KESKO CORPORATION INTERIM REPORT 21.10.2008 AT 09.00 1(28)
Interim financial report for the period 1 Jan.-30 Sept. 2008:
earnings per share €2.28
In January-September 2008, the Group's net sales from continuing
operations were €7,264 million, up 5.3% on the corresponding
period of the previous year (€6,897 million). In January-
September, the operating profit excluding non-recurring items was
€189.7 million (€243.1 million). The pre-tax profit was €280.9
million (€291.7 million). The earnings per share from continuing
operations were €1.86 (€2.13). The Group's profit for the
reporting period was €223.7 million (€244.4 million). The Group's
earnings per share were €2.28 (€2.48).
JANUARY-SEPTEMBER 2008
CONTINUING OPERATIONS
Net sales and profit
The Group's net sales in January-September 2008 were €7,264
million, which is 5.3% up on the corresponding period of the
previous year (€6,897 million). The Group's net sales increased by
5.3% in Finland and by 5.4% abroad. The contribution of business
acquisitions and disposals excluded, the Group's net sales growth
was 5.1%. Exports and foreign operations accounted for 22.1%
(22.1%) of the net sales.
In January-September, the K-Group's (i.e. Kesko's and the chain
stores') retail sales (incl. VAT) were €8,900 million, an increase
of 5.6% on the corresponding period of the previous year.
The Group's profit before tax for January-September was €280.9
million (€291.7 million). The operating profit was €278.8 million
(€253.3 million). Non-recurring income includes a €16.3 million
gain on a property transaction between Kesko and Aberdeen Property
Fund Finland 1 Ky, a €103.2 million gain on property lease and
sale arrangements between Kesko and Nordisk Renting Oy, and a
€10.3 million gain on the sale of K-Rahoitus Oy shares. Non-
recurring expenses include a €47.0 million impairment charge on
the consolidated goodwill and trademark of Byggmakker Norge, a
Rautakesko subsidiary. The impairment is based on a weakened
outlook for the business. The financial items of the comparative
period included a €37.1 million non-recurring gain on the sale of
SATO Corporation shares.
The operating profit excluding non-recurring items was €189.7
million (€243.1 million). It represented 2.6% of net sales (3.5%).
The smaller year-on-year operating profit excluding non-recurring
items was due to a decreased demand in the construction market and
the home and speciality goods trade, and the expansion and
renovation of the store site network.
The Group's earnings per share from continuing operations were
€1.86 (€2.13). Equity per share was €20.29 (€19.08).
Investments
In January-September, the Group's investments totalled €233.2
million (€158.8 million), which is 3.2% (2.3%) of net sales.
Investments in store sites were 194.8 million (€126.2 million) and
other investments €38.4 million (32.6 million). Investments in
foreign operations represented 25.0% of total investments.
Finance
In January-September, the cash flow from operating activities was
€118.3 million (€178.2 million) and the cash flow from investing
activities was €49.9 million (€-13.7 million). The cash flow from
investing activities included €277.8 million (€141.0 million) of
proceeds received from the disposal of fixed assets.
At the end of the period, liquid funds totalled €536 million (€353
million). The amount was increased by the about €44 million real
estate transaction between Kesko and Aberdeen Property Fund
Finland 1 Ky, and the property and lease arrangement between Kesko
and Nordisk Renting Oy, which contributed €82 million to the cash
flow. In addition, the amount of liquid funds was increased by the
debt-free selling price of about €77 million received from the
disposal of Kauko-Telko, and by the disposal of K-Rahoitus Oy,
which contributed about €240 million to liquid funds in finance
receivables paid to Kesko. At the end of the reporting period, the
interest-bearing net debt was €-27 million (€266 million). Equity
ratio was 50.2% (47.4%) and gearing -1.3% (13.9%) at the end of
the period.
In January-September, the Group's net financial income was €0.2
million (€38.2 million). The income for the comparative period
included a €37.1 million gain on the sale of SATO Corporation
shares.
Taxes
In January-September, the Group's taxes were €84.7 million (€68.7
million). The effective tax rate was 29.8% (22.9%), increased by
the non-deductible impairment charge on Byggmakker Norge's
consolidated goodwill recognised for the reporting period.
Personnel
In January-September, the average number of personnel in the Kesko
Group was 21,462 (20,226) converted into full-time employees. In
Finland, the average increase was 13 employees, while outside
Finland it was 1,223. The number of personnel was significantly
increased by the Belarusian subsidiary OMA, acquired in the
previous year.
At the end of September 2008, the total number of personnel was
24,870 (24,292), of whom 13,253 (13,140) worked in Finland and
11,617 (11,152) outside Finland. Compared with the end of
September 2007, there was an increase of 113 employees in Finland
and 465 employees outside Finland.
Market review
According to the preliminary data of Statistics Finland, in
January-August 2008, the Finnish retail trade sales increased by
7.1% compared with the previous year. In January-August, the
wholesale trade sales were up by 11.9% compared with the previous
year. The year-on-year change in inflation, calculated by
Statistics Finland, was 4.7% in August.
According to Statistics Finland's consumer survey of September
2008, consumers' confidence in the economy was clearly weaker
compared to one year ago and the long-term average. Consumers
considered their own financial situation and saving possibilities
to be excellent. However, they did not think it was the right time
to buy consumer durables or raise a loan.
The economic development and consumer demand in Kesko's operating
area are subject to significant uncertainties relating to the
aggravated problems in the international financial market and
weakened general economic development. Therefore Kesko's interim
financial report does not make separate forward-looking statements
concerning the divisions.
Seasonal nature of operations
The Group's operating activities are affected by seasonal
fluctuations. The net sales and operating profits of its business
segments are not earned evenly throughout the year. Instead they
vary by quarter depending on the characteristics of each business
segment.
Divisions
Kesko Food
In January-September, Kesko Food's net sales were €2,988 million
(€2,825 million), up 5.8%.
In January-September, Kesko Food's operating profit excluding non-
recurring items was €91.9 million (3.1% of net sales), i.e. €19.7
million, or 0.9 percentage points, lower than in the previous
year. The operating profit excluding non-recurring items was
negatively affected by the expansions and renovations carried out
in the store site network, investments in information systems, and
the weaker year-on-year sales growth in the home and speciality
goods trade. The operating profit was €206.0 million (€111.3
million). The operating profit was increased by a €103.2 million
non-recurring gain on the property and lease arrangement between
Kesko and Nordisk Renting, and by a €10.7 million non-recurring
gain on the property transaction between Kesko and Aberdeen
Property Fund Finland 1 Ky.
In January-September, Kesko Food's investments totalled €137.4
million (€79.8 million), of which investments in store sites were
€123.3 million (€68.1 million).
In January-September, the retail sales (incl. VAT) of K-food
stores increased by 6.5%, totalling €3,895 million.
The growth rate of the total grocery trade market in Finland for
January-September is estimated at about 9% up on the previous
year. In January-September, prices increased at an average monthly
rate of about +7.1% compared with the previous year (Statistics
Finland).
Rautakesko
In January-September, Rautakesko's net sales amounted to €2,000
million (€1,915 million), an increase of 4.4%. The contribution of
business acquisitions and disposals excluded, the net sales growth
was 3.2%. Net sales in Finland were €716 million (€714 million),
an increase of 0.3%. Foreign operations' contribution to net sales
was €1,284 million (€1,201 million), up 6.9%. Foreign operations
accounted for 64.2% of Rautakesko's net sales.
In Sweden, the net sales increased by 5.2% to €149 million in
January-September. In Norway, the net sales increased by 0.1% and
were €463 million. In Estonia, the net sales were down by 9.2% to
€64 million. In Latvia, the net sales decreased by 11.4% and were
€56 million. In Lithuania, Senukai's net sales increased by 5.0%
to €345 million. The net sales of the Belarusian OMA were €53
million. In Russia, Stroymaster's net sales grew by 37.6% to €149
million.
In January-September, Rautakesko's operating profit excluding non-
recurring items was €59.5 million (3.0% of net sales), i.e. €34.5
million, or 1.9 percentage points, lower than in the previous
year, as a result of the decreasing demand in the construction
market and the expansion of the store site network. Rautakesko's
operating profit for January-September was €21.6 million (€95.7
million). The operating profit includes a €47.0 million non-
recurring impairment charge on Byggmakker Norge's intangible
assets. In addition, the operating profit includes a €5.4 million
non-recurring gain on the property transaction between Kesko and
Aberdeen Property Fund Finland 1 Ky.
In January-September, Rautakesko's investments were €76.4 million
(€55.7 million). Investments abroad accounted for 75.5% (53.2%) of
total investments.
In January-September, the retail sales (incl. VAT) of the K-rauta
and Rautia chains in Finland increased by 4.0% and were €959
million. The sales of Rautakesko B-to-B Service decreased by 7.5%.
VV-Auto
In January-September, VV-Auto's net sales were €723 million (€661
million), up 9.3%. The aggregate number of registrations of
passenger cars and vans imported by VV-Auto increased by 21.0%
during January-September in Finland. The net sales growth was
reduced by the average car prices, fallen as a result of the car
tax change, by a decline in the Baltic car sales, and a decrease
in van sales.
In January-September, the number of first registrations of new
passenger cars totalled 118,717 in Finland, up 9.2% on the
previous year. Compared with the year before, first registrations
of vans were down by 6.9% to 12,495.
In January-September, first registrations of passenger cars
imported by VV-Auto increased by 26.8%. First registrations of
Volkswagen passenger cars in January-September were 13,951 and the
market share was 11.8%, compared with 10.1% the year before. In
January-September, first registrations of Audis were 4,760, and
the market share was 4.0% (3.4%). The registrations of new Seat
passenger cars totalled 1,597 in Finland, and the market share in
Finland was 1.3% (1.2%). The number of Volkswagen vans registered
was 1,886 and the market share was 15.1% (17.3%).
In January-September, the operating profit excluding non-recurring
items was €34.4 million (4.8% of net sales), which was up €7.8
million, or 0.7 percentage points, compared with the corresponding
period of the previous year. The profitability was improved by the
good sales performance of the brands represented by VV-Auto.
Investments totalled €5.0 million (€5.1 million) in January-
September.
Anttila
In January-September, Anttila's net sales were €376 million (€374
million), up 0.6%. Owing to an overall rise in price level and the
uncertainty of the economic outlook, a sharp change in the
consumer demand of the home and speciality goods market took place
in the summer, which deteriorated Anttila's sales performance.
In January-September, the retail sales (incl. VAT) of the Anttila
department stores were €255 million, up 0.1%. The retail sales of
the Kodin Ykkönen department stores for home goods and interior
decoration were €125 million, up 0.9%. Distance retail sales in
Finland were €66 million, up 5.4%.
In Estonia, distance sales grew by 6.1%, but decreased by 16.9% in
Latvia, owing to the weakening of the Latvian economy.
In January-September, Anttila's operating loss excluding non-
recurring items was €0.2 million (0.0% of net sales). In January-
September of the previous year, the operating profit excluding non-
recurring items was €3.6 million (1.0% of net sales). Anttila's
operating loss was €0.2 million (operating profit €5.5 million).
Due to the nature of the department store trade, the majority of
profits are made towards the end of the year.
Kesko Agro
In January-September, Kesko Agro's net sales were €644 million
(€580 million), an increase of 10.9%. The net sales from foreign
operations were €234 million (€212 million), accounting for 36.3%
of the net sales.
In January-September, Kesko Agro's net sales in Finland were €410
million, up 11.2% because of the grain, animal feed and chemicals
trade. The net sales from foreign operations increased by 10.4% in
January-September, which is attributable to an increase in the
grain and agricultural machinery trade.
In January-September, Kesko Agro's operating profit excluding non-
recurring items was €12.2 million (1.9% of net sales), i.e. €2.0
million, or 0.1 percentage points, higher than in the
corresponding period of the previous year.
The sales of the K-maatalous chain in Finland increased by 12.0%
to €540 million (incl. VAT) in January-September.
In January-September, investments were €1.8 million (€6.7
million).
Other operating activities
Other operating activities comprise the reporting for Konekesko,
Intersport Finland, Indoor, Musta Pörssi and Kenkäkesko.
In January-September, the aggregate net sales of other operating
activities were €546 million (€562 million), a decrease of 2.8%.
In January-September, the net sales from foreign operations
totalled €49 million, accounting for 8.9% of the net sales.
In January-September, the aggregate operating profit of other
operating activities excluding non-recurring items was €7.7
million (1.4% of net sales), i.e. €10.6 million, or 1.9 percentage
points, down on the corresponding period of the previous year. The
decline in profitability was mainly attributable to the weaker
profit performance of the recreational machinery trade, the
furniture trade and home technology compared with the previous
year. In January-September, the operating profit was €10.4 million
(€18.4 million).
In January-September, investments were €10.8 million.
In January-September, Konekesko's net sales were €183 million
(€186 million), down 2.0% on the previous year. In Finland, sales
were €156 million, down 1.5% in January-September. Konekesko's
export sales totalled €31 million, a decrease of 2.1%.
In January-September, Intersport Finland's net sales were €118
million (€106 million), an increase of 11.1%. In March, Budget
Sport stores were opened in Espoo and Raisio.
Indoor's net sales in January-September were €136 million (€146
million), down 6.9%. In January-September, the aggregate net sales
of the furniture trade in foreign operations were €22 million, a
decrease of 42.2%. Indoor's operating activities in Sweden were
discontinued in March 2008.
Musta Pörssi Ltd's net sales in January-September were €88 million
(€106 million), down 16.6%.
In January-September, Kenkäkesko Ltd's net sales were €22 million
(€18 million), up 23.0%.
Discontinued operations
In January-September, the Group's profit from discontinued
operations was €40.9 million (€34.7 million). Discontinued
operations comprise the reporting for Kauko-Telko Ltd and the
about €30 million gain on its disposal, and TähtiOptikko Group Oy,
with the about €8.5 million gain on its disposal. During the
comparative period, discontinued operations also included a €28.2
million gain on the disposal of food store properties leased to
Rimi Baltic AB.
JULY-SEPTEMBER 2008
CONTINUING OPERATIONS
Net sales and profit
The Group's net sales in July-September 2008 were €2,437 million,
which is 3.0% up on the corresponding period of the previous year
(€2,365 million). The Group's net sales increased by 4.9% in
Finland and decreased by 2.7% abroad. The contribution of business
acquisitions and disposals excluded, the Group's net sales growth
was 3.5%. Exports and foreign operations accounted for 23.0%
(24.3%) of the net sales.
In July-September, the K-Group's (i.e. Kesko's and the chain
stores') retail sales (incl. VAT) were €3,136 million, an increase
of 3.3% on the corresponding period of the previous year.
The Group's profit before tax for July-September was €48.0 million
(€96.0 million). The operating profit was €43.8 million (€93.3
million). It included a net total of €-28.2 million (€1.4 million)
of non-recurring gains and losses on the disposal of fixed assets,
and impairment charges. The gains on the disposal of fixed assets
include €16.3 million from a transaction in September in which
Kesko sold its store properties to Aberdeen Property Fund Finland
1 Ky. Non-recurring expenses include a €47.0 million impairment
charge on the consolidated goodwill and trademark of Byggmakker
Norge, a Rautakesko subsidiary. The impairment is based on a
weakened outlook for the business.
The operating profit excluding non-recurring items was €72.0
million (€91.9 million). It represented 3.0% of net sales (3.9%).
The smaller year-on-year operating profit excluding non-recurring
items was due to a decreased demand in the construction market and
the home and speciality goods trade, and the expansion and
renovation of the store site network.
The Group's earnings per share from continuing operations were
€0.17 (€0.69). Equity per share was €20.29 (€19.08).
Investments
The Group's investments in July-September totalled €89.9 million
(€48.2 million), which is 3.7% (2.0%) of net sales. Investments in
store sites were €75.4 million (€41.5 million). The Group's other
investments were €14.5 million (€6.8 million). Investments in
foreign operations represented 23.3% of total investments.
Finance
In July-September, the cash flow from operating activities was
€27.4 million (€81.2 million) and the cash flow from investing
activities was €-28.6 million (€-10.2 million). The cash flow from
investing activities included €60.4 million (€4.5 million) of
proceeds received from the disposal of fixed assets.
At the end of the period, liquid funds totalled €536 million (€353
million). The funds have been invested in a diversified manner,
within counterparty specific limits, across the debt instruments
of enterprises (€247 million) and banks (€180 million), in funds
(€36 million) and Finnish Government bonds (€30 million).
In July-September, the Group's net financial income was €1.8
million (€2.5 million).
Taxes
In July-September, the Group's taxes were €26.0 million (€22.9
million). The effective tax rate was 53.6% (23.3%), increased by
the non-deductible impairment charge on Byggmakker Norge's
consolidated goodwill recognised for the reporting period.
Personnel
In July-September, the average number of personnel in the Kesko
Group was 21,471 (21,397) converted into full-time employees.
There was an increase of 74 employees compared with the
corresponding period of the previous year. In Finland, the average
decrease was 194 employees, while outside Finland, there was an
increase of 268 employees.
Divisions
Kesko Food
In July-September, Kesko Food's net sales totalled €1,024 million
(€959 million), up 6.8%.
In July-September, Kesko Food's operating profit excluding non-
recurring items was €35.8 million (3.5% of net sales), i.e. €5.3
million, or 0.8 percentage points, lower than in the previous
year. The operating profit excluding non-recurring items was
negatively affected by the expansions and renovations carried out
in the store site network, investments in information systems, and
the weaker year-on-year sales growth in the home and speciality
goods trade. Kesko Food's operating profit was €46.6 million
(€41.2 million), which includes a €10.7 million non-recurring gain
on a property transaction between Kesko and Aberdeen Property Fund
Finland 1 Ky.
In July-September, Kesko Food's investments totalled €57.6 million
(€25.0 million), of which investments in store sites were €51.3
million (€24.4 million).
In July-September, the retail sales (incl. VAT) of K-food stores
increased by 6.3%, totalling €1,345 million. At the end of
September, there were a total of 1,048 K-food stores (mobile
stores excluded).
Kesko Food continued the intensive development of the K-food store
network. In July-September, a K-citymarket was opened in
Päiväranta, Kuopio, and K-supermarkets were opened in Mustasaari,
Rauma and Kerava. Other renovations and expansions were also
implemented.
At the beginning of October, a new K-citymarket was opened in
Mikkola, Pori. The most important store sites being built are the
K-citymarkets in Koivukylä, Vantaa, in Tornio, Jämsä, Ylivieska,
in Klaukkala, Nurmijärvi, in Ylöjärvi, Kirkkonummi, in the Skanssi
shopping centre in Turku, in Koilliskeskus, Tampere, as well as
the expansions of K-supermarkets into K-citymarkets in Rusko, Oulu
and in Kemi, the expansion of the K-citymarket in Mikkeli, and the
K-supermarkets being built in Kempele, Suomussalmi, in Konala,
Helsinki, in Eurajoki, Porvoo, Järvenpää and Liminka.
Rautakesko
In July-September, Rautakesko's net sales amounted to €681 million
(€694 million), a decrease of 1.9%. The contribution of
acquisitions and disposals excluded, the change in net sales was -
1.2%. Net sales in Finland were €225 million (€232 million), a
decrease of 3.0%. Foreign operations' contribution to net sales
was €456 million (€462 million), down 1.4%. Foreign operations
accounted for 66.9% of Rautakesko's net sales.
In Sweden, the net sales of K-rauta AB decreased by 3.8% to €51
million in July-September. In Norway, Byggmakker's net sales
decreased by 8.2% and were €154 million. In Estonia, Rautakesko's
net sales were down by 12.0% to €23 million. In Latvia,
Rautakesko's net sales decreased by 19.6% and were €19 million. In
Lithuania, Senukai's net sales decreased by 1.2% to €126 million.
The net sales of the Belarusian OMA, acquired by Senukai in July
2007, were €22 million. In Russia, Stroymaster's net sales grew by
37.6% to €59 million.
In July-September, Rautakesko's operating profit excluding non-
recurring items was €25.3 million (3.7% of net sales), i.e. €13.7
million, or 1.9 percentage points, lower than in the corresponding
period of the previous year. The profit performance was affected
by a decreasing demand in the Nordic and the Baltic construction
markets, and by the expansion of the store site network.
Rautakesko's operating profit for July-September was €-16.3
million (€39.5 million). The operating profit includes a €47.0
million non-recurring impairment charge on Byggmakker Norge's
intangible assets and a €5.4 million non-recurring gain on a
property transaction between Kesko and Aberdeen Property Fund
Finland 1 Ky.
In July-September, Rautakesko's investments totalled €25.4 million
(€17.2 million). Investments abroad accounted for 81.7% (65.7%) of
total investments.
In July-September, the retail sales (incl. VAT) of the K-rauta and
Rautia chains in Finland increased by 2.4% to €362 million. The
sales of Rautakesko B-to-B Service decreased by 11.5%. A new K-
rauta store was opened in Lohja in August. At the end of
September, the K-rauta chain in Finland comprised 42 stores. At
the end of September, the Rautia chain in Finland comprised 102
stores.
In Sweden, there are 19 K-rauta stores, one of which is owned by
the retailer. In Estonia, the eighth K-rauta store opened in
Kuressaari. In Norway, the Byggmakker chain comprises 121 stores,
18 of which are owned by Byggmakker.
In St. Petersburg, Russia, there are eight K-rauta stores, four of
which operate in conformity with the new K-rauta concept. There
are seven K-rauta stores and two K-rauta partner stores in Latvia.
In Lithuania, Senukai has 14 stores of its own and 76 partnershop
stores.
VV-Auto
In July-September, VV-Auto's net sales totalled €217 million (€195
million), up 11.2%. First registrations of passenger car brands
represented by VV-Auto increased by 16.4% on the previous year.
In July-September, the operating profit excluding non-recurring
items was €9.5 million (4.4% of net sales), i.e. €2.7 million, or
0.9 percentage points, higher than in the corresponding period of
the previous year.
Investments totalled €1.7 million (€1.5 million) in July-
September.
Anttila
In July-September, Anttila's net sales totalled €132 million (€143
million), down 7.6%.
In July-September, the retail sales (incl. VAT) of the Anttila
department stores were €90 million, down 6.5%. The retail sales of
the Kodin Ykkönen department stores for home goods and interior
decoration were €43 million, a decrease of 13.4%. Distance retail
sales in Finland were €24 million, up 0.1%. The sales trend was
affected by a general increase in economic uncertainty, and the
fact that sales in the comparative period had been boosted by
households going digital.
In July-September, Anttila's operating profit excluding non-
recurring items was €1.7 million (1.3% of net sales), i.e. €4.6
million, or 3.1 percentage points, lower than for the
corresponding period of the previous year. Anttila's operating
profit was €1.7 million (€6.3 million).
At the end of the reporting period, there were 28 Anttila
department stores and one TopTen specialist store, eight Kodin
Ykkönen department stores, and one Kodin1.com online department
store for home goods and interior decoration. NetAnttila engages
in distance sales and operates in Finland, Estonia and Latvia.
The most important store site projects underway are the department
stores in Rovaniemi and Pori, scheduled to open for the Christmas
season. The new store site in Pori is a replacement of the old
department store.
Kesko Agro
In July-September, Kesko Agro's net sales were €219 million (€196
million), an increase of 11.8%. The net sales from foreign
operations were €83 million (€81 million), accounting for 38.1% of
total net sales.
In July-September, Kesko Agro's net sales in Finland were €136
million, up 17.6%. The net sales from the agricultural and
machinery trade in the Baltics increased by 3.6% in July-
September.
In July-September, Kesko Agro's operating profit excluding non-
recurring items was €3.5 million (1.6% of net sales), i.e. €0.5
million, or 0.0 percentage points, higher than in the
corresponding period of the previous year.
In July-September, investments totalled €0.4 million (€1.3
million).
At the end of the reporting period, the K-maatalous chain
comprised 91 agricultural stores in Finland. Kesko Agro has six
stores in Estonia, four in Latvia and three in Lithuania.
Other operating activities
Other operating activities comprise the reporting for Konekesko,
Intersport Finland, Indoor, Musta Pörssi and Kenkäkesko.
In July-September, the aggregate net sales of other operating
activities were €166 million (€185 million), down 9.9%.
In July-September, the aggregate operating profit of other
operating activities, non-recurring items excluded, was €0.8
million (0.5% of net sales), i.e. €2.4 million, or 1.3 percentage
points lower than in the corresponding period of the previous
year. In July-September, the operating profit was €3.3 million
(€3.3 million).
In July-September, investments were €3.3 million.
Konekesko's net sales in July-September were €36 million (€45
million), a decrease of 20.6% on the previous year. In Finland,
sales were €34 million, down by 15.5%. Konekesko's export sales
totalled €3 million, a decrease of 55.8%.
Intersport Finland's net sales in July-September were €44 million
(€38 million), up 14.9%.
Indoor's net sales in July-September were €48 million (€52
million), down 7.1%. In July-September, the aggregate net sales of
the furniture trade in foreign operations were €6 million, a
decrease of 49.9%. Indoor's operating activities in Sweden were
discontinued in March 2008.
Musta Pörssi Ltd's net sales in July-September were €29 million
(€43 million), down 31.7%.
Kenkäkesko Ltd's net sales in July-September were €10 million (€7
million), an increase of 36.5%.
Changes in the Group composition
K-Rahoitus Oy and its subsidiaries were sold and the transaction
was completed on 31 January 2008. Tähti Optikko Group Oy was sold
and the transaction was completed on 31 March 2008. Kauko-Telko
Ltd was sold and the transaction was completed on 30 April 2008.
Decisions of the Annual General Meeting
Kesko Corporation's Annual General Meeting held on 31 March 2008
adopted the financial statements for 2007 and discharged the
members of the Board of Directors and the Managing Director from
liability. The Annual General Meeting also decided to distribute a
dividend of €1.60 per share, as proposed by the Board of
Directors, or total dividends of €156,428,592. The record date for
dividend distribution was 3 April 2008 and the dividend payment
date 10 April 2008.
The Annual General Meeting decided to leave the number of Board
members unchanged at seven. The members of the Board of Directors
elected by the Annual General Meeting of 27 March 2006 are Pentti
Kalliala, Ilpo Kokkila, Maarit Näkyvä, Seppo Paatelainen, Keijo
Suila, Jukka Säilä and Heikki Takamäki. The Board Chairman is
Heikki Takamäki and the Deputy Chairman is Keijo Suila. The term
of office of each Board member, in accordance with the Articles of
Association, is three years, with the term starting at the close
of the General Meeting electing the member and expiring at the
close of the third Annual General Meeting after the election (in
2009).
The decisions of the Annual General Meeting were published in more
detail in a stock exchange release on 31 March 2008 and in the
interim financial report for January-March 2008.
Corporate governance
Kesko Food Ltd and Rautakesko Ltd, major subsidiaries fully owned
by Kesko Corporation, elected the members of their Boards of
Directors at their Annual General Meetings held on 28 March 2008.
The compositions of the Boards were announced in a stock exchange
release on 28 March 2008.
The organising meeting of Kesko Corporation's Board of Directors
held after the Annual General Meeting on 31 March 2008 decided to
leave the compositions of its committees unchanged. The Board
elected Maarit Näkyvä as the Chairman of its Audit Committee, and
Seppo Paatelainen and Keijo Suila as its members. The Board
elected Heikki Takamäki as the Chairman of its Compensation
Committee, and Pentti Kalliala and Keijo Suila as its members. The
committees' terms of office always expire at the Annual General
Meeting. On the basis of the evaluation of independence carried
out by the Board of Directors, all members of the Audit Committee
are independent of the company and its significant shareholders.
The decisions of the organising meeting of the Board of Directors
were published in a stock exchange release on the day of the
meeting.
Shares, securities market and Board authorisations
At the end of the reporting period, Kesko Corporation's share
capital totalled €195,624,708. Of all shares 31,737,007 or 32.4%
are A shares and 66,075,347 or 67.6% are B shares. The aggregate
number of shares was 97,812,354. Each A share entitles to ten (10)
votes and each B share to one (1) vote. During the reporting
period, the share capital was increased four times by share
subscriptions with the stock options of the year 2003 option
scheme. The increases were made on 11 February 2008 (€210), 28
April 2008 (€38,168), 9 June 2008 (€42,200), and 28 July 2008
(€8,600), and announced in stock exchange notifications on the
same days. The subscribed shares were included on the main list of
the Helsinki Stock Exchange for public trading with the old B
shares on 12 February 2008, 29 April 2008, 10 June 2008 and 29
July 2008.
The price of a Kesko A share was €37.85 at the end of 2007, and
€24.69 in September 2008, at the end of the reporting period,
representing a decrease of 34.8%. The price of a B share was
€37.72 at the end of 2007, and €17.92 at the end of the reporting
period, representing a decrease of 52.5%. During the reporting
period, the highest A share quotation was €38.20 and the lowest
was €22.95. For B shares, they were €38.12 and €17.24
respectively. During the first part of 2008, the Helsinki Stock
Exchange All Share index (OMX Helsinki) fell by 40.2%, the
weighted OMX Helsinki CAP index by 34.6%, while the Consumer
Staples Index dropped by 42.9% during the same period.
At the end of the reporting period, the market capitalisation of A
shares was €784 million, while that of B shares was €1,184
million. Their combined market capitalisation was €1,968 million,
a decrease of €1,724 million from the end of 2007. During the
first part of 2008, about 1,164,000 A shares were traded on the
Helsinki Stock Exchange at a total value of €34.7 million, while
91.3 million B shares were traded at a total value of €2,340
million.
The 2003E and 2003F stock options of the year 2003 option scheme
were available for trading and a total of some 121,500 options
were traded at a total value of €1,243,000 during the first part
of 2008.
The Board of Directors was authorised by the Annual General
Meeting of 26 March 2007 to issue a maximum of 20,000,000 new B
shares against payment. The authorisation also includes a right to
deviate, for a weighty financial reason, from the shareholders'
pre-emptive right with a rights issue so that the issued shares
can be used as consideration in possible company acquisitions,
other arrangements concerning the company's operations, or to
finance investments. The authorisation is valid for two years from
the decision of the Annual General Meeting.
Flagging notifications
Kesko Corporation did not receive any flagging notifications
during the reporting period.
Main events
On 31 January 2008, K-Rahoitus Oy's share capital was transferred
to OKO Bank plc (Pohjola Bank plc from 1 March 2008). An agreement
to this effect was signed between OKO and Kesko Corporation on 21
December 2007. The price paid was about €30 million (stock
exchange releases on 21 December 2007 and 31 January 2008).
Kesko Corporation waived the purchase option included in the lease
agreements made with Nordisk Renting Oy in 2001 and 2002, for
which RBS Nordisk Renting paid Kesko €74.2 million in
compensation. The previous agreements were finance leases and the
non-recurring gain resulting from the cancellation was €26.5
million. The lease arrangement and the property sale contributed a
total of €103 million to Kesko Food's and the Kesko Group's
operating profits for the first quarter, which was reported as a
non-recurring item (stock exchange release on 11 February 2008).
On 31 March 2008, Kesko Corporation sold the shares of Tähti
Optikko Group Oy to the Specsavers optical chain. The debt-free
selling price was about €15 million. The disposal contributed a
non-recurring gain of €8.5 million to Kesko's profit from
discontinued operations (release on 1 April 2008).
Kesko Corporation sold the share capital of Kauko-Telko Ltd to
Aspo plc on 30 April 2008. Based on Kauko-Telko's end-of-April
balance sheet, the debt-free selling price was about €77 million.
A non-recurring gain on the disposal of about €30 million has been
recognised in Kesko's profit from discontinued operations (stock
exchange releases on 23 May 2007, 28 February 2008 and 30 April
2008).
Kesko will strengthen the competitiveness of the K-maatalous and
Rautia chains. Kesko Agro Ltd will demerge on 1 January 2009 so
that the agricultural trade activities in Finland will become part
of Rautakesko Ltd. The trade of tractors and combines as well as
the agricultural and machinery trade companies in the Baltic
countries will become part of Konekesko Ltd. The arrangement is
not anticipated to have an immediate impact on the number of
personnel. It is estimated that the arrangement will result in an
annual benefit of approximately €3 million to Kesko (stock
exchange release on 28 May 2008).
On 30 September 2008, the Kesko Group, the Kesko Pension Fund and
Valluga-Sijoitus Oy sold 23 of their store properties in different
parts of Finland to Aberdeen Property Fund Finland 1 Ky. The
selling price was about 56 million euros, of which the Kesko
Group's share was about 44 million euros. The Kesko Group's gain
on the sale was about 16 million euros, which has been treated as
a non-recurring item in Kesko's third quarter operating profit
(stock exchange release on 30 September 2008).
Events after the end of the reporting period
No significant events have taken place after the end of the
reporting period.
Risk management
The Kesko Group has established a risk management process in
accordance with which the divisions regularly assess risks and
their management, and report on them to the Group's management.
Kesko's risk management and business risks are described in more
detail in the 2007 Annual Report and financial statements.
For Kesko, the most significant business risks relate to the
general economic development in Kesko's operating area, the
expansion and growth rate of foreign operations, the cost-
efficiency of operating activities, and the availability of
competent personnel. During the past quarter, the aggravated
problems in the international financial market and their impact on
the general economic development have added to the uncertainties
of consumer demand especially for building materials, cars and
machines, and home and speciality goods. In consequence of a
weakened economic development, the importance of risk management
operations relating to the management of customer receivables and
investment assets has increased.
Other risks and uncertainties relating to profit performance are
described in the outlook for the Group.
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 (10/2008-9/2009) in
comparison with the 12 months preceding the reporting period
(10/2007-9/2008).
The development of the Group's operating activities is affected by
the economic outlook in its different market areas and especially
by the growth rate of private consumption. During the past months,
the economic outlook has continued to weaken as a result of the
aggravated problems in the financial market. Private consumer
demand is expected to decelerate in the Nordic and the Baltic
countries owing to lower levels of consumer confidence and higher
levels of saving. It is not possible to estimate the effects of a
possible credit depression on the behaviour of businesses and
consumers.
Market growth is expected to slow down especially in the
construction sector, the home and speciality goods trade and the
car and machinery trade.
The increasing uncertainty about the economic outlook makes any
statement about the Group's future outlook significantly more
difficult. In consequence of the weakening economic development,
the Kesko Group's net sales and operating profit excluding non-
recurring items from continuing operations is expected to remain
at a lower level compared with the net sales and operating profit
excluding non-recurring items of the preceding 12 months. The
Group's liquidity and solvency are expected to remain strong.
Helsinki, 21 October 2008
Kesko Corporation
Board of Directors
The figures of this interim financial report are unaudited.
Further information is available from Arja Talma, Senior Vice
President, CFO, telephone +358 1053 22113, and Jukka Erlund, Vice
President, Corporate Controller, telephone +358 1053 22338. A
Finnish-language webcast from the media and analyst briefing on
the interim financial report can be accessed at www.kesko.fi at
11.00. An English-language web conference on the interim financial
report will be held today at 14.30 (Finnish time). The web
conference login is available at www.kesko.fi.
KESKO CORPORATION
Paavo Moilanen
Senior Vice President, Corporate Communications and Responsibility
ATTACHMENTS
Consolidated income statement
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated cash flow statement
Group financial indicators
Net sales by division
Operating profit by division, incl. non-recurring items
Operating profit by division, excl. non-recurring items
Divisions' operating profits, excl. non-recurring items, as % of
net sales
Investments by division
Group contingent liabilities
Group financial indicators by quarter
Calculation of financial indicators
Divisions' net sales by quarter
Divisions' operating profits by quarter, incl. non-recurring items
Divisions' operating profits by quarter, excl. non-recurring items
Personnel, average number, and number at 30 September
The K-Group's retail sales
Kesko Corporation's financial statements report will be published
on 5 February 2009. In addition, the Kesko Group sales figures
will be published each month. News releases and other company
information are available at www.kesko.fi.
DISTRIBUTION
Helsinki Stock Exchange
Main news media
********
ATTACHMENTS:
This interim financial report has been prepared in accordance with
the IAS 34 standard. The interim financial report has been
prepared in accordance with the same principles as the annual
financial statements for 2007.
Consolidated
income statement
(€ million)
1-9 1-9 Change 7-9 7-9 Change 1-12
2008 2007 % 2008 2007 % 2007
Net sales 7,264 6,897 5.3 2,437 2,365 3.0 9,287
Cost of sales -6,280 -5,930 5.9 -2,112 -2,035 3.8 -
7,957
Gross profit 984 967 1.7 324 330 -1.6 1,330
Other operating 577 422 36.9 171 140 21.9 577
income
Staff cost -433 -392 10.6 -138 -133 3.7 -547
Depreciation and -134 -84 58.2 -76 -29 (..) -116
impairment charges
Other operating -715 -659 8.5 -238 -215 10.7 -922
expenses
Operating profit 279 253 10.1 44 93 -53.1 322
Financial income 40 75 -46.4 18 16 8.5 87
Financial expenses -40 -36 9.6 -16 -14 15.6 -51
Income from 2 0 (..) 2 0 (..) 0
associates*
Profit before tax 281 292 -3.7 48 96 -50.1 358
Income tax** -84 -66 26.3 -26 -22 16.8 -87
Net profit from 197 225 -12.6 22 74 -70.2 270
continuing
operations
Net profit from 41 35 18.0 0 2 (..) 37
discontinued
operations
Net profit 238 260 -8.5 22 75 -71.5 307
Attributable to:
Equity holders 224 244 -8.5 16 69 -76.9 285
of the
parent company
Minority 14 16 -8.9 5 6 -10.2 22
interest
Earnings per share
(€) for profit
attributable to
the equity holders
of the parent
company
Continuing
operations
Basic 1.87 2.15 -13.0 0.17 0.69 -75.7 2.54
Diluted 1.86 2.13 -12.8 0.17 0.69 -75.6 2.52
Whole Group
Basic 2.29 2.50 -8.6 0.16 0.71 -76.9 2.92
Diluted 2.28 2.48 -8.4 0.16 0.70 -76.9 2.90
* Change over 100%
** Income tax has been calculated on the profit for the reporting
period as a proportion of
the estimated tax for the whole financial year.
Consolidated balance sheet
(€ million)
30.9.200 30.9.200 Change, 31.12.20
8 7 % 07
ASSETS
Non-current assets
Intangible assets 170 258 -34.0 252
Tangible assets 1,174 1,137 3.3 1,153
Non-current financial assets 34 31 10.9 31
Loans and receivables 60 125 -51.6 45
Pension assets 290 238 21.8 262
Total 1,729 1,788 -3.3 1,743
Current assets
Inventories 922 886 4.1 922
Trade and other receivables 889 1,028 -13.5 840
Financial assets at fair 130 109 18.9 106
value through profit or loss
Available-for-sale financial 353 189 86.9 156
assets
Cash and cash equivalents 54 55 -3.0 90
Total 2,347 2,268 3.5 2,113
Non-current assets held for 1 1 0.0 237
sale
Total assets 4,077 4,057 0.5 4,093
* Change over 100%
Consolidated balance sheet
(€ million)
30.9.200 30.9.200 Change, 31.12.20
8 7 % 07
EQUITY AND LIABILITIES
Equity 1,984 1,865 6.4 1,909
Minority interest 54 49 10.1 55
Total equity 2,038 1,914 6.5 1,964
Non-current liabilities
Pension obligations 4 4 -1.6 4
Interest-bearing liabilities 213 317 -32.9 314
Non-interest-bearing 4 14 -68.4 12
liabilities
Deferred tax liabilities 137 119 15.8 126
Provisions 20 17 16.2 15
Total 378 471 -19.7 471
Current liabilities
Interest-bearing liabilities 296 302 -2.0 311
Non-interest-bearing 1,353 1,357 -0.3 1,320
liabilities
Provisions 11 13 -14.1 23
Total 1,661 1,672 -0.7 1,654
Liabilities for available- - - - 3
for-sale assets
Total equity and liabilities 4,077 4,057 0.5 4,093
Consolidated statement of changes in equity (€ million)
Share Issue Share Other Curre Reval Re- Minor Total
capit of premi- reser n-cy u- taine ity
al share um ves trans-ation d inter
capit latio surpl earni est
al n us ngs
diffe
r-
ences
Balance at
1.1.2007 195 0 196 246 -6 -1 1,120 27 1,777
Shares
subscribed
for with
options 1 0 2 3
Option 1 1
cost
Currency
translatio
n 6 1 7
difference
s
Minority
interest
acquisitio 15 15
ns
Fair value
changes 6 6
Other
changes 2 2
Dividend -146 -9 -155
Net profit
for the 244 16 260
period
Balance at
30.9.2007 196 0 199 246 -1 5 1,220 49 1,914
Balance at
1.1.2008 196 0 200 247 -3 9 1,260 55 1,964
Shares
subscribed
for with
options 0 0 0 0
Option 4 4
cost
Currency
translatio
n -3 1 1 -1
difference
s
Fair value
changes 3 3
Other
changes -4 6 2
Dividend -156 -16 -172
Net profit
for the 224 14 238
period
Balance at
30.9.2008 196 0 204 243 -6 12 1,335 54 2,038
Consolidated cash
flow statement (€
million)
1-9 1-9 Change 7-9 7-9 Change% 1-12
2008 2007 % 2008 2007 2007
Cash flow from
operating activities
Profit before tax 323 329 -1.8 48 98 -51.7 398
Planned depreciation 88 87 1.0 29 30 -2.6 119
Financial income and 0 -39 -99.2 -2 -3 -35.0 -37
expenses
Other adjustments* -161 -54 (..) 11 -4 (..) -75
Working capital
Current non-interest- -103 -102 1.0 57 44 28.2 -37
bearing trade and
other receivables,
increase (-)/
decrease (+)
Inventories -39 -85 -54.4 -28 -41 -32.2 -123
increase (-)/
decrease (+)
Current non-interest- 77 105 -26.2 -62 -32 95.1 95
bearing liabilities,
increase
(+)/decrease (-)
Financial items and -67 -62 7.1 -25 -11 (..) -91
taxes
Net cash from 118 178 -33.6 27 81 -66.2 248
operating activities
Cash flow from
investing activities
Investments -223 -164 35.8 -88 -39 (..) -237
Disposals of fixed 278 141 97.0 60 4 (..) 146
assets
Increase of long- -5 0 (..) -1 15 (..) 0
term receivables*
Decrease of long- 0 10 (..) 0 10 (..) 6
term receivables*
Net cash used in 50 -14 (..) -29 -10 (..) -85
investing
activities*
Cash flow from
financing activities
Debt increase* 0 6 (..) 0 6 (..) 16
Debt decrease -26 -14 85.2 -2 31 (..) -20
Increase (- 214 -49 (..) 3 -30 (..) -52
)/decrease (+) in
short-term interest-
bearing receivables*
Dividends paid -172 -156 10.8 -16 -9 72.7 -156
Equity increase 0 3 -92.5 0 0 -89.2 3
Short-term money -54 32 (..) 57 1 (..) 35
market investments*
Other items* -1 1 (..) 1 1 3.9 1
Net cash used in -39 -177 -78.0 43 1 (..) -173
financing activities
Change in cash and 129 -13 (..) 41 72 -42.2 -9
cash equivalents*
Cash and cash 245 257 -4.5 335 172 94.0 257
equivalents and
current portion of
available-for-sale
financial assets
at 1 Jan.
Currency translation 0 0 (..) 0 0 (..) 0
difference*
Cash and cash -2 0 (..) 0 0 (..) 2
equivalents relating
to available-for-
sale assets*
Cash and cash
equivalents and
current portion of
available-for-sale
financial assets 377 244 54.3 377 244 54.3 245
at 30 Sept.
* Change over 100%
Group financial indicators
9/2008 9/2007 Change,
pp
Return on invested capital, % 18.1 19.2 -1.1
Return on invested capital, %, 16.8 22.1 -5.2
moving 12 months
Return on invested capital 11.4 15.1 -3.6
excl. non-recurring items, %
Return on invested capital 11.9 14.8 -2.9
excl. non-recurring items, %,
moving 12 months
Return on equity, % 15.8 18.8 -2.9
Return on equity, %, moving 12 14.4 23.4 -9.0
months
Return on equity excl. non- 9.4 13.5 -4.1
recurring items, %
Return on equity excl. non- 9.7 14.0 -4.3
recurring items, %, moving 12
months
Equity ratio, % 50.2 47.4 2.7
Gearing, % -1.3 13.9 -15.2
Change,
%
Investments, € million* 233.2 158.8 46.8
Investments, % of net sales* 3.2 2.3 39.4
Earnings per share, basic, €* 1.87 2.15 -13.0
Earnings per share, diluted, €* 1.86 2.13 -12.8
Earnings per share, basic, €** 2.29 2.50 -8.6
Earnings per share, diluted, 2.28 2.48 -8.4
€**
Equity per share, € 20.29 19.08 6.3
Personnel, average* 21,462 20,226 6.1
* Continuing operations
** Whole Group
Divisions
Net sales by division, 1- 1- Change 7- 7- Change
continuing operations 9/2008 9/2007 , 9/2008 9/2007 , %
€ € % € €
millio millio millio millio
n n n n
Kesko Food, Finland 2,977 2,813 5.8 1,021 955 6.9
Kesko Food, other 11 12 -7.8 3 4 -20.5
countries*
Kesko Food, total 2,988 2,825 5.8 1,024 959 6.8
Rautakesko, Finland 716 714 0.3 225 232 -3.0
Rautakesko, other 1,284 1,201 6.9 456 462 -1.4
countries*
Rautakesko, total 2,000 1,915 4.4 681 694 -1.9
VV-Auto, Finland 710 640 11.0 213 188 13.3
VV-Auto, other 12 21 -41.4 4 7 -44.3
countries*
VV-Auto, total 723 661 9.3 217 195 11.2
Anttila, Finland 361 359 0.7 127 138 -7.7
Anttila, other 15 16 -2.4 5 5 -3.7
countries*
Anttila, total 376 374 0.6 132 143 -7.6
Kesko Agro, Finland 410 369 11.2 136 115 17.6
Kesko Agro, 234 212 10.4 83 81 3.6
other countries*
Kesko Agro, total 644 580 10.9 219 196 11.8
Other operating 497 500 -0.5 158 169 -6.3
activities, Finland
Other operating 49 61 -20.8 8 16 -49.6
activities,
other countries*
Other operating 546 562 -2.8 166 185 -9.9
activities, total
Common operations and -13 -21 -34.9 -3 -7 -56.8
eliminations
Finland, total 5,659 5,374 5.3 1 ,877 1,790 4.9
Other countries, 1,605 1,523 5.4 559 575 -2.7
total*
Group, total 7,264 6,897 5.3 2,437 2,365 3.0
* Exports and net sales outside Finland
Operating profit by 1- 1- Change 7- 7- Change
division incl. non- 9/2008 9/2007 , 9/2008 9/2007 ,
recurring items, € € € € € €
continuing millio millio millio millio millio millio
operations n n n n n n
Kesko Food 206.0 111.3 94.7 46.6 41.2 5.4
Rautakesko 21.6 95.7 -74.1 -16.3 39.5 -55.8
VV-Auto 34.4 26.6 7.8 9.5 6.8 2.7
Anttila -0.2 5.5 -5.7 1.7 6.3 -4.6
Kesko Agro 12.2 10.8 1.5 3.5 3.5 0.0
Other operating 10.4 18.4 -8.0 3.3 3.3 0.0
activities
Common operations -5.6 -15.0 9.4 -4.6 -7.3 2.8
and eliminations
Group's operating 278.8 253.3 25.5 43.8 93.3 -49.5
profit
Operating profit by 1- 1- Change 7- 7- Change
division excl. non- 9/2008 9/2007 , 9/2008 9/2007 ,
recurring items, € € € € € €
continuing millio millio millio millio millio millio
operations n n n n n n
Kesko Food 91.9 111.6 -19.7 35.8 41.1 -5.3
Rautakesko 59.5 94.0 -34.5 25.3 39.0 -13.7
VV-Auto 34.4 26.6 7.8 9.5 6.8 2.7
Anttila -0.2 3.6 -3.8 1.7 6.3 -4.6
Kesko Agro 12.2 10.3 2.0 3.5 3.0 0.5
Other operating 7.7 18.4 -10.6 0.8 3.3 -2.4
activities
Common operations -16.0 -21.4 5.4 -4.7 -7.6 2.9
and eliminations
Total 189.7 243.1 -53.4 72.0 91.9 -19.9
Operating profit 1- 1- Change 7- 7- Change
as % of net 9/2008 9/2007 pp 9/2008 9/2007 pp
sales excl. non- % of % of % of % of
recurring items, net net net net
continuing sales sales sales sales
operations
Kesko Food 3.1 3.9 -0.9 3.5 4.3 -0.8
Rautakesko 3.0 4.9 -1.9 3.7 5.6 -1.9
VV-Auto 4.8 4.0 0.7 4.4 3.5 0.9
Anttila 0.0 1.0 -1.0 1.3 4.4 -3.1
Kesko Agro 1.9 1.8 0.1 1.6 1.5 0.0
Other operating 1.4 3.3 -1.9 0.5 1.8 -1.3
activities
Common (..)* (..)* 15.3 (..)* (..)* 44.5
operations and
eliminations
Total 2.6 3.5 -0.9 3.0 3.9 -0.9
* over 100%
Investments by 1- 1- Change, 7- 7- Change,
division, 9/2008 9/2007 € 9/2008 9/2007 €
continuing € € million € € million
operations million million million million
Kesko Food 137 80 58 58 25 33
Rautakesko 76 56 21 25 17 8
VV-Auto 5 5 0 2 1 0
Anttila 4 4 -1 1 2 -1
Kesko Agro 2 7 -5 0 1 -1
Other operating 11 4 7 3 1 2
activities
Common operations -2 3 -5 0 0 0
and eliminations
Group, total 233 159 74 90 48 42
Group's contingent liabilities 9/2008 9/2007 Change, %
(€ million)
For own commitments 223 268 -16.7
For associates - - -
For shareholders 0 1 -95.0
For others 11 11 6.7
Lease liabilities 22 14 58.5
Liabilities arising from
derivative financial
instruments
Fair
value
Values of underlying 9/2008 9/2007 30.9.2008
instruments
at 30 Sept.
Interest rate derivatives
Forward and future contracts - 40 -
Interest rate swap contracts 205 202 6.41
Currency derivatives
Forward and future contracts 342 329 4.59
Option contracts
Bought - - -
Written 3 - -0.12
Currency swap contracts 100 100 -16.52
Commodity derivatives
Electricity derivatives 59 42 8.90
Grain derivatives 1 2 0.04
Figures by quarter
Group financial 1-3/ 4-6/ 7-9/ 10- 1-3/ 4-6/ 7-9/
indicators by quarter 2007 2007 2007 12/ 2008 2008 2008
2007
Net sales, € million 2,131 2,401 2,365 2,390 2,279 2,549 2,437
Change in net sales, 11.6 8.5 10.8 6.9 6.9 6.2 3.0
%
Operating profit, € 60.4 99.6 93.3 68.3 150.1 84.8 43.8
million
Operating profit, % 2.8 4.1 3.9 2.9 6.6 3.3 1.8
Operating profit 57.8 93.4 91.9 71.9 36.6 81.1
excl. non-recurring 72.0
items, € million
Operating profit 2.7 3.9 3.9 3.0 1.6 3.2
excl. non-recurring 3.0
items, %
Financial 37.6 -1.9 2.5 -2.1 -1.4 -0.2
income/expenses, 1.8
€ million
Profit before tax, € 98 97 96 66 149 84 48
million
Profit before tax, % 4.6 4.1 4.1 2.8 6.5 3.3 2.0
Return on invested 23.5 18.6 17.4 12.4 26.6 19.6 8.8
capital, %
Return on invested 11.9 17.5 17.2 13.0 7.4 14.1
capital excl. non- 13.3
recurring items, %
Return on equity, % 24.4 17.3 16.2 9.8 25.1 19.1 4.2
Return on equity 9.1 16.3 15.9 10.6 5.6 12.3
excl. non-recurring 10.4
items, %
Equity ratio, % 44.6 46.5 47.4 48.5 46.3 49.0 50.2
Gearing, % 9.8 16.0 13.9 14.0 -1.8 -2.1 -1.3
Investments, € 50.3 60.3 48.2 68.8 60.3 83.0 89.9
million*
Investments, % of net 2.4 2.5 2.0 2.9 2.6 3.3 3.7
sales*
Earnings/share, 0.75 0.69 0.69 0.39 1.11 0.58 0.17
diluted, €*
Equity/share, € 17.52 18.32 19.08 19.53 19.13 20.17 20.29
* Continuing operations
Calculation of financial indicators
Return on invested (Profit / loss before tax + financial
capital, % expenses) x 100 /
(Shareholders' equity + interest-bearing
liabilities)
Return on invested (Profit / loss before tax for the prior
capital, %, moving 12 months + financial expenses for the
12 months prior 12 months) x 100 /
(Shareholders' equity + interest-bearing
liabilities)
Return on invested (Profit / loss adjusted for non-
capital, excluding recurring items before tax + financial
non-recurring expenses) x 100 /
items, % (Shareholders' equity + interest-bearing
liabilities)
Return on invested (Profit / loss for the prior 12 months
capital, excluding adjusted for non-recurring items before
non-recurring tax + financial expenses for the prior
items, %, moving 12 months) x 100 /
12 months (Shareholders' equity + interest-bearing
liabilities)
Return on equity, Profit / loss before tax - income tax x
% 100 /
Shareholders' equity
Return on equity, Profit / loss for the prior 12 months
%, moving 12 before tax - income tax for the prior 12
months months) x 100 /
Shareholders' equity
Return on equity Profit / loss adjusted for non-recurring
excluding non- items before tax - income tax adjusted
recurring items, % for the tax effect of non-recurring
items) x 100 /
Shareholders' equity
Return on equity Profit / loss for the prior 12 months
excluding non- adjusted for non-recurring items before
recurring items, tax - income tax for the prior 12 months
%, moving 12 adjusted for the tax effect of non-
months recurring items) x 100 /
Shareholders' equity
Equity ratio, % Shareholders' equity x 100 /
(Balance sheet total - advances
received)
Earnings/share, (Profit / loss - minority interest) /
diluted Average number of shares adjusted for
the dilutive effect of options
Earnings/share, (Profit / loss - minority interest) /
basic Average number of shares
Equity/share Equity attributable to equity holders of
the parent /
Basic number of shares at balance sheet
date
Gearing, % Net interest-bearing liabilities x 100 /
Shareholders' equity
Divisions' net 1-3/ 4-6/ 7-9/ 10- 1-3/ 4-6/ 7-9/
sales by quarter, 2007 2007 2007 12/ 2008 2008 2008
€ million 2007
Kesko Food 883 983 959 1,046 937 1,027 1,024
Rautakesko 534 687 694 622 591 728 681
VV-Auto 248 218 195 144 261 246 217
Anttila 120 111 143 189 128 116 132
Kesko Agro 168 216 196 213 180 245 219
Other operating 184 193 185 182 189 191 166
activities
Common operations -6 -7 -7 -6 -6 -5
and eliminations -3
Group's net sales 2,131 2,401 2,365 2,390 2,279 2,549 2,437
Divisions' 1-3/ 4-6/ 7-9/ 10- 1-3/ 4-6/ 7-9/
operating profits 2007 2007 2007 12/ 2008 2008 2008
by quarter incl. 2007
non-recurring
items, € million
Kesko Food 29.2 40.9 41.2 40.0 123.9 35.5 46.6
Rautakesko 18.6 37.6 39.5 22.1 7.0 30.9 -16.3
VV-Auto 11.7 8.1 6.8 -0.5 13.9 11.0 9.5
Anttila -0.9 0.1 6.3 21.6 -1.4 -0.6 1.7
Kesko Agro -0.6 7.9 3.5 2.1 -0.4 9.2 3.5
Other operating 8.6 6.5 3.3 -8.4 2.2 4.8 3.3
activities
Common operations -6.1 -1.6 -7.3 -8.6 5.0 -6.0 -4.6
Group's operating 60.4 99.6 93.3 68.3 150.1 84.8
profit 43.8
Divisions' 1-3/ 4-6/ 7-9/ 10- 1-3/ 4-6/ 7-9/
operating profits 2007 2007 2007 12/ 2008 2008 2008
excl. non-recurring 2007
items, by quarter,
€ million
Kesko Food 29.0 41.4 41.1 39.8 20.7 35.5 35.8
Rautakesko 16.3 38.7 39.0 21.9 7.0 27.3 25.3
VV-Auto 11.7 8.1 6.8 -0.5 13.9 11.0 9.5
Anttila -0.9 -1.8 6.3 21.6 -1.3 -0.6 1.7
Kesko Agro -0.6 7.9 3.0 2.1 -0.4 9.2 3.5
Other operating 8.6 6.5 3.3 -4.5 2.2 4.6 0.8
activities
Common operations -6.3 -7.5 -7.6 -8.5 -5.4 -5.9 -4.7
Group's operating 57.8 93.4 91.9 71.9 36.6 81.1
profit 72.0
Personnel, 7-9/2008 7-9/2007 Change
average number,
continuing operations
Kesko Food 5,979 6,103 -124
Rautakesko 10,259 9,817 442
VV-Auto 764 745 19
Anttila 2,100 2,090 10
Kesko Agro 701 781 -80
Other operating 1,668 1,861 -193
activities and common
operations
Kesko Group, total 21,471 21,397 74
Personnel at 30 2008 2007 Change
Sept.*,
continuing operations
Kesko Food 7,616 7,457 159
Rautakesko 11,280 10,630 650
VV-Auto 778 737 41
Anttila 2,682 2,663 19
Kesko Agro 723 785 -62
Other operating 1,791 2,020 -229
activities and common
operations
Kesko Group, total 24,870 24,292 578
* Total number including part-time employees
The K-Group's retail sales (incl. VAT) (preliminary data):
1.1.-30.9.2008 1.7.-30.9.2008
€ Change, € Change,
million % million %
K-Group food stores
K-citymarket 1,338.9 3.8 463.7 3.4
K-supermarket 1,170.2 8.2 401.8 9.1
K-market and other K-food 1,386.1 7.8 479.8 6.9
stores
Finland, total 3,895.2 6.5 1,345.3 6.3
Food stores, total 3,895.2 6.5 1,345.3 6.3
K-Group building and home
improvement stores
K-rauta 523.3 4.5 195.3 3.4
Rautia 436.2 3.5 166.9 1.3
Finland, total 959.4 4.0 362.1 2.4
K-rauta, Sweden 187.5 5.7 64.4 -2.7
K-rauta, Estonia 75.3 -9.2 27.7 -12.0
K-rauta, Latvia 68.1 -9.0 23.6 -16.6
Senukai, Lithuania 409.5 5.1 150.0 -1.0
OMA, Belarus 62.0 25.7 28.9
Stroymaster, Russia 175.9 37.6 69.2 37.6
Byggmakker, Norway 882.2 0.9 316.0 -5.4
Other countries, total 1,860.7 6.5 676.7 -0.8
Building and home 2,820.1 5.6 1,038.8 0.3
improvement stores, total
Kesko Group car stores
Helsingin VV-Auto and Turun 386.7 14.3 123.3 17.8
VV-Auto
Finland, total 386.7 14.3 123.3 17.8
Anttila
Anttila department stores 255.3 0.1 90.0 -6.5
Kodin Ykkönen department 124.7 0.9 42.5 -13.4
stores for home goods and
interior decoration
Distance sales (Mail Order 65.6 5.4 23.9 0.1
and NetAnttila)
Finland, total 445.6 1.1 156.4 -7.5
Anttila Mail Order, Estonia 14.3 -6.0 4.9 -7.2
and Latvia
Other countries, total 14.3 -6.0 4.9 -7.2
Anttila, total 459.9 0.8 161.3 -7.5
K-Group agricultural stores
K-maatalous 540.5 12.0 188.9 19.7
Finland, total 540.5 12.0 188.9 19.7
Kesko Agro, Estonia 59.6 5.3 15.8 -12.8
Kesko Agro, Latvia 107.6 10.3 47.2 13.9
Kesko Agro, Lithuania 45.2 -33.7 18.7 -21.2
Other countries, total 212.5 -4.5 81.6 -1.9
Agricultural stores, total 753.0 6.8 270.5 12.2
Other operating activities
Kesko Group machinery
stores
Yamaha Center 14.6 -6.8 4.1 0.6
Finland, total 14.6 -6.8 4.1 0.6
K-Group home and speciality
goods stores
Intersport 193.0 6.3 63.9 10.4
Kesport 23.1 4.7 8.0 2.7
Asko 72.0 1.5 27.8 4.7
Sotka 83.6 -3.8 28.6 -9.6
Musta Pörssi 133.7 -8.7 43.7 -27.8
Andiamo and K-kenkä 35.5 8.2 12.1 12.3
Kenkäexpertti 9.1 -3.9 3.0 -4.1
Finland, total 550.0 0.0 187.1 -5.6
Furniture sales, Sweden, 20.4 -43.4 6.0 -49.7
Estonia and Latvia
Other countries, total 20.4 -43.4 6.0 -49.7
Home and speciality goods 570.4 -2.7 193.1 -8.2
stores, total
Other operating activities, 585.0 -2.8 197.2 -8.0
total
Finland, total 6,792.0 6.0 2,367.1 5.1
Other countries, total 2,107.9 4.3 769.2 -1.7
Retail sales, total 8,899.9 5.6 3,136.4 3.3
Interim financial report for the period 1 Jan.-30 Sept. 2008: earnings per share €2.28
| Source: Kesko Oyj
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