Varie
Kesko's interim report for 1 Jan.-30 Sep. 2012
KESKO CORPORATION STOCK EXCHANGE RELEASE 24.10.2012 AT 09.00 1(28)
Financial performance in brief:
* The Group's net sales for January-September increased by 3.6%.
* The K-Group's (i.e. Kesko's and the chain stores') retail and B2B sales (VAT 0%) increased by 3.8% in January-September.
* The operating profit excluding non-recurring items was EUR162.9 million (EUR207.4 million).
* The Kesko Group's net sales are expected to grow during the next twelve months. As a result of measures to be taken to enhance sales and purchasing operations and cost savings to be achieved, the operating profit excluding non-recurring items for the next twelve months is expected to exceed the operating profit excluding non-recurring items for the preceding twelve months. Capital expenditure is expected to be lower compared to the capital expenditure for the preceding twelve months. The Group has amended its future outlook with regard to profitability performance. Previously, we were prepared for the operating profit excluding non-recurring items for the next twelve months to be lower than the operating profit excluding non-recurring items for the preceding twelve months.
Key performance indicators
FINANCIAL PERFORMANCE
Net sales and profit for January-September 2012
The Group's net sales for January-September 2012 were EUR7,227 million, which is 3.6% up on the corresponding period of the previous year (EUR6,979 million). In Finland, net sales increased by 2.3% and in other countries by 9.2%. International operations accounted for 18.6% (17.6%) of net sales. Net sales grew in the food trade, the home and speciality goods trade and the building and home improvement trade.
The operating profit excluding non-recurring items in January-September was EUR162.9 million (EUR207.4 million), representing 2.3% of net sales (3.0%). The profit performance was affected by new store openings, higher level of costs and the expansion of Russian business operations.
Operating profit was EUR164.0 million (EUR207.8 million). The operating profit includes a net amount of EUR1.1 million (EUR0.4 million) of non-recurring gains on disposals of properties and write-downs. The Group's profit before tax for January-September was EUR162.1 million (EUR208.1 million).
The Group's earnings per share were EUR1.06 (EUR1.33). The Group's equity per share was EUR22.21 (EUR21.66).
In January-September, the K-Group's (i.e. Kesko's and the chain stores') retail and B2B sales (VAT 0%) were EUR9,006 million, up 3.8% compared to the previous year. In January-September, the K-Group chains' sales entitling to K-Plussa points were EUR4,323 million excluding tax, up 4.0% compared to the previous year. The K-Plussa customer loyalty programme gained 67,837 new households in January-September. At the end of September, the number of K-Plussa households was 2,201,885 and the number of K-Plussa card holders was over 3.8 million.
Net sales and profit for July-September 2012
The Group's net sales for July-September 2012 were EUR2,449 million, which is 1.9% up on the corresponding period of the previous year (EUR2,404 million). In Finland, net sales increased by 0.5% and in other countries, it increased by 7.5%. International operations accounted for 20.5% (19.4%) of net sales. In the third quarter, net sales growth slowed due to the 15.4% decrease in the car trade net sales after the car tax change.
The operating profit excluding non-recurring items for July-September was EUR78.6 million (EUR89.2 million), representing 3.2% of net sales (3.7%). The operating profit excluding non-recurring items was negatively impacted by the slowing of sales growth, an increase in costs, the expansion of the store site network and the expansion of Russian business operations.
Operating profit was EUR78.6 million (EUR88.2 million). The operating profit of the comparative period included EUR-1.0 million of non-recurring items. The Group's profit before tax for July-September was EUR77.3 million (EUR88.0 million).
The Group's earnings per share were EUR0.51 (EUR0.53).
In July-September, the K-Group's (i.e. Kesko's and the chain stores') retail and B2B sales (VAT 0%) were EUR3,122 million, up 1.8% compared to the previous year. In July-September, the K-Group chains' sales entitling to K-Plussa points were EUR1,479 million excluding tax, up 2.8% compared to the previous year.
Finance
In January-September, the cash flow from operating activities was EUR207.4 million (EUR169.1 million). The cash flow from investing activities was EUR-274.9 million (EUR-330.9 million), including EUR22.5 million (EUR6.2 million) of proceeds from the sale of fixed assets.
The Group's solvency remained at an excellent level. In September , a EUR250 million unsecured bond was issued to finance the Group's capital expenditure and to extend the debt financing structure. At the end of the period, liquid assets totalled EUR356 million (EUR488 million). Interest-bearing liabilities were EUR640 million (EUR424 million) and interest-bearing net debt EUR284 million (EUR-64 million) at the end of September. Equity ratio was 51.2% (54.0%) at the end of the period.
In January-September, the Group's net finance costs were EUR1.8 million (EUR0.0 million).
In July-September, the cash flow from operating activities was EUR150.1 million (EUR125.7 million). The cash flow from investing activities was EUR-103.8 million (EUR-136.7 million), including EUR1.5 million (EUR2.4 million) of proceeds from the sale of fixed assets.
In July-September, the Group's net finance costs were EUR1.3 million (net finance income EUR0.3 million).
Taxes
The Group's taxes for January-September were EUR48.6 million (EUR66.5 million). The effective tax rate was 30.0% (32.0%), affected by loss-making foreign operations.
The Group's taxes for July-September were EUR22.8 million (EUR29.3 million). The effective tax rate was 29.5% (33.2%).
Capital expenditure
In January-September, the Group's capital expenditure totalled EUR274.5 million (EUR320.9 million), or 3.8% (4.6%) of net sales. Capital expenditure in store sites was EUR238.8 million (EUR272.8 million) and other capital expenditure was EUR35.7 million (EUR27.0 million). Capital expenditure in foreign operations represented 19.6% (36.0%) of total capital expenditure.
In July-September, the Group's capital expenditure totalled EUR102.6 million (EUR126.3 million), or 4.2% (5.3%) of net sales. Capital expenditure in store sites was EUR90.7 million (EUR101.4 million) and other capital expenditure was EUR11.9 million (EUR3.8 million). Capital expenditure in foreign operations represented 29.2% (34.7%) of total capital expenditure.
Kesko's strategic focus areas and profitability programme
The key focus areas in Kesko's business operations are the strengthening of sales growth and return on capital in all divisions, exploiting business opportunities provided by e-commerce and Russia, as well as good solvency and dividend payment capacity.
As a result of the weakening general economic situation, tightened competition and an increase in the level of costs, Kesko is implementing the profitability programme announced previously which aims to ensure price competitiveness and a significant improvement in profitability. Measures to enhance sales and purchasing operations and to achieve cost adjustments are taken separately in each division. At the Group level, the objective is to achieve total cost savings of around EUR100 million. The key saving measures will affect marketing, personnel, store site and IT expenses and most of the cost savings are expected to be achieved in 2013. Cost savings will be implemented in all operating countries, mostly on Finnish operations in view of the volume of operations. In respect of enhancement measures launched so far, the combined reduction need in workforce in all operating countries equals to some 900 full time employees, of which some 500 are in Finland. In addition to lay-offs, the planned reduction need comprises reductions of working hours, temporary lay-offs, as well as part-time and pension arrangements.
As announced earlier, capital expenditure will be aligned with funds generated from operations to some EUR200-300 million per year.
Personnel
In January-September, the average number of employees in the Kesko Group was 19,740 (18,855) converted into full-time employees. In Finland, the average increase was 228 people, while outside Finland, it was 658.
At the end of September 2012, the total number of employees was 23,666 (22,579), of whom 12,847 (12,321) worked in Finland and 10,819 (10,258) outside Finland. Compared to the end of September 2011, there was an increase of 526 people in Finland and 561 people outside Finland.
In January-September, the Group's staff cost was EUR447.9 million, an increase of 8.1% compared to the previous year. In July-September, the Group's staff cost increased by 6.8% compared to the previous year and was EUR140.0 million.
SEGMENT INFORMATION
Seasonal nature of operations
The Group's operating activities are affected by seasonal fluctuations. The net sales and operating profits of the reportable segments are not earned evenly throughout the year. Instead, they vary by quarter depending on the characteristics of each segment.
Food trade
January-September 2012
In the food trade, the net sales for January-September were EUR3,179 million (EUR3,074 million), up 3.4%. During the same period, the grocery sales of K-food stores increased by 4.3% (VAT 0%). The sales of Pirkka products grew by 14.0% (VAT 0%). In the grocery market, retail prices are estimated to have changed by some 4.5% compared to the previous year (VAT 0%; Kesko's own estimate based on the Consumer Price Index of Statistics Finland) and the total market (VAT 0%) is estimated to have grown by some 5% in January-September compared to the previous year (Kesko's own estimate).
In January-September, the operating profit excluding non-recurring items of the food trade was EUR123.4 million (EUR133.6 million), or EUR10.2 million down on the previous year. The operating profit performance was impacted by the expansion of the store site network and costs related to launching business operations in Russia. Operating profit was EUR126.2 million (EUR133.7 million). Non-recurring income included EUR2.7 million of gains on disposals of properties.
The capital expenditure of the food trade was EUR156.7 million (EUR159.2 million).
July-September 2012
In the food trade, the net sales for July-September were EUR1,078 million (EUR1,049 million), up 2.8%. The third quarter had one delivery day less than in the previous year. During the same period, the grocery sales of K-food stores increased by 3.2% (VAT 0%).
In July-September, the operating profit excluding non-recurring items of the food trade was EUR49.6 million (EUR46.4 million), or EUR3.2 million up on the previous year. Profitability was improved by enhanced operations and cost savings achieved. Operating profit was EUR49.6 million (EUR45.7 million).
The capital expenditure of the food trade in July-September was EUR60.8 million (EUR64.8 million).
In July-September 2012, one new K-citymarket and four new K-supermarkets were opened. Two K-supermarkets were extended into K-citymarkets and two K-markets were extended into K-supermarkets. A total of eight stores were renovated and extended.
The most significant store sites being built are the new K-citymarkets in Kokkola and Valkeakoski. New K-supermarkets are being built in Espoo, Joutsa, Jyväskylä, Kouvola, Lohja and Muurame. K-market Malminmäki in Espoo is being extended into a K-supermarket and K-supermarket Välivainio in Oulu is being extended. The first Kesko food store in Russia is being built in St. Petersburg.
Home and speciality goods trade
January-September 2012
In the home and speciality goods trade, the net sales for January-September were EUR1,116 million (EUR1,063 million), up 4.9%. The sales of K-citymarket home and speciality goods, Intersport, Budget Sport, as well as Asko and Sotka grew markedly from the previous year.
The operating profit excluding non-recurring items of the home and speciality goods trade for January-September was EUR-12.5 million (EUR3.7 million). Profit was negatively impacted by an increase in Anttila's and K-citymarket's costs and the restructuring costs of Intersport operations in Russia. Operating profit was EUR-12.5 million (EUR4.1 million).
The capital expenditure of the home and speciality goods trade for January-September was EUR47.7 million (EUR50.5 million).
In April 2012, Kesko acquired the minority holding of 20% of Intersport Russia from its previous owner Melovest Ltd. Due to the transaction, Kesko's ownership in Intersport Russia went up to 100%. In June, the plan was announced to integrate the Konebox online store and physical stores in the Musta Pörssi chain and to reorganise the network.
July-September 2012
In the home and speciality goods trade, the net sales for July-September were EUR395 million (EUR376 million), up 4.8%. K-citymarket home and speciality goods, Anttila, Intersport and Budget Sport increased their sales.
The operating profit excluding non-recurring items of the home and speciality goods trade for July-September was EUR0.9 million (EUR8.7 million), or EUR7.7 million down on the previous year. Profit was negatively impacted by an increase in Anttila's and K-citymarket's costs and the poor profitability of Intersport operations in Russia. Operating profit was EUR0.9 million (EUR8.7 million).
The capital expenditure of the home and speciality goods trade was EUR18.4 million (EUR32.4 million).
In July-September, a new K-citymarket was opened in Mäntsälä and Loimaa and a new replacement K-citymarket in Kouvola. Anttila opened a new Kodin1 department store in Kaisaniemi, Helsinki and an Anttila department store in Kouvola in July-September. In September, Intersport opened a new Budget Sport store in Kouvola. In Russia, Intersport closed down four stores in July-September. As a result of network reorganisation, there were 26 (32) Musta Pörssi stores at the end of September. A new citymarket.fi online store will be opened on 24 October.
Building and home improvement trade
January-September 2012
In the building and home improvement trade, the net sales for January-September were EUR2,170 million (EUR2,059 million), up 5.4%. The sales of the building and home improvement trade increased especially in Russia, which was attributable to market growth, as well as new store openings in Moscow during the last year. Market growth in the building and home improvement trade in the other operating countries slowed toward the end of the reporting period.
In Finland, the net sales for January-September were EUR956 million (EUR936 million), an increase of 2.1%. The building and home improvement product lines contributed EUR678 million to the net sales in Finland, a decrease of 1.5%. The agricultural supplies trade contributed EUR278 million to the net sales, up 12.4%.
The retail sales of the K-rauta and Rautia chains in Finland grew by 1.3% to EUR827 million (VAT 0%). The sales of Rautakesko B2B Service, mainly deriving from basic building materials, decreased by 1.4%. As a whole, Rautakesko chains' retail and B2B sales are estimated to have exceeded the growth rate of the Finnish market. The retail sales of the K-maatalous chain were EUR330 million (VAT 0%), up 9.6%.
In January-September, the net sales from foreign operations of the building and home improvement trade were EUR1,213 million (EUR1,122 million), an increase of 8.1%. In Sweden, net sales were down by 2.1% in terms of kronas. In Norway, net sales increased by 5.3% in terms of krones. In Russia, net sales increased by 19.6% in terms of roubles. Foreign operations contributed 55.9% (54.5%) to the net sales of the building and home improvement trade.
The operating profit excluding non-recurring items of the building and home improvement trade for January-September was EUR24.4 million (EUR31.1 million). The profit performance was impacted by an overall increase in cost level, new store openings in Russia and Sweden and the introduction and development costs of the international enterprise resource planning system. In addition, profitability was negatively impacted by obsolete inventories written off and credit losses in a total of EUR9 million. Operating profit was EUR22.7 million (EUR30.8 million).
In January-September, the capital expenditure of the building and home improvement trade totalled EUR42.4 million (EUR89.3 million), of which 52.0% (85.8%) abroad.
In September, a replacement K-rauta store was opened in the new shopping centre Veturi in Kouvola and an extension of a Rautia store in Riihimäki. Earlier in the year, a K-rauta was opened in Ylivieska, and an extension of a K-rauta in Mikkeli was completed. A new Rautia K-maatalous store was opened in Turku and a replacement Rautia was opened in Muhos and Sastamala. A replacement K-rauta is being built in Turku. In Sweden, a K-rauta was opened in Uppsala and a replacement K-rauta in Linköping. In Russia, a new K-rauta was opened in Moscow.
July-September 2012
In the building and home improvement trade, the net sales for July-September were EUR759 million (EUR731 million), up 3.7%. During the third quarter, the growth of building and home improvement market slowed especially in Finland, Sweden and Latvia. In Russia, the strong sales growth continued.
In Finland, net sales were EUR309 million (EUR311 million), a decrease of 0.9%. The building and home improvement product lines contributed EUR218 million to the net sales in Finland, a decrease of 5.7%. The agricultural supplies trade contributed EUR90 million to the net sales, up 13.0%.
The retail sales of the K-rauta and Rautia chains in Finland in July-September decreased by 1.7% to EUR317 million (VAT 0%). The sales of Rautakesko B2B Service decreased by 7.5%. The retail sales of the K-maatalous chain were EUR109 million (VAT 0%), up 8.0%.
The net sales from foreign operations in the building and home improvement trade were EUR450 million (EUR420 million), an increase of 7.2%. The net sales from foreign operations grew by 5.2% in terms of local currencies. In Sweden, net sales were down by 3.4% in terms of kronas. In Norway, net sales decreased by 1.0% in terms of krones. In Russia, net sales increased by 20.3% in terms of roubles and in Belarus, net sales increased by 43.4% in terms of roubles compared to 2011 due to high inflation. Foreign operations contributed 59.3% (57.4%) to the net sales of the building and home improvement trade.
The operating profit excluding non-recurring items of the building and home improvement trade for July-September was EUR18.0 million (EUR21.3 million). The profit performance was impacted by a slow-down in sales performance in addition to new store site openings in Russia and Sweden and the introduction and development costs of the international enterprise resource planning system. Operating profit was EUR18.0 million (EUR21.0 million).
The capital expenditure of the building and home improvement trade totalled EUR16.6 million (EUR23.2 million), of which 47.9% (86.9%) abroad.
Car and machinery trade
January-September 2012
In January-September, the net sales of the car and machinery trade were EUR887 million (EUR911 million), down 2.7%.
VV-Auto's net sales for January-September were EUR622 million (EUR646 million), a decrease of 3.7%. In Finland, new registrations of passenger cars decreased by 11.2% and those of vans by 10.9% compared to the previous year. In January-September, the combined market share of passenger cars and vans imported by VV-Auto was 20.4% (20.5%).
Konekesko's net sales for January-September were EUR265 million (EUR266 million), down 0.1% compared to the previous year. Net sales in Finland were EUR171 million, down 1.6%. The net sales from Konekesko's foreign operations were EUR96 million, up 2.4%.
In January-September, the operating profit excluding non-recurring items of the car and machinery trade was EUR37.4 million (EUR44.8 million), down EUR7.4 million compared to the previous year. Regardless of the sales decrease, profitability remained at a good level. The operating profit for January-September was EUR37.4 million (EUR44.9 million).
The capital expenditure of the car and machinery trade was EUR23.4 million (EUR20.5 million) for January-September.
July-September 2012
In July-September, the net sales of the car and machinery trade were EUR259 million (EUR290 million), down 10.5%.
VV-Auto's net sales for July-September were EUR168 million (EUR199 million), a decrease of 15.4%. The decrease in the car trade sales was attributable to the more difficult conditions of the total market for passenger cars and vans. In July-September, the combined market share of passenger cars and vans imported by VV-Auto was 20.2% (21.2%).
Konekesko's net sales for July-September were EUR92 million (EUR91 million), up 0.4% compared to the previous year.
In July-September, the operating profit excluding non-recurring items of the car and machinery trade was EUR11.5 million (EUR13.0 million), down EUR1.5 million compared to the previous year. Profitability was weakened by a decrease in car trade sales. The operating profit for July-September was EUR11.5 million (EUR13.0 million).
The capital expenditure of the car and machinery trade was EUR4.7 million (EUR6.6 million) for July-September.
Changes in the Group composition
No significant changes took place in the Group composition during the reporting period.
Shares, securities market and Board authorisations
At the end of September 2012, the total number of Kesko Corporation shares was 98,650,142, of which 31,737,007, or 32.2%, were A shares and 66,913,135, or 67.8%, were B shares. On 30 September 2012, Kesko Corporation held 607,725 own B shares. Each A share entitles to ten (10) votes and each B share to one (1) vote. The company cannot vote with own shares held by it and no dividend is paid on them. At the end of September 2012, Kesko Corporation's share capital was EUR197,282,584. During the reporting period, the number of B shares was increased twice to account for the shares subscribed for with the options based on the 2007 stock option scheme. The increases were made on 5 June 2012 (4,500 B shares) and on 31 July 2012 (600 B shares), and announced in a stock exchange notification on the same days. The shares subscribed for were listed for public trading on NASDAQ OMX Helsinki (Helsinki Stock Exchange) with the old B shares on 6 June 2012 and 1 August 2012. The combined subscription price of EUR68,544.00 received by the company was recorded in the reserve of invested non-restricted equity.
The price of a Kesko A share quoted on NASDAQ OMX Helsinki was EUR24.82 at the end of 2011, and EUR23.00 at the end of September 2012, representing a decrease of 7.3%. Correspondingly, the price of a B share was EUR25.96 at the end of 2011, and EUR22.05 at the end of September 2012, representing a decrease of 15.1%. In January-September, the highest A share price was EUR27.65 and the lowest was EUR19.99. For B share, they were EUR27.81 and EUR18.08 respectively. In January-September, the Helsinki stock exchange (OMX Helsinki) All-Share index was up by 2.1% and the weighted OMX Helsinki CAP index by 3.1%. The Retail Index was down by 5.1%.
At the end of September 2012, the market capitalisation of A shares was EUR730 million, while that of B shares was EUR1,462 million, excluding the shares held by the parent company. The combined market capitalisation of A and B shares was EUR2,192 million, a decrease of EUR314 million from the end of 2011. In January-September 2012, a total of 1.3 (1.6) million A shares were traded on the Helsinki stock exchange, down 21.5%. The total turnover of A shares was EUR30 million. The total number of B shares traded on the Helsinki stock exchange was 56.8 (51.4) million, up 10.4%. The exchange value of B shares was EUR1,281 million.
The company operates the 2007 stock option scheme for management and other key personnel, under which the share subscription period of 2007A option rights has ended, that of 2007B option rights runs from 1 April 2011 to 30 April 2013, and that of 2007C option rights runs from 1 April 2012 to 30 April 2014. The 2007B and 2007C option rights are included on the official list of the Helsinki stock exchange. A total of 144,539 2007B option rights were traded during the reporting period at a total value of EUR312,975, and correspondingly, a total of 111,622 2007C option rights were traded at a total value of EUR905,531.
The Board has the authority, granted by the Annual General Meeting of 16 April 2012 and valid until 30 June 2015, to issue a total maximum of 20,000,000 new B shares. In addition, the Board has the authority, granted by the Annual General Meeting of 4 April 2011 and valid until 30 June 2014, to decide on the issuance of a total maximum of 1,000,000 own B shares held by the company itself. The authority granted by the Annual General Meeting of 4 April 2011 to acquire a total maximum of 1,000,000 own B shares expired on 30 September 2012. Based on the authority to issue own shares and the fulfilment of the vesting criteria of the 2011 vesting period of Kesko's three-year share-based compensation plan, the Board granted a total of 92,751 company shares held by the company itself to the people included in the target group. The matter was announced in a stock exchange release on 12 April 2012. After the vesting period, a total of 476 shares already transferred have been returned to the company in accordance with the terms of the share-based compensation plan. The return was announced in a stock exchange notification on 20 July 2012. Further information on the Board's authorities is available at www.kesko.fi.
At the end of September 2012, the number of shareholders was 45,411, which is 4,196 more than at the end of 2011. At the end of September, foreign ownership of all shares was 16%. At the end of September, foreign ownership of B shares was 24%.
Flagging notifications
Kesko Corporation did not receive flagging notifications during the reporting period.
Main events during the reporting period
The second phase of the transfer of the Kesko Group companies' statutory pension insurance liability portfolio, agreed between the Kesko Pension Fund and Ilmarinen Mutual Pension Insurance Company, was carried out with effect from 1 January 2012.
(Stock exchange release on 15 February 2012)
Kesko transferred a total of 90,889 own B shares held by the company itself to the about 150 Kesko management employees and other named key persons included in the target group of the 2011 vesting period of Kesko's three-year share-based compensation plan. In addition, on the same basis, Kesko transferred a total of 1,862 own B shares held by the company itself in May. After the transfers, the company itself held 607,249 own B shares.
(Stock exchange release on 12 April 2012)
The number of own shares increased by 476 B shares which were returned in accordance with the terms of the share-based compensation plan. On 20 July 2012, Kesko held 607,725 own B shares. (Stock exchange notification on 20 July 2012)
On 11 September 2012, Kesko Corporation issued a EUR250 million unsecured bond. The six-year bond will mature on 11 September 2018 and it carries a fixed annual interest at the rate of 2.75 percent. NASDAQ OMX Helsinki admitted the bond to public trading as from 12 September 2012. (Stock exchange release on 4 and 11 September 2012)
Matti Mettälä, 49, LL.M., was appointed Senior Vice President and member of Kesko's Corporate Management Board responsible for human resources and stakeholder relations starting from 1 October 2012. Starting from 1 October 2012, Kesko's Corporate Management Board is composed of Matti Halmesmäki, Chair; Terho Kalliokoski, responsible for the food trade; Minna Kurunsaari, responsible for the home and speciality goods trade and Kesko's electronic marketing and services projects; Arja Talma, responsible for the building and home improvement trade; Pekka Lahti, responsible for the car and machinery trade; Jukka Erlund, responsible for finance, treasury and IT management; and Matti Mettälä, responsible for human resources and stakeholder relations. (Stock exchange release on 21 September 2012)
Kesko's profitability programme is progressing. The objective is to achieve cost savings of EUR100 million. Most of the savings are expected to be achieved in 2013. The profitability programme covers all of Kesko's divisions. The aim is to reduce especially marketing, personnel, rent and information system expenses. (Stock exchange release on 24 September 2012)
Resolutions of the 2012 Annual General Meeting and decisions of the Board's organisational meeting
Kesko Corporation's Annual General Meeting, held on 16 April 2012, adopted the financial statements for 2011 and discharged the Board members and the Managing Director from liability. The General Meeting also resolved to distribute EUR1.20 per share as dividends on 98,035,931 shares held outside the company at the date of dividend distribution, or a total amount of EUR117,643,117.20. The dividend pay date was 26 April 2012. The General Meeting resolved to leave the number of Board members unchanged at seven and elected Esa Kiiskinen, Ilpo Kokkila, Tomi Korpisaari, Maarit Näkyvä, Seppo Paatelainen, Toni Pokela and Virpi Tuunainen as Board members for a three-year term of office as stated in the Articles of Association. The General Meeting elected PricewaterhouseCoopers Oy as the company's auditor, with Johan Kronberg, APA, as the company's auditor with principal responsibility. The General Meeting also approved the Board's proposal to issue a total maximum of 20,000,000 new B shares until 30 June 2015, and the Board's proposal that it be authorised until the 2013 Annual General Meeting to decide on the donation of a total maximum of EUR300,000 for charitable or corresponding purposes.
The organisational meeting of Kesko Corporation's Board of Directors, held after the Annual General Meeting, elected Esa Kiiskinen as its Chair and Seppo Paatelainen as its Deputy Chair. The Board elected Maarit Näkyvä as the Chair, Seppo Paatelainen as the Deputy Chair and Virpi Tuunainen as a member of the Audit Committee, and Esa Kiiskinen as the Chair, Seppo Paatelainen as the Deputy Chair and Ilpo Kokkila as a member of the Remuneration Committee. The Board elects the Board Chair and Deputy Chair for the whole three-year term of a Board member, and the Committee Chairs, Deputy Chairs and members for one year at a time.
The resolutions of the Annual General Meeting and the decisions of the Board's organisational meeting were announced in more detail in stock exchange releases on 16 April 2012.
Responsibility
Kesko has been included in the Dow Jones sustainability indexes DJSI World and DJSI Europe for the 10 time. Kesko's total score increased from the previous year and Kesko was given the sector's highest scores in four areas.
Kesko was again included in the FTSE4Good index. In the 2012 assessment, Kesko's overall rating was 96 out of 100, up four points on the previous year. The score given to Kesko's work for curbing climate change was 5 on the scale of 0-5.
Kesko was included in the STOXX Global ESG Leaders indices for the second time. Kesko is also one of the 100 companies in the new listing of the 100 world's most responsible companies by SPP Fonder.
Starting from autumn 2012, Keslog will provide a training programme in economical driving for its contract transporters and their drivers. The aim is to reduce emissions from stores' distribution transportation. Nearly all of Keslog's over 500 contract drivers will be trained in economical driving .
The environmental perspective has been taken into account in the Veturi shopping centre opened in Kouvola in September; the shopping centre uses ground heat in heating and the parking space is provided with three charging points for electric cars.
Risk management
The Kesko Group has an established and comprehensive risk management process. Risks and their management responses are regularly assessed within the Group and reported to the Group management. Kesko's risk management and risks associated with business operations are described in more detail on Kesko's website in the Corporate Governance section.
The most significant near-future risks in Kesko's business operations are associated with the general economic development, the euro zone financial market situation and the fall in consumer confidence in Kesko's operating area, as well as their impact on the Kesko Group's sales and profit performance. It is estimated that in other respects, no material changes have taken place in the risks described in the report by the Board of Directors and financial statements for 2011 and the risks described on Kesko's website.
Risks and uncertainties associated with economic development are described in the future outlook section of this release.
Future outlook
Estimates of the future outlook for the Kesko Group's net sales and operating profit excluding non-recurring items are given for the 12 months following the reporting period (10/2012-9/2013) in comparison with the 12 months preceding the reporting period (10/2011-9/2012).
Resulting from the problems of European national economies, the outlook for the general economic situation is characterised by significant uncertainty. In addition, tightening taxation and cuts in public finances are estimated to weaken the growth in the trading sector.
The market of the grocery trade is expected to remain stable. Market development in the home and speciality goods trade, the building and home improvement trade and the car and machinery trade is expected to weaken.
The Kesko Group's net sales are expected to grow during the next twelve months. As a result of measures taken to enhance sales and purchasing operations as well as cost savings to be implemented, the operating profit excluding non-recurring items for the next twelve months is expected to exceed the operating profit excluding non-recurring items for the preceding twelve months. Capital expenditure is expected to be lower compared to the capital expenditure for the preceding twelve months.
Helsinki, 23 October 2012
Kesko Corporation
Board of Directors
The information in the interim report release is unaudited.
Further information is available from Jukka Erlund, Senior Vice President, CFO, telephone +358 1053 22113, and Eva Kaukinen, Vice President, Corporate Controller, telephone +358 1053 22338. A Finnish-language webcast on the interim report can be viewed at www.kesko.fi at 11:00. An English- language web conference on the interim report will be held today at 14:30 (Finnish time). The web conference login is available at www.kesko.fi.
Kesko Corporation's financial statements release will be published on 5 February 2013. In addition, the Kesko Group's sales figures are published each month. News releases and other company information are available on Kesko's website at www.kesko.fi.
KESKO CORPORATION
Merja Haverinen
Vice President, Corporate Communications and Responsibility
ATTACHMENTS:
Accounting policies
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated cash flow statement
Group's performance indicators
Net sales by segment
Operating profit by segment
Operating profit excl. non-recurring items by segment
Operating margin excl. non-recurring items by segment
Capital employed by segment
Return on capital employed excl. non-recurring items by segment
Capital expenditure by segment
Segment information by quarter
Personnel average and at the end of the reporting period
Group's contingent liabilities
Calculation of performance indicators
K-Group's retail and B2B sales
DISTRIBUTION
NASDAQ OMX Helsinki
Main news media
www.kesko.fi
TABLES
Accounting policies
This interim report has been prepared in accordance with the IAS 34 standard, applying the same accounting policies as to the annual financial statements for 2011, with the exception of the following changes due to the adoption of new and revised IFRS standards and IFRIC interpretations:
IFRS 7 Financial instruments: Disclosures - Derecognition (Amendment)
IAS 12 Income taxes - Deferred tax (Amendment)
Annual amendments to the IFRS (Annual Improvements)
The above amendments to standards and interpretations do not have a material impact on the reported income statement, statement of financial position or notes.
(..) Change over 100%
(..) Change over 100%
Consolidated statement of changes in equity (EUR million)
Consolidated cash flow statement (EUR million), condensed
(..) Change over 100%
Segment information
* Net sales in countries other than Finland.
(..) Change over 100%
Segment information by quarter
Personnel, average and at 30 September
* total number incl. part-time employees
Calculation of performance indicators
* Indicators for return on capital have been annualised.
K-Group's retail and B2B sales, VAT 0% (preliminary data):
(..) Change over 100%
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Attachment(s)
http://hugin.info/3055/R/1651801/532982.pdf
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