kesko analyst meeting 181215
TRANSCRIPT
ANALYSTMEETINGJUKKA ERLUND18 DEC. 2015
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La
test m
onth
Estonia
Sweden
Lithuania
Norway
Latvia
Finland
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RETAIL TRADE TRENDS IN OPERATING COUNTRIESROLLING 12 MO
Source: Eurostat, excl. motor vehicles and fuels
% (
roll
ing
12
mo
)
Latest
month
3
Net sales, €m 9,285 9,235 9,166 9,071 9,024 8,881 8,780
Gross margin, % 13.7 13.8 13.8 13.7 13.6 13.5 13.3
Operating profit*, €m 239.3 237.2 237.6 232.6 240.0 248.8 247.2
EPS*, basic, € 1.71 1.75 1.82 1.65 1.69 1.72 1.66
Liquid assets, €m 532 461 503 598 506 843 858
Return on capital
employed*, %9.9 9.9 10.0 9.9 10.2 10.9 11.3
Equity ratio, % 53.2 52.3 54.2 54.5 51.5 52.2 54.2
Capital expenditure, €m 173 181 197 194 202 205 195
Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15
*Excl. non.recurring items
KESKO’S KEY FIGURES, ROLLING 12 MONTHS
4
OPERATING MARGIN BY DIVISIONEXCL. NON-RECURRING ITEMS
Q1/
2014
Q2/
2014
Q3/
2014
Q4/
2014
Q1/
2015
Q2/
2015
Q3/
2015
Grocery trade 4.1 4.6 5.1 4.9 3.2 3.8 3.8
Home improvementand speciality goods
trade
-4.1 1.0 2.2 0.4 -1.8 3.9 4.2
Car trade 4.6 3.7 3.6 3.0 4.7 3.4 3.5
Total 0.9 2.9 3.6 2.7 1.3 3.4 3.7
KESKO GROUP’S SALES 1–11/2015
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1.1. - 30.11.2015 Change, %
€ million Change,
%
in local
currencies
excl. Anttila
Grocery trade, total 4,250.8 -1.7 -0.9
Home improvement and speciality goods trade,
Finland 1,639.3 -12.5 -1.2
Home improvement and speciality goods trade,
other countries 1,448.8 -3.5 +5.6
Home improvement and speciality goods
trade, total 3,088.1 -8.5 +2.1
Car trade, total 707.7 -3.5 -3.5
Grand total 8,054.2 -4.3 0.0
Finland, total 6,512.2 -4.5 -1.8
Other countries, total 1,542.0 -3.4 +7.4
Grand total 8,054.2 -4.3 0.0
STRONG FINANCIAL POSITION
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Liquid assets €858m €503m
Interest bearing net
liabilities€-394m €-3m
Equity ratio 54.2% 54.2%
Q3/2015 Q3/2014
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ROCE AND ROEEXCL. NON-RECURRING ITEMS, %
12.4
14.7
10.2
7.4
14.013.1
9.09.8 9.9
11.3
14.0
10.0
14.6
8.1
3.8
8.7 8.8
6.97.7 7.6 8.0
12.0
0
2
4
6
8
10
12
14
16
2006 2007 2008 2009 2010 2011 2012 2013 2014 Q3/2015 target
ROCE ROE
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CAPITAL EXPENDITURE IN STRATEGICGROWTH AREAS
• Grocery trade
• Building and home improvement trade
• Car trade
• Capital expenditure in range of €250 million / year,
excluding possible acquisitions
• Also acquisitions are considered in all three strategic
growth areas
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KEY STRATEGIC OBJECTIVES
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• Turning the market share in the Finnish grocery trade around
• Increasing the building and home improvement trade in Europe
• Strengthening the market leadership in the Finnish car trade
• The best omni-channel customer experience in the trading sector
• One unified Kesko, harvesting synergies
KESKO TO INVEST IN FINLAND BY ACQUIRING SUOMEN LÄHIKAUPPA
• Kesko has made an agreement to acquire the whole share capital of Suomen
Lähikauppa Oy from the private equity investment firm Triton
• Net sales of Suomen Lähikauppa in 2014 were €999.2 million
• Suomen Lähikauppa has 643 neighbourhood stores and 4,100 employees
• Transaction price of the debt-free acquisition, structured as a share purchase,
is approximately €60 million
• Kesko estimates that its capital expenditure in 2015-2017 will decrease from
the approximately €1 billion announced in the strategy to €750 million,
excluding possible acquisitions
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GROCERY TRADE
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• Net sales €4,684m, change in local
currencies -1.5%
• Operating profit* €185m (4.0%)
• ROCE* 20%
*excl. non-rec. items
Q4/2014-Q3/2015 (12 months)
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• Strengthening of competitiveness is
progressing as planned
• Price trend in Finnish grocery trade
continues to decline (-1%)
• Sales in Russia in 1-9/2015, change
in local currency +34.5%, in euros
-2.4%
0
10
20
30
40
50
60
70
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SALES, CHANGE %,IN LOCAL CURRENCIES1-11/2015
OPERATING PROFITEXCL. NON-REC. ITEMS
-4.5
0.6
7.6
-6.0
-3.3
-0.9-1.1
0.5
-0.4
-2.2
0.5
-8
-6
-4
-2
0
2
4
6
8% €m
PROGRESS OF GROCERY TRADE STRATEGY
• Expansion and renewal of store site network and renewal of concepts
• Acquisition of Suomen Lähikauppa
• Improving price competitiveness
• Some 300 K-Menu private label products
• K-Myllypuro boldly tests different food store concepts and models
• Kantar: Store of the Week in the World
• Digital services, such as K-ruoka app
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GROCERY TRADE PERFORMANCE, TREND
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60
70
80
90
100
110
120
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Net sales Volume index
• Market share of the K-Group’s
building and home improvement
stores has strengthened in Finland,
Norway, the Baltic countries and
Russia
• In Finland, market share has
strengthened by some +1 pp
• Profitablity has improved in 10
consecutive quarters
HOME IMPROVEMENT AND SPECIALITY GOODS TRADE
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• Net sales €3,351m, comparable
change +1.6%
• Operating profit* €60m (1.8%)
• ROCE* 7%
*excl. non-rec. items
Q4/2014-Q3/2015
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-40
-30
-20
-10
0
10
20
30
40
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SALES, CHANGE %,IN LOCAL CURRENCIES1-11/2015*
OPERATING PROFITEXCL. NON-REC. ITEMS
%€m
*excl. Anttila
-0.8
3.1
1.8
-1.4-1.2
3.9
8.7
1.8
2.8
-0.9
6.1
-2
0
2
4
6
8
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STRATEGIC OBJECTIVES OF BUILDING AND HOME IMPROVEMENT TRADE
• Kesko #5 Europe – strong potential to grow organically or through
acquisitions
• We offer excellent services from a single store network to three different
customer segments
• Business customers
• Project customers
• Consumer customers
• Common core for all operating countries to ensure operating efficiency
• We offer the best digital services on all channels
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• In November, VW #2 in new
registrations of passenger cars
• Remedial solution proposals of NOx
vehicles have been presented to
and approved by the authorities
• Repair campaign will start in
Finland next spring, mainly as
software updates
CAR TRADE
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• Net sales €745m, -3.0%
• Operating profit* €27m (3.7%)
• ROCE* 29%
*excl. non-rec. items
Q4/2014-Q3/2015
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19
SALES, CHANGE %,1-11/2015
OPERATING PROFITEXCL. NON-REC. ITEMS
-11.4
-5.3
4.6
-2.5
-9.0
1.3
-2.1
-4.8
-0.1
0.2
-7.3
-12
-10
-8
-6
-4
-2
0
2
4
6
%
0
2
4
6
8
10
12€m
NEW REGISTRATIONS OF PASSENGER CARSIN FINLAND
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Soure: Statistics Finland
NEW REGISTRATIONS OF PASSENGER CARS 14.12.2015
Brand December
December
mo % Prev. Prev. mo %
Change in
month, % Cum Cum. mo % Cum prev. Prev. mo %
K
u
VOLKSWAGEN 435 13,2 827 11,7 10,5 12 209 11,7 12 988 12,2
TOYOTA 404 12,2 836 11,8 1,5 11 738 11,3 12 558 11,8
FORD 308 9,3 436 6,1 48,4 8 309 8,0 7 424 7,0
SKODA 283 8,6 589 8,3 0,9 9 528 9,1 9 649 9,1
VOLVO 263 8,0 575 8,1 -3,9 7 036 6,8 7 695 7,2
OPEL 155 4,7 193 2,7 68,7 5 252 5,0 4 507 4,2
RENAULT 151 4,6 297 4,2 6,8 2 414 2,3 1 737 1,6
KIA 138 4,2 268 3,8 8,2 6 337 6,1 6 028 5,7
AUDI 137 4,1 496 7,0 -42,0 5 122 4,9 6 285 5,9
NISSAN 132 4,0 342 4,8 -18,9 7 102 6,8 6 437 6,1
HYUNDAI 129 3,9 107 1,5 153,2 2 593 2,5 2 158 2,0
BMW 121 3,7 465 6,6 -45,3 4 547 4,4 5 025 4,7
MERCEDES-BENZ 119 3,6 525 7,4 -52,4 4 882 4,7 5 631 5,3
DACIA 80 2,4 127 1,8 32,3 1 174 1,1 1 358 1,3
PEUGEOT 78 2,4 225 3,2 -27,2 2 652 2,5 2 591 2,4
HONDA 69 2,1 161 2,3 -10,0 2 437 2,3 2 934 2,8
SEAT 57 1,7 159 2,2 -24,7 1 598 1,5 1 801 1,7
CITROEN 54 1,6 152 2,1 -25,4 1 964 1,9 2 257 2,1
MAZDA 41 1,2 54 0,8 59,5 1 596 1,5 1 727 1,6
SUBARU 33 1,0 48 0,7 44,4 1 161 1,1 1 003 0,9
SUZUKI 24 0,7 14 0,2 260,1 642 0,6 648 0,6
MITSUBISHI 23 0,7 82 1,2 -41,1 1 664 1,6 1 578 1,5
FIAT 13 0,4 9 0,1 203,4 178 0,2 195 0,2
LEXUS 11 0,3 20 0,3 15,5 207 0,2 196 0,2
Total 3 307 100,0 7 091 100,0 -2,0 104 231 100,0 106 281 100,0
VV-AUTO TOTAL 629 19,0 1 482 20,9 -15,1 18 929 18,1 21 074 19,8
CUSTOMER ORDER BACKLOG
22
4 561
5 1465 4055 353
4 956
4 5704 4814 572
5 168
5 6035 5425 405
4 615
5 0185 3655 313
4 8274 598
4 0144 015
4 655
5 2084 854
5 0144 666
5 188
5 7835 639
4 893
4 353
3 7903 946
4 934
5 6695 380
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
0
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3 000
4 000
5 000
6 000
7 000
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/15
Customer order backlog (pcs) Rolling average 12 mth (pcs)