The core of Kesko's new strategy is profitable growth in three strategic areas


The core of Kesko's new strategy is profitable growth in three strategic areas

Kesko's Board of Directors has decided on a strategy aimed at achieving profitable growth in three strategic areas: the grocery trade, the building and home improvement trade and the car trade. We will operate the retailer business model or Kesko's own stores when it provides competitive advantage. Kesko will differentiate from the competitors with quality and customer orientation, and by bringing the best digital services in the trading sector to the market.

"Kesko will seek profitable growth in the future by focusing on three strategic growth areas: the grocery trade, the building and home improvement trade and the car trade. In addition, all business operations will be developed aiming at business success."

"When we operate even more as a unified company we will be able to offer our customers even better services and to operate more efficiently. In the grocery trade, our objective is to turn the market share around. In the building and home improvement trade, we want to further strengthen our already strong position in Europe. As the market leader in the Finnish car trade, we want to increase our market share in Finland and the Baltic countries."

At the same time, the customer experience of consumers and businesses will be strengthened by building the best digital services in the sector for the customers of the K-Group and its chains, and by revising the K-Plussa customer loyalty system to make it even more attractive."

"In the future, Kesko will operate as a unified K-Group more strongly than before and a new strong corporate identity, expressed through a revised K symbol, will be built for the company."

"A successful implementation of Kesko's strategy relies on the value that guides all operations: Customer and quality - in everything we do," says Kesko's President and CEO Mikko Helander.

Finnish and European

In the grocery trade, Kesko's strategic objective is to turn the K-Group's market share around in Finland in 2016. Capital expenditure in the K-supermarket and K-market chains will be increased significantly. The target is approximately 30 new K-supermarkets. In the K-market chain, the current network will be revised and the objective is to establish over 100 new neighbourhood stores and to test a completely new store concept. In addition, the whole K-citymarket concept will be renewed. In the online food trade, the target is a 40% market share. In Russia, increasing business operations and improving profitability in the St. Petersburg area will continue. Moreover, new growth opportunities in the Moscow area and possibly other metropolitan cities in Russia will be explored. Increasing the business operations of the grocery wholesale company Kespro is also at the centre of the grocery trade strategy.

In the building and home improvement trade, Kesko's objective is to further strengthen its position in Europe. Kesko is already now the market leader in Finland and the fifth largest operator in the sector in Europe. The objective is to increase market share and achieve profitable growth in the existing markets alone, through acquisitions, or in cooperation with partners. At the same time, possibilities to expand also elsewhere in Europe will be examined. The K-rauta Express concept of fast and easy shopping will be launched for locations with large flows of customers at, for example, shopping centres and city centres.

Also in the passenger car and van trade, Kesko is currently the clear market leader in Finland. In the future, the Group aims to increase its market share in Finland and the Baltic countries.

In the core and support processes of the Group's different business operations, the objective is to achieve significant synergies and enhancement benefits. For this purpose, common functions that support business operations will be created and the competitiveness of business operations will be strengthened through an even closer cooperation in the core processes of business operations.

Kesko Group will also immediately start planning to simplify the legal structure.

In order to ensure competitiveness and improve profitability Kesko's objective is to achieve cost savings of at least €50 million in fixed costs by the end of 2016.

Financial targets and capital expenditure

Financial targets according to Kesko's new strategy announced on 27 May 2015:

Indicator Target
Return on capital employed 14%
Return on equity 12%
Interest-bearing net liabilities / EBITDA <2.5
Capital expenditure in 2015-2017 c. €1bn*
* Excluding possible acquisitions.

The composition of Kesko's divisional structure and segment reporting will change as of 1 July 2015. An agricultural and machinery trade unit will be established as part of the speciality goods trade of the home improvement and speciality goods trade division.

Conference call today at 15.00 EET

Kesko will hold a conference call on the new strategy today, Wednesday 27 May 2015, at 15.00 EET. To participate in the call, please phone +358 9 747 90302 and enter the code 83093888# when requested.

Further information:
Mikko Helander, President and CEO, Kesko Corporation, tel. +358 105 322 301
Jukka Erlund, Senior Vice President, Chief Financial Officer, Kesko Corporation, tel. +358 105 322 113
Lauri Peltola, Senior Vice President, Corporate Responsibility, Communications and Stakeholder Relations, Kesko Corporation, tel. +358 50 570 5606.

Kesko Corporation

Merja Haverinen
Vice President, Group Communications

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