excl. non-recurring items, %, moving 12 months | (Profit/loss for prior 12 months adjusted for non-recurring items before tax - income tax for prior 12 months adjusted for the tax effect of non-recurring items) x 100 / Shareholders' equity |
| Equity ratio, % | Shareholders' equity x 100 / (Balance sheet total - prepayments received) |
| Earnings/share, diluted | (Profit/loss - non-controlling interests) / Average diluted number of shares |
| Earnings/share, basic | (Profit/loss - non-controlling interests) / Average number of shares |
| Earnings/share excl. non-recurring items, basic | (Profit/loss adjusted for non-recurring items - non-controlling interests) / Average number of shares |
| Equity/share | Equity attributable to equity holders of the parent / Basic number of shares at the balance sheet date |
| Gearing, % | Interest-bearing net liabilities x 100 / Shareholders' equity |
| Interest-bearing net debt | Interest-bearing liabilities - money market investments - cash and cash equivalents |
* Indicators for return on capital have been annualised.
K-Group's retail and B2B sales, VAT 0% (preliminary data):
| 1.1.-31.3.2013 | ||||
| K-Group's retail and B2B sales | million | Change, % | ||
| K-Group's food trade | ||||
| K-food stores | 1,140 | 2.1 | ||
| Kespro | 186 | 3.9 | ||
| Food trade total | 1,326 | 2.4 | ||
| K-Group's home and speciality goods trade | ||||
| Home and speciality goods stores, Finland | 366 | -8.5 | ||
| Home and speciality goods stores, other countries | 10 | -24.0 | ||
| Home and speciality goods trade total | 376 | -9.0 | ||
| K-Group's building and home improvement trade | ||||
| K-rauta and Rautia | 170 | -8.8 | ||
| Rautakesko B2B Service | 38 | -20.8 | ||
| K-maatalous | 93 | 4.3 | ||
| Finland total | 301 | -7.0 | ||
| Building and home improvement stores, other Nordic countries | 174 | -28.6 | ||
| Building and home improvement stores, Baltic countries | 70 | -2.2 | ||
| Building and home improvement stores, other countries | 72 | 4.8 | ||
| Building and home improvement trade total | 616 | -12.8 | ||
| K-Group's car and machinery trade | ||||
| VV-Autotalot | 90 | -35.2 | ||
| VV-Auto, import | 107 | -32.6 | ||
| Konekesko, Finland | 39 | -21.7 | ||
| Finland total | 235 | -32.1 | ||
| Konekesko, other countries | 19 | 12.8 | ||
| Car and machinery trade total | 254 | -30.0 | ||
| Finland total | 2,220 | -6.2 | ||
| Other countries total | 353 | -14.6 | ||
| Retail and B2B sales total | 2,573 | -7.4 | ||
