Kesko CMD, President, Building and Technical Trade, Terho Kalliokoski
KESKO CMD 2018 Value Creation in Building and Technical Trade · KESKO CMD 2018 Value Creation in...
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KESKO CMD 2018
Value Creation in Building and Technical TradeJorma Rauhala, President, Building and Technical Trade, Deputy CEO
19.6.2018 KESKO CMD 2018 | Investor Relations1
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Building and Technical Trade in Brief
• Number 1 operator in building andtechnical trade in Northern Europe
• Sales €4.4bn
• 430 stores in 8 countries
• Comprehensive digital services
• Serves three customer segments
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Retail sales 2017, excl. speciality goods trade and the Russian business operations, which will be discontinued in 2018
Norway€933m
Poland€218m
Finland€2,110m
Sweden€401m
Baltics€701m
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Solid Foothold in Eight Countries
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Solid business across the eight main countries,with 0.3 million customer contactsa day, increasingly online
65 Byggmakker stores, 25 Onninen stores, retail sales €933m
17 K-Rauta stores, 14 Onninen stores, retail sales €401m
8 K-Rauta stores, 8 Onninen stores, retail sales €128m
9 K-Senukai stores, 4 Onninen stores, retail sales €70m
137 K-Rauta stores, 55 Onninen stores, retail sales €2,110m*
22 K-Senukai stores, 3 Onninen stores, retail sales €385m
17 Oma stores, retail sales €120m
35 Onninen stores, retail sales €218m
*Excluding speciality goods trade
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Technicalprofessionals
• Technical contractors• Infrastructure• Industry• Retailers
Consumers
• Renovators• Home and garden builders• Decorators• Gardeners
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Building and Technical Trade Brings Valueto Three Customer Segments
Professionalbuilders
• Construction companies• Renovation contractors• Decoration contractors
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Technicalprofessionals
• Heating, plumbing• Electricals• Ventilation and refrigeration
Consumers
• Building materials• Timber• Surface materials
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Customer Drivers Differ in Each Customer Segment
Professionalbuilders
• Surface materials• Bathroom• Garden products
• 100% availability for key items• Reliable next day deliveries• Personal sales, always available
• 100% availability for key items• Personal sales, always available• Deep assortment
• Competitive prices • Approachable and competent customer
service with advice• Easy to shop, good availability• Showrooms and visual displays
Customer requirements
Main product categories
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Sharper Country Specific Focus
Jorma Rauhala
Customers
EndreEspeseth
Olli PereMartti Forss
KnutStrand Jacobsen
Arturas RakauskasMartti Forss
EndreEspeseth
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New Management ModelEffective as of 1 April 2018
Jorma RauhalaPRESIDENT
FINLAND and
BALTICS
Onninen
MarttiForss
FINANCE, M&ATommi Kasurinen
MARKETING AND COMMUNICATIONSJonna Nummela
HRUlla Rehnström
COMMERCE, SUPPLY CHAINPetteri Niemi
KESKO SENUKAI*ESTONIALATVIA
LITHUANIABELARUS
K-RautaK-Senukai
OMA
ArturasRakauskas
NORWAY
ByggmakkerOnninen
Knut Strand Jacobsen
SWEDEN
K-RautaOnninen
EndreEspeseth
* Kesko Senukai is led through company board
CONCEPT, SALES SUPPORT, DIGITAL SERVICESJohanna Kontio
ICTBenjamin von Nandelstadh
FINLAND
K-Rauta
Olli Pere
POLAND
Onninen
EndreEspeseth
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Strong Strategy Execution
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Continued operations, comparable operating profit, building and technical trade excluding speciality goods trade
Financial performance2015 2017
Net sales
Operating profit
€1,989m €3,639m
€62m €79m
Focusing on core business
Operational efficiency
Acquisition of OnninenKesko-Senukai arrangementDivestments in speciality goods and machinery trade Divestment of K-Rauta Russia
Changed management modelMeasures to improve profitability in Sweden and PolandMerging the K-Rauta and Rautia chainsNew digital services and eCommerce
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Profitability Improvement with a More Focused Portfolio
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3/2015Divestment of Anttila
7/2016Divestment of IntersportRussia
6/2017Divestment of K-maatalous
2/2018Divestment of Russian building and home improvement trade
4/2016Kesko-Senukai arrangements
6/2016Acquisition of Onninen
6/2017Divestment of Yamaha and Yamarin
6/2017Divestment of Asko and Sotka furniture trade
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Successful Onninen Acquisition
• Acquisition strengthened position in the well-growing professional customer segment
• Expansion into technical trade with HEPACand electrical product groups
• Strong growth in sales, EBITDA €48.3m*
• Focus on profitability improvement continues
*Rolling 12 months Q1/18, comparable
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Continued Profitability Improvement with Strategy Execution
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Operating Environment Changing at Growing Speed
The market isconsolidating
Consumers increasingly outsourcing construction to professionals
Growing need forrenovation building
Digital is a critical part ofthe customer journey
Non-traditionalplayers entering the market
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Strategic Direction to Become an Even Stronger Operator in the Northern European Building and Technical Trade
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Country focus with specified
strategic actions
Three customer segments served according their
specific customer needs
Synergies – within individual countries
and between the operating countries
Organic growthand profitability
improvement
Selected acquisitions
to win a chosen country and
segment
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Market Offering Ample Opportunities
Building & home improv.
Onninen
Retail market 2017 (€bn) 5.0 2.5
Onninen
Building & home improv.
Onninen
Building & home improv.
Onninen
Building & home improv.
Building & home improv.
Onninen
4.6
3.1 2.1
2.7 1.2
5.5 4.2
1.1
Marketposition #3-4 #4
#2
#5-11 #6
#1
#1 #1
Retail market 2017 (€bn)
Marketposition
Retail market 2017 (€bn)Marketposition
Retail market 2017 (€bn)
Marketposition
Retail market 2017 (€bn)
Marketposition
Retail market 2017 (€bn)
Marketposition
EE #2LAT #3LIT #1
EE #2LAT #4LIT #3
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Future value creating actions
• Growing the Onninen Express store network
• Store-specific business ideas in K-Rauta
• Developing digital channels 791 794
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-10%
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Fully Utilising the Potential of Market Leadership in Finland
€m %
1,800
1,600
1,400
1,200
1,000
Net sales, €m Net sales, change %
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Future value creating actions
• Growth in Byggmakker sales andprofitability
• Acquisitions to change the Byggmakker business model
• Strengthened Byggmakkermanagement model
431 418
558662
-15%-10%-5%0%5%10%15%20%25%30%35%40%
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2014 2015 2016 2017
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Raising the Business to Next Level in Norway
€m %
Net sales, €m Net sales, change %
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Future value creating actions
• Measures to improve profitability
• New management team in place
• Increased focus on all three customer segments194
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Gaining Sustainable Profitability in Sweden
€m %
Net sales, €m Net sales, change %
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Future value creating actions
• Remodelling the store network in linewith the K-Senukai concept accordingto local needs
• Growing the store network especiallyin big cities
• Development of digital services
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Strengthening Value Creation Potential in Kesko Senukai
€m %
Net sales, €m Net sales, change %
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Future value creating actions
• Continuing the ongoing turnaround
• Changes to the store network
• Potential evaluation of future options114
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Continuing Turnaround in Poland with Systematic Execution
€m %
Net sales, €m Net sales, change %
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Operations in Russia Divested to Focus on Northern Europe
• Kesko sold the K-Rauta store sites in Russia for a price of some €169m
• All building and home improvement trade operations in Russia discontinued in H1/2018
• The transaction will significantly improvereturn on capital employed
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Good Value Creation for Upcoming Years
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0
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Best Europeanoperators
6-8%
Operating margin (%)
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Taking Building and Technical Tradeto the Next Level Through
Customer Driven Country Focus