Kesko Oyj Unsp/Adr

Hyvää päivää ja tervetuloa seuraamaan Keskon kolmannen kvartaalin tulosinfoa. Minun nimeni on Karoliina Partanen ja olen Keskon viestintäjohtaja. Aloitamme pääjohtaja Jorma Rauhalan katsauksella. Hän käy esityksessään läpi kolmannen vuosineljänneksen tuloskehitystä, toimialojen kuulumisia sekä toimintaympäristön näkymiä. After the chairman's review, there will be a Q&A session. We hope for active participation both here at the campus and on the lines. And to the lines, a familiar reminder, you have already asked questions during Jorma's presentation. They can be seen here between us on the long line. But without further ado, let's get started. Have a good one, Jorma.

Thank you, Karoliina, and good morning and welcome from my side as well. Indeed, the results improved in terms of sales and development in all areas. What we mean by that is that if we start moving to the daily grocery store, in all of Finland, the daily grocery store has grown significantly more in Q3 than it has grown in the beginning of the year. Our sales development was clearly better than before, and I can say that we are very close to the market pace. We also see that the quality of these products, quality ready-to-eat foods, fish, fruits and vegetables, sales are growing more than before. There are certain positive signs in the use of consumer funds at this point. Building and housing technology is positive in that, if we look at it, of course, the share of foreign countries has already increased by 60%. There, the sales development of Poland, Baltic, and Denmark was quite strong, very strong, and then in Finland, however, Onninen, a significant operator here, was now the best sales development in more than two years. Well, on the car side, we know that the market has been quite weak, but there it was actually only positive for us. Then to these key issues. Central revenue clearly improved. Trade increased in all areas. Trade increased in the daily goods market. Profitability at a good level. The sales and sales of KRO are close to the market level. Trade increased in the construction and financial technology market, especially with the support of the corporate sector, and the profitable trade increased. In the automotive industry, trade and comparable trade have increased significantly. Onninen and K-Auto's joint logistics center was created in time and under the original budget. In 2015, the company updated its income guidance and estimated a turnover of 640-690 million euros. The company estimated that in 2026, the operating environment and income will improve in all areas and in all operating countries. Here are the key issues from Q3 and beyond. The turnover increased by 200 million for the consortium to 12.3 billion in the last 12 months. The turnover increased by 6.5 million, and here we have opened up the central bank. The official figures for the beginning of the year were 1-6. We had a kind of a guide report on that. Now we have exact figures 1-9, and they have been put here for the whole nine months to Q3. But when the first six months had 100,000 deaths, then in practice the Q3 result was very strong for the central sector and can be seen there. Why was it vulnerable at the beginning of the year? Operatively, it was okay. The first quarter is usually not vulnerable. But there was a drop in the stock market, which is again a normal practice. Sometimes the drops are positive. So there is no drama in the business. The operation is good and a strong Q3. But here are the explanations that will come later. The profit of the joint venture dropped somewhat. It improved in the car market. The economic position, the amount of net income, the impact of the commercial investment and corporate purchases. And the net income without leasing fees or net income per use rate is 1.8. Of course, there is a rise, but it is good to remember that our economic goal is that it is below 2.5, so we are well there. The most important investments were the shopping mall investments and the logistics center Onnella. Onnella shows the other investments, and now it is ready for investments. Costs rose mainly due to the company's purchase. Without new purchases, the costs only increased by 1.3%. So here you can see the total costs from Tanska. Three new companies means tens of shops, means hundreds of people. They are visible there, but without them, the 1.3% is quite well spent in the stock market. The retail stock market. Sales increased. The market share of K-Shop has improved. The turnover increased by 36 million euros. In terms of turnover, a small decrease, a decrease of one million euros, but still 7.1% and a sluggish 6.6%, so a strong performance from the day-to-day stock market. In the central day-to-day stock market in the previous quarter, the turnover increased, the comparability decreased slightly. K-food stores' daily sales increased by 3.6%. Kespro's turnover dropped by 0.2% and development was close to market level. If we look at it all year round, Kespro has won market share. K-Sitemarit's consumer goods sales increased by 3.2% and the results improved. In fact, our K-Sitemarit's consumer goods is, can I say, makes quite a strong profit from consumer goods operators. The sales are strong and it is also strongly profitable. The customer base has continued to grow due to the price of the program and the campaign. The sales of Ruo online shop increased by 9.9%. There, in particular, the increase and the speed of action increased the most. In Finland, according to the order center, the price inflation in Ruo was 2.7%, for us it was 1.2%. So you can clearly see in this price program where we have calculated In terms of prices and their products, sales development is two-digit. It is clearly visible here, which means that the volume increase of Mars has come to Q3. The overall market growth was 3.9. In terms of market share, we have found that Q1 was better than last year, and Q2 was better than Q1, but now Q3 was clearly the best year. It was very close to market growth and the overall market, and it is important that City Market has now won in its own class, i.e. the market in Finland is considered to be three out of four. They are the hypermarket sector, the supermarket sector and the close market sector. In the supermarket sector, the city market has won all year round. Now the last quarter of the supermarket was very close to market growth. What we lose the most is the local market, and the biggest reason is that we have stopped some shops. When we had hundreds of shops through the Finnish local shops, some of them have been closed. But it looks very positive. As I said earlier, the food market is still price-driven, but you can see the signs of the growth of quality products and services. Then, the activities that have been done bring results and positive market development, and that is the pattern. I have been asked if the price program is enough for the market to turn into growth. I have realized that it is not enough, but these three elements are needed. We need quality, price, and local network, and in all respects, we must move forward, and we are moving forward, and that can be seen in the results. If we take a look at the shopping site network, we see that the latest developments on the City Market side are that Ideapark Lempäälä has moved very well, again in September when it was opened, and Lahti Paavola, Finland's first City Market in 1971, will now open completely new in March. Next year, Vantaa Kivistö and Kuopio Haapanen will come to our Ylivieska. But then, years ahead, we see that there are ten new shops here, a hundred new shops. This morning, we published some very important information, that is, the center is investing in growth, strengthening its market position with three new city markets. So, let's open the shopping center in Redi, right next to us, where K-Supermarket is currently located, and then there will be K-Citymarket. In Vantaa-Tikkurila, we have purchased Kauppakeskus Tikkuri, a retail store, and there we plan to start building a city market at the end of this year, and we can say that in that context the entire area would be significantly renewed. And then a great thing in Espoo, the Espoontori has become law-abiding and construction work has actually begun there. The construction of the new K-City Marit is in progress and the sales are estimated to be 28, and then there would be the third City Marit in Espoo, and we can see an observation picture of it there. It could be said that the desire of the Espoo center is also moderated by this project. Very good, positive things, as you know, especially in such growth centers, that finding a place for a new city market is not very easy for a hypermarket, so it has been done very well there, and it is precisely such right-sized city markets in the shopping center environment. Price program. This was one of the three. We started in January. The main thing was that there was a 1,000 mark product in which we calculated the price. And now that we look at the results, profitability has remained clearly above 6%, as we have seen. Sales have grown strongly. Sales of these products, sales growth is two numbers. Customer numbers have increased. The average has increased several months. Of course, campaigns are still an important role for us, but also this kind of daily basic buying has now grown, and it comes through this price program. And we will continue this price program in the long run. It doesn't necessarily mean what we talked about last year or at that time at the turn of the year, that we will invest about 50 million euros with these stores, but this is kind of this model now in our price program and in our pricing models, and we will continue this implementation. Quality level, there is significant sales growth potential, and commercial and commercial business ideas are our most important competitors. That is what separates us from competitors, and we know that we have a large number of absolutely excellent businesses. We know that even at the global level, we are doing great in different comparisons. But of course, there are quality changes in over a thousand shops. There are also shops where you can improve the quality level, and that is done together with the merchants. And then, of course, it is important that we always have the right kind of merchant for that particular shop. And as an example, there are 140 such changes in a year. It starts with the fact that, let's say that CityMarket is going to retire, then probably from the supermarket we will move to CityMarket, from the market we will move to the supermarket, and a new business will start in the market. So in one period of time, three new businesses will retire. And that is a critical point, that we will find the right business for that trading environment. And then we will continue with other activities, for example, further refining of commercial activities and certain product groups that we renew there, and then we will use the used goods, bread, and use technology to improve quality and productivity. It is important that we do this in strong cooperation with the merchants, both central and commercial, so that we can improve the performance. Then, as the relationship between the construction and the financial technology trade was improving, the technical trade sales were clearly strengthened. The turnover rose by more than 100 million, and the turnover improved, and this is also the focus of the central market. So 5.8% was the profit in the third quarter and then sluggishly 3.7%. What is central here? In the construction and economic trade, trade growth and results improved. The market expectations in the construction and economic trade are weaker, especially in the construction of new housing. I'll come back to that later. The sales of the technical trade increased significantly, but the results remained the same as last year. The trade of the steel trade increased as a support for the corporate trade, but decreased comparatively. Despite the increase in sales, the sales price declined due to the intense price competition in the challenging market. So, of course, we have talked about the fact that the construction market has been soft, as it still is, but in addition, of course, if the market is soft, then the competition in those projects, in those small projects, is actually stronger, which is visible then, for example, in the sales price, but it is What I would say is natural for such a market situation and improves over time when the market also improves. In Finland, the sales of K-Rauda fell slightly from the comparison period. In Finland, the sales of Onnis increased for the first time in more than two years. In Norway, the sales of positive Pygma-Kroninen increased and also the results improved. In Denmark, Davidsson had good sales development and then we get the integration to the end of these three parts soon. And in Sweden, the conversion of stores to K-types continued and negatively affected sales development and results. It is good to note that in Sweden we have about, I don't remember the exact number outside, but let's say about 50 stores. And the stores we are talking about here are seven or eight, where the K-rate has been changed to K-types, so the problem with which we are pressed is limited, but sales are slowly improving all the time. Trust risks are under control, and the central market has been opened. We have shown this from the summer of 2024, and this is always the sales development of the quarter compared to the previous year's equivalent quarter. If we look at the last Q3, we see that Onninen became a plus mark for the first time in a long time. There have already been more than a quarter of a zero. But this is a positive message in this regard. I would like to return to the new housing construction, which is talked about a lot. Suomen Onninen, like other Onnis in other countries, serves a wide range of different areas of construction. Suomen Onninen is organized in such a way that we have housing technology there, we have two sides, electricity and the LVI side, then there is industry, infrastructure and so on, resellers and other business customers. If we look at the half of this industry, the largest customers there are, for example, shipyards. We know that in Finnish shipbuilding it is going quite well, so there is a good situation there. Infrastructure is especially in a good situation and, according to my understanding, it is still growing. Then there is this sale of 10% again. And then we go to housing technology. And about half of this is new building. and the other half for renovation and maintenance. On the other side, part of the new construction is housing. At the moment, there are about four new apartments in the whole of Finland. That's what we get to read from the media every day, and of course we know the situation. So there are new apartments, but others are being built. Of course, the entire construction sector is quite weak, but new apartments in particular, but it is not a complete one, but in this case it is the fourth. And of course, when the construction of the apartment starts to speed up, that share then also increases. There are two messages on this slide. One is that almost 60% of construction and economic technology is being sold outside Finland. This may be a surprise to many who don't know the center so well. We are a very international company. It is expected to be 2.8 billion when the international sales level is calculated. That is one message. The other message is that the difference in the area is such that if we look at Tanska, Poland and Baltic states, there is a very strong sales growth of 8-29%. And then Finland, Sweden, Norway is more there, 0, plus or minus something. But this also gives us faith that first of all, the central or building and development technology is other than Finland. There are eight countries in all. And in different countries, sales are developing in different ways. And from the southernmost countries on our map, the best sales development at the moment. The logistics center has been completed successfully. It serves the technical business of Onni and in addition to the logistics of K-Auto. It was completed in August 2000, this year in August, and the change is made at the quietest time of the year in business mind. That is, we are talking about December, January, so that we are at the end of the first of June, it is in full operation. And at the same time, the current warehouse of K-Rauda, which has been exported, will be moved to the old Onninen warehouse. So we will get the Synergia, for example, from the individuals when they are in the same location. Next year, we will have some additional costs when we work with a couple of warehouses here, but they have been taken into account in our views also next year. Onnilla is able to grow as the market strengthens and the efficiency increases, especially when the volume starts to grow. When we had strong years in 2021-2022, in addition to the current central storage, we had four or even five other storages. We had to collect and store goods in many places, and now we have one storage. The construction went well on all sides, and cost-effectively, we estimated that 300 million was estimated to be under 250 million euros. Here's what it can do for the future growth and also this, that in the right corner, Tonti has a 100% increase in revenue and automation increases significantly here. Car sales, strong income development continued, the turnover rose by 60 million euros, The net profit of 4.9 million euros is almost 23 million euros, with a net profit of 6.4 percent, a sluggish 6.1 percent. I have to say that it is quite satisfying to be at the level of our car business performance, what we do with it, and it comes very safely. Let's look at the different segments in there. In other words, the turnover of business changes and profitability clearly increases, regardless of the challenging market. And then the new cars, Q3 first registered in the Finnish market, which is still at a low level, had a growth of 2.5%, so we had a growth of 18.2%, which is a very clear difference. In terms of used cars, and this is specifically when companies sell to consumers. In Finland, we sell 600,000 used cars a year. A large part of it is from consumers to consumers, but then we talk about when companies sell to consumers. There, the market dropped by 0.1% and our sales growth was almost 25%. Of course, when we came there as a new company, our business model and K-brand works great there. Service sales also increased, and sales continued to increase, especially in repair and maintenance of older cars. The sports market was also in decline. Our income dropped a bit, but our market share continued to grow. Intersport and Patsasport are very strong operators in the Finnish market. Determined income guidelines 25 and future outlooks 26. In the normal way, we defined our income guidance for this year, and the income guidance for the central concert will be given from the year 2025 to be compared to the year 2024. The operating environment is estimated to be better at the time of 2025, but still relatively challenging. The average turnover of Keski is expected to improve by 2025, and we estimate that the average turnover will be 640-690 million euros, compared to 640-700 million euros earlier, which is a very small determination in terms of what is done in the year ahead. And it is based on the fact that we are now in the nine-month period and it goes completely into building this economy. The market was also a little weaker in Q3 than we expected even in the summer. And the car market, the daily goods market is at least according to our expectations. And in fact, the key factors affecting visibility are the development of consumer confidence and investment desire, as well as geopolitical crises and tensions. And then we have also tried to serve the markets and at this point also give visibility from next year, although in today's world it is not very easy to give this kind of visibility. This is how we have done it. The turnover rate is estimated to improve during the year 2026 in all sectors and in all sectors. Also, the average competitive profit is estimated to be better in the year 2026 in all areas and in all operating countries. In the consumer goods market, it is estimated to be firm and the food service business remains stable. And in the year 2026, the average competitive profit margin of the consumer goods market is clearly over 6%. Despite these price investments and our investment in the shopping mall network. So next year, in 2026, we predict that the retail and commercial business will be able to make a profit, improving from the year 2025. The relationship between construction and financial technology has not improved since 2025, as we expected at the beginning of the year. In the year 2026, we see that we are beginning to improve our relationship from a relatively low level. And in the year 2026, the net profit of the construction and financial technology trade is estimated to improve from 25% in all operating countries. In the automotive market, the sales of new cars are expected to remain stable compared to the long-term level, i.e. there may be 100,000 cars or even more in the long term, but still growing from 2025. In the year 2026, the exchange rate between the central automotive industry and the comparable profit margin is estimated to improve from 2025. Last day summed up, Q3, a good result, positive development in all areas, regardless of the environmental challenges. In the everyday goods market, strategic practices are breaking, the market share growth in K-commerce is turning better, the Kespro has a strong market share and in the everyday goods market, the mark is tightening. The sales of construction and financial technology have clearly increased in Tanska, Puola and Valttia. The sales of technology have strengthened. The degree of construction is strengthening, but earlier estimated to be more moderate. There is good sales development in the car market, in new and used cars and services, and the retail market is doing better. All in all, I can say that all of our activities are in very good shape as we look forward to the market strengthening next year. Tässä kohtaa kiitoksia ja Karoliina varmaan tulee sitten toivottavasti joidenkin kysymysten kanssa.

Kiitos paljon Jorma. Siirrytään kysymyksiin ja aloitetaan täältä kampukselta. Onko täällä tässä vaiheessa kysymyksiä mielessä? I'm not at the campus yet. Let's get to the lines. You just told us that our K-City markets have been doing well in the market and today you have told us that there are three new K-City markets in the metropolitan area. What role do hypermarkets play in the growth of our daily goods market?

The central role, of course, as I have said earlier, is that after the purchase of the Finnish local store in 2016, we had 400 new stores. Then we had a little quieter years. That was before 2017 in Sastamala, when the City Market was opened. There was a break of years before the completely new City Market was opened in Lempäälä. Now they are coming, and they are in a very central role if we look at these new ones that are coming to Helsinki, Vantaa, Espoo, i.e. growth centers where we do not have enough city markets. It is important to note that if we talk about hypermarket, especially if we talk about hypermarket at international forums, it may come that, oh, is it such a ten-thousand field hall with large commercial facilities? These are called hypermarkets, but they are very high-quality, suitable-sized food stores, where there is a compact non-food department, cosmetics and certain household necessities. So the concept is good, and so are these in the shopping center environment. Yes, that's right. This change is happening in Finland and we need to have our own shops there. We need all the shops. We have city markets, supermarkets and markets. And why these sites are highlighted is because opening them was not a simple thing. Finding good locations can be a story of years, sometimes even decades. But they have succeeded. I am very pleased with it.

That's right. Regarding the construction and housing technology trade, you mentioned in the presentation that the pace of the development of the construction market is changing a bit, and it seems that the market is improving from the south. Could you elaborate on this a little more? What does Finland, Sweden and Norway look like? Are there differences between these countries?

It's not a big deal. It's just that Poland, Baltic and Denmark clearly have the same numbers as we do, because the market also has the most positive numbers. All these countries have encountered that 2021-2022 were very strong years, and then in 2023-2024 there was a collapse, and now they have started to improve a little bit at a different pace. As we have said, we expect that Finland, Sweden and Norway will also improve in each country next year. It's hard to assess. I looked at our latest forecasts, and there haven't been any big differences in how the next year's volume growth could be. Everyone is growing, but I hope so, and we believe that Finland, Sweden and Norway will start to improve. But as we have said, in a multilateral way, and there is probably especially this new housing construction, that it will take time, even if new projects are started, it will take time. But it can happen quickly. If the market is positive and people are changing more and more, there can be positive changes. But at this point, we believe in this kind of massive growth.

That's right. The presentation should be as empty as it is today. There are no more questions on the lines, so it's time for the closing remarks.

First of all, thank you to everyone who is here and on the line. This was actually my last slide. The market is known to be the easiest to sell, and our daily grocery store is more balanced. But building a technical car store is a very cyclical business. and how we have performed this year and the last quarter, we can be very pleased. It is important that when the rise starts, we are in a very good position. Thank you all.

Thank you, Jorma, and have a good rest of the week. Thank you.