Kesko Oyj Class A · OMXHEX:KESKOA
Kesko Oyj Class A — Investor Presentation (June 2022)
30 slides from Kesko Oyj Class A's investor presentation, Jun 6, 2022
Slide 1: The best Q1 result in Kesko's history
THE BEST Q1 RESULT IN KESKO’S HISTORY THANKS TO STRONG PERFORMANCE IN BUILDING AND TECHNICAL TRADE Jukka Erlund & Jorma Rauhala 6.6.2022
Slide 2: Successful strategic choices and their timely execution yield results
SUCCESSFUL STRATEGIC CHOICES AND THEIR TIMELY EXECUTION YIELD RESULTS • Reshaping K-retailer entrepreneurship and chain operations • Acquisition of Suomen Lähikauppa • Acquisition of Onninen • Divesting e.g. department store and speciality goods operations • Divesting operations in Russia between 20
Slide 3: Key events in Q1
KEY EVENTS IN Q1 • Best Q1 result in Kesko’s history, net sales +6.5% 1-3/2022 1-3/2021 • Sales growth continued strong in building and technical Net sales, € million 2,707.3 2,539.4 trade, record-result Net sales growth*, % 6.5 5.9 • Good result in grocery trade Operating profit*, € million 143.7 1
Slide 4: Net sales
NET SALES Growth 6.5% in comparable terms + €168 million € million 11,468 € million 11,300 2,988 2,902 2,870 3,000 3 000 11,000 11 000 2,707 2,539 2,000 2 000 10,000 10 000 1,000 1 000 9 000 9,000 0 2021 Q1/2022 Q1/21 Q2/21 Q3/21 Q4/21 Q1/22 rolling 12 months 4
Slide 5: Comparable operating profit
COMPARABLE OPERATING PROFIT Growth €27.6 million in comparable terms + €27.6 million € million € million 236.4 219.4 803.1 800 775.5 203.5 200 600 143.7 116.2 400 100 200 0 0 Q1/21 Q2/21 Q3/21 Q4/21 Q1/22 2021 Q1/2022 Operating 4.6% 7.3% 8.1% 7.1% 5.3% 6.9% 7.0% margin rolling 12 months 5
Slide 6: Return on capital employed continued to improve
RETURN ON CAPITAL EMPLOYED CONTINUED TO IMPROVE % 20.4 20.6 20 18.0 17.7 13.8 13.4 13.1 10 7.7 0 Grocery trade Building and technical trade Car trade Group Q1/2021 Q1/2022 6 Comparable figures, rolling 12 months
Slide 7: Strong financial position
STRONG FINANCIAL POSITION Q1/2022 Q1/2021 Cash flow from operating activities, € million 71.0 155.1* Liquid assets, € million 319.6 316.3 Capital expenditure, € million 126.2 44.2 Interest-bearing net debt excl. lease liabilities, € million 72.9 249.1 Interest-bearing net debt/EBITDA (rolling, excl.
Slide 8: Topical themes
K TOPICAL THEMES
Slide 9: Total Finnish food trade market some €20 billion
GROCERY TRADE TOTAL FINNISH FOOD TRADE MARKET SOME €20 BILLION Kesko the only operator that is strong in all three areas 2% • Sales heavily focused on grocery stores, 88% of total sales 10 % • Foodservice wholesale to companies and public operators the fastest growing area 88 % • Consumer online gro
Slide 10: Strong position in all food trade areas yields good results
GROCERY TRADE STRONG POSITION IN ALL FOOD TRADE AREAS YIELDS GOOD RESULTS • A strong combination of the most extensive network of grocery KESKO’S SHARE OF FOOD TRADE stores in Finland, Kespro’s market-leading foodservice business, ~38% and leading online grocery operations • K-retailers and data-bas
Slide 11: Kespro the undisputed market leader in foodservice wholesale
GROCERY TRADE KESPRO THE UNDISPUTED MARKET LEADER IN THE FAST GROWING FOODSERVICE WHOLESALE • Market share nearly 45% • Kespro’s sales close to €1 billion, digital already accounts for some 70% of sales • A wide customer base from private operators in the restaurant sector to public sector operators
Slide 12: Leading operator also in online grocery
GROCERY TRADE LEADING OPERATOR ALSO IN ONLINE GROCERY • Consumer online grocery sales accounted for some 3.9% of K Group’s grocery trade sales in Q1/2022 • The best customer experience in the business (NPS 83) • We estimate that we have fared well in the changing landscape of consumer online grocery
Slide 13: Strong country-specific actions bring growth
BUILDING AND TECHNICAL TRADE STRONG COUNTRY-SPECIFIC ACTIONS BRING GROWTH • Our leading position in Northern European building and technical trade increases our competitiveness • Our focus on the growing B2B trade maintains growth, B2C trade supporting the good performance • Our focus on Northern Eu
Slide 14: Successful changes form a basis for growth
CAR TRADE SUCCESSFUL CHANGES FORM A BASIS FOR GROWTH • Thanks to our ongoing transformation efforts, Kesko’s car trade is strongly part of the wider sector transformation SHARE OF ORDERS FOR ELECTRIC CARS • Focus on new cars, used cars, and services AND RECHARGEABLE HYBRIDS ~40% • Big order book for
Slide 15: Guidance
GUIDANCE 15
Slide 16: Guidance for 2022
GUIDANCE FOR 2022 Kesko estimates that its comparable operating profit in 2022 will be in the range of €730–840 million. In 2021, Kesko’s comparable operating profit totalled €776 million. 16
Slide 17: Focus on building and technical trade
FOCUS ON BUILDING AND TECHNICAL TRADE
Slide 18: Building and technical trade division
BUILDING AND TECHNICAL TRADE DIVISION Leading operator in Building and home improvement and technical trade products, Comprehensive building and technical digital services and building, renovation and trade in Northern Europe building services engineering services Q1/2022* 2021 2020 B2B trade accoun
Slide 19: Serving three customer segments according to local customer needs
SERVING THREE CUSTOMER SEGMENTS ACCORDING TO LOCAL CUSTOMER NEEDS Technical professionals Professional builders Consumers • Technical contractors • Construction companies • Renovators • Infrastructure • Renovation contractors • Home and garden builders • Industry • Decoration contractors • Decorator
Slide 20: Good performance in all operating countries has yielded record results
GOOD PERFORMANCE IN ALL OPERATING COUNTRIES HAS YIELDED RECORD RESULTS Comparable operating profit 2021 and 2020 €180.7 million €30.5 million €70.4 million Profit improved in all €126.5 million €15.4 million €29.5 million countries Strong market leader in Good position achieved in Position in Norway
Slide 21: Focusing on the growing B2B segment yielding results
BUILDING AND TECHNICAL TRADE FOCUSING ON THE GROWING B2B SEGMENT YIELDING RESULTS • B2B trade now accounts for nearly 80% of the division’s B2B TRADE SHARE OF SALES sales, figure has quadrupled since 2014 • Sales growth particularly strong in Onninen ~80% • In addition to technical trade, the share
Slide 22: Demand expected to remain strong in 2022
DEMAND EXPECTED TO REMAIN STRONG IN 2022 • Kesko issued a positive profit warning on 25 April 2022 due to better than anticipated market development in building and technical trade. • Demand in building and technical trade is expected to continue to be stronger than previously anticipated especially
Slide 23: Looking ahead
LOOKING AHEAD 23
Slide 24: We operate in a strong future growth business
WE OPERATE IN A STRONG FUTURE GROWTH BUSINESS – PLENTY OF MORE POTENTIAL FOR GROWTH AND PROFIT Market Repair and consolidation Urbanisation investment debt continues Green transition, Growing importance New solutions for incl. emissions targets of technology and producing and storing and energy effi
Slide 25: Market and operating environment in upcoming years
MARKET AND OPERATING ENVIRONMENT IN UPCOMING YEARS • New building activity expected to come down form the 2021-2022 peak levels in Northern Europe, but activity is expected to still remain at a good level * • Plenty of property investment debt in Northern Europe, renovation expected to grow further
Slide 26: Forecon: building construction volume in Nordics and Poland
FORECON: BUILDING CONSTRUCTION VOLUME IN NORDICS AND POLAND Building construction volume, change % 2018 2019 2020 2021 2022e 2023e 2024e 1.6 -0.6 -0.1 4.7 4.5 -4.9 -3.7 -4.1 1.7 -2.2 2.5 -0.4 1.5 -1.0 -2.3 -1.3 -1.0 9.9 2.7 -4.4 -1.1 11.1 -2.6 5.5 2.9 3.9 3.7 1.0 26 Source: Forecon Economy and const
Slide 27: Forecon: building renovation volume in the Nordics and Poland
FORECON: BUILDING RENOVATION VOLUME IN THE NORDICS AND POLAND Building renovation volume, change % 2018 2019 2020 2021 2022e 2023e 2024e -1.0 0.1 0.7 1.1 1.3 1.6 1.4 1.3 2.0 0.8 1.4 2.0 2.7 3.0 1.4 2.2 1.8 0.8 1.3 1.7 1.9 7.1 4.3 -4.5 2.4 4.4 5.2 3.1 27 Source: ForeconEconomy and construction summar
Slide 28: Promoting green transition offers significant growth potential
PROMOTING GREEN TRANSITION OFFERS SIGNFICANT GROWTH POTENTIAL Energy and Solar panels refrigeration EV charging Ventilation products, incl. pumps More Insulation environmentally Infrastructure Electricity friendly construction materials
Slide 29: Focus areas
FOCUS AREAS Strong country-specific focus Proactive sales Improving Synergies Organic growth and Targeted Ambitious and digital within and between profitability acquisitions sustainability improvement objectives sales management customer experiences operating countries 29
Slide 30: Al
Al