Annual General Meeting 31 March 2008 · 2015-01-25 · Page 11 AGM, 31 March 2008 Matti Halmesmäki...

AGM, 31 March 2008 Matti Halmesmäki

Annual General Meeting31 March 2008Matti Halmesmäki, President and CEO


Kesko’s strong performancecontinued in 2007

• Record sales and profit• 9% net sales growth excluding the effect of acquisitions

• 20% growth abroad, 45% growth in Russia• Net sales from foreign operations over €2 billion

• Operating profit excluding non-recurring items €325 million, up €45 million (+16%)• Operating profit excluding non-recurring items 3.4% of net sales (3.2%)• Especially Kesko Food and Rautakesko improved their results• New Car Tax Act significantly postponed VV-Auto’s sales to 2008

• Number of K-Plussa cooperation cards already exceeds 400,000


IFRS

Net salesNet sales in 2003-2007, M€

7,0707,509 7,922 *

8,749 *

* excl. Rimi Baltic

9,534

+20.4%

+6.0%

+9.0%

0

2,000

4,000

6,000

8,000

10,000

2003 2004 2005 2006 2007Finland Other countries


41%of net sales

27% of net sales

8%of net sales

Rautakesko

VV-Auto

Kesko FoodGrocerytrade

Building andhome improvementtrade

Car andspare parts trade

Divisions and their contributionto net sales


8%of net sales

6%of net sales

10%of net sales

Anttila

Divisions and their contributionto net sales

Otheroperations

Kesko AgroAgriculturaltrade

Department storetrade


Operating profit excl. non-recurring items2003-2007, M€

Group’s operating profitexcluding non-recurring items

Operating profit by division excl. non-recurring items

FAS IFRS

136.8170.4

201.2 216.0279.8

325.1

0

50

100

150

200

250

300

350

2003 2004 2004 2005 2006 2007

Operating profit excluding non-recurring items

Kesko Food 43%Rautakesko 33%VV-Auto 7%Anttila 7%Kesko Agro 4%Others 7%


0

1,000

2,000

3,000

4,000

2006 2007

Finland

• Net sales increased by 7.1%• Operating profit excl. non-recurring

items was up by €22.8 million• 3.9% of net sales (change +0.4 pp)

• K-food stores’ retail sales grew by 7.4%• Opportunities to expand operations in

Russia and the Baltic countries are beingactively sought

Operating profit for 1-12, M€

3,615 3,871 +7.1%

173.2151.3

Kesko Food had a strong yearNet sales for 1-12, M€

128.6151.4

44.6

-0.10

50

100

150

200

2006 2007Non-recurring itemsOperating profit excl. non-rec. items


0

10

20

30

40

50

78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

K-food storesSource: A.C. Nielsen

%

+0.5ppMarket share 33.9%

Market share of the K-Group’s grocery salesin 1978 - 2007


Grocery retail trends by quarter2005-2007

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

Q1/2005 Q2/2005 Q3/2005 Q4/2005 Q1/2006 Q2/2006 Q3/2006 Q4/2006 Q1/2007 Q2/2007 Q3/2007 Q4/2007

FGTA K-food stores


• Kesko Food’s own Product Research Unitannually tests over 10,000 samples

• Nutritioncode service and GDA (guidelinedaily amount) label on Pirkka products

• Reduction of salt, fat and sugar content of Pirkka products

• 500 sales assistants trained as healthy dietexperts

– the right to knowwhat you are eating


Rautakesko’s sales and profit on a strong growth path

• Net sales increased by 19.2%• Foreign subsidiaries contributed

64%• Operating profit excluding non-

recurring items was up by €24.8 million

• 4.6% of net sales (change +0.3 pp)• Investments €77.0 million (€75.8

million)• 16 new store sites were opened, of

which 11 abroad

Operating profit for 1-12, M€

Net sales for 1-12, M€

2 1292 537

117.8139.3

0

1,000

2,000

3,000

2006 2007

Finland Other countries

91.2 115.9

48.1 1.8

0

50

100

150

2006 2007

Non-recurring itemsOperating profit excl. non-rec. items

+19.2%

+24.5%

+10.7%


Rautakesko’s operations by countryin 2007

Finland• K-rauta, 41• Rautia, 104

Sweden• K-rauta, 17

Norway• Byggmakker, 120

Lithuania• Senukai, 14 own+ 76 partnershopstores

Estonia• K-rauta, 5

Latvia• K-rauta, 7

Russia• K-rauta, 8

Belarus• OMA (from 07/ 2007), 3


Retail sales development in Rautakesko’s foreign operations

M€

381 496

1,080

1,981

2,388

0

500

1,000

1,500

2,000

2,500

2003 2004 2005 2006 2007

Retail sales development in foreign operations


Major operators in the Europeanbuilding and home improvement trade

Sources: annual reports, www pages, EDRA statistics (Groupe Adeo 2006)

Retail sales and sales to professional customers, incl. VATM€

7,900 7,100

4,582 3,963 3,600 2,773 2,632 2,401

14,748

02,0004,0006,0008,000

10,00012,00014,00016,000

Kingfisher

Groupe Adeo

(LM)

OBIPrak

tiker

Rautak

esko

Bauhau

sHorn

bach

DT group

Homebas

e


Rautakesko’s retail sales developmentin Russia

42

121

178

020406080

100120140160180

7-12 / 2005 2006 2007

Retail sales development in Russia

M€


Kesko Group’s return on capital, %

12.711.4

13.3 14.5

0

10

20

1-12/2006 1-12/2007

Return on equity, %, excl. non-recurring items

Return on invested capital, %, excl. non-recurring items


Kesko-Group’s investments, continuing operations

233.9250.5

47.6

M€

189.0186.6

6.016.338.9

0

50

100

150

200

250

1-12/2006 1-12/2007Store sites Acquisitions Others


We are intensively expandingour retail store network

• Within the next three years, Kesko Food will open• 20 new K-citymarkets• 50 new K-supermarkets• 40 new K-markets• A great number of stores will be refurbished• Kesko Food’s opportunities to expand internationally are actively sought

• Rautakesko is expanding strongly in Finland and abroad• In 2008, 7 new building and home improvement stores will open in Finland

and 13 in other countries• In addition, several store expansions

• Other store openings during the next three years• Anttila: three new department stores• Intersport: five new stores• Budget Sport: four new stores• Musta Pörssi: seven new stores• In addition, several refurbishments and expansions


Dividend/share, €

*)

*) Proposal

55% of earnings/share

3.00

1.50 1.60

1.00 1.10

0

0.5

1

1.5

2

2.5

3

3.5

2003 FAS

2004 FAS

2005 IFRS

2006 IFRS

2007 IFRS

Dividend/share


• The K-Group employs nearly 50,000 peoplein eight countries

• In 2007 the K-Group paid• €776 million in wages and salaries• €123 million in income tax• €73 million for social security

• Kesko paid about €500 million in wages, salaries and fees• of which some €17 million in employee bonuses

• K-retailers’ purchases from local suppliers increased by 14% and passed the milestone of half a billion (€534 million)

The K-Group’scontribution to wellbeing


Kesko’s and the K-Group’soutlook for the future


Our vision

Kesko is the leadingprovider of trading sectorservices and a highlyvalued listed company.

This can only be achieved byexceeding our customers’expectations, which is ourmost important value.


Kesko’s strategic emphases

Healthyfocusedgrowth

Responsibleand cost-efficientbusiness models

Sales and services for consumer-customers


K-stores and retail store chains

Corporate strategyPortfolio strategy Internationalisation strategy Investment strategy Synergies Healthy growth

Increasing corproate value

Customer

DivisionsAnttila Indoor Musta

PörssiIntersportFinland

TähtiOptikko

Kenkä-kesko

Kesko Agro

Purchasing and logistics Store site acquisition Marketing Information management Support functions Business models and concepts

Corporate managementCompetence development Real estate Accounting and finance management IT management Communication and brands

Risk management Internal audit Responsibility and quality District operations Management system

Kesko GroupListed company Risk-taking capacity Finance Culture and values

Kesko Food Rautakesko Kone-kesko

54

54152

428

223

70

105

14 + 82

118

27

8

11243

58

57

58

2

37

20

33 130

VV-Auto

http://www.plussa.com/


K-stores’ and partners’ customer programmes, about 3,000 in all

3.5 million K-Plussa customers

K-chains’ customer programmes

Joint Plussa benefits

Plussa pointsup to 5.0%

All you need

Plussa points tobank account

c. 400,000 cards

• Active interaction between the customer and the store

• K-food store chains’ customer loyalty benefits• Asko’s and Sotka’s customer loyalty benefits• Kodin Ykkönen’s and Anttila’s customer loyalty benefits• K-rauta’s and Rautia’s benefits for builders and renovators

Healthyway of life

€100m €200m

€0.5 million

3.5 million cards


K-Plussa customer loyalty system

• Customer relationship programmes• Leveraging customer information• 1.9 million K-Plussa households and 3.5 million K-Plussa

cardholders (about 5% increase) • Number of cardholders +172,764 • Number of K-Plussa supercards in cooperation with the OP

Bank Group totals around 400,000• The total of K-Plussa sales increased by 8.5% in 2007• The total of K-Plussa rewarding increased by 26.6%• The Pirkka magazine readership increased from 2.56 million to 2.61

million


Clarification of brand and marketingstrategies• Strengthening of chain brands• The strong and brands• Internationalisation of Rautakesko and the K-rauta brand

• Development of electronic customer communication• The K-Group’s online stores include NetAnttila, Kodin1.com

and CM Store• Accoring to surveys, NetAnttila has the highest recognition rate and

enjoys an image of offering the best online selections in Finland • Electronic Musta Pörssi and Budget Sport store sites


THE MOSTCOMPETENT

AND MOTIVATEDPERSONNEL

THE MOSTATTRACTIVEWORKPLACE

THE BESTPERSONNEL

PRODUCTIVITY

TRADINGSECTOR

Work and productivity programme in Kesko and K-stores in 2008-2011


K-retailers’ and Kesko’s cooperationfor the benefit of customers

• 1,285 K-retailer-entrepreneurs in Finland• 113 Byggmakker retailers in Norway• 77 Senukai retailers in the Baltics

Total number of the K-Group stores 2,120• In Finland 1,750• Abroad 370

K-retailers are successful entrepreneurs• over 95% of retailers who started 5 years ago

are still active today• The corresponding average among

entrepreneurs is 53.6% (Statistics Finland)


K2 chain system reform 2001 →• K-retailers are and will be the K-Group’s most important asset• A comprehensive survey showed that the essence of K-retailer-

entrepreneurship has not changed, the operating conditions haveimproved significantly

• The most important objectives set for the implementation havebeen achieved

Source: TNS Gallup Oy Consumer

2007: All respondents N=5562006: All respondents N=615

4,06

4,00

1,0 2,0 3,0 4,0 5,0

Retailers’ confidencein Kesko


Kesko’s and the K-Group’sresponsible operations

Social responsibility

Environmentalresponsibility

Economicresponsibility


Pioneer in sustainable developmentin Finland and throughout the world

Major indexes and assessments

• Dow Jones Sunstainability Index: Kesko has beenincluded five times in the DJSI World andDJSI STOXX indexes

• The World Economic Forum: Kesko is included in The Global 100 Most Sustainable Corporations list(1,800 corporations were evaluated)

• SAM Sustainability Yearbook 2008: Kesko in the silver class in the food and drug retail sector

• AccountAbility Rating 2006: Kesko ranked 8th amongthe world’s largest companies and the best in the trading sector (Fortune G50+)

• Innovest: Kesko Food and Sainsbury were awarded the highest quality rating AA for sustainability among food retailing companies


Main results inthe K-Group

• CO2 emissions from electricity purchased by Keskofor the K-Group have decreased by about 40% since 2001

• Energy consumption in Finland has decreased relatively in Finland since 2005

• Recovery rate of waste in warehouse operations is 90%• Product selections for responsible consumption

• Luomu organic products, swan symbol and fairtrade products• 90% of imported fruit and vegetables are certified for

traceability, safety and environmental requirements• In 2008, the responsibility programme will be clarified

• incl. energy consumption targets and energy efficiency of realestate


Putting children on the move – Young Finland, K-Plussa

• We promote healthy lifestyles for children and youths

• Ten years of cooperation with the Young Finland Association: • ’Let’s get the toes tapping’ campaign in

day care centres• Exercise campaign for schoolchildren• Use your K-Plussa card to put children

on the move’ campaign


Thank you!

Annual General Meeting 31 March 2008 · 2015-01-25 · Page 11 AGM, 31 March 2008 Matti Halmesmäki...

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