Kesko's financial statements release for 1 Jan.-31 Dec. 2021: The best result in Kesko’s history

FINANCIAL PERFORMANCE IN BRIEF:          

10-12/2021

• Group net sales in October-December totalled €2,870.3 million (€2,662.3 million), an increase of 7.2% in comparable terms, reported net sales grew by 7.8%
• Comparable operating profit totalled €203.5 million (€165.6 million), comparable operating profit grew by €37.9 million.
• Operating profit totalled €204.9 million (€155.6 million)
• Comparable earnings per share €0.40 (€0.31)
• Reported Group earnings per share €0.41 (€0.29)

1-12/2021

• Group net sales in January-December totalled €11,300.2 million (€10,669.2 million), an increase of 8.2% in comparable terms, reported net sales grew by 5.9%
• Comparable operating profit totalled €775.5 million (€567.8 million), Comparable operating profit grew by €207.7 million.
• Operating profit totalled €775.2 million (€600.2 million)
• Comparable earnings per share €1.43 (€0.97)
• Reported Group earnings per share €1.44 (€1.09)
• Board’s dividend proposal €1.06 per share, proposed to be paid in four instalments

KEY PERFORMANCE INDICATORS

Kesko is reporting Kesko Senukai Group, which is part of Kesko’s building and technical trade segment and operates in the Baltic countries and Belarus, as a joint venture as of 1 July 2020. Kesko Senukai Group was reported as a subsidiary until 30 June 2020. In order to enable the comparison of financial performance indicators between reporting periods, Kesko reports illustrative Group performance indicators to be used alongside indicators based on IFRS consolidated financial statements. In segment information, Kesko Senukai is reported as a joint venture also for the comparison periods, as this method is used in management reporting.

* Reported

In this financial statements release, the comparable change % in net sales has been calculated in local currencies and excluding the impact of Kesko Senukai and the acquisitions and divestments completed in 2020 and 2021. The comparable operating profit has been calculated by deducting items affecting comparability from the reported operating profit. The illustrative performance indicators have been calculated for the comparison periods as if Kesko Senukai had been consolidated as a joint venture.

OUTLOOK AND GUIDANCE FOR 2022

Kesko Group’s outlook is given for the year 2022, in comparison with the year 2021.

Kesko estimates that its comparable operating profit in 2022 will be in the range of €680-800 million. In 2021, Kesko’s comparable operating profit totalled €775.5 million.

Overall, the outlook for Kesko's business in 2022 is positive.

Net sales for the grocery trade division are expected to remain at a good level also in 2022. As the pandemic eases, food sales are expected to partly shift from B2C trade to foodservice wholesale. Food price inflation is estimated to support sales growth.

Outlook for the building and technical trade division is also positive. We expect sales to stay at a good level in B2B trade, which now accounts for 75% of the division’s sales. Demand in B2C trade is expected to normalise. Price inflation is expected to support growth, but prolonged price inflation would lead to lower construction volumes. 

In the car trade division, predictions regarding new car sales are made more difficult by uncertainties related to component supply chains. Delivery issues related to the availability of semiconductors will continue to hinder the car trade division’s business also in 2022.

The progress of the pandemic will continue to have an impact on the overall economy, consumer behaviour, and trading sector demand in Kesko’s operating countries. During the pandemic, household consumption has focused on domestic purchases, which is expected to have a positive impact on some of Kesko’s businesses also in 2022. In addition to the Covid-19 pandemic, assessments for outlook and predictions for demand are made more difficult by uncertainties related to overall economic development, inflation, geopolitics, and the availability of goods.

PRESIDENT AND CEO MIKKO HELANDER:

Kesko recorded the best result in the company’s history in 2021 and its Q4 result was also record-high.This was the seventh consecutive year that Kesko’s annual result improved, and 11th consecutive quarter where profit was up on the comparison period. Our sales and profit have been growing for several years, which is a strong indication that our growth strategy is working and being successfully executed. In 2021, our net sales grew by 8.2% in comparable terms, totalling €11,300 million. Our comparable operating profit amounted to a record €776 million, representing an increase of €208 million. Our good ability to produce a profit and strong financial position enable investments in growth and good dividend capacity. Kesko’s Board proposes to the Annual General Meeting a dividend of €1.06/share, totalling nearly €421 million, proposed to be paid in four instalments.

We made a record result in the grocery trade division in 2021. We managed to grow sales and improve customer satisfaction and profitability. The division’s net sales grew by 3.1%, and its comparable operating profit rose to €443 million. Profitability in grocery trade is among the best in the world, with a comparable operating margin of 7.5%. Net sales and sales continued to grow in both grocery stores and foodservice. Online grocery sales grew by 14.2% despite the strong comparison figures. Our strength in grocery trade lies in our extensive network of physical grocery stores combined with efficient online sales and our foodservice business as well as our well-functioning retailer business model. Our strategic objective is to grow sales and improve customer experiences further.

We also achieved a record result in the building and technical trade division, where sales and profitability improved in all business operations. The success is based on the successful execution of our country-specific strategies, combined with good demand. Strong growth continued, driven in particular by B2B trade. Net sales in 2021 grew by 14.7% and totalled €4,388 million. The comparable operating margin for the division rose to a new level of 7.2%. The growth has been underpinned by the good development of the construction markets and high product price levels. In Finland, performance continued strong for Onninen and K-Rauta. Sales and profitability developed well also in Norway and Sweden, in both technical trade and building and home improvement trade. Profitability was also supported by the changes made in recent years, and the acquisitions completed and their successful integration. In line with our strategy, we have focused on B2B trade, which now accounts for 75% of the division’s sales. International operations account for an increasing share of the division’s net sales, now totalling 46%. 

Our transformation process in the car trade division is proceeding well and yielding results. Net sales for the division in 2021 grew by 15.2% and totalled €1,028 million. The division’s profitability improved, and the comparable operating margin rose to 5.1%. All operations within the division – new cars, used cars, and services – were profitable. Measures conducted to restructure operations and improve their efficiency, a competitive range, and the growing demand for new and used cars resulted in growth in sales and profitability. Demand for all-electric cars and rechargeable hybrids grew in particular. The global component shortage limited the availability of new cars.

Overall, the outlook for Kesko's business in 2022 is positive. Kesko estimates that its comparable operating profit in 2022 will be in the range of €680-800 million. We will continue our efforts to grow our sales and improve  profitability.

I want to thank all our customers, shareholders, employees, K-retailers and their staff, and our partners for the valuable work you did towards Kesko’s and our shared success in 2021.

IMPORTANT EVENTS

POSITIVE PROFIT WARNING ON 14 OCTOBER 2021

Kesko raised its profit guidance for 2021 on 14 October 2021. Kesko estimated that its comparable operating profit in 2021 would be in the range of €740-800 million. Before, the company estimated that the comparable operating profit would be in the range of €650-750 million. The guidance upgrade was based on better-than-anticipated sales growth and profit development especially in the building and technical trade division, and the division’s more positive outlook for the remainder of the year. In 2020, Kesko’s illustrative comparable operating profit totalled €554 million. (Stock exchange release 14.10.2021)

POSITIVE PROFIT WARNING ON 14 JUNE 2021

Kesko issued a positive profit warning based in particular on stronger-than-anticipated development in building and technical trade, and raised its profit guidance for 2021. Kesko estimated that its comparable operating profit in 2021 would be in the range of €650-750 million. Before, the company estimated that its comparable operating profit would be in the range of €570-670 million. (Stock exchange release 14.6.2021)

UPDATED STRATEGY AND NEW FINANCIAL TARGETS

The Board of Directors of Kesko Corporation confirmed an updated version of the company’s strategy and new medium-term financial targets for the company. Kesko’s growth strategy centres on profitable growth in three selected business divisions: grocery trade, building and technical trade, and car trade. The new medium-term financial targets for profitability are a comparable operating margin of over 6.0% (previously 5.5%) and a comparable return on capital employed of over 14.5% (previously 12.5%). As for financial position, the Group continues to target a maximum interest-bearing net debt/EBITDA of 2.5, excluding the impact of IFRS 16. (Stock exchange release 27.5.2021

POSITIVE PROFIT WARNING ON 15 APRIL 2021

Kesko raised its guidance for its comparable operating profit in 2021, estimating that its comparable operating profit in 2021 would be in the range of €570-670 million. Before, the company estimated that the comparable operating profit would be in the range of €520-620 million. The guidance upgrade was based on better-than-anticipated sales development in all divisions and a more positive outlook for the remainder of the year. The illustrative comparable operating profit in 2020 was €554 million. (Stock exchange release 15.4.2021)

PROPOSAL FOR PROFIT DISTRIBUTION

The Board of Directors of Kesko Corporation proposes to the Annual General Meeting to be held on 7 April 2022 that a dividend of €1.06 per share be paid for the year 2021 based on the adopted balance sheet on shares held outside the company at the date of dividend distribution. The remaining distributable assets will remain in equity. The Board proposes that the dividend be paid in four instalments.

The first instalment of €0.27 per share is to be paid to shareholders registered in the company's register of shareholders kept by Euroclear Finland Ltd on the instalment’s record date 11 April 2022. The Board proposes that the dividend instalment pay date be 20 April 2022.

The second instalment of €0.26 per share is to be paid to shareholders registered in the company's register of shareholders kept by Euroclear Finland Ltd on the instalment’s record date 22 June 2022. The Board proposes that the dividend instalment pay date be 29 June 2022.

The third instalment of €0.27 per share is to be paid to shareholders registered in the company's register of shareholders kept by Euroclear Finland Ltd on the instalment’s record date 13 September 2022. The Board proposes that the dividend instalment pay date be 20 September 2022.

The fourth instalment of €0.26 per share is to be paid to shareholders registered in the company's register of shareholders kept by Euroclear Finland Ltd on the instalment’s record date 13 December 2022. The Board proposes that the dividend instalment pay date be 20 December 2022. The Board proposes it be authorised to decide, if necessary, on new dividend payment record dates and pay dates for the second, third and/or fourth instalments, if the rules and statutes of the Finnish book-entry system change or otherwise so require.

As at the date of the proposal for the distribution of profit, 2 February 2022, a total of 397,110,344 shares were held outside the company, and the corresponding total amount of dividends was €420,936,964.64.  

The distributable assets of Kesko Corporation total €1,502,200,136.91, of which profit for the financial year is €354,650,052.25.

ANNUAL GENERAL MEETING

The Board of Directors has decided that the company’s Annual General Meeting will be held on 7 April 2022 at 1.00 pm (EET). Kesko Corporation will publish a notice of the General Meeting at a later date.

Annual Report 2021, Corporate Governance Statement, and Remuneration report for Governing Bodies

Kesko will publish its 2021 Annual Report, including a strategy review, the Report by the Board of Directors and financial statements for 2021, the Corporate Governance Statement, and the Remuneration Report for Governing Bodies, in week 10 at the latest on the company’s website at www.kesko.fi. Key indicators for sustainability reporting (GRI) will be published in week 10.

Further information

Further information is available from Jukka Erlund, Executive Vice President, Chief Financial Officer, tel. +358 105 322 113, Hanna Jaakkola, Vice President, Investor Relations, tel. +358 105 323 540, and Eva Kaukinen, Vice President, Group Controller, tel. +358 105 322 338.

webcast and audio conference

An English-language audio conference on the results briefing will be held on 3 February 2022 at 9.00 am (Finnish time). The audio conference login is available on Kesko's website at www.kesko.fi. A Finnish-language webcast of the results briefing can be viewed at 11.30 am (EET) at www.kesko.fi.

Kesko Corporation's interim report for January-March 2022 will be published on 29 April 2022. In addition, Kesko Group's sales figures are published monthly. News releases and other company information are available on Kesko's website at www.kesko.fi.

DISTRIBUTION
Nasdaq Helsinki Ltd
Main news media
www.kesko.fi

The complete financial statements release is attached to this release (pdf) and is also available at our website