Kesko Oyj Class A · OMXHEX:KESKOA
Kesko Oyj Class A — Non-Deal Roadshow (May 2024)
67 slides from Kesko Oyj Class A's roadshow presentation, May 2024
Slide 1: Growth Strategy Execution Driving Growth
KESKO GROWTH STRATEGY EXECUTION DRIVING GROWTH May 2024
Slide 2: Kesko Today
KESKO TODAY KEY FINANCIALS Leading trading sector ~45 000 employees in the Net sales, € million Q1/2024 11,715.2 2023 11,783.8 #1 company in Northern Europe with retail and B2B sales of nearly €16bn whole K Group,1,800 stores, 3 divisions, comprehensive digital services in 8 countries Operating prof
Slide 3: Kesko Segment Key Figures
KESKO SEGMENT KEY FIGURES NET SALES OPERATING PROFIT Car trade Car trade €79.5m Grocery trade €1,232m 6.5% €6,372m €443.4m Building and 7.0% technical trade €11,715m Building and €685.6m €4,134m technical trade 5.9% €189.3m 4.6% 3 Q1 2024 rolling 12 months, division figures include common functions
Slide 4: Jorma Rauhala appointed Kesko's President and CEO as of 1 February 2024
JORMA RAUHALA APPOINTED KESKO’S PRESIDENT AND CEO AS OF 1 FEBRUARY 2024 MASTER OF SCIENCE (ECON.), BORN 1965 A STRONG TRACK-RECORD IN RESULT-DRIVEN LEADERSHIP A LONG CAREER IN KESKO WITH VARIOUS RESPONSIBILITIES • Joined Kesko Corporation in 1992 • President of building and technical trade division
Slide 5: Grocery Trade: Strong Position in Finnish Food Trade Yielding Good Results
GROCERY TRADE STRONG POSITION IN FINNISH FOOD TRADE YIELDING GOOD RESULTS 5
Slide 6: Strong Position in All Areas of Finnish Food Trade
STRONG POSITION IN ALL AREAS OF FINNISH FOOD TRADE • Strong No. 2 in Finnish grocery trade, with a market • No. 1 in Finnish foodservice trade, with a market share of over 34% share of approx. 48% • Finland’s most extensive network of grocery stores, • Finland’s biggest online store for food, some 7
Slide 7: Grocery Trade Division: Grocery Store Business
GROCERY TRADE DIVISION GROCERY STORE BUSINESS In brief: Market and market shares: Operates in Finland, business comprises three grocery store Total Finnish grocery trade market €21–22 billion; chains with some 1,200 stores across the country operated Kesko the second biggest operator with a market b
Slide 8: Grocery Trade Division: Foodservice Business
GROCERY TRADE DIVISION FOODSERVICE BUSINESS In brief: Market and market share: Operates in Finland, business comprises Kespro’s foodservice Total Finnish foodservice market €2.5 billion; wholesale with 13 cash-and-carry outlets and online sales Kespro the market leader with a market share (70% of to
Slide 9: New Hypermarkets to Be Opened in Finnish Growth Centres
NEW HYPERMARKETS TO BE OPENED IN FINNISH GROWTH CENTRES Several new growth centre hypermarkets in pipeline • K-Supermarket Columbus in Eastern Helsinki to be converted into a K-Citymarket hypermarket in 2024 • New K-Citymarket in Lempäälä near Tampere in 2025 • New K-Citymarket in Lahti in autumn 20
Slide 10: Kesko and K-Retailers
KESKO AND K-RETAILERS Wholesale, product strategy Chain agreement, chain steering Services and business KESKO support Store concepts Chain selections, wholesale Responsible purchasing channels, K-RETAILERS purchasing alliances, logistics Responsible for ensuring customer Own brands satisfaction, res
Slide 11: Forerunner in Trading Sector Digitalisation
FORERUNNER IN TRADING SECTOR DIGITALISATION Using digitalisation to improve customer experience and make operations more efficient Online and digital sales Data and analytics at the core Digitalisation of stores and Digitalisation increases growing forcefully of business operations processes proceed
Slide 12: Three Main Operators in the Finnish Grocery Trade
THREE MAIN OPERATORS IN THE FINNISH GROCERY TRADE All operators enjoy good profitability 60 • Three main players in Finnish grocery trade 50 • Profits generated by Kesko, S Group and Lidl Finland at a good European level 40 • Co-operative S Group has opened close to 10 new 30 hypermarkets in recent
Slide 13: Building and Technical Trade: A Good Result in a Bad Economic Cycle
BUILDING AND TECHNICAL TRADE A GOOD RESULT IN A BAD ECONOMIC CYCLE 13
Slide 14: Leading Player in Building and Technical Trade in Northern Europe
LEADING PLAYER IN BUILDING AND TECHNICAL TRADE IN NORTHERN EUROPE Total retail sales of €6.0 billion*, B2B accounts for over 80% of sales** TECHNICAL TRADE BUILDING AND HOME IMPROVEMENT TRADE • Net sales €2,344.7 million • Net sales € 1,912.1 million • Operating profit €128.5 million • Operating pro
Slide 15: Building and Technical Trade: Technical Wholesale
BUILDING AND TECHNICAL TRADE TECHNICAL WHOLESALE In brief: Market and market shares: Operates in 7 countries. Kesko subsidiary Onninen offers Total market (est.) for 8 countries (incl. Denmark) technical wholesale products and services (offering varies €23 bn; Kesko’s market shares Finland 45% (mark
Slide 16: Technical Trade: Still Further Potential for Growth
TECHNICAL TRADE STILL FURTHER POTENTIAL FOR GROWTH Market size €23 billion Technical trade Retail Market (€bn) 3.3 Technical trade Market share 20 % Retail Market (€bn) 2.6 Market share of current Market share 45% 41%* operating market Technical trade Retail Market (€bn) 7.8 Technical trade Market s
Slide 17: Building and Technical Trade: Building and Home Improvement
BUILDING AND TECHNICAL TRADE BUILDING AND HOME IMPROVEMENT In brief: Market and market shares: Operates in 7 countries; offers products and services for Total market (est.) for 8 countries (incl. Denmark) building, renovation, garden, interior decoration and home €25 bn; Kesko’s market shares Finlan
Slide 18: Successful M&A Carried Out – Still Further Possibilities
BUILDING AND HOME IMPROVEMENT SUCCESSFUL M&A CARRIED OUT – STILL FURTHER POSSIBILITIES Market size €21 billion Professional Consumers builders Professional Consumers Retail Market (€bn) 3.7 1.9 builders Market share 2023 13% Retail Market (€bn) 1.8 1.0 Market share 49% Professional Consumers builder
Slide 19: Car Trade: Good Result in Car Trade
CAR TRADE GOOD RESULT IN CAR TRADE 19
Slide 20: Car Trade
CAR TRADE In brief: Market and market shares: Operates in Finland. The whole value chain - imports and sells Total first registrations of new cars in Finland approx. Volkswagen Group car brands, sells used cars, and offers car- 90,000 in 2022, of which Kesko’s K-Auto accounted for related services (
Slide 21: Determined Strategy Execution Brings Results
DETERMINED STRATEGY EXECUTION BRINGS RESULTS
Slide 22: Kesko's Strategy
KESKO’S STRATEGY GROWTH STRATEGY FOCUS ON THREE DIVISIONS ONE UNIFIED GROCERY TRADE CUSTOMER EXPERIENCE BUILDING AND TECHNICAL TRADE DIGITALISATION CAR TRADE SUSTAINABILITY 22
Slide 23: Successful Strategic Choices and Consistent Strategy Execution
SUCCESSFUL STRATEGIC CHOICES AND CONSISTENT STRATEGY EXECUTION Focusing on three selected divisions Becoming the market leader in neighbourhood grocery stores by acquiring Suomen Lähikauppa Divesting non-core operations, including A forerunner in trading sector digitalisation businesses in R
Slide 24: Acquisitions Have Played a Significant Role in International Growth
ACQUISITIONS HAVE PLAYED A SIGNIFICANT ROLE IN INTERNATIONAL GROWTH 4/2016 6-7/2018 1/2019 3/2020 08/2021 4/2022 3/2023 1/2024 Suomen Reinin Liha Sørbø Trelast MIAB Kungälvs Trä Djurbergs Zenitec Sweden Davidsen A/S Lähikauppa and Kalatukku and Tau & Jørpel €18 million €33 million Järnhandel €13 mil
Slide 25: Elektroskandia Strengthened Onninen's Position in Technical Trade in Norway
ELETROSKANDIA STRENGTHENED ONNINEN’S POSITION IN TECHNICAL TRADE IN NORWAY ONNINEN NOW THE MARKET LEADER IN ELECTRICAL WHOLESALE IN NORWAY • Kesko acquired Elektroskandia Norge in March 2023 • One of the most significant distributors of electricals in Norway • Net sales of some €250 million (2022) •
Slide 26: Expanding Operations to Denmark and Acquiring Davidsen
EXPANDING OPERATIONS TO DENMARK AND ACQUIRING DAVIDSEN DAVIDSEN STORE NETWORK PARTICIPATING IN SECTOR CONSOLIDATION IN NORTHERN EUROPE PART OF KESKO’S STRATEGY Greenland • Kesko acquired 90% of the previously family-owned Davidsen Koncernen A/S, enterprise value approx. €190 million • Davidsen is on
Slide 27: Competitive Landscape in Danish Building and Home Improvement Business
COMPETITIVE LANDSCAPE IN DANISH BUILDING AND HOME IMPROVEMENT BUSINESS Competitive landscape and positioning, illustrative Builders’ merchants Broad Assortment breadth Focused B2C Customer focus B2B 27
Slide 28: Kesko Set to Continue Growth in Building and Technical Trade
KESKO SET TO CONTINUE GROWTH IN BUILDING AND TECHNICAL TRADE Slowdown in economic growth accelerating market consolidation • Kesko intends to continue to take an active part in the consolidation of the building and technical trade B2B market in Northern Europe also going forward • The objective is t
Slide 29: Transformation from a Traditional Retailer into 'One Unified K'
TRANSFORMATION FROM A TRADITIONAL RETAILER INTO ‘ONE UNIFIED K’ 29
Slide 30: Annual Sales for Core Businesses Have Grown by €5.9 Billion Since 2014
ANNUAL SALES FOR CORE BUSINESSES HAVE GROWN BY €5.9 BILLION SINCE 2014 GROCERY TRADE BUILDING AND TECHNICAL TRADE CAR TRADE € million € million € million 9,000 9 000 7,000 7 000 11,400 400 6 500 6,500 8,500 8 500 11,300 300 6,000 6 000 8 000 8,000 5 500 5,500 11,200 200 7,500 7 500 5,000 5 000 7 000
Slide 31: Strong Profit Generation Also in a Weaker Market
STRONG PROFIT GENERATION ALSO IN A WEAKER MARKET Comparable operating profit Reported figures, € million 815 800 776 712 620-700 700 600 568 500 462 429 400 274 296 300 243 221 200 100 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2014 - 2019 continuing operations IFRS 16 impact 31
Slide 32: Sales via Digital Channels Over €2.0 Billion
SALES VIA DIGITAL CHANNELS OVER €2.0 BILLION 2% 1% 11% 44% 42% K-ruoka.fi (online grocery) Kespro (food service) Onninen Building and home improvement Sportstrade 32 Q1 2024, rolling 12 months, excl. VAT
Slide 33: B2B Trade's Role Has Strengthened Significantly
B2B TRADE’S ROLE HAS STRENGTHENED SIGNIFICANTLY Net sales breakdown - B2C trade and B2B trade Grocery trade B2C net sales B2C net sales ~ 60% B2B Total net sales €11,715 million B2C Building and B2B ~ 40% technical trade net sales net sales B2B B2C Car trade net sales B2B 33 *Q1 2024, rolling 12 mon
Slide 34: Sustainability Is Integrated into Our Business
SUSTAINABILITY IS INTEGRATED INTO OUR BUSINESS SUSTAINABILITY STRATEGY VISION EXECUTION BY THE BUSINESS DIVISIONS We enable sustainable choices for our customers and Grocery trade drive change throughout the value chain Building and technical trade Car trade FOCUS AREAS Climate and nature PROGRESS M
Slide 35: Focus Areas and Key Objectives in ESG
FOCUS AREAS AND KEY OBJECTIVES IN ESG WE ENABLE SUSTAINABLE CHOICES FOR OUR CUSTOMERS AND DRIVE CHANGE THROUGHOUT THE VALUE CHAIN Achieving carbon neutral K Group • Carbon neutrality by 2025 and zero emissions by 2030 in our own operations and transports Ensuring sustainability in the supply chain I
Slide 36: Kesko Is One of the Most Sustainable Trading Sector Operators in the World
KESKO IS ONE OF THE MOST SUSTAINABLE TRADING SECTOR OPERATORS IN THE WORLD Kesko’s sustainability has been recognised in various independent assessments 36
Slide 37: Financial Targets
FINANCIAL TARGETS Operating margin, comparable Over 6% Return on capital employed, comparable, % Over 14.5% Interest-bearing net debt/EBITDA, at maximum 2.5 excluding IFRS 16 impact 37
Slide 38: Dividend
DIVIDEND Dividend for 2023: €1.02 / share, to be paid in four instalments. Kesko's dividend policy: In the long-term, Kesko aims to distribute a steadily growing dividend of some 60-100% of its comparable earnings per share, taking into account the company’s financial position and strategy. 1.54 1,5
Slide 39: Kesko Interim Report Q1/2024: A Good Result in a Challenging Market
KESKO INTERIM REPORT Q1/2024 A GOOD RESULT IN A CHALLENGING MARKET
Slide 40: Key Events in Q1/2024
KEY EVENTS IN Q1/2024 Q1/2024 Q1/2023 • Result in line with expectations in a challenging market, good cost efficiency and Net sales, € million 2,759.5 2,828.0 strong cash flow from operating activities Change in net sales*, % -5.5 +4.4 • Grocery trade: net sales increased, profit stable Operating p
Slide 41: Net Sales
NET SALES - €69 million 11,784 11,715 12,000 12 000 3,105 2,949 2,902 3,000 3 000 2,828 2,759 10 000 10,000 8 000 8,000 2,000 € million 2 000 € million 6 000 6,000 4 000 4,000 1,000 1 000 22,000 000 0 0 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 2023 Q1/2024 rolling 12 months 41
Slide 42: Operating Profit
OPERATING PROFIT 300 - €26.4 million 800 712.0 685.6 207.6 208.1 200 600 € million € million 170.5 125.9 400 99.5 100 200 0 0 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 2023 Q1/2024 rolling 12 months Operating Operating margin 4.5% 6.7% 7.1% 5.9% 3.6% margin 6.0% 5.9% 42 Comparable figures
Slide 43: Return on Capital Employed
RETURN ON CAPITAL EMPLOYED 25 20 17,4 17,0 15,8 15,0 15 13,4 12,5 11,4 % 9,6 10 5 0 Grocery trade Building and technical trade Car trade Group 2023 Q1/2024 rolling 12 months 43 Comparable figures
Slide 44: Financial Position
FINANCIAL POSITION Q1/2024 Q1/2023 Cash flow from operating activities, € million 112.6 27.0 Liquid assets, € million 145.1 159.8 Capital expenditure, € million 329.0 231.8 Interest-bearing net debt excl. lease liabilities, € million 881.7 495.6 Interest-bearing net debt / EBITDA (excl. IFRS 16 impa
Slide 45: Capital Expenditure
CAPITAL EXPENDITURE Capital expenditure up due to investments in store sites and acquisitions Q1/2024 Q1/2023 • Kesko continued investments in its network of grocery store sites Store sites, € million 110.3 56.4 • Two properties acquired from eQ Commercial Properties Fund: Acquisitions, € million 17
Slide 46: Expenses
EXPENSES Excluding acquisitions, expenses stable year-on-year Q1/2024 Q1/2023 Fixed costs, € million 507.1 487.8 - Employee benefit expenses, € million 204.8 197.5 - Other expenses, € million 162.8 161.3 - Depreciation, € million 139.4 129.0 Cost ratio, % 18.4 17.2 46 Figures excluding items affecti
Slide 47: Grocery Trade: Good Performance in Q1
GROCERY TRADE GOOD PERFORMANCE IN Q1 47
Slide 48: Grocery Trade Net Sales
GROCERY TRADE NET SALES €20 million 6,352 6,372 1,624 1,593 1,639 1,495 1,515 6 000 6,000 11,500 500 5 500 5,500 € million € million 11,000 000 55,000 000 500 4 500 4,500 0 4 000 4,000 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 2023 Q1/2024 rolling 12 months 48
Slide 49: Grocery Trade Operating Profit
GROCERY TRADE OPERATING PROFIT - €1.4 million 444.8 443.4 150 400 124.2 118.4 118.2 120 300 90 83.9 82.5 € million € million 200 60 30 100 0 0 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 2023 Q1/2024 rolling 12 months Operating margin 5.6% 7.3% 7.4% 7.6% 5.4% 7.0% 7.0% 49 Comparable figures
Slide 50: Key Events in Grocery Trade in Q1
KEY EVENTS IN GROCERY TRADE IN Q1 • Net sales and profit at a good level despite our actions towards more competitive price levels • K Group's grocery sales grew by 3.3%, online grocery sales up by 19.9% • Kespro’s net sales up by 0.7%, growth again outpacing the market • K-Citymarket’s non-food sal
Slide 51: Building and Technical Trade: Result in Line with Expectations in a Weak Cycle
BUILDING AND TECHNICAL TRADE RESULT IN LINE WITH EXPECTATIONS IN A WEAK CYCLE 51
Slide 52: Building and Technical Trade Net Sales
BUILDING AND TECHNICAL TRADE NET SALES - €59 million 11,200 200 1,149 4,193 4,134 1,023 1,050 971 964 4,000 4 000 € million 800 € million 3,000 3 000 400 0 22,000 000 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 2023 Q1/2024 rolling 12 months 52
Slide 53: Building and Technical Trade Operating Profit
BUILDING AND TECHNICAL TRADE OPERATING PROFIT - €23.2 million 90 212.5 72.0 69.8 200 189.3 € million 60 € million 40.6 100 30.0 30 6.8 0 0 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 2023 Q1/2024 rolling 12 months Operating 2.9% 6.3% 6.6% 4.2% 0.7% 5.1% 4.6% margin 53 Comparable figures
Slide 54: Key Events in Building and Technical Trade in Q1
KEY EVENTS IN BUILDING AND TECHNICAL TRADE IN Q1 Q1/2024 Q1/2023 • Overall, net sales and operating profit development in line with expectations Net sales, € million 963.6 1,023.0 • Construction cycle weak in all operating countries; net sales and operating profit also impacted by Technical trade 52
Slide 55: Onninen Finland's Operating Profit Down
ONNINEN FINLAND'S OPERATING PROFIT DOWN Solar power product sales exceptionally strong in the comparison period ONNINEN FINLAND, • Technical trade market continued to weaken especially due to the COMPARABLE OPERATING PROFIT heavy decline in new building construction Q1/2023 operating profit 23,0 23.
Slide 56: Car Trade: Profitability at a Good Level
CAR TRADE PROFITABILITY AT A GOOD LEVEL 56
Slide 57: Car Trade Net Sales
CAR TRADE NET SALES - €30 million 1,262 1,232 338 1,200 1 200 316 311 297 300 286 900 € million 200 € million 600 100 300 0 0 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 2023 Q1/2024 rolling 12 months 57 Figures including sports trade
Slide 58: Car Trade Operating Profit
CAR TRADE OPERATING PROFIT - €3.0 million 30 82.6 80 79.5 24.3 24.3 19.5 60 20 € million 16.4 € million 14.4 40 10 20 0 0 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 2023 Q1/2024 rolling 12 months Operating 6.2% 7.2% 7.8% 4.8% 5.7% 6.5% 6.5% margin Comparable figures 58 Figures including sports trade
Slide 59: Key Events in Car Trade in Q1
KEY EVENTS IN CAR TRADE IN Q1 • K-Auto’s order book for new cars grew compared to the end of 2023, K-AUTO, NET SALES new car orders exceeded the market New cars Used cars Services • Used car sales also grew, and market share continued to strengthen 20 % • Positive development in service sales: growt
Slide 60: Profit Guidance and Outlook
PROFIT GUIDANCE AND OUTLOOK 60
Slide 61: Outlook
OUTLOOK In grocery trade, B2C trade and the foodservice market are expected to remain stable despite tightened price competition, and inflation is expected to slow down in 2024. Profitability in grocery trade is estimated to remain good also in 2024. In building and technical trade, the market is ex
Slide 62: Profit Guidance for 2024
PROFIT GUIDANCE FOR 2024 Kesko Group’s profit guidance is given for the year 2024, in comparison with the year 2023. Kesko’s operating environment is estimated to remain challenging in 2024. Kesko’s net sales and operating profit are estimated to remain at a good level in 2024 despite the challenges
Slide 63: Topical Themes
TOPICAL THEMES 63
Slide 64: Priorities in Grocery Trade
PRIORITIES IN GROCERY TRADE • Development of our store site network continues in 2024 • 1 new K-Citymarket store, 13 store updates • 3 new K-Supermarket stores, 12 store updates • 6 new K-Market stores, 20 store updates • Further development of store-specific business ideas • Further improvement of
Slide 65: Priorities in Building and Technical Trade
PRIORITIES IN BUILDING AND TECHNICAL TRADE • Proactive sales • Continued cost savings programme • Developing the Onninen Express network in Finland and the Baltic countries, building central warehouses for Onninen • Converting K-Rauta stores in Sweden into K-Bygg stores, finalising Zenitec’s integra
Slide 66: Priorities in Car Trade
PRIORITIES IN CAR TRADE • Maintaining good profitability • Growth that outpaces the market in all business areas • Launching important new car models • Continued growth in used cars • Expanding offering in the service business • Growing multichannel sales and network • Further developing and expandi
Slide 67: IR-Contact
IR-CONTACT Hanna Jaakkola Vice President, Investor Relations tel.+358 40 5666 070 hanna.jaakkola@kesko.fi