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4<br />
<strong>Kesko's</strong> <strong>year</strong> <strong>2007</strong><br />
Year <strong>2007</strong> in brief Sales and profit increased<br />
considerably<br />
Kesko’s sales and profit continued to increase<br />
considerably in <strong>2007</strong>. The strong development<br />
of operating profit excluding non-recurring<br />
items continued for the sixth successive <strong>year</strong>.<br />
Kesko Food and Rautakesko increased their<br />
profit most. Particularly encouraging was the<br />
growth in the sales of K-food stores. Rautakesko<br />
continued its successful expansion and<br />
Kesko continued its strong<br />
performance in <strong>2007</strong><br />
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Retail sales of the K-Group increased<br />
by 9.7% to €11,575.6 million (incl. VAT).<br />
The Kesko Group’s net sales increased<br />
by 9.0% to €9,534 million.<br />
Net sales in Finland increased by 6.0%<br />
to €7,357 million.<br />
Net sales outside Finland grew by 20.4%<br />
to €2,177 million, accounting for 22.8%<br />
of the total net sales.<br />
Operating profit excluding non-recurring<br />
items increased by €45.3 million to €325.1<br />
million.<br />
Kesko Food’s sales grew by 7.7%.<br />
Rautakesko’s strong internationalisation<br />
continued.<br />
Earnings per share were €2.61 (€2.45).<br />
The market capitalisation of the company<br />
was €3,692 million (€3,852 million) at the<br />
end of the <strong>year</strong>.<br />
A dividend of €1.50 per share was distributed<br />
for the <strong>year</strong> 2006. The Board of Directors<br />
proposes to the Annual General Meeting<br />
that €1.60 per share be distributed as<br />
a dividend for <strong>2007</strong>.<br />
achieved strong growth particularly in international<br />
operations.<br />
Investments in new store sites and the<br />
renovation of existing ones were are at a high<br />
level in Finland. 27 new K-food stores were<br />
opened, and several stores were refurbished<br />
or expanded. Investments in the building and<br />
home improvement sector mainly focused on<br />
the development of the international network,<br />
but stores were opened and improved in Finland,<br />
too. Out of the 16 new building and<br />
home improvement stores opened during the<br />
<strong>year</strong>, eleven were outside Finland. The eighth<br />
K-rauta outlet in St. Petersburg was opened in<br />
December. Major investments in store sites<br />
will continue over the next few <strong>year</strong>s.<br />
Corporate strategy was specified<br />
In spring, the Board of Directors revised the<br />
company’s financial targets and specified the<br />
strategy. Due to the expanding international<br />
operations and outlook for business development,<br />
objectives for return on equity and<br />
invested capital were raised. The company is<br />
preparing for sizable store site investments in<br />
the next few <strong>year</strong>s in all the countries where it<br />
operates. Strategic emphases include healthy,<br />
focused growth, the focus on sales and services<br />
to consumer-customers, and responsible<br />
and cost-efficient operations.<br />
K-Plussa is undergoing a reform<br />
Kesko and the K-retailers started a thorough<br />
reform of the K-Plussa customer loyalty programme.<br />
The choice of cards became more<br />
diversified and the benefits for loyal customers<br />
increased. The new K-Plussa combination<br />
card can be used as a means of payment both<br />
at home and abroad. The popularity of the<br />
new cards exceeded expectations: their total<br />
number has already exceeded 400,000.<br />
Pirkka magazine revamped<br />
The content and appearance of Pirkka, the<br />
K-Group’s customer loyalty magazine, were<br />
changed. The first new-look Pirkka magazine<br />
was published in February and was well<br />
received by readers. According to the survey<br />
published by the National Media Research<br />
KMT in September, Pirkka has increased its<br />
readership by 60,000 to over 2.5 million readers<br />
and is the most widely read magazine in<br />
Finland.<br />
Recognition for responsible<br />
operating practices<br />
Kesko continues to be one of the top companies<br />
in the world judged by sustainability<br />
indicators and was again included among<br />
’The Global 100 Most Sustainable Corporations’<br />
list published by the World Economic<br />
Forum. Furthermore, Kesko was listed for the<br />
fifth time in the Dow Jones sustainability<br />
index. In the review for <strong>2007</strong>, Kesko’s environmental<br />
performance was evaluated to be the<br />
best in the retailing sector.<br />
Actions promoting a healthier<br />
way of life<br />
Kesko started a campaign to promote children’s<br />
and adolescents’ physical activity in<br />
cooperation with the Young Finland Association.<br />
Kesko promised to donate 0.25 cents to<br />
support children’s and adolescents’ healthy<br />
way of life every time a customer uses a<br />
K-Plussa card in a K-Group store. The total<br />
sum raised was about €500,000.<br />
Market capitalisation<br />
The company’s market capitalisation was €3.7<br />
billion, showing a decrease of about €150 million<br />
compared with the end of 2006. The proportion<br />
of foreign owners of the B shares was<br />
about 50% at end of the <strong>year</strong>.
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