Kesko in Russia. CFO Jukka Erlund

Transcription

1 Kesko in Russia 1 CFO

2 Kesko today Kesko s net sales 9.3bn - K-Group s sales 11.6bn 2,000 stores in eight countries Over 1.3 million customer visits every day Book value of real estate 1.4bn Market capitalisation 3.1bn (March 31st, 2014) 41,000 shareholders 23,000 employees Net sales Q2/13-Q1/14 9,285m Food trade Home and speciality goods trade Building and home improvement trade Car and machinery trade Operating profit excl. non-recurring items Q2/13-Q1/14 239m 0 2

3 Kesko has 2,000 stores engaged in chain operations in eight countries Total about 56m consumers Food trade Finland, Russia Home and speciality goods trade Finland, Estonia, Latvia, Russia 5% 2% 1% 82% 1% 4% Building and home improvement trade Finland, Sweden, Norway, Baltic countries, Russia, Belarus 3% 1% Car and machinery trade Finland, Baltic countries 3

4 Retail growth has exceeded GDP growth Source: Rosstat Retail GDP 4

5 Strategic priorities Strengthening sales growth and improving profitability E-commerce and multi-channel service models Utilising Russia s business opportunities Strong financial position and good dividend payment capacity 5

6 Risks and possibilities of Russian market Possibilities Economy and exports are on surplus, raw materials sold in hard currencies. Population 140 million, large middle class, good education. Unemployment modest, some 5% Retail trade one of the growth drivers Grocery market largest in Europe Market share of the 10 largest grocery operators 20% In the medium term, customs duties will go down and the openness of the economy increases. Risks and challenges Slowdown of GDP growth Renewal of business environment has been slow High inflation and weakening rouble affect purchasing power Ukrainian crisis has affected investments and financing in the Russian market Competition tightens as store site networks are expanded For retailing, good store sites are expensive Infrastructure is a bottleneck. 6

7 Kesko s operations in Russia Changes in the operating environment - Slowdown of GDP growth - Weakening ruble - Political situation Approximately 4% ( 360 million) of Kesko s net sales came from Russian operations in 2013 Net capital employed in Russian operations some 300 million Kesko has 13 K-rauta stores, net sales in 2013 some 300 million (operations since 2005) Kesko has 4 K-ruoka stores in St Petersburg, net sales in 2013 some 70 million (operations since Dec 2012) Kesko had 20 Intersport stores at the end of Q1/2014 (operations since 2011) Russian initiatives are continued, taking into account changes in operating environment 7

8 Kesko s sales in Russia in 2013 K-rauta, 272 million K-ruoka, 71 million Intersport, 18 million 8

9 K-pyoka

10 K-ruoka Russian business operations started in St. Petersburg in December Total of 4 food stores and net sales of 71 million at the end of Target is to open 3 new stores in 2014 and a network of 10 stores by 2015 Net sales target of the food trade 500 million and positive result in 2017 The basic concept is a large, better than the average food store Best in Fresh, with a selection of home and speciality goods for everyday needs K-ruoka 10

11 Change in the grocery market value in Russia % Source: PMR 11

12 Largest grocery chains in 2013 Russia St. Petersburg Retailer Revenues 13, bn Retailer Revenues 13, bn Magnit 13.4 X Auchan 7.2 Dixy 4.3 O key 3.3 Metro 3.0 X5 1.8 O key 1.5 Lenta 1.2 Intertorg 0.9 Dixy 0.6 Auchan 0.4 Lenta 2.0 Source: PMR Source: Infoline 12

13 Russian food market Market size some 255 billion - Share of all retailing some 47% Market is very fragmented Heavy investment programs planned Noticeable shift in shoppers preferences towards more quality and service, especially in the highly saturated urban areas of Moscow and St Petersburg Private label is very limited but rising up the agenda Operative EBITDA of peers 6-12% 13

14 Russia is the largest grocery market in Europe Largest grocery markets in Europe, 2012 Rank Country Grocery retail market (USD bn) 1 Russia France Germany United Kingdom Italy Spain Turkey Switzerland Poland Belgium 46.4 Largest grocery markets in the world, 2012 Rank Country Grocery retail market (USD bn) 1 China 1, USA Japan India Brazil Russia France Germany United Kingdom Indonesia Source: IGD Source: IGD Datacentre

15 Structures of the grocery retailing Structure of the retail grocery market, value Structure of the organised retail, value 100% 80% 60% 40% 20% 0% Source: PMR e Open air markets Organised retail Independent stores *Only estimated retail sales Discounters 37.3% Hypermarkets 27.7% Supermarkets 22.2% Cash and carry stores* 8.4% Convenience stores 4.4% 15

16 K-payta

17 K-rauta in Russia Russian business operations started in St. Petersburg in 2005 Kesko has 13 K-rauta stores in Russia and net sales of 272 million in 2013 K-rauta is the second largest operator in St. Petersburg - Targeting a network of some 10 stores The focus of the expansion will be Moscow and cities nearby Moscow Moscow is clearly number one city in Russia when it comes to the consumers purchasing power Targeting a network of stores Common projects with Kesko Food - Support each other s sales 17

18 Change of DIY retail sales in Russia % e Source: PMR 18

19 Main competitors Main competitors Sales, million 2012 Number of stores Average sales Market share area St. Petersburg Total m ,000 1, , , , ,000 19

20 Russian DIY market Market size some 20 bn Major international chains dominate the market Local chains have started targeting smaller cities and less developed regions A major trend is market consolidation Retail chains share of DIY sales about 50% - Share of modern retail on the increase Density of DIY stores in Moscow much lower than in St. Petersburg 20

21 Estimated share of DIY retail channels 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Independent, open-air markets, kiosks etc. Grocery hypermarkets DIY chains Online 21

22 Intersport

23 Intersport in Russia Acquired in 2011 Includes 20 stores, mainly in St Petersburg, Novosibirsk and Moscow Russian market is very focused on clothing and footwear Russian Sportmaster is the largest player on the clothing and footwear market Adidas #2 in the market Next steps Renovation of the stores Rapid growth in Russia 23

24 Kesko s loyalty program in Russia Loyalty card was launched in December 2012 Discounts and special offers in more than 50 stores in Russia Since 1st of January 2013 customers with Russian loyalty card have had an opportunity to receive Finnish Tourists K-Plus card without charge. Visa versa card holders of Finnish Tourists K-Plus card receive Russian loyalty card without charge. 24

25 Thank you! Twitter.com/Kesko_IR 25