KESKO CORPORATION JANUARY-DECEMBER FINANCIAL STATEMENTS RELEASE 30.1.2024 AT 8.00
FINANCIAL PERFORMANCE IN BRIEF:
10-12/2023
- Group net sales in October-December totalled €2,902.0 million (€2,983.4 million); reported net sales were down by 2.7%, or by 3.7% in comparable terms
- Comparable operating profit totalled €170.5 million (€192.6 million)
- Operating profit totalled €159.8 million (€191.2 million)
- Cash flow from operating activities totalled €342.4 million (€263.0 million)
- Comparable earnings per share €0.31 (€0.36); reported earnings per share €0.28 (€0.36)
1-12/2023
- Group net sales in January-December totalled €11,783.8 million (€11,809.0 million); reported net sales were flat year-on-year, while in comparable terms net sales decreased by 0.8%
- Comparable operating profit totalled €712.0 million (€815.1 million)
- Operating profit totalled €695.4 million (€816.5 million)
- Cash flow from operating activities totalled €1,049.5 million (€915.2 million)
- Comparable earnings per share €1.28 (€1.54); reported earnings per share €1.25 (€1.53)
- The Board proposes a dividend of €1.02 per share, proposed to be paid in four instalments
KEY PERFORMANCE INDICATORS
| 10-12/2023 | 10-12/2022 | 1-12/2023 | 1-12/2022 | |
| Net sales, € million | 2,902.0 | 2,983.4 | 11,783.8 | 11,809.0 |
| Operating profit, comparable, € million | 170.5 | 192.6 | 712.0 | 815.1 |
| Operating margin, comparable, % | 5.9 | 6.5 | 6.0 | 6.9 |
| Operating profit, € million | 159.8 | 191.2 | 695.4 | 816.5 |
| Profit before tax, comparable, € million | 145.1 | 178.6 | 630.4 | 763.2 |
| Profit before tax, € million | 134.4 | 177.2 | 613.5 | 761.1 |
| Cash flow from operating activities, € million | 342.4 | 263.0 | 1,049.5 | 915.2 |
| Capital expenditure, € million | 158.5 | 108.5 | 678.9 | 449.2 |
| Earnings per share, €, basic and diluted | 0.28 | 0.36 | 1.25 | 1.53 |
| Earnings per share, comparable, €, basic | 0.31 | 0.36 | 1.28 | 1.54 |
| 1-12/2023 | 1-12/2022 | |
| Return on capital employed, comparable, % | 13.4 | 16.9 |
| Return on equity, comparable, % | 18.5 | 23.2 |
In this financial statements release, the comparable change % in net sales has been calculated in local currencies and excluding the impact of acquisitions and divestments completed in 2022 and 2023. Comparable operating profit has been calculated by deducting items affecting comparability from the reported operating profit.
OUTLOOK AND GUIDANCE FOR 2024
Kesko Group's profit guidance is given for the year 2024, in comparison with the year 2023. Kesko's operating environment is estimated to remain challenging in 2024. Kesko's net sales and operating profit are estimated to remain at a good level in 2024 despite the challenges in the company's operating environment. Kesko estimates that its comparable operating profit in 2024 will be in the range of €620-720 million.
The profit guidance is based on an estimate of a relatively short recession in Kesko's operating countries. Key uncertainties impacting Kesko's outlook are developments in inflation and interest rate levels, and geopolitical crises and tensions.
In grocery trade, B2C trade and the foodservice market are expected to remain stable despite tightened price competition, and inflation is expected to slow down in 2024. Profitability in grocery trade is estimated to remain good also in 2024.
In building and technical trade, the market is expected to continue to decline in 2024. The economic cycle will have the biggest impact on new residential building, while the decline in other building construction, renovation building and infrastructure construction is expected to be smaller. The cycle is expected to turn in 2025. Profitability in building and technical trade is estimated to fall short of the 2023 level, but to still remain at a reasonably good level in 2024.
In car trade, new car sales are expected to fall short of the 2023 level. Sales of used cars and services are
expected to grow. Profitability in car trade is estimated to still remain good in 2024, but to fall short of the 2023 level.
PRESIDENT AND CEO MIKKO HELANDER:
All Kesko divisions generated good results in 2023. Our net sales for the year totalled €11,783.8 million, and our comparable operating profit €712.0 million. Our strong profitability shows that Kesko's growth strategy and its successful execution in all three divisions have managed to yield results also in a more challenging operating environment. Our good ability to generate profits and our strong financial position enable investments in growth and also good dividend capacity. Kesko's Board of Directors proposes to the Annual General Meeting that a dividend of €1.02 per share, in total nearly €406 million, be paid in four instalments.
In the grocery trade division, sales grew in both the grocery store business and the foodservice business. The good performance was based on our strong position in all areas of Finnish food trade. Kespro's performance in 2023 was particularly strong. Improved purchasing power and slowing inflation have begun to have a positive impact on the market. Demand for premium products recovered in the second year-half. Campaigns and other marketing efforts strengthened our customer flows and sales. Tight price competition continued in Finnish grocery trade. Net sales for the division totalled € 6,351.6 million, up by 3.7%, and the comparable operating profit amounted to €444.8 million.
In the building and technical trade division, profitability remained good even though it declined year-on-year as construction activity and cycle weakened. Construction activity declined in all our operating countries due to inflation and rising interest rates. In the longer term, however, the outlook for building and technical trade is positive. Urbanisation, repair and infrastructure investment debt, infrastructure projects and the green transition sustain construction across cycles. We continued the determined execution of our growth strategy also in 2023, for example, by acquiring Elektroskandia in Norway and agreeing to acquire Davidsen, one of Denmark's leading building and home improvement operators, thus expanding our operations to Denmark. The division's net sales totalled €4,193.2 million, down by 8.7%, and its comparable operating profit amounted to €212.5 million.
In the car trade division, new car sales and the transformation of our operations have led to markedly improved profitability. Sales grew in all car trade business areas. New car deliveries grew clearly on the comparison period, and sales of used cars and services also increased markedly. Kesko's car trade division today is a leading operator in the electrification of transport in Finland. The division's net sales totalled €1,262.3 million, up by 13.9% in comparable terms, while the comparable operating profit totalled €82.6 million.
Kesko today is an efficient, profitable trading sector operator. Our good success acts as strong proof of the effectiveness of our strategy, which yields results also in a changing operating environment. Throughout the history of Kesko and K Group, our strength has been our ability to quickly adapt to our surroundings as necessary. A key objective for a listed company is to generate value for its shareholders. Over the past ten years, our total shareholder return - including the dividend suggested to be paid for 2023 - is approximately €8.3 billion. At the same time, we have paid total performance bonuses of some €308 million to our personnel.
I have had the privilege of leading Kesko for over nine years. My successor Jorma Rauhala will be heading a strong and modern international trading sector company that is set to continue to grow profitably also in years and decades to come. Kesko's success has been built together. As I retire, I want to express my gratitude to all our customers, shareholders, the people of K Group, and our partners for their trust and collaboration over these past nine years.
PROPOSAL FOR PROFIT DISTRIBUTION
The Board of Directors of Kesko Corporation proposes to the Annual General Meeting to be held on 26 March 2024 that a dividend of €1.02 per share be paid for the year 2023 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 €0.26 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 28 March 2024. The Board proposes that the dividend instalment pay date be 9 April 2024.
The second instalment of €0.25 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 16 July 2024. The Board proposes that the dividend instalment pay date be 23 July 2024.
The third 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 15 October 2024. The Board proposes that the dividend instalment pay date be 22 October 2024.
The fourth instalment of €0.25 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 14 January 2025. The Board proposes that the dividend instalment pay date be 21 January 2025.
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, 29 January 2024, a total of 397,769,511 shares were held outside the company, and the corresponding total amount of dividends is €405,724,901.22.
The distributable assets of Kesko Corporation total €1,584,703,413.17, of which profit for the financial year is €509,617,838.22.
ANNUAL GENERAL MEETING
The Board of Directors decided that Kesko's Annual General Meeting will be held on 26 March 2024 at 1.00 pm (EET). Kesko Corporation will publish a notice of the General Meeting on the company's website and as a stock exchange release on 30 January 2024.
ANNUAL REPORT 2023, CORPORATE GOVERNANCE STATEMENT, AND REMUNERATION REPORT FOR GOVERNING BODIES
Kesko will publish its 2023 Annual Report, including a strategy review, the Report by the Board of Directors and financial statements for 2023, the Corporate Governance Statement, the Remuneration Report for Governing Bodies, and sustainability reporting indicators (GRI) in week 10 at the latest on its website at www.kesko.fi.
FURTHER INFORMATION, AUDIO CONFERENCE AND WEBCAST
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. An English-language audio conference on the results briefing will be held on 30 January 2024 at 9.00 am (EET). The audio conference login is available on Kesko's website at www.kesko.fi. A Finnish-language webcast of the interim report briefing can be viewed at 12.00 noon (EET) at www.kesko.fi.
Kesko's interim report for January-March 2024 will be published on 25 April 2024. 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
This is a summary of Kesko Corporation's January-December 2023 Financial Statements Release. The complete report is attached to this release and also available at www.kesko.fi/en/investor/
