Kesko's Year 2004
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kesko’s year 2004 Kesko’s year 2004 Kesko Corporation, Satamakatu 3 FI-00016 Kesko, Helsinki, Finland. Tel. + 358 10 5311 Business ID 0109862-8 www.kesko.fi further information > information about kesko for investors 111 Kesko in brief Information about Kesko for investors Kesko is the leading provider of services in the Finnish trading sector Investor relations The Internet and printed material and is also expanding its operations in the Nordic countries, the Baltic Satamakatu 3, FI-00016 Kesko In its investor communications, Kesko follows the principle countries and Russia. of impartiality and publishes all investor information prima- Juhani Järvi Jukka Pokki rily on the Internet pages in Finnish, Swedish and English. Our business divisions Corporate Executive Vice Investor Relations Manager Kesko publishes its annual report as a printed publication – Kesko Food: groceries trade President, CFO Tel. +358 1053 22645 in Finnish, Swedish and English. The annual fi nancial state- – Rautakesko: building and interior decoration supplies trade Tel. +358 1053 22209 Fax +358 9 174 398 ments release and three interim reports are also published as – Kesko Agro: agricultural and machinery trade Fax +358 9 657 465 Mobile +358 50 65 632 part of the TradeMaker stakeholder magazine which is mailed – Keswell: home and speciality goods trade juhani.jarvi@kesko.fi jukka.pokki@kesko.fi to all shareholders. In addition, the company maintains a mail- – Kaukomarkkinat: international technical trade, branded products trade ing list of other persons to whom the annual report and Trade- – VV-Auto: car and spare parts trade Maker magazine are sent. Those who wish their names to be entered on the mailing list may fi ll in the material service form Our core competence areas IR principles at Kesko’s Internet site or the coupons in the printed publica- – creation of new trading concepts and operating systems tions. Kesko’s stock exchange and press releases can be ordered – purchasing and logistics services and wholesale trade In line with its IR strategy, Kesko continually produces cor- by e-mail through the ‘Material’ section at the Internet site. rect and up-to-date information for the markets as a basis for – development of retail store network Press conferences and period of silence – customer relationship management the formation of Kesko’s share price. The aim is to make – chain operations management and support services Kesko’s activities better known and to increase the transpar- Kesko arranges press conferences for analysts and the media – marketing and retail trade ency of investor information and, therefore, the attraction of at the time of announcing the annual and interim results Kesko as an investment target. or other signifi cant news, and holds Capital Market Days on various themes 1–2 times a year. Kesko observes a two-week period of silence before pub- lishing information on its results. At other times, we are hap- py to answer the enquiries of analysts and investors by phone or e-mail, or at the investor meetings arranged administration and ownership Contents The brokerage fi rms analysing Kesko Risk management 55 Corporate governance statement 57 group’s operations Aktia Savings Bank plc, Helsinki Enskilda Securities AB, Helsinki Kaupthing Bank Oyj, Helsinki Shares and shareholders 63 Tel. +358 1024 76581 Tel. +358 9 6162 8714 Tel. +358 9 4784 0241 Values 5 Board of Directors 70 Fax +358 1024 76809 Fax +358 9 6162 8769 Fax +358 9 4784 0111 Review by the President and CEO 6 Corporate Management Board 72 magnus.boman@aktia.fi kari.paajanen@enskilda.fi mika.metsala@kaupthing.fi Strategy and financial targets 8 Management and organisation 74 Vision 2015 project 12 ABN AMRO Alfred Berg, Helsinki EQ Pankki Oy, Helsinki Mandatum Stockbrokers Ltd, Helsinki financial statements Divisions in brief 13 Tel. +358 9 228 321 Tel. +358 9 2312 3314 Tel. +358 1023 64794 Brands 14 Report by the Board of Directors 76 Fax +358 9 2283 2283 Fax +358 9 2312 3335 Fax +358 9 651 093 Kesko outside Finland 15 Income statement 83 tia.lehto@alfredberg.fi kalle.karppinen@eqonline.fi noora.alestalo@mandatum.fi Operating environment 16 Balance sheet 84 D. Carnegie AB, Helsinki FIM Securities Ltd, Helsinki Opstock Ltd, Helsinki Competitive environment Cash flow statement 86 and competitors 20 Notes to the financial statements 87 Tel. +358 9 6187 1235 Tel. +358 9 6134 6234 Tel. +358 1025 24408 Fax +358 9 6187 1219 Fax +358 9 6134 6251 Fax +358 1025 22703 Intellectual capital 21 Key indicators by quarter 99 kim.nummelin@carnegie.fi kim.gorschecnik@fi m.com jari.raisanen@opstock.fi Human capital/personnel Group in figures 100 Structural capital on the cover Calculation of indicators 101 Deutsche Bank, Helsinki Handelsbanken Securities, Helsinki Relationship capital Large photo: Anu Pihlaja, Manager of the Year Auditors’ report 102 Tel. +358 9 2525 2552 Tel. +358 1044 42752 2004 and Sales Director of Kodin Ykkönen Corporate responsibility in Kesko 30 Kesko and IFRS financial statements 103 Fax +358 9 2525 2585 Fax +358 1044 42578 (right) and Minna Laakkonen, Managing Real estate 34 [email protected] [email protected] Director of Kespro Ltd pondering future further information visions at Kesko management’s strategy divisions event. Major stock exchange and Small photos: Kesko Food 37 press releases 105 Top: Heta Hyytiäinen, Quality Director, Heini Rautakesko 41 Glossary 106 Haverinen, Research Chemist, and Arto Kesko Argo 44 Hyytiäinen, Managing Director. Contact information 108 Centre: Teemu Ilkka, Sales Assistant and Ulla- Keswell 47 Information for shareholders 110 Maija Koppinen, customer. Kaukomarkkinat 50 Information about Kesko Below: Miia Hartikka, Consulting Manager. VV-Auto 52 for investors 111 Spokesman Oy/Libris Oy 2005 kesko’s year > year 2004 in brief 3 Year 2004 in brief Net sales and profi t continued to grow Matti Halmesmäki was appointed Managing Director The Group’s net sales were EUR 7,517 million, representing a In September, Kesko Corporation’s Board of Directors appointed growth of 6.3%. The profi t before extraordinary items and taxes Matti Halmesmäki, M.Sc. (Econ.), LL.M. (b. 1952), President of was EUR 172.9 million, an increase of 7.0%. Rautakesko Ltd and Kesko Agro Ltd, to the position of Kesko Kesko distributed a total dividend of EUR 3.00 per share from Corporation Managing Director and Kesko Group President and the profi t for the year 2003. CEO, with effect from 1 March 2005. President and CEO Matti Honkala will retire on 28 February 2005. Intensive internationalisation continued The Group’s net sales outside Finland grew by 31.9% and exceeded Recognition for responsibility and quality work one billion euros (EUR 1,095 million). Kesko’s corporate responsibility report for 2003 was ranked best Rautakesko signed a letter of intent to acquire a majority in the trading sector in the global comparison made for the holding in the St. Petersburg company which owns the Stroy- United Nations Environmental Programme UNEP. In October, master DIY chain. Stroymaster’s market share of total sales Kesko Corporation won an award for the best overall reporting through all the chains in this sector in the St. Petersburg area of environmental and corporate responsibility in Finland. is about 20%. The plan is to complete the acquisition by 15 March Anttila Ltd won the Finnish Quality Award in October. Accord- 2005 at the latest. ing to the jury, the award was evidence of business expertise Kesko Food and the Swedish ICA Baltic AB agreed to establish which has enabled Anttila to attain excellent results and sus- a joint venture for the Baltic food market. Rimi Baltic AB start- tainable competitiveness in its sector. Anttila Ltd also completed ed operations at the beginning of 2005. The joint venture has the ISO 14001 certification of all its operations in Finland. about 160 food stores and its market share is about 15%. The At the beginning of 2002, Anttila became the fi rst Finnish de- company’s objective is to reach the leading position in the Bal- partment store chain to adopt an environmental system based tic market. The total number of employees is around 8,300. on the ISO 14001 standard. Sales in the Baltic agricultural and machinery trade increased well. Kesko Agro is the largest company engaged in the agricul- Financial highlights tural trade in the Baltic countries. In Lithuania, the largest ag- ricultural and machinery trading and service centre in the coun- Change, 2004 2003 % try was opened near Kaunas in July. Net sales, EUR million 7,517 7,070 6.3 Expansion also in Finland Operating profit, EUR million 176 158 11.4 In October, Keswell Ltd agreed to acquire Indoor Group Ltd’s Profit before extraordinary shares. The transaction was completed in January 2005. As a items, EUR million 173 162 7.0 result, the chain concepts of Indoor Group Ltd, as well as In- Return on invested capital, % 11.9 10.9 8.9 door’s own Asko and Sotka furniture stores in Finland, Sweden, Estonia and Latvia, were transferred to Keswell Ltd’s ownership. Return on equity, % 9.3 7.4 25.9 There is an appeal pending concerning the Finnish Competition Capital expenditure, EUR million 170 259 -34.3 Authority’s approval of the acquisition. Cash flow from operating In February, Kesko Food started testing Cassa discounters in activities, EUR million 192 165 16.8 various parts of Finland. Cassa stores are operated by Kesko Food. Their sales performance has so far exceeded expectations. Equity ratio, % 45.5 51.7 -12.0 The total number of Plussa cardholders in the K-Alliance’s Gearing ratio, % 28.8 16.2 78.1 customer loyalty system exceeded three million. At present, Personnel (average) 17,528 15,219 15.2 about 1.6 million households have Plussa cards.