Kesko Oyj Class A · OMXHEX:KESKOA
Kesko Oyj Class A — Q3 2024 Earnings Presentation
73 slides from Kesko Oyj Class A's earnings presentation, December 2024
Slide 1: Growth Strategy: Execution Driving Growth
KESKO INVESTOR PRESENTATION GROWTH STRATEGY EXECUTION DRIVING GROWTH December 2024
Slide 2: Kesko Today – Key Financials
KESKO TODAY KEY FINANCIALS Leading trading sector ~ 45 000 employees in the Net sales, € million Q3/2024 11,781.4 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 pro
Slide 3: Kesko Segment Key Figures
KESKO SEGMENT KEY FIGURES NET SALES OPERATING PROFIT Car trade Car trade Grocery trade €63.5m B2C-sales 5.4% €1,178m Sales to Grocery trade ~15% €6,360m K-retailers €440.0m Building and ~46% 6.9% Building and technical technical trade trade €649.7m €4,266m €11,781m €11,781m 5.5% B2B-sales €173.6m ~3
Slide 4: Strong Position in Finnish Food Trade Yielding Good Results
GROCERY TRADE STRONG POSITION IN FINNISH FOOD TRADE YIELDING GOOD RESULTS 4
Slide 5: Grocery Trade Division in Brief
GROCERY TRADE GROCERY TRADE DIVISION IN BRIEF 34.3% MARKET 1,200 stores 6,300 SHARE IN employees The leading foodservice More than 700 K Group 2023 provider in Finland (NIELSEN) grocery stores offer online 900 grocery services K-retailers 48% market share NET SALES 2023 2022 2021 KCM non-food Net sa
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: 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 9: 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 10: A Good Result in a Challenging Economic Cycle
BUILDING AND TECHNICAL TRADE A GOOD RESULT IN A CHALLENGING ECONOMIC CYCLE 10
Slide 11: Building and Technical Trade in Brief
BUILDING AND TECHNICAL TRADE BUILDING AND TECHNICAL TRADE IN BRIEF NET SALES Leading operator in building and B2B trade accounts for more technical trade in Northern Europe 80% than 80% of net sales Onninen Baltic Onninen countries 3% Poland 7% K-Rauta Customer segments: Technical professionals, pro
Slide 12: 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 13: Building and Technical Trade – Technical Trade
BUILDING AND TECHNICAL TRADE TECHNICAL TRADE 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% (market b
Slide 14: 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 15: 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 16: 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 17: Strong Focus on B2B Trade in Building and Home Improvement in Finland
STRONG FOCUS ON B2B TRADE IN BUILDING AND HOME IMPROVEMENT TRADE ALSO IN FINLAND Breakdown of K-Rauta Finland’s sales by customer segments B2B-sales B2C-sales, project customers B2C-sales, occational customers 18% 22% 60% DIRECT DELIVERIES TO INDUSTRY 17 Project customers purchase typically e.g. the
Slide 18: Good Result in Car Trade
CAR TRADE GOOD RESULT IN CAR TRADE 18
Slide 19: Car Trade in Brief
CAR TRADE CAR TRADE IN BRIEF K-Auto is the leading and most interesting automotive company 2023 2022 2021 in Finland Net sales, € million 1,079 911 1,028 Importing and sales of attractive and high-quality new cars. Operating profit*, € million 73 48 52 Significant multi-brand used car sales in Finla
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 2023, of which Kesko’s K-Auto accounted for related services (
Slide 21: Highlights of the Strategy
HIGHLIGHTS OF THE STRATEGY 21
Slide 22: Kesko Is Affected by Various Megatrends
KESKO IS AFFECTED BY VARIOUS MEGATRENDS INTEREST RATES & INFLATION URBANISATION CLIMATE CHANGE & GREEN TRANSITION • Weak FOCUS : consumer and business confidence • Migration to growth centres • Energy efficiency and energy infrastructure investments • Higher cost of capital • Substantial infra and b
Slide 23: 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 24: Grocery Trade: Maintain Good Profitability and Gain Market Share
GROCERY TRADE: TARGET TO MAINTAIN GOOD PROFITABILITY AND GAIN MARKET SHARE KEY ACTIONS: • STRENGTHENING STORE SPECIFIC BUSINESS IDEAS: INVESTMENTS WILL HAVE A SLIGHT EFFECT ON Focusing on strengthening chosen competitive advantages PROFITABILITY. and raising the level of stores. • DEVELOPING STORE S
Slide 25: Grocery Trade Store Site Investment Focus on Growth Centres
GROCERY TRADE GROCERY TRADE STORE SITE INVESTMENT FOCUS ON GROWTH CENTRES Emphasising hypermarkets and other larger units • Urbanisation is expected to accelerate in Finland • Long-term store site investment program to ensure Kesko’s competitiveness and market share development • During up-coming ye
Slide 26: New Hypermarkets to Be Opened in Finnish Growth Centres
GROCERY TRADE NEW HYPERMARKETS TO BE OPENED IN FINNISH GROWTH CENTRES Several new growth centre hypermarkets in pipeline • K-Supermarket Columbus in Eastern Helsinki has been converted into a K-Citymarket hypermarket in November 2024 • New K-Citymarket in Lempäälä near Tampere in 2025 • New K-Cityma
Slide 27: 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 28: Elektroskandia Strengthened Onninen's Position in Norway
BUILDING AND TECHNICAL TRADE ELEKTROSKANDIA 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
Slide 29: Entry to Denmark an Important Strategic Step
BUILDING AND TECHNICAL TRADE ENTRY TO DENMARK AN IMPORTANT STRATEGIC STEP • Kesko has a consistent strategy in building and technical trade: to consolidate the market in Northern Europe and to be among the leading players in B2B business in each country • The Danish market is not yet consolidated, g
Slide 30: Danish Builders' Merchant Market Share to Rise from ~10% to ~20%
BUILDING AND TECHNICAL TRADE MARKET SHARE IN DANISH BUILDERS’ MERCHANT SET TO RISE FROM ~10% TO ~20% VIA ACQUISITIONS DAVIDSEN ACQUISITIONS ANNOUNCED ON 14 AUGUST 2024 * KESKO SUBSIDIARY AS OF 1 FEB. 2024 TØMMERGAARDEN A/S • Kesko acquired 90% of the Company: A builders’ merchant focusing mainly on
Slide 31: Building and Technical Trade: Securing Profitability and 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 market share. THE LONG-TERM STRATEGIC TARGET OF 6-8 % EBIT MARGIN IS STILL VALID. • SWEDEN AND NORWAY: Stabilising and improvin
Slide 32: Building and Technical Trade Long-Term EBIT-% Target Intact
BUILDING AND TECHNICAL TRADE BUILDING AND TECHNICAL TRADE LONG-TERM EBIT-% TARGET INTACT EBIT-% Target Kesko 8 6-8% 6 7.1% Kesko 4 5.1% Kesko 2 2.4% 0 Time 2018 2021 2023 32
Slide 33: Car Trade: Performing Better Than the Market
CAR TRADE CAR TRADE: FOCUSING ON PERFORMING BETTER THAN THE MARKET IN ALL BUSINESSES KEY ACTIONS: • CONTINUING WITH GROWTH STRATEGY: SOLID EBIT DEVELOPMENT Major turnaround and continuous development establish a robust foundation for the next strategy period. #1 IN BRAND AWARENESS AND PREFERENCE • M
Slide 34: Kesko's Financial Targets Intact
KESKO’S FINANCIAL TARGETS INTACT TARGET 2023 OPERATING MARGIN, OVER 6% COMPARABLE 6.0% RETURN ON CAPITAL OVER 14.5% 13.4% EMPLOYED, COMPARABLE, % INTEREST-BEARING NET DEBT/EBITDA, AT MAXIMUM 2.5 0.7 EXCLUDING IFRS 16 IMPACT 34
Slide 35: 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 36: Focus Areas and Key Actions
FOCUS AREAS AND KEY ACTIONS WE ENABLE SUSTAINABLE CHOICES FOR OUR CUSTOMERS AND DRIVE CHANGE THROUGHOUT THE VALUE CHAIN CLIMATE AND NATURE VALUE CHAIN OUR PEOPLE GOOD GOVERNANCE Reduce emissions in the value chain Ensure sustainability in the value Increase the safety and wellbeing of Commit to the
Slide 37: One of the Most Sustainable Trading Sector Operators
KESKO IS ONE OF THE MOST SUSTAINABLE TRADING SECTOR OPERATORS IN THE WORLD Sustainability indices are Kuva, joka sisältää kohteen teksti key tools for investors Kuvaus luotu automaattisesti Kuva, joka sisältää kohteen teksti, clipart-kuva Kuvaus luotu automaattisesti to assess the ESG level of corpo
Slide 38: 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 39: 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 (foodservice) Onninen Building and home improvement Sportstrade 39 Q3 2024, rolling 12 months, excl. VAT
Slide 40: 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 41: Number of Shareholders Has Grown
NUMBER OF SHAREHOLDERS HAS GROWN ~115,600 REGISTERED SHAREHOLDERS BALANCED OWNERSHIP STRUCTURE 115 000 105 000 26,3 % 32,7 % 95 000 85 000 7,5 % 75 000 65 000 33,5 % 55 000 45 000 Nominee-registered, foreign ownership 35 000 Finnish institutions 07 07 07 04 07 04 07 07 01/19 04 04 04 04 01/21 01/20
Slide 42: Jorma Rauhala Appointed President and CEO
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 43: Kesko Strategy Summary 2024-2026
KESKO STRATEGY SUMMARY 2024-2026 # The portfolio will most likely stay as is during 2024-2026. The focus is on maintaining and further developing current businesses. # Targeting growth and profitability improvement as outlook strengthens in construction in 2025-2026. # In grocery trade, focusing on
Slide 44: A Turn for the Better in Building and Technical Trade
KESKO INTERIM REPORT Q3/2024 A TURN FOR THE BETTER IN BUILDING AND TECHNICAL TRADE Jorma Rauhala President and CEO 30 October 2024
Slide 45: Key Events in Q3/2024
KEY EVENTS IN Q3/2024 Q3/2024 Q3/2023 • Net sales increased, comparable operating profit decreased Net sales, € million 3,026.6 2,949.1 • Building and technical trade net sales increased. A turnaround can be seen: year-on-year result increased for the first time in 8 quarters Change in net sales, %*
Slide 46: Net Sales
NET SALES €+77 million € million € million rolling 12 months 46
Slide 47: Operating Profit
OPERATING PROFIT €-6.6 million € million € million rolling 12 months Operating Operating 4.5% 6.7% 7.1% 5.9% 3.6% 5.8% 6.7% 6.0% 5.5% margin margin 47 Comparable figures
Slide 48: Return on Capital Employed
RETURN ON CAPITAL EMPLOYED % rolling 12 months 48 Comparable figures
Slide 49: Financial Position
FINANCIAL POSITION Increase in working capital impacted cash flow in Q3 Q3/2024 Q3/2023 Cash flow from operating activities, € million 285.6 394.9 Liquid assets, € million 219.9 169.6 Capital expenditure, € million 109.4 127.5 Interest-bearing net debt excl. lease liabilities, € million 855.8 559.8
Slide 50: The Onnela Logistics Centre
THE ONNELA LOGISTICS CENTRE • The Onnela logistics centre in Hyvinkää, Finland is the biggest construction project in Kesko’s history and a notable investment in future growth • The centre will serve both Onninen's technical trade and K-Auto's spare parts business; implementation in stages from Q3/2
Slide 51: Expenses
EXPENSES Expenses up due to the Davidsen acquisition and real estate costs Q3/2024 Q3/2023 Fixed costs, € million 484.1 451.9 - Employee benefit expenses, € million 192.7 176.1 - Other expenses, € million 149.9 140.5 - Depreciation, € million 141.5 135.3 Cost ratio, % 16.0 15.3 51 Figures excluding
Slide 52: Grocery Trade: Stable Performance
GROCERY TRADE STABLE PERFORMANCE 52
Slide 53: Grocery Trade Net Sales
GROCERY TRADE NET SALES €+16 million € million € million rolling 12 months 53
Slide 54: Grocery Trade Operating Profit
GROCERY TRADE OPERATING PROFIT €+0.5 million € million € million rolling 12 months Operating Operating 5.6% 7.3% 7.4% 7.6% 5.4% 7.2% 7.4% margin 7.0% 6.9% margin 54 Comparable figures
Slide 55: Key Events in Grocery Trade in Q3
KEY EVENTS IN GROCERY TRADE IN Q3 • Net sales and profit increased, operating margin flat year-on-year • K Group grocery sales down by 0.1% • Kespro's net sales up by 3.1%, again exceeding market growth • K-Citymarket non-food sales down by 4.1% • Online grocery sales up by 13.9% thanks to express d
Slide 56: Strategy Execution Proceeding According to Plan
STRATEGY EXECUTION PROCEEDING ACCORDING TO PLAN • Key actions in grocery trade strategy in 2024-2026: • Strengthening store-specific business ideas • Developing our store site network • Improving price competitiveness • Impact from stronger store-specific business ideas and investments in price set
Slide 57: Building and Technical Trade: Better-Than-Expected Result
BUILDING AND TECHNICAL TRADE BETTER-THAN- EXPECTED RESULT 57
Slide 58: Building and Technical Trade Net Sales
BUILDING AND TECHNICAL TRADE NET SALES €+78 million € million € million rolling 12 months 58
Slide 59: Building and Technical Trade Operating Profit
BUILDING AND TECHNICAL TRADE OPERATING PROFIT €+0.2 million € million € million rolling 12 months Operating 2.9% Operating 6.3% 6.6% 4.2% 0.7% 4.7% 6.2% 5.1% 4.1% margin margin 59 Comparable figures
Slide 60: Key Events in Building and Technical Trade in Q3
KEY EVENTS IN BUILDING AND TECHNICAL TRADE IN Q3 • Construction cycle still weak, but we have seen a turnaround: result for the division grew for the Q3/2024 Q3/2023 first time in eight quarters Net sales, € million 1,128.0 1,050.3 • Sales have picked up in both building and home improvement trade a
Slide 61: Sales of K-Rauta Finland and Onninen Finland
SALES OF K-RAUTA FINLAND AND ONNINEN FINLAND Retail and B2B sales 61
Slide 62: Byggmakker Sales in 2020-2024
BYGGMAKKER SALES IN 2020-2024 Retail and B2B sales 62
Slide 63: Car Trade: Good Performance in a Challenging Market
CAR TRADE GOOD PERFORMANCE IN A CHALLENGING MARKET 63
Slide 64: Car Trade Net Sales
CAR TRADE NET SALES €-16 million € million € million rolling 12 months 64 Figures incl. sport trade
Slide 65: Car Trade Operating Profit
CAR TRADE OPERATING PROFIT €-6.5 million € million € million rolling 12 months Operating Operating 6.2% 7.2% 7.8% 4.8% 5.7% 5.0% 6.0% 6.5% 5.4% margin margin 65 Comparable figures Figures incl. sport trade
Slide 66: Key Events in Car Trade in Q3
KEY EVENTS IN CAR TRADE IN Q3 K-AUTO, NET SALES • Market demand for new cars muted, Q3 first registrations in Finland -24.4% (passenger cars and vans) • Net sales and comparable operating profit decreased as market continued challenging, profitability remained at a good level • New car sales down, b
Slide 67: Profit Guidance for 2024 and Outlook for 2025
PROFIT GUIDANCE FOR 2024 AND OUTLOOK FOR 2025 67
Slide 68: Profit Guidance for 2024 (Specified)
PROFIT 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 th
Slide 69: Outlook for 2025
OUTLOOK FOR 2025 Kesko's operating environment is estimated to improve in 2025, and Kesko’s comparable operating profit is also estimated to improve in 2025. In grocery trade, B2C trade and the foodservice market are estimated to remain stable. In 2025, the comparable operating margin for the grocer
Slide 70: Management and IR Contact
MANAGEMENT AND IR CONTACT 70
Slide 71: 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 72: IR Contact
IR CONTACT Hanna Jaakkola Vice President, Investor Relations tel.+358 40 5666 070 hanna.jaakkola@kesko.fi
Slide 73: Al
Al