Kesko's year 2007

Year 2007
Kesko Agro
Kesko Agro’s K-maatalous chain
purchases and sells animal feed,
chemicals and machinery to agricultural
entrepreneurs and trades in grain. Kesko
Agro is active in Finland and in all the
Baltic countries.
Market
In Finland, Kesko Agro and 95 K-maatalous
agricultural stores form the K-maatalous
chain. About half of the stores in the chain
are combined with Rautia under the name
’Rautia-K-maatalous’, or with K-rauta under
the name ’K-rauta-K-maatalous’. The K-maatalous
chain’s major customer groups are agricultural
entrepreneurs (farmers) and contractors.
K-maatalous provides agricultural entrepreneurs
with solutions that help them
efficiently produce the safe and pure foodstuffs
that are valued by consumers.
The total Finnish agricultural market is
valued at about €2 billion. There are two big
operators: the Agrimarket chain of Hankkija-
Divisions The Group Financial statements Further information 27
Maatalous is the market leader with a share
of 46%, while the K-maatalous chain ranks
second with a market share of about 35%.
Valtra and Agritek are major competitors in
the tractor trade.
Kesko Agro Eesti AS in Estonia, SIA Kesko
Agro Latvija in Latvia and UAB Kesko Agro
Lietuva in Lithuania are the Kesko Agro subsidiaries
that are involved in the agricultural
trade in the Baltic countries. The Baltic market
is currently valued at about €1.2 billion.
Kesko Agro is the market leader in the Baltic
agricultural trade with a market share of
about 25% in Estonia, about 26% in Latvia
and about 11% in Lithuania.
Strengths
The K-maatalous chain’s strengths in Finland
include the K-maatalous retailers, who know
the local customers and circumstances, and
the wide product range combined with the
comprehensive services and network. In the
Baltic countries, its strengths include Kesko
Agro’s position in the machinery trade and
the comprehensive sales and service network.
The best-known product brands represented
by Kesko Agro include Massey Ferguson
tractors, Claas combines and forage harvesters,
and the Tume and Elho agricultural
implements made in Finland.
Active contacts and sales and the utilisation
of data and information technology provide
the basis for close cooperation between
farmers and K-maatalous and Kesko Agro.
The popular trade-in machinery service, the
web trading place and revised web pages provide
many kinds of information and services
to farmers and other partners.
Kesko Agro and Rautakesko are working
together to develop the combined Rautia-Kmaatalous
stores into innovators in the sector.
The chains aim to duplicate the best practices
of individual stores throughout the
entire chain and, in that way, improve customer
service and operational efficiency.
The Cultivation Programme of K-maatalous
provides solutions that improve the profitability
of cultivation while meeting the
needs of each farmer. The cultivation programme
includes guidelines on the choice of
seed, on fertilisation, on plant protection and
liming. The K-Experimental Farm in Hauho
does pioneering research and development
for agriculture by testing plant varieties, fertilisation
and protection.
The annual Kone-Forum exhibition, the
most important event in the agricultural
machinery calendar, gives customers an
opportunity to become acquainted with the
new products and machinery offered for the
coming season. Experts of K-maatalous assist
customers in questions related to the use of
machinery and in the planning of machinery
purchases, while taking farm-specific needs
into account.
Year 2007
In 2007 Kesko Agro’s net sales were €793.4
million, an increase of 5.1% over the previous
year. In the Baltic countries Kesko Agro’s net
sales increased by 7.9% to €294.6 million.
Kesko Agro’s operating profit excluding nonrecurring
items was €12.4 million in 2007,
which was €4.6 million more than in the previous
year.
Kesko Agro improved its operational efficiency
in 2007 by renewing its organisation
and business models.
K-maatalous and Kesko Agro will continue
to focus on improving customer satisfaction
by offering the best solutions, a diversified
product range and excellent services.
Objectives and outlook
The objective of K-maatalous is to improve its
profitability in the agricultural trade. To do
this, it will focus on developing the machinery
trade and after-sales services in Finland and
the Baltic countries. Another area of development
in Finland will be the Cultivation
Programme.
The rising prices of grain and other agricultural
products are creating positive expectations
for next year’s agricultural trade.
Regardless of the structural changes taking
place in the sector, it is expected that in
2008, Kesko Agro’s net sales and operating
profit excluding non-recurring items will
match the level of 2007.