Slide 1: Good performance in a weak market
KESKO HALF-YEAR FINANCIAL REPORT Q2/2024 GOOD PERFORMANCE IN A WEAK MARKET Jorma Rauhala President and CEO 23 July 2024
Slide 2: Key events in Q2/2024
KEY EVENTS IN Q2/2024 • Net sales and profit decreased as expected, cash flow from operating activities Q2/2024 Q2/2023 strengthened Net sales, € million 3,093.4 3,104.7 • Grocery trade: net sales down, profit at a good level Change in net sales, %* -4.1 -0.8 • Building and technical trade: profitab
Slide 3: Net sales
NET SALES - €11 million 11,784 11,704 12 000 12,000 3,105 3,093 2,949 2,902 3 000 3,000 2,828 2,759 10 000 10,000 8 000 8,000 € million 2 000 2,000 € million 6,000 6 000 44,000 000 1,000 1 000 22,000 000 0 0 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 2023 Q2/2024 rolling 12 months 3
Slide 4: Operating profit
OPERATING PROFIT - €29.3 million 800 712.0 207.6 208.1 656.3 200 178.3 600 170.5 € million 125.9 € million 400 99.5 100 200 0 0 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 2023 Q2/2024 rolling 12 months Operating Operating margin 4.5% 6.7% 7.1% 5.9% 3.6% 5.8% 6.0% 5.6% margin 4 Comparable figures
Slide 5: Return on capital employed
RETURN ON CAPITAL EMPLOYED 20 17.4 16.5 15.8 15 13.6 13.4 11.4 11.8 10 % 8.5 5 0 Grocery trade Building and technical trade Car trade Group 2023 Q2/2024 rolling 12 months 5 Comparable figures
Slide 6: Financial position
FINANCIAL POSITION Q2/2024 Q2/2023 Cash flow from operating activities, € million 309.0 285.2 Liquid assets, € million 354.4 271.0 Capital expenditure, € million 128.4 161.2 Interest-bearing net debt excl. lease liabilities, € million 847.3 629.6 Interest-bearing net debt / EBITDA (excl. IFRS 16 imp
Slide 7: Capital expenditure
CAPITAL EXPENDITURE Q2/2024 Q2/2023 Store sites, € million 68.2 79.2 Acquisitions, € million -0.0 1.4 IT, € million 5.5 5.6 Other investments, € million 54.7 75.0 Total, € million 128.4 161.2 7
Slide 8: Expenses
EXPENSES Expenses up due to the Davidsen acquisition and real estate costs Q2/2024 Q2/2023 Fixed costs, € million 531.5 494.9 - Employee benefit expenses, € million 217.9 201.9 - Other expenses, € million 172.5 161.2 - Depreciation, € million 141.1 131.7 Cost ratio, % 17.2 15.9 8 Figures excluding i
Slide 9: Grocery trade: profitability at a good level
GROCERY TRADE PROFITABILITY AT A GOOD LEVEL 9
Slide 10: Grocery trade: net sales
GROCERY TRADE NET SALES - €28 million 6,352 6,344 1,624 1,593 1,639 1,596 1,495 1,515 6 000 6,000 1 500 1,500 5,500 5 500 € million € million 1 000 1,000 5,000 5 000 500 4 500 4,500 0 4 000 4,000 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 2023 Q2/2024 rolling 12 months 10
Slide 11: Grocery trade: operating profit
GROCERY TRADE OPERATING PROFIT - €3.9 million 444.8 439.5 118.4 124.2 400 118.2 114.5 120 300 90 83.9 82.5 € million € million 60 200 30 100 0 0 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 2023 Q2/2024 rolling 12 months Operating margin 5.6% 7.3% 7.4% 7.6% 5.4% 7.2% 7.0% 6.9% 11 Comparable figures
Slide 12: Key events in grocery trade in Q2
KEY EVENTS IN GROCERY TRADE IN Q2 • Net sales and profit decreased, operating margin close to flat year-on-year • K Group grocery sales down by 1.1% • Kespro’s net sales down by 1.3%, still again exceeding market growth • K-Citymarket non-food sales down by 4.3% • Online grocery sales up by 13.5% th
Slide 13: Beverages with 5.6-8.0% alcohol content added to grocery store selections
BEVERAGES WITH 5.6-8.0% ALCOHOL CONTENT SUCCESSFULLY ADDED TO GROCERY STORE SELECTIONS • Change in Finnish legislation has enabled the sales of beverages with a 5.6-8.0% alcohol content in grocery stores as of 10 June • Impact of the legislative change on Kesko’s sales expected to be around few doze
Slide 14: Building and technical trade: result in line with expectations
BUILDING AND TECHNICAL TRADE RESULT IN LINE WITH EXPECTATIONS IN A DIFFICULT CYCLE 14
Slide 15: Building and technical trade: net sales
BUILDING AND TECHNICAL TRADE NET SALES €55 million 1,204 1,200 1 200 1,149 4,193 4,189 1,023 1,050 971 964 44,000 000 € million 800 € million 33,000 000 400 0 22,000 000 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 2023 Q2/2024 rolling 12 months 15
Slide 16: Building and technical trade: operating profit
BUILDING AND TECHNICAL TRADE OPERATING PROFIT - €15.9 million 90 212.5 200 72.0 69.8 173.4 60 56.1 € million € million 40.6 100 30.0 30 6.8 0 0 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 2023 Q2/2024 rolling 12 months Operating margin 2.9% 6.3% 6.6% 4.2% 0.7% 4.7% 5.1% 4.1% 16 Comparable figures
Slide 17: Key events in building and technical trade in Q2
KEY EVENTS IN BUILDING AND TECHNICAL TRADE IN Q2 Q2/2024 Q2/2023 • Construction cycle still weak in the Nordics; turnaround seen in Poland and the Baltics Net sales, € million 1,203.7 1,148.8 where Onninen’s sales growing Technical trade 583.8 614.1 • Overall, net sales and operating profit developm
Slide 18: Sales of K-Rauta Finland and Onninen Finland 2019-2024
18 -5% -25% 0% 5% 25% -15% -20% -10% 10% 15% 20% Q1/2019 Q2/2019 Retail and B2B sales % Q3/2019 Q4/2019 Q1/2020 Q2/2020 Q3/2020 Q4/2020 Q1/2021 Q2/2021 Q3/2021 Q4/2021 Q1/2022 IN 2019-2024 Q2/2022 Q3/2022 Q4/2022 Q1/2023 Q2/2023 Q3/2023 Q4/2023 Q1/2024 SALES OF K-RAUTA FINLAND AND ONNINEN FINLAND Q2
Slide 19: Car trade: good performance in a challenging market
CAR TRADE GOOD PERFORMANCE IN A CHALLENGING MARKET 19
Slide 20: Car trade: net sales
CAR TRADE NET SALES - €39 million 1,262 1,193 338 1 200 1,200 316 311 297 299 300 286 900 € million 200 € million 600 100 300 0 0 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 2023 Q2/2024 rolling 12 months 20 Figures incl. sports trade
Slide 21: Car trade: operating profit
CAR TRADE OPERATING PROFIT - €9.5 million 30 82.6 80 24.3 24.3 70.0 19.5 60 20 € million 16.4 € million 14.4 14.9 40 10 20 0 0 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 2023 Q2/2024 rolling 12 months Operating margin 6.2% 7.2% 7.8% 4.8% 5.7% 5.0% 6.5% 5.9% 21 Comparable figures Figures incl. sports trade
Slide 22: Key events in car trade in Q2
KEY EVENTS IN CAR TRADE IN Q2 • Market demand for new cars muted, Q2 first registrations in Finland -19.7% K-AUTO NET SALES (passenger cars and vans); market for used cars up +2.9% New cars Used cars Services • Net sales and profitability at expected level in a difficult market 21 % • New car sales
Slide 23: Key highlights
KEY HIGHLIGHTS 23
Slide 24: Focus by division: grocery, building and technical, car trade
GROCERY TRADE BUILDING AND TECHNICAL CAR TRADE TRADE FOCUS : • Consumer confidence still weak, • A balanced business portfolio • Market showing signs of picking but has improved in recent months up in all operating countries, ONE UNIFIE D • New car sales muted, but GROCE RY TRAD E though the cycle s
Slide 25: Outlook and guidance
OUTLOOK AND GUIDANCE 25
Slide 26: 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 27: Guidance for 2024 (specified)
GUIDANCE FOR 2024 (SPECIFIED) 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 chall
Slide 28: Updated growth strategy
UPDATED GROWTH STRATEGY 28
Slide 29: Kesko growth strategy
KESKO GROWTH STRATEGY THE LEADING AND MOST ATTRACTIVE TRADING SECTOR VISION GROWTH COMPANY IN NORTHERN EUROPE STRATEGIC DELIVERING STRENGTHENING BUILDING A FOCUSED INCREASING TARGETS PROFITABLE GROWTH MARKET POSITION B2C AND B2B CUSTOMER VALUE BUSINESS PORTFOLIO COMPETITIVE OPERATIONAL OMNICHANNEL K
Slide 30: Grocery trade: aim to gain market share
GROCERY TRADE GROCERY TRADE: AIM TO GAIN MARKET SHARE KEY ACTIONS: STORE SITE AND PRICE INVESTMENTS WILL HAVE A SLIGHT IMPACT ON GROCERY TRADE PROFITABILITY IN UPCOMING YEARS • STRENGTHENING STORE-SPECIFIC BUSINESS IDEAS: Focusing on strengthening chosen competitive advantages and raising the qualit
Slide 31: Building and technical trade: focusing on securing profitability and generating cash flow
BUILDING AND TECHNICAL TRADE BUILDING AND TECHNICAL TRADE: FOCUSING ON SECURING PROFITABILITY AND GENERATING CASH FLOW KEY ACTIONS: • FINLAND: Continuing growth and winning over market share. THE LONG-TERM STRATEGIC TARGET OF A • SWEDEN AND NORWAY: Stabilising and improving business 6-8 % OPERATING
Slide 32: Car trade: focus on outperforming the market in all businesses
CAR TRADE CAR TRADE: FOCUS ON OUTPERFORMING THE MARKET IN ALL BUSINESSES KEY ACTIONS: • CONTINUING WITH GROWTH STRATEGY EXECUTION: Major turnaround and continuous development establish a SOLID EBIT DEVELOPMENT robust foundation for the next strategy period. • MAINTAINING THE BALANCED BUSINESS PORTFO
Slide 33: Kesko Group Management Board
KESKO GROUP MANAGEMENT BOARD President and CEO Jorma Rauhala EVP, Chief Financial Officer EVP, Human Resources Anu Hämäläinen Matti Mettälä EVP, Brand and Communications EVP, Legal and Sustainability Karoliina Partanen Lasse Luukkainen Grocery trade Building and technical trade Car trade President P
Slide 34: Al
Al