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Kesko managed a fine performance in a challenging market in the third quarter of 2023. We recorded net sales of €2,949.1 million, down by 2.0% year-on-year. Our comparable operating profit totalled €208.1 million, and was thus at the same level as in the second quarter, but fell short of the level seen a year ago. Our cost-efficiency has improved further thanks to measures implemented. Our cash flow in the third quarter stood strong at €395 million. In August, we announced Kesko would be acquiring Davidsen Koncernen A/S, a leading Danish builders’ merchant, thus expanding our operations to Denmark and gaining a solid foothold on the local building and home improvement market. Kesko’s objective is to take part in the consolidation of Northern European building and technical trade on the B2B side also going forward, and to be a leading operator in the sector not only in Finland and Norway, but also in Sweden and Denmark. In technical trade, growth will also be important in Poland and the Baltics.

"Kesko managed a fine performance in a challenging market in the third quarter of 2023. Kesko’s outlook for the remainder of 2023 continues to be positive. Kesko’s operating profit is expected to remain at a good level also in 2024 despite the challenges in the operating environment."

In the grocery trade division, net sales totalled €1,593.5 million, and comparable operating profit amounted to €118.2 million. K Group's grocery sales grew by 3.6%.  Sales also grew in the foodservice business: Kespro’s net sales increased by 4.7% and profitability stood at 7.3%. Price continues to be an important factor in grocery trade, but demand for premium products has started to recover. Customer flows have grown stronger thanks to campaigns and other marketing efforts. Kesko continues to update its existing stores, and will be opening many new grocery stores in Finnish growth centres in the near future. Sales of Kesko’s K-Citymarket hypermarket stores in particular have been growing considerably, and they have a crucial impact on the profitability and market share of Kesko’s grocery store business. In the food trade market, Kesko’s annual retail and B2B sales total over €8 billion, and the company holds a market share of approximately 37%. In contrast to many other European operators, Kesko holds a strong position in all areas of food trade.

In the building and technical trade division, net sales amounted to €1,050.3 million, with a comparable operating profit of €69.8 million. Profitability weakened, but stayed at a good level of 6.6%. In our biggest market Finland, the operating margin for building and home improvement trade was 7.2% and the margin for Onninen 8.6%. Inflation and rising interest rates have seen construction activity decline in 2023. Cyclical fluctuations are natural for the construction sector, and the down-cycle  is currently impacting new residential building in particular, which accounts for 20-30% of all construction. However, in the long term, the outlook for building and technical trade is positive. Urbanisation, renovation and investment debt, infrastructure projects and the green transition sustain construction over cycles. Kesko is a leading operator in building and technical trade in Northern Europe, and has great potential to grow further.

In the car trade division, sales grew clearly in all car trade business segments. The division’s net sales grew by 7.2% in comparable terms and totalled €310.8 million, and its comparable operating profit was €24.3 million. New car deliveries grew markedly year-on-year. Used car sales grew clearly, and our market share strengthened. Service sales also developed well. The order book for new cars continues to be at a good level, but demand and orders are clearly below normal levels.

Kesko’s outlook for the remainder of 2023 continues to be positive. Kesko specifies its profit guidance and now estimates that its comparable operating profit in 2023 will be in the range of €680–730 million. Kesko’s operating profit is expected to remain at a good level also in 2024 despite the challenges in our operating environment.

KEY FIGURES IN JULY-SEPTEMBER 2023: 

• Group net sales in July-September totalled €2,949.1 million (€3,009.8 million). Reported net sales were down by 2.0%, in comparable terms net sales decreased by 2.7%

• Comparable operating profit totalled €208.1 million (€242.8 million)

• Operating profit totalled €206.6 million (€242.4 million)

• Cash flow from operating activities totalled €394.9 million (€318.8 million)

• Comparable earnings per share €0.38 (€0.47), reported earnings per share €0.37 (€0.47)
  
  

See all Q3 reporting materials 

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