Recession slowed down the construction market; steady development in the grocery trade
In 2008, the market weakened in almost
all of Kesko's product lines, especially
towards the end of the year. This was
reflected, above all, in the building and
home improvement, and car and
machinery trades.
Kesko's net sales increased by 3.4%. In
Finland, the growth was 4.4%, but activities
in other countries showed some
decrease.
Steady growth continued in the grocery
trade throughout the year. The retail sales
of K-food stores increased by 6.0%, but
fell short of the estimated overall market
development. Kesko Food's net sales
grew by 6.2% and accounted for 43% of
the Group's total net sales.
Rautakesko's net sales performance
was greatly affected by the weakening
construction market in the Nordic and
Baltic countries, particularly towards the
end of the year. Rautakesko's net sales
dropped by 0.8% from the previous year.
Sales growth in the car trade can be
attributed to the competitive Audi and
Volkswagen ranges, imported by VV-Auto,
and to the car tax reform which became
effective at the beginning of the year.
However, demand for new and trade-in
cars dropped towards the end of the year.
VV-Auto's net sales increased by 9.9%.
In the department store trade, Anttila's
sales performance was affected by the
slowdown in the sale of homes particularly
in late 2008, which reduced demand
for interior decoration items and home
electronics. Anttila's net sales dropped by
0.7% from the previous year.
In the agricultural trade, the market
situation deteriorated clearly in the Baltic
countries in particular. Kesko Agro's net
sales increased by 6.6%.
In other operating activities, Intersport's
sales were good and its net sales
grew. Kenkäkesko, too, had a good year.
The sales of Asko, Sotka and Musta Pörssi
did not develop as expected. Konekesko's
sales were, above all, negatively impacted
by the slowdown in the recreational
machinery market.
Operating profit fell short of the previous year
The Group's operating profit excluding
non-recurring items was €217.0 million,
representing a decrease of €98 million
from the previous year. This can be
mainly attributed to the weakening construction
market and the strong expansion
and refurbishing of the networks of
the food and the building and home
improvement stores. Owing to the deterioration
of the economic situation, the
measurement principles applied to
inventories and trade receivables were
tightened further.
During the year, 37 new food stores
were opened. Two new building and
home improvement stores were opened
in Finland and 12 stores in other countries.
Gains on business and real estate disposals
The gains on business and real estate
disposals totalled approximately €180
million in 2008. During the first half of
the year,
During 2008, several plans aiming at
saving costs and improving efficiency
progressed.
A decision was taken to intensify the
cooperation between Anttila, K-citymarket's
home and speciality goods trade
and Kesko's other companies engaged in
the home and speciality goods business.
In this way synergy benefits are being
sought particularly in goods purchasing,
management and customer relationship
management. Customers will continue to
see each K-citymarket as one store in
which a K-retailer is responsible for the
food trade. All of the existing home and
speciality goods chains will continue
operating separately.
At the beginning of 2009, Kesko Agro's
activities were combined with Rautakesko
and Konekesko. The agricultural trade
activities in Finland became part of Rautakesko,
while the tractors and combines
trade and the Baltic subsidiaries both
became part of Konekesko. The objective
is to enhance product selections, customer
service and the maintenance and
spare part network.
In 2009, Kesko's reportable segments
are the food trade, the home and speciality
goods trade, the building and
home improvement trade, and the car
and machinery trade.
