Kesko Oyj Unsp/Adr

Welcome to the conference call. For the first part of the conference call, the participants will be in listen only mode. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to the speakers. Please go ahead.

Dear all, Warmly welcome and thank you for tuning in for Kesko's full year and Q4 2023 release call. My name is Hanna Jaakkola. I work as IR Director at Kesko. We have a slightly enhanced agenda today, as this is the last time we had the honor of having President and CEO Mikko Hellander with us before his well-deserved retirement. Jorma Rauhala, currently Deputy CEO and President of Building and Technical Trade, has been appointed by the Board of Directors, President and CEO of Kesko as of 1 February 2024, as Mikko retires. We had the great pleasure of having our Chairman Esa Kiiskinen here with us today to introduce Jorma and to give some background thoughts behind the appointment. So first, Mikko will give the full year Q4 presentation. As always, we have here together with us our business division presidents, Jorma Rauhala, Ari Akseli and Sami Kiiski, as well as CFO Jukka Erlund. After the presentation, it is time for questions, both by phone and via chat. And after the Q&A session, the chairman of the board, Esa Kiiskinen, will give his presentation. But now Mikko, the virtual stage is yours, please.

Thank you, Hanna. Ladies and gentlemen, welcome also on my behalf to this release call. Today's headline is a good result from all divisions and it describes well our year. Now I will first give an overview of our business performance in 2023 and then the fourth quarter. After the presentation, we will be happy to take your questions. Kesko's profit-making ability is excellent. Operating profit 712 million euros is a good result in a week cycle. As you can see in the graph on the right, the result and profitability has risen to a new level. Key events in 2023. Very good profitability in grocery trade. Profitability in building and technical trade remained good despite weak construction cycle. Sales and profit improved clearly in all card rate business segments. During the year, we acquired Ereskandia in Norway, and in August, we announced that Kesku will acquire Danish builders Mersen & Davidsen and enter Denmark. In December, I announced that I would retire from Kesko's president and CEO position and soon after, Jorma Rauhala was appointed as new president and CEO as of February 1st. The number of domestic shareholders has increased during the year for more than 27% to above 105,000 owners. The Board proposes to the annual General Meeting a dividend of €1–€2 per share to be paid in four instalments. Net sales for 2023 totaled 11.8 billion euros and it decreased by 0.8%. Net sales increased in grocery trade as well as in card trade. Comparable operating profit for last year was 712 million euros. It decreased by 103 million. Operating margin was 6%. Operating profit increased in card trade. Return on capital employed, one of our strategy targets was 13.4%. Return on capital employed increased in car trade year on year and decreased in building and technical trade as well as grocery trade. Our financial position is strong. Cash flow from operating activities rose above 1 million euros. Cash flow strengthened on the comparison year thanks to further improvement in working capital management. Interest-bearing net debt increased year on year as a result of investments in store sites, logistics and acquisitions. Net debt to EBITDA was 0.7. We continued the investments in growth, capital expenditure grew due to acquisitions and logistics projects, especially the construction of Oninen and Kei Autos shared logistics center in Hyvinkää, Finland. In accordance with our growth strategy, last year we continued consolidating the Scandinavian building and technical trade market by acquiring two companies in Norway and one in Sweden. We have succeeded well in focusing on cost efficiency. We were able to reduce personal expenses despite significant wage inflation, also other expenses decreased. Depreciations increased due to investments and cost increases related to rental agreements. Now to Q4 results. Net sales in Q4 totaled over 2.9 billion euros. It was down by 3.7%. The net sales grew in grocery trade by 1.3% and car trade by 3.8%, but decreased in building and technical trade. In Q4, comparable operating profit was at 170.5 million euros and operating margin was 5.9%. Comparable operating profit increased in grocery trade and decreased in building and technical trade and in card trade. Grocery trade key topics in Q4. Improved purchasing power and slowing inflation impacted the market positively. Tight price competition continues in Finland grocery trade, as in the third quarter, also in the fourth quarter, decline in grocery retail market share continued to slow down further. Campaigns and other marketing efforts worked well, customer visits in K-stores increased, also the number of K-ruoka application users grew significantly. Grocery sales in our stores grew by 2.6% and online grocery sales grew by 17.9%. Gaspros sales grew by 4.9%, again clearly exceeding market growth. Gaspros comparable operating profit rose to 17.9 million euros and operating margin was 6.3. Price inflation for groceries continued to decline. Building and technical trade, Q4, key topics for building and home improvement trade. Construction activity has declined in Northern Europe due to inflation and rising interest rates. The biggest drop has been in residential construction. Q4 operating profit for building and home improvement was 5 million euros despite seasonal fluctuations and weak market. Our market share grew further in our biggest market, Finland. Net sales for building and home improvement trade decreased in all operating countries in both B2B and B2C trade. Share of results reported by Kesko from the Kesko Senukai joint venture was 13.5 million, up by 2.3 million euros. In Q4, we continued the successful cost and working capital management. Credit losses were low. And then to technical trade. Net sales for technical trade decreased by 0.7%, in comparable terms by 9.4% due to the weakening of the construction market. A significant part of the decrease in comparable sales came from solar power products. In solar power products, sales in the comparison period were exceptionally high due to a fast rise in electricity price at the time. In Q4 technical trade operating profit was 22.1 million. Market share continued to grow in the only biggest market in Finland and operating margin was 5%. Also in technical trade credit losses were low. Car trade key topics in Q4. New car deliveries were at the same level as the year before. Used car sales increased clearly. Market share in used cars continued to grow. Also, service sales development was good. Q4 profit for the division was at a good level, 10.6 million euros. Order book for new cars took an upturn in Q4. Net sales for sports trade were down by 15.1%, but profitability was good at 7.5%. And then outlook and guidance. outlook. In grocery trade, B2C trade and the food service 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 a 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. Guidance for the current year, the 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 euros. The 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 industry levels and geopolitical crises and tensions. Dividend proposal. Board of Directors is proposing a dividend of one euro, two euro cents per share to the annual general meeting. It is proposed to be paid again in four installments. This proposed dividend represents 80 percent of the comparable EPS. And now, ladies and gentlemen, let's look at Kesko's transformation. The strategy has the key role in the company's transformation. We have experienced, I would say, an amazing transformation from traditional fragmented retailing company into one unified K. Earlier, the company did not have a unified identity from customer's point of view. Today, Kesko is a unified focus company where we also utilize the synergies between the businesses and divisions, and the customers recognize Orange K and appreciate it. The strategy works and the sales increase proves it. I can proudly report that we have been able to increase the sales of our core businesses by 6 billion euros since 2014. Also sales via digital channels have continued to increase steadily. Currently, digital sales exceed 2 billion euros. Digitalization is an important growth driver for Kesko, not only as a sales channel, but also more holistically in, for example, in improving efficiency and customer experience. Customer satisfaction has risen to a new level. Two million customers visit case stores every single day. In the field of sustainability, Kesko is a global leader. In the recent Global 100 listing, Kesko was ranked as the best company in its sector. We are the only company in the world to have made this list every year since its start in 2005. The sustainability work is in our DNA and we have put a lot of effort to improve it constantly in all our operations. This work has been noticed also in other ratings where Kesko has received excellent scores. Thanks to growth, thanks to successful implementation of our growth strategy, we can see a strong development in our comparable operating profit. Despite weak economy, we are able to report strong numbers. The profit guidance of 620-720 million in this year market environment is a strong message that Kesko's profit-making ability is excellent. The mission of a listed company is to create value to its owners. Since 2015, the total shareholder return paid dividends reinvested and the latest dividend proposal included is 8.3 billion euros. Hence, the excellent profit-making ability can be seen in total shareholder return. Our success is created by people. Performance bonus is paid to personnel since 2015, total 300 million euros. Thank you all for the great work. We published a book last December that makes a deep dive into Kesko's history. The author, well-known historian Anitra Komulainen said in the book, the success of Kesko and K-group is not a coincidence. Throughout its history, Kesko has been able to transform and adjust its operations and find success and will continue to do so also going forward. I have had the privilege of leading Kesko for over nine years. I wish the best of luck to my colleague and new successor Jorma Rauhala as the next president and CEO of Kesko. And as I now 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. Thank you so much.

Thank you, Mikko. And now it's time for questions. We will first go to the conference call line, as always, and then to the chat. And if I may, could you please ask just one question at a time, so it's easier for us to answer? But without further ado, conference call line is open.

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Frederick Avasan from ABG Sundal Collier. Please go ahead.

Thank you. Good morning all. Thanks for the presentation. I've got a couple of questions. I'll take them one by one, I think. So first, on the outlook, you say you expect a stable food retail market with fierce price competition in 24. Does this mean that you expect price deflation in 24, or how should we sort of understand this last statement?

The first competition has been always very tough in Finnish grocery market and we have succeeded very well in that tough competition. 2023 was not easy, not at all, but also it was not unusual and market will continue quite challenging also 2024. But we are unique also in Finnish grocery market and we are confident that we will succeed very well also in coming year. Of course price competition is fierce but we are in excellent position to succeed in that. But Ari please open more detailed especially actions and measures what we have done and what we will do to continue this great development.

Thank you very much. The market has been challenging during the last year and it will keep on being challenging this year. We are estimating that the inflation will continue, but it will be much slower during this year. And we have all the actions needed to be able to adapt to the changes in market, especially lots of campaigning, lots of using Plusa loyalty card data to give customers excellent services. And we think that It will be tight here, but we will manage it.

And maybe Ari, we can also add amazing development in digitalization. KFood app is a great success story. Already more than 800 Finnish households are loading this app. And more than 500,000 Finnish households weekly are utilizing this KFood app.

Yeah. We was able to increase the use of the K-Ruoka applications. It was in the beginning of the last year about 200,000. Now the active users are something like 600,000. And total number of the uploaded customers is more than 1 million customers. So these are very impressive numbers. Because if we compare these customers who have loaded this KöiRuoka application, the average shopping basket is 12 euros higher. So it has actually quite big impact. Another very important tool for us in this difficult market challenge is the private labels. We have been able to increase the sales of the key menu, which is able to It's actually the price fighter in the market. Best prices for the customers and still reasonable margins for the retailers at the same time. And we also have Pirkka private labels and premium Pirkka label, best of the Pirkka. So these are the good tools in this market situation. And share of these are increasing and actually the margins for the retailers are a little bit better comparing to the A-brands.

And last but not least, please remember, we are still the most profitable grocery trade company in Europe.

Will do, thanks. That's a good caller. Second question on PTT and the margin specifically, which obviously came down a bit this year, but it's still quite well ahead of pre-pandemic levels. So how should we think about PTT margin? on a more mature basis. Is this level of around 4.5-5% sustainable you think?

Thank you for this question. We are extremely happy that our operating profit in building a technical trade was last year above 5% despite very challenging market and we see and we feel that this is extremely strong message that we have succeeded to create very solid very well functioning building and technical trade operation to the northern part of Europe and of course we expect that when Sooner or later, business environment market starts to recover in Northern Europe. We are in excellent position to report again wonderful numbers and very strong financial performance. But please, Jorma, please open more detail your businesses and operations.

Yes, I remember when I started as a president of this division and We did something like 2% EBIT, it was 2017-2018. And then we kind of set a very long-term target that in some day we could do, as best European players do, something like 6-8% EBIT level. 2021-2022, we reached more than 7% EBIT. And last year, as we know, was very, very low activities in construction business, and still we did more than 5% EBIT. I think in that circumstances, the level was good, even very good. And what comes this year, as we have stated, the market is not strong yet this year, what we are waiting, but still we think that the margin and EBIT will remain at a reasonable good level.

And also in building a technical trade, we are nowadays among the best profitable companies in Europe. But Jorma, I'm very confident that when you will start as the CEO, you will remind the new president of building a technical trade that in North America they can make even more than 10% operating profit.

Definitely, maybe this is the first message. That's great. Thanks. Last question from my side on CapEx in 24. It seems like you're accelerating on the store site investments after a couple more slow years, I guess. If you could provide some guidance on the 24 CapEx, that would be helpful. If you didn't mention it, sorry about that. I missed that in that case.

As you know we have a very well functioning growth strategy and already years we have put a lot of efforts to implement this strategy and invest on growth and definitely we will continue investments but maybe Jukka can a little bit more open our investment programs and investment plans.

Yes. So first of all, like we said earlier, our capex to our grocery trade Stosat network is roughly from 200 to 250 million euros. On top of that, of course, we have some capex to building a technical trade and car trade as well. What makes the capex this year higher than normally, obviously, is the Oninen logistics warehouse, which we are still building. So we will invest to that one close to 100 million euros still during this year. And also the Danish acquisition Davidsen will increase our capex this year higher. So this will be a year of another higher capex. But then going forward, obviously, when the Oninen logistics warehouse is CAPEX goes down. Of course, the CAPEX is then coming down after this year.

Perfect. Thanks. That's all my questions. So thanks for that. And then congrats, Mikko, on a good career and enjoy retirement.

Thank you for asking questions one by one. That was lovely. Next question, please.

The next question comes from Maria from Wikstrom. Please go ahead. Yes.

This is Maria from SCB. And I would like to join congratulating Mikko and thank you for the years that we worked together. And I got to say that it has been a fun year. So hopefully with Jorma it will be as much fun.

Thank you, Maria.

Thank you. My first question comes to the grocery trade, that if you could give a little bit more in light the timing of the new hypermarket openings, and then also a bit more color that how the profitability is impacted on these upcoming openings, please.

Very important question and we are so pleased and we have been very pleased today to publish those new hypermarket investments, Ideapark in Lempäälä very close Tampere, the second biggest city in Finland. New hypermarket Kuopio, very close city center of Kuopio, capital of Eastern Finland. Our strategy is to increase amount of hypermarkets, invest money on new hypermarkets in capital areas of Finland. capital area in Helsinki capital area and regional capital areas and those investments what we have published are very well in line with our strategy and we have learned that our hyper markets are real money making machines especially big hyper markets close city centers in regional capitals, Helsinki capital area are real money-making machines and we are very confident that those latest hypermarket investments will have also very good return on capital. But Ari, please, maybe you can open a little bit more our programs and plans.

Yes, I would like to underline that if you are willing to gain market share, you have to open hypermarkets to the growth centers of the Finland. Just the one hypermarket, for example, in Helsinki city area or in the Espoo area could mean like 0.2% more market share. And we have plans to open several of these. And in the long term, like Mikko mentioned earlier, they are usually the most profitable business of the company. And that's the reason. And when we are getting these in our own balance sheet, it actually means good earnings in the long term.

and always remember when we talk about modern hypermarkets as we have already 81 modern hypermarkets and now very soon more those massive hypermarkets we always combine successfully also online business to traditional hypermarket and that will be definitely also important part of our latest hypermarket announcements

Perfect. And just to get my numbers right, so how many new hypermarkets are expected to open this year and how many in 2025?

Maria you should remember that those hypermarkets are always massive investments and it takes always time to construct and complete construction work but Vuosaari we are transforming supermarket in Vuosaari eastern part of Helsinki to hypermarket This year Kivistö, massive new city market construction was started in Vantaa, northern part of Helsinki area last year and that will be opened already 2025. And Siks and Lempäälä, what we announced will be opened this year or 2025. I think it will be 25 Kuopio 26 hopefully Porvoo construction permission we hope we will receive very soon and construction in Porvoo would be started very very soon and a couple of other but let's say 20 25 26 we believe quite many new openings

And just to underline how difficult these projects actually are, that I have been waiting for this new city market for Porvoo now 30 years.

Hopefully it's worth waiting. Then one more on the growth rate and increased price competition. It seems that especially like these customer loyalty programs, there have been a lot of talks and a little bit very aggressive in paybacks. And you mentioned that you will respond to the price competition, but how should we think about it in terms of how much Kesco contributes and how much the retailer contributes now when we have more focus on these campaign products? So how will this impact on Kesco's grocery profitability?

First we should remember that the cooperation between Kesko and K-Retailers is seamless nowadays. It works extremely well and weekly our chain people together with all retailing entrepreneurs are planning short and long term measures and actions and implement nowadays very big topic of course campaigns and how we react price competition and we have succeeded very well. I'm very confident that this seamless cooperation will support strong development this year coming years and help us also to succeed in tough competition. Once again I remind that we have succeeded very well. The big issue are new store openings and now when we will open more new hypermarkets we are very confident that we will gain back also market share what we have a little bit lost last year. Hanna is pushing me to hurry up, but this was a very important question.

Maria. If I may, the last question on the building and technical trade. So you say that you expect the market to continue difficult in 2024. Can you split a little bit your view between the building and technical trade and then the Onlinen side? Onlinen, I think we saw the sales to decline much later compared to the building or the DIY part of the business. So how do you see the comparables here now for Onlinen and the building and technical trade part? And if there are some cost-saving measures you still plan to take during this year that we should take into account?

We have implemented a lot of cost-saving measures, but Jorma can open definitely more detailed this market. But before that, I remind that we expect that 2024 will be still challenging year, but we are expecting that 2025 will be already much better in business and especially also in building a technical trade. But Jorma, please open a little bit more.

Yes, as we have said, we expect that the market will continue to decline. But of course there can be some differences, first of all, between countries. I think that... Maybe Norway, Denmark, Poland, Baltics can be a little bit stronger than Finland or Sweden. And what comes to building and home improvement and technical trade, we have to remember that the consumer, we're the first which start to decrease already to 2021. So I believe that the consumer business will recover first, and then building and home improvement and technical trade. But definitely the second half of the year will be a stronger one than the first one.

Thank you.

I have no further questions.

And now we have more questions on the conference call line.

Yes, please. The next question comes from Anna Schumacher from BNP Paribas Exane. Please go ahead.

Hi, good morning, everyone. I have two questions, if that's okay, both on grocery. To the first question, you reported a more than 7% EBIT margin for 2023. Given competition and tough environment, do you think this is sustainable going forward?

No, definitely we believe that this is sustainable, but once again, we remind that competition is tough. It has been always very tough and it will continue tough also in the future. But we are very confident that our concept works. We have seamless cooperation with the retailing entrepreneurs and we are in many respects a unique grocery trade company in Finland and our market share is unusually high. Plus we should remember that besides successful, well-functioning consumer business, we have massive B2B business and our market share is closing 50% in Finnish market we are in many respects a unique grocery trade company in Europe and that is definitely the reason why our profitability is best in class in Europe okay great thank you and then a final question could you please elaborate by what you meant when you said that your purchasing power has improved in grocery in the quarter

Yeah, we can notice that, you know, if you think about the increase of the, for example, in salaries and at the same time for the retired people, they also have got increases in pensions. So we can see that currently buying power in the Finnish market is increasing and this is a big change, first time for a long time. And I would also like to add that we have lots of new earnings coming from the data businesses and also from the retail marketing, and these are one of the explanations why we have so good EBIT margin.

Okay, great. Thank you.

A couple of more questions. The next question comes from Mika Ihamaki from DNB. Please go ahead.

Hi everyone, it's Mika from D&B. Congratulations to Mikko on a great achievement and Kesko and all the best for your retirement from my side as well. First question, so profits in building and technical trade in both segments halved but Kesko Senokai profits increased, so can you first explain what's the dynamic behind this?

Yeah, I can start and Jorma can... You can open more detail, but... As well as we have done great job in Kesko, they have done also great job in Kesko-Senukai to reduce operational expenses, as well as they have worked very hard together with suppliers to improve margins. Plus, we should remember that economy in Baltic countries has started also to recover. I believe that those are very important elements, but Jukka, definitely you are well prepared to open more detailed this development.

Yes, sure. So comparing those two, like Jumika said, obviously the reason is on the top line there. So the top line development in Baltics for Kesko Senukai, the decrease was smaller than it was for the rest of Billinga technical trade business, where it's more sort of professional builders and technical trade driven. So the top line development was the main reason. And for Keskos and Alkai, operating profit development was good during the fourth quarter. Top line came down somewhat, but the gross margin and cost efficiency side was in good order. So that improved the profitability.

Okay, great. And then question on Kespro. So also there are strong margins. Maybe you're citing stable outlook. What do we see there in terms of competition? Is there still room to expand margin if we assume that you're strong markets are momentum continues.

Definitely there is still space for expansion as well as for profit improvements and Ari can open more detail but I remind that our position is exceptional strong and we succeed extremely well against all other food service companies in the Finnish market and that promise of course strong development also in future.

We see the future of the Gespro very bright because we have been transforming the whole company to be more like a platform company currently. So we are able to provide customers new services which are very good and making our customers more happy and more profitable. So we have been seeing that many of the customers have been switching their buy-ins to the Gespro, and we have been gaining market share during the recent years more than 7%. So we have a very good position in the Finnish market also in the future.

Okay, that's all from my side. Thank you so much.

And one more, and since we have Esa's presentation coming up, so if you could please be a bit fast. My colleagues as well, please.

The next question comes from Oysteining from Watch Media Norge. Please go ahead.

Yes, hello. This is from Norway. Thanks for a good presentation. I want to go... Yes, it won't be fast. The first thing I wanted to ask you about was if you could give a heads up about the first year with Electroscandia and how do you see your presence in Norway in the future?

Thank you. Very good question. Norway is an extremely important market for us, and we are so pleased that we have succeeded to strengthen our market position in Norway so well. Big market, strong development, very strong growth. And today, Oninen Eltroskandia, market leader in all segment in Norway, And very easy to repeat, according to Kesko's strategy, we are seeking all options to continue this strong growth in Norway. But Jorma, definitely you are the right man to open more this status of electricity acquisition and integration.

Yes, maybe I opened that a little bit. Yes, this integration between Oninen and Electroscandes may be the biggest integration process that we have had in Kesko. But everything has gone as planned. And our plan is that in the second quarter of this year, we are ready, that then we will have only one company, Oninen, and then we will be the clear market leader in electric wholesale business. And of course, we will gain all of those synergies that we have planned.

Yeah, thank you. Who of you said that didn't catch? Yes, it was. Yeah, it was. And then it was.

Building a technical trade president was the second speaker.

Yeah, yeah, it was. It was the second speaker.

And then I take a couple of really short questions before Esa's presentation. Since we haven't touched car trade here, there is a question regarding car trade here going, you mentioned uptick in car trade order book in Q4. Can you give any additional information of the absolute level of the order book and how long does it take to deliver a current order book is the question from Joni Sandvall.

Thank you for the good question. And fortunately, yes, we saw a shift or better in Q4. But of course, the market in general continues to be soft. Order book is not exceptional high anymore. Order book is below average. In general, the orders are below long-term average in the market as well. When it comes to, you know, The order book or deliveries have been improving, and it depends on the brand, but in general, you may say that two to nine months are the delivery times currently.

Very good. Thank you, Sami. Then I'll take one more question and then I get back to you on the questions you have posed here. The here's question about the technical trade. What is your visibility in technical trade and what are your measures to keep profitability at reasonably good level in a weak market?

I think that published numbers already a strong message that our technical trade also in excellent shape despite such a big challenge on the market for example in Finland your operating profit ordinance operating profit was about 5% in last quarter Last quarter, yes. Yes, a full year much better. All that means that our machine is in excellent condition and when economy starts to recover, we are very confident that our building and technical trade will report again excellent numbers and all-time best numbers and Jorma maybe sooner or later will exceed even this 10% threshold. I didn't succeed, but I know that you are better.

Very good. Thank you, dear colleagues, for the good discussion. Thank you, analysts. Very good questions. I'm sorry to rush you on, but since we have the great pleasure of having Esa here, I will now turn to Esa, please.

Thank you and welcome also on my behalf. I would like to present Jorma Rauhala, who was appointed Kesko's president and CEO as of 1st of February. Jorma holds a master of science in economics and has a strong track record in result driven leadership. Jorma joined the company more than 30 years ago, and he has a long career in Kesko with many different responsibilities. He has been leading the Building and Technical Trade Division since 2017 and has had a significant role in growing the business in recent years. Before that, he was responsible for the Grocery Trade Division for some five years and was, among other things, very much involved in Suomen Lähikauppa acquisition and its integration. Jorma has also headed food service business Kespro for several years. As a director, Jorma is a modern and approachable leader. The execution of Kesko's growth strategy continues. Kesko is today a strong, modern and international trading sector company. We have an established strategy that has proven to be effective and it has yielded excellent results. Under Mikko here on there, Kesko has undergone a major transformation with growth and a significant increase in shareholders' value. On behalf of the whole board of directors, I would like to express our gratitude to Mikko for the great work he has done as Kesko's president and CEO. Thank you, Mikko. As said, strategy execution continues. We see no reason to make any notable changes to the strategy. During the annual strategy review this spring, it is possible that some adjustment can be made to teams and focus areas. Our main focus is on maintaining our strong position in all areas of full trade and further growing our building and technical trade business internationally. Kesko is well positioned to continue to grow profitably also going forward. Thank you.

Thank you, Esa. And now it's time for some questions. Was it a tough race and what made you choose Jorma?

In reality, the process was very extensive and well prepared.

Thank you. And then the next question is, was it a tough race and what made you choose Jorma in the end?

Kesko is one of the biggest listed companies in Finland. So being the president and CEO of Kesko is one of the most interesting roles you could have. We considered many experienced high-level candidates from outside the company. So it was a tough race, but in the end, it was not a difficult decision. Jorma's very strong track record in Kesko's two biggest divisions, his extensive understanding of the company and his easy and approachable personality won the race for him.

Thanks. And then I have one more here. What are your main expectations for the new president and CEO?

Jorma gets to lead a company that is in excellent shape and has a strong strategy that works and brings results. So there's no need to change the course. The key objective for a listed company is to increase shareholders' value strongly. Our main expectations are related to further development and strengthening of our full trade business and growing the building and technical trade business and making it even more international. I also expect Jorma to empower the members of the group management board to lead their respective areas, setting them up for success.

Thank you, Esa. And there's no more questions at this time. I could actually ask a couple of questions to Jorma. So day after tomorrow, you will be the president and CEO of Kesko. So what are your thoughts and feelings before you take the role of the president and CEO?

Thank you, Hanna. When I joined Kesko 32 years ago, I could never have imagined that one day I would become the president and CEO. This shows what a great company Kesko is, as it makes such careers possible. I'm naturally happy and excited. And as the board chair Esa Kiiskinen said, Kesko today is a strong international and modern trading sector company. We have a strategy that works and brings results. Of course, we can always find things we can do better and develop further. This is not the first time in my career that there have been big changes, and I have had to take over significant new areas of responsibility, like managing director of Kespro 2007, president of Kesko Food 2013, and then president of Building and Technical Trade 2017. And I feel very focused and full of energy as I take on this new role to lead Kesko to future growth and success.

Thanks, Jorma. And as we have heard today, Kesko's strategy is working and we see no reason to make any major changes at this point. What can we expect from the strategy review process this spring?

Yes, as mentioned earlier, at this point there will be no massive changes to our strategy. We will have our annual strategy review this spring. Our focus is on further developing our strong full trade operation, further growing our billing and technical trade and making it even more international, and on growing the three core stores of car trade. In the strategy review process, we will focus on our operating environment, investments, and our goals for potential acquisition. And I would say that maybe the most important one is that we have to be sure that our competitive strategies in each business are clear enough and our action plan is also clear and effective. And I'm sure that our strategy execution will lead to Kesko becoming increasingly international. This also means that building a technical trade will be Kesko's biggest division someday. I don't know when, but someday it will be the biggest one. And that doesn't mean that grocery trade becomes smaller. Our goal is also that our customers, personnel, and other stakeholders will value Kesko highly.

Thank you, Jorma.

Thank you.

And before we thank everybody else, Mikko, any last thoughts before the retirement, well-reserved retirement? What are your last message to the international community of investors and analysts?

My last or now very last message is that Kesko K-Group is an amazing company. Amazing company and one of the biggest company in Finland and amazing success story. And guys, I can tell you that I'm so pleased that I have had opportunity to participate almost 10 years Kesko and K-Group's development. And I have had privilege to work with amazing people. We have amazing people. amazing game retailers, 45,000 people working in this group, and everybody has done great job. Once again, I'm so pleased that I have had opportunity to participate this success story. And once again, also thank you so much also for amazing cooperation, what we have done together. Also big thanks for our amazing stakeholders. Thank you.