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