KESKO ROADSHOW CEO MIKKO HELANDER Q4/2015

Transcription

1 KESKO ROADSHOW CEO MIKKO HELANDER Q4/2015

2 KESKO TODAY ROLLING 12 MO Net sales 8,780m Operating profit* 247m Personnel 21,812 Shareholders 38,853 Market capitalisation 3.1bn (Sep 30, 2015) * excl. non-recurring items 2

3 K-GROUP K-Group s sales 11.3bn Operations is eight countries Over 1.3 million customer visits every day Personnel 45,000 FOR SHOPPING TO BE FUN 3

4 KESKO NET SALES BY LINE OF BUSINESS 2014 Agricultural and machinery trade 7% Sports trade 2% Furniture trade 2% Car trade 9% Grocery trade Finland 44% Building and home improvement trade 25% Grocery trade 4,754m Home improvement and speciality goods trade 3,568m Car trade 766m Kespro 9% Grocery trade Russia 1% 4

5 KESKO NET SALES BY COUNTRY 2014 Over 80% of net sales comes from Finland Belarus 1% Russia 4% Lithuania 4% Latvia 1% Estonia 1% Norway 5% Sweden 2% Finland 82% 5

6 NET SALES m % +11.1% +9.3% +3.3% -11.9% +3.9% +7.8% +2.4% -3.8% -2.6% Finland Other countries 6

7 OPERATING PROFIT m Operating profit excl. non-recurring items Non-recurring items 7

8 YEAR-ON-YEAR CHANGE IN FIXED COSTS EXCLUDING NON-RECURRING ITEMS 15% 10% 5% 0% 10.3% 7.5% 8.0% 1.2% -5% -10% -15% -4.0% -4.5% -4.0% -2.0% -1.3%-1.0% -1.6% -1.9% -4.4% -8.4% -10.6% 8

9 % RETURN ON CAPITAL EMPLOYED MOVING 12 MO, EXCL. NON-RECURRING ITEMS Grocery trade 6.9 Home improvement and speciality goods trade 29.0 Car trade 11.3 Group total 9

10 STRONG FINANCIAL POSITION Q3/2015 Q3/2014 Liquid assets 858m 503m Interest bearing net debt -394m -3m Equity ratio 54.2% 54.2% Cash flow 403 million from real estate arrangement Strong cash position enables growth and good dividend yield 10

11 EARNINGS / SHARE AND DIVIDEND % 3.7% 4.6% 4.8% 5.2% 5.0% Earnings / share excl. non-recurring items % Effective dividend yield Dividend 11

12 FINANCIAL TARGETS AND CAPITAL EXPENDITURE Return on capital employed 14% Return on equity 12% Interest bearing net liabilities / EBITDA < 2.5 Capital expenditure in approximately 1 billion Excluding possible acquisitions Dividend policy: Kesko Corporation distributes at least 50% of its earnings per share excluding non-recurring items as dividends, taking however the company's financial position and operating strategy into account. 12

13 ROCE AND ROE EXCL. NON-RECURRING ITEMS, % target ROCE ROE 13

14 CAPITAL EXPENDITURE BACK TO NORMAL LEVEL m Capital expenditure in store sites Acquisitions Other capital expenditure average 14

15 MARKET SITUATION AND FUTURE OUTLOOK 15

16 RETAIL TRADE TRENDS IN OPERATING COUNTRIES ROLLING 12 MO 10 8 % (rolling 12 mo) Estonia Lithuania Sweden Norway Latvia Finland Latest month Source: Eurostat, excl. motor vehicles and fuels 16

17 odotukset omasta taloudesta seuraavan 12 kk:n kuluttua CONSUMER CONFIDENCE IN FINLAND 16 Expectations for own finances Expectation, 21st century average /00 7/00 1/01 7/01 1/02 7/02 1/03 7/03 1/04 7/04 1/05 7/05 1/06 7/06 1/07 7/07 1/08 7/08 1/09 7/09 1/10 7/10 1/11 7/11 1/12 7/12 1/13 7/13 1/14 7/14 1/15 7/15 Source: Statistics Finland 17

18 BUSINESS ENVIRONMENT Finland In Finland, owing to the decline of consumers purchasing power, the trading sector s performance is expected to remain weak in all product lines, which may be complicated further by actions taken to balance the public finances Skandinavia and the Baltic countries The market is expected to grow Russia Economic situation and consumers purchasing power, as well as the outlook have weakened further Belarus Consumers purchasing power is expected to strengthen, hyperinflation is expected to ease 18

19 FUTURE OUTLOOK 10/2015-9/2016 The general economic situation and the expected trend in consumer demand vary in Kesko s different operating countries. In Finland, owing to the decline of consumers purchasing power, the trading sector s performance is expected to remain weak in all product lines, which may be complicated further by actions taken to balance the public finances. In the Finnish grocery trade, the tough competitive situation is expected to continue. The market performance of the Finnish building and home improvement trade is expected to remain weak. The outlook for the car trade is also uncertain. With respect to foreign countries, the economic situation and consumers purchasing power, as well as the outlook in Russia have weakened further. Instead, in Sweden and Norway and the Baltic countries, the market is expected to grow. Kesko Group's net sales for the next 12 months are expected to be lower than the level of the preceding 12 months. The operating profit excluding nonrecurring items for the next 12-month period is expected to equal the operating profit level of the preceding 12 months. 19

20 PORTFOLIO STRATEGY 20

21 INVESTING IN STRATEGIC GROWTH AREAS Grocery trade (Finland, Russia, Kespro) Building and home improvement trade (Europe) Car trade (Finland, the Baltic countries) Good profitability achieved in all strategic growth areas Investments in range of 300 million / year, excluding potential acquisitions Also acquisitions are considered in all three strategic growth areas 21

22 KEY STRATEGIC OBJECTIVES 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 22

23 MAXIMISING VALUE CREATION ALSO IN OTHER BUSINESSES Important to have the best platform for Kesko s small and medium sized businesses to succeed in tight competition Furniture trade (Finland and Estonia) Agricultural trade (Finland) Machinery trade (Finland and the Baltic countries) Shoe trade (Finland) Sports trade (Finland and Russia) All options which improve competitiveness of other businesses and retailer entrepreneurs are possible 23

24 24 GROCERY TRADE

25 KESKO GROCERY TRADE KEY FIGURES ROLLING 12 MO Total market 16.7 billion Net sales 4,684m Operating profit* 185m Operating margin* 4.0% ROCE* 19.9% * excl. non-recurring items K-Group 33.1% S-Group 45.7% Lidl 7.6% Suomen Lähikauppa 6.8% Others 6.8% Source: Nielsen 25

26 RETAIL STORES Sales 2014 million, VAT 0% Number of stores at Concept 1, Hypermarket 1, Supermarket 1, Neighbourhood store Compact hyper, Russia Others Incl. online store Total 5,

27 STRATEGIC OBJECTIVES OF THE GROCERY TRADE Turning the market share in the Finnish grocery trade around Further improving quality and service level Investments to improve the K-supermarket and K-market store network Customer focused renewal of the K-citymarket concept Improving price competitiveness and price image Offering leading digital services in grocery Developed retailer business model 27

28 INCREASING THE HORECA BUSINESS Organic growth through strong international cooperation Searching for expansion alternatives in Finland and the neighbouring areas Supporting the service counter offering of the K-food stores STRATEGY FOR RUSSIA Increasing operations and improving profitability in the St. Petersburg area Active in acquiring store sites K-ruoka is the best food store in the St. Petersburg area Identifying new growth possibilities in the Moscow area and possibly in other metropolitan cities in Russia 28

29 HOME IMPROVEMENT AND SPECIALITY GOODS TRADE 29

30 HOME IMPROVEMENT AND SPECIALITY GOODS TRADE KEY FIGURES ROLLING 12 MO Net sales 3,351m Operating profit* 60m Operating margin* 1.8% ROCE* 6.9% * excl. non-recurring items Furniture trade 176m Shoe trade 20 Konekesko Baltics 96m Konekesko Finland 161m Agricultural trade 372m Sports trade 186m Building and home improvement trade Belarus 125m Building and home improvement trade Russia 250m Others 20m 2014 Building and home improvement trade Baltics 443m Building and home improvement trade Finland 785m Building and home improvement trade Scandinavia 625m 30

31 PROFITABLE GROWTH IN BUILDING AND HOME IMPROVEMENT TRADE Market shares in 2014 Finland Sweden Norway Estonia Latvia Lithuania N-w and central N-w Russia and Belarus Operating profit, million

32 300 STORES IN EIGHT COUNTRIES Norway 671m 82 stores Finland 1,190m 138 stores TOTAL RETAIL SALES 2,881m Sweden 197m 20 stores Estonia 78 M 8 stores Lithuania 317m 19 stores Latvia 53m 8 stores Russia 250m 13 stores Belarus 125m 11 stores 32

33 STRATEGIC OBJECTIVES OF THE BUILDING AND HOME IMPROVEMENT TRADE Kesko #5 in Europe strong potential for further growth organically or through acquisitions Providing excellent services from the same store network to the three different customer segments A common core for all countries to ensure efficient operations Offering the best omni-channel digital services 33

34 34 CAR TRADE

35 CAR TRADE KEY FIGURES ROLLING 12 MO Net sales 745m Operating profit* 27m Operating margin* 3.7% ROCE* 29.0% * excl. non-recurring items 2014 Volkswagen 12.3% Toyota 11.9% Skoda 9.2% Volvo 7.3% Ford 7.0% Nissan 6.1% Audi 6.0% Kia 5.7% Seat 1.7% Others 32.8% 35

36 THE CAR TRADE IS ONE OF KESKO S THREE STRATEGIC GROWTH AREAS VV-Auto s market share in the Finnish passenger car and van trade has risen from 15% to 21% within ten years Throughout recent years, Volkswagen has been the best selling car brand in Finland and Audi has been number one in its competitive segment VV-Auto s retail net sales have quadrupled within ten years from 100 million to 400 million VV-Auto s profitability has remained at a good level despite the difficult market situation 36

37 THE WORLD S MOST SUSTAINABLE RETAIL OPERATOR In January 2015, Kesko was ranked fifth on The Global 100 Most Sustainable Corporations in the World list. 37

38 KESKO IS THE MOST RESPONSIBLE FOOD AND STAPLES RETAILER IN THE WORLD In 2015, Kesko rose to CDP s Climate A List for the first time scoring the maximum 100 points At the top of the Nordic Carbon Disclosure Leadership climate index since In 2015, Kesko was awarded the full 100 points In The Global 100 Most Sustainable Corporations in the World list since 2005 In the Sustainability Yearbook 2015, Kesko was classified into the bronze class in the Food & Drug Retailers sector Included in the FTSE4Good index since 2009 Included in the STOXX Global ESG Leaders index family since 2011 Included in the Dow Jones sustainability indexes DJSI World and DJSI Europe

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40 BASIC INFORMATION Established in 1940 Listed on the Helsinki Stock Exchange (Nasdaq Helsinki) in ,000 shareholders 28% of all shares owned by non-finnish 41% of B-shares owned by non-finnish Market capitalisation 3.1 billion (Sep 30, 2015) Share series: A and B voting rights 10:1 Number of shares Voting rights A shares 31.7% B shares 68.3% A shares 82% B shares 18% 40

41 SHAREHOLDERS % % 1 K-retailers Association 3,816, Vähittäiskaupan Takaus Oy 3,491, Kruunuvuoren Satama Oy 3,438, Ilmarinen Mutual Pension Insurance Company 2,050, The largest registered shareholders At 9/2015 by number of shares 5 Valluga-sijoitus Oy 1,340, Varma Mutual Pension Insurance Company 1,130, Foundation for Vocational Training 7 in the Retail Trade 1,084, Oy The English Tearoom Ab 1,000, Elo Pension Company 896, Kesko Oyj 876,

42 REAL ESTATE ARRANGEMENT COMPLETED The joint real estate investment company established by Kesko, AMF Pensionsförsäkring and Ilmarinen started operating in June The combined fair value was 652 million and the properties owned by Kesko Group companies accounted for 485 million Cash flow to Kesko was 403 million 42

43 REAL ESTATE IN 6/2015 Owned properties Country Area, 1,000 m 2 Classification Finland 550 Other Nordic countries 66 Baltic countries and Belarus 113 Russia 179 Total Carrying amount 908 1,070m Strategic properties 59% Standard properties 32% Leased properties total 1,000 m 2 3,008 Development properties 8% Realisation properties 1% 43

44 OPERATING MARGIN BY DIVISION EXCL. NON-RECURRING ITEMS Q1/ 2014 Q2/ 2014 Q3/ 2014 Q4/ 2014 Q1/ 2015 Q2/ 2015 Q3/ 2015 Grocery trade Home improvement and speciality goods trade Car trade Total

45 TREND IN FOREIGN OWNERSHIP, % (31.12.) % Q3/2015 All shares B share 45

46 UNEMPLOYMENT RATE Source: Statistics Finland 46

47 RETAIL TRADE, TREND DEVELOPMENT Source: Statistics Finland 47 Turnover Volume index

48 DAILY CONSUMER GOODS TRADE, TREND DEVELOPMENT Source: Statistics Finland Turnover Volume index

49 GRANTED PERMITS AND STARTED BUILDINGS, MIL. M3, MOVING ANNUAL TOTAL *) The data is based on estimation Source: Statistics Finland 49

50 FIRST REGISTRATIONS OF PASSENGER CARS IN FINLAND Source: Statistics Finland 50

51 INTERIM REPORT JANUARY-SEPTEMBER 2015 PRESIDENT AND CEO MIKKO HELANDER 22 OCTOBER

52 KEY EVENTS IN Q3 Measures taken to strengthen the competitiveness of the grocery trade have progressed as planned and the division s profitability remained at a good level Market share and profitability of the building and home improvement trade continued to strengthen New cars have continued to sell well despite Volkswagen s emissions issue Balance sheet very strong, liquid assets 858 million 52

53 Q3 NET SALES GROWTH +1.2% IN LOCAL CURRENCIES EXCL. ANTTILA m 7,000 6,000 6,804 6,513 5,000 4,000 3,000 2,000 2,304 2,203 1,000 0 Q3/2014 Q3/2015 Q1-Q3/2014 Q1-Q3/2015 Reported net sales,, incl. Anttila 53

54 Q3 NET SALES BY DIVISION Car trade -2.6% 170m 8% Home improvement and speciality goods trade +4.5% 857m 39% 1,171m 53% Grocery trade -0.6% Comparable change 54

55 OPERATING PROFIT EXCL. NON-RECURRING ITEMS m Q3/2014 Q3/2015 Q1-Q3/2014 Q1-Q3/

56 STEADY PROFIT PERFORMANCE CONTINUES OPERATING PROFIT EXCL. NON-RECURRING ITEMS m Q1/2013 Q2/2013 Q3/2013 Q4/2013 Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q1/2015 Q2/2015 Q3/

57 RETURN ON CAPITAL EMPLOYED INCREASES EXCL. NON-RECURRING ITEMS, ROLLING 12 MO % Q1/2013 Q2/2013 Q3/2013 Q4/2013 Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q1/2015 Q2/2015 Q3/

58 CASH FLOW AFTER CAPITAL EXPENDITURE m Q1/2013 Q2/2013 Q3/2013 Q4/ Q1/2014 Q2/2014 Q3/2014 Q4/ Q1/2015 Q2/2015 Q3/

59 FINANCIAL POSITION Equity ratio, % Liquid assets, m Interest-bearing net liabilities, m Capital expenditure, m Return on capital employed*, % Return on equity*, % * Excl. non-recurring items, rolling 12 mo 59

60 60 GROCERY TRADE

61 NET SALES m 3,500 3,494 3,424 3,000 2,500 2,000 1,500 1,000 1,190 1, Q3/2014 Q3/2015 Q1-Q3/2014 Q1-Q3/

62 OPERATING PROFIT EXCL. NON-RECURRING ITEMS m Q3/2014 Q3/2015 Q1-Q3/2014 Q1-Q3/

63 GROCERY TRADE IN Q3 Measures taken to strengthen the competitiveness of the grocery trade have progressed as planned and the division s profitability remained at a good level. Price level in Finnish grocery trade has fallen by around 1% The K-Group responds to changes in the competitive environment both by renewing store concepts in line with strategy and improving its operational efficiency Effect of the real estate arrangement completed in June on the operating profit excluding non-recurring items was -3.3 million. Sales in Russia were down by 2.5% in euros and up by 42% in roubles Kespro s market share increased and profitability remained at a good level 63

64 HOME IMPROVEMENT AND SPECIALITY GOODS TRADE 64

65 Q3 NET SALES GROWTH +4.5% IN LOCAL CURRENCIES EXCL. ANTTILA m 3,000 2,500 2,731 2,514 2,000 1,500 1, Q3/2014 Q3/2015 Q1-Q3/2014 Q1-Q3/2015 Reported net sales,, incl. Anttila 65

66 OPERATING PROFIT EXCL. NON-RECURRING ITEMS CONTINUED TO INCREASE IN Q3 m Q3/2014 Q3/2015 Q1-Q3/2014 Q1-Q3/

67 HOME IMPROVEMENT AND SPECIALITY GOODS TRADE IN Q3 Building and home improvement trade Market share is estimated to have grown in Finland, Norway, the Baltics and Russia Operating profit has improved in ten successive quarters Net sales and profitability strengthened in the agricultural and machinery trade In the leisure trade, Budget Sport s sales increased markedly Asko s sales performance +8% 67

68 68 CAR TRADE

69 NET SALES m Q3/2014 Q3/2015 Q1-Q3/2014 Q1-Q3/

70 OPERATING PROFIT EXCL. NON-RECURRING ITEMS m Q3/2014 Q3/2015 Q1-Q3/2014 Q1-Q3/

71 ORDER BACKLOG AT END OF SEPTEMBER HIGHER THAN THE YEAR BEFORE 7000 Backlog of customer orders (pcs) Rolling 12 mo average (pcs) /13 02/13 03/13 04/13 05/13 06/13 07/13 08/13 09/13 10/13 11/13 12/13 01/14 02/14 03/14 04/14 05/14 06/14 07/14 08/14 09/14 10/14 11/14 12/14 1/15 2/15 3/15 4/15 5/15 6/15 7/15 8/15 9/15

72 CONTACT INFORMATION Twitter.com/Kesko_IR 72