In the third quarter of 2024, Finnish retail giant Kesko Corporation (KESKOB:HE) reported a mix of challenges and growth across its sectors. CEO Jorma Rauhala emphasized a significant improvement in the Building and Technical Trade sector, which saw its first profit increase in two years.
Despite a rise in net sales to €3 billion, the company experienced a decrease in comparable operating profit to €201.5 million. Kesko’s Car Trade division faced a downturn in new car sales but saw an uptick in used car sales and service demand, contributing to overall profitability. The company also issued a €300 million green bond to fund projects like the Onnela logistics center, aiming to boost efficiency by 2026.
Looking ahead, Kesko forecasts a comparable operating profit between €630 million and €680 million for 2024, with more favorable conditions anticipated in 2025.
Key Takeaways
- Kesko’s net sales increased to €3 billion, up €77 million year-on-year.
- Comparable operating profit decreased to €201.5 million.
- Building and Technical Trade sector reported the first profit increase in eight quarters.
- Grocery Trade net sales rose slightly; Car Trade profitability maintained despite new car sales decline.
- €300 million green bond issued, maturing in 2030, for financing projects like Onnela logistics center.
- Forecasted comparable operating profit for 2024 is between €630 million and €680 million, with improved conditions expected in 2025.
Company Outlook
- Kesko anticipates a challenging operating environment for 2024 but expects stable net sales and operating profit.
- The company projects an improvement in the operating environment for 2025, especially in Building and Technical Trade.
- Car Trade is likely to continue experiencing low new car orders but robust demand for used cars and services.
- Grocery Trade’s comparable operating margin is expected to exceed 6%, despite investments in pricing and store network.
Bearish Highlights
- Net sales in Q3 decreased by €6.5 million year-on-year.
- The demand for new cars remained low, with a 24.4% drop in first registrations in Finland.
Bullish Highlights
- Used car sales increased, and K-Auto’s market share grew.
- Sports trade sector saw improvements in net sales and comparable operating profit.
- New income streams from Media and Data business are expected to contribute significantly.
Misses
- Operating margin in Q3 was €63.5 million (5.4%), a decrease from the previous year.
Q&A Highlights
- CEO Rauhala expressed cautious optimism regarding market share recovery in Grocery Trade by 2026.
- Building and Technical Trade margins in Q3 exceeded expectations, with continued profit growth anticipated.
- Akseli highlighted the competitive landscape in Grocery, with a focus on price-driven market strategies.
- New income streams from media and data are projected to contribute double-digit millions annually.
Kesko’s Q3 performance reflects a complex landscape of both progress and setbacks. The company’s strategic investments and diversification, such as the acquisition of Danish builders merchants, are set to strengthen its market position in the long term.
With the issuance of the green bond and the projected efficiency gains from the Onnela logistics center, Kesko is laying the groundwork for future growth.
Despite the current challenges, particularly in the Car Trade, Kesko’s management remains confident in the company’s strategic positioning and its ability to navigate the tough market conditions toward a gradual recovery and growth across its various divisions.
Full transcript – None (KKOYF) Q3 2024:
Hanna Jaakkola: Dear all warmly, welcome virtual to Helsinki. And thank you for turning in for Kesko’s Q3 2024 Release Call. Today’s headline is a Turn For Better in Building and Technical Trade. All the divisions did well, as well, but we wanted to highlight the Building and Technical Trade after many harsh quarters. Our agenda today is the following: President and CEO, Jorma Rauhala will do the Q3 presentation. We have here together with us Business Division Presidents are Ari Akseli for Grocery Trade, Sami Kiiski for building and Technical Trade and Johanna Ali for Car Trade, as well as CFO Anu Hamalainen. After Jorma’s presentation, it is time for questions, both by phone and via chat function. All the materials related to Q3 can be found at our web page kesko.fi under Investors. My name is Hanna Jaakkola, responsible for IR Director at Kesko. I will be at your service after the presentation for your questions and discussions. But now, Jorma, the virtual state is yours. Please.
Jorma Rauhala: Thank you, Hanna. Ladies and gentlemen, welcome also on my behalf to this release call. I am Jorma Rauhala I have now the pleasure to present Kesko’s Q3 results. Yes, the Turn For The Better in Building and Technical Trade is our headline, and it highlights the biggest change in the third quarter.Other divisions performed well too. Now, I will give an overview of our business performance and open up elements behind the results. Key events in the third quarter. Kesko’s net sales increased and comparable operating profit decreased. Building and Technical Trade net sales increased and turnaround can be seen. Year-on-year result increased for the first time in eight quarters. Grocery Trade net sales increased, result was flat year-on-year. Car Trade net sales and results decreased, profitability was at a good level. Kesko announced it will acquire three builders merchants in Denmark, Roslev Trælasthandel, Tømmergaarden and CF Petersen & Søn. The combined net sales of the company’s total approximately €400 million Lcf, Peterson and son. The combined. Net says of the company is total approximately 400 million euros. Once the acquisition are completed in first half of 2025, Kesko’s market share in Danish Building and Home Improvement rate is set to rise to some 20%. Kesko issued a €300 million green bond, which will mature on 2nd, February 2030. Net sales in Q3 totaled €3 billion. It was up by €77 million. Net sales increased in Building and Technical Trade and Grocery Trade. Rolling 12 months net sales were flat, compared to 2023 and were over €11.7 billion, In Q3, comparable operating profit was €201.5 million, and operating margin was. 6.7%. Comparable, operating profit increased slightly in Grocery Trade and Building and Technical Trade and decreased in Car Trade. Rolling 12 months operating profit was €650 million and operating margin was 5.5%. Return on capital employed decreased was 11.5%. Return on capital employed decreased compared to ‘23 in all divisions as earnings declined. Financial position increase in working capital impacted cash flow in Q3. Cash flow from operating activities was €286 million. Cash flow was impacted by calendar as the last day of the quarter this year was Monday, while last year it was Saturday. There are typically large out payments of trade payables on Mondays. Also inventory growth affected the cash flow. Net debt to EBITDA was 1.2, well below our maximum target of 2.5. Interest-bearing net debt increased year-on-year as a result of the investments in acquisitions, Grocery Trade store in the site network and Logistics. I’ll open up the Logistic investments on the next slide. Onnela is Kesko’s history’s largest construction project. It is also largest ongoing construction project in Finland at the moment. This is an investment in future growth. The center will serve both Onnela’s technical trade and K-Auto’s Spare Parts business. Implementation of the center will take place in stages from Q3, ‘25 onwards. Once the center is on full use by the end of ’26 it will remarkably improve Onnela’s efficiency. Timing for the construction has been good and the project cost is estimated to be less than the original cost estimate of €300 million. Total investment so far is €174 million. Capital received by Kesko through to issuance of green notes is used to finance the project. In this project, special attention has been paid to reducing energy consumption and carbon footprint, which reduces costs and emissions over the property’s long life cycle. The site will host, for example, some 100 geothermal wells and an entire solar power plant. Expenses. Expenses were up due to Davidsen acquisition and real estate costs. We have succeeded well in focusing on cost efficiency. For example, excluding Davidsen, personal expenses have increased only by 0.3% year-to-date despite rates increases. Fixed costs were €484 million and cost ratio was 16%, it was down compared to last quarter, but up year-on-year. Now, to the Grocery Trade, stable performance. In Q3, net sales totaled €1.6 billion and increased by €16 million. Rolling 12 months net sales totaled over €6.3 billion. In Grocery Trade, comparable operating profit for Q3 was €118.8 million and it was close to last year’s level up by €0.5 million, Profitability was 7.4%. Rolling 12 months operating profit was €440 million and operating margin was 6.9%. Key events in Grocery Trade in Q3. In the Grocery Trade division, net sales and profit increased, operating margin was flat year-on-year. K-Group. Grocery sales were down by 0.1%. Kespro’s net sales were up by 3.1%, again, exceeding market growth. K-City Market non-food sales were down by 4.1%. Good development continued in Online Grocery. Online sales were up by 13.9%. Thanks to express deliveries. Total Grocery Trade market was approximately 1.5% and Group sales performance was slightly below the market. Grocery price inflation in Finland was approximately 0.4%. Customer flows continued to grow. Thanks to campaigns, but average purchase was down. According to our strategy, Media business and Data Utilization are supporting profitability. Strategy execution is proceeded according to plan. I want to highlight our key actions in Grocery Trade strategy. One, strengthening store-specific business ideas. Two, developing our store site network. Three, improving price competitiveness. Impacts from stronger store-specific business ideas and investments in price will be become visible from early ‘25 onwards. Investments in the store network continue, impacts will become visible in the end of Kesko’s strategy period. This year, we will open 50 new stores and 44 renewed stores, of which seven new and 14 renewed stores in Q4 ‘24. In ‘25, we will open a 18 new and 46 renewed stores. In Building and Technical Trade, the result was better than expected. Net sales increased by €78 million, to €1.1 billion. Thanks to Davidsen acquisition. In comparable terms, net sales decreased by 2.2%, due to the challenging construction cycle. Rolling 12 months net sales we’re over €4.6 billion. Comparable operating profit for the Building and Technical Trade division totaled €70.1 million, and operating margin 6.2%. Rolling 12 months operating profit was €173.6 million and operating margin was 4.1%. Comparable operating profit increased. Thanks to positive profit development K out of Finland, and Davidsen acquisition. Key events in building and Technical Trade in Q3. Construction cycle is still weak, but we have seen a turnaround. Result for the division grew for the first time in eight quarters. Sales have picked up in both Building and Home Improvement Trade and Technical Trade, but the market continues to be challenging. Net sales and operating profit development was better than anticipated. Operating profit for Onninen Finland was at last year’s level, sales and profitability for Solar Power products have returned to normal levels. In Norway, there have been logistic-related delays in Elektroskandia’s integration and Byggmakker’s slightly underperformed the markets. In Sweden, increased focus on peer-to-peer trade under the e K-Bygg brand has proceeded according to plan. Credit risks are well, under control. Write-downs of overdue trade receivables total €0.5 million. Share of results from Kesko Senukai was €4.8 million. In this picture, we can see K-Rauta’s and Onninen’s sales development in Finland since 2019. We saw this picture last quarter and here you can see the Q3 development added. K-Rauta is the market leader in Building and Home Improvement business in Finland and Onninen in Technical Trade. Both have nearly took 50% market shares. So, this picture describes the Finnish Building and Home Improvement market well. In the graph, we can see now that after several quarters of weak cycle, sales are turning. This positive trend has continued also in Q3, but numbers are still below zero level. We believe that the moderate sales development will continue. But there are no major sales hikes in sites. Low comparable figures support the development too. And this is Byggmakker’s sales development, which is very similar to K-Rauta and Onninen’s graph. Norway is our second largest operating country and Byggmakker’s market share in ‘23 were some 13% and Byggmakker is among the largest players in the market. Here too we can see the consumer Covid boost starting in late 2020 and then, in ‘21, we saw B2B sales increase with high demand and global price increases. Turning construction cycle started to affect 2022 and sales declined sharply in first half of 2022. After several quarters of weak cycle, we can now see sales returning. We estimate that the construction cycle will turn in 2025 in Norway too. In Car trade, we saw good performance in the challenging markets. In Car Trade, net sales for Q3 decreased by €16 million and were €295 million. Net sales decreased in new cars and increased in used cars and services. In the comparison period net sales for new cars increased, but clearing off order books as the availability of cars improved. The comparable operating profit totaled €17.9 million and decreased by €6.5 million year-on-year. Rolling 12 months operating margin was €63.5 million and operating margin was 5.4%. Key events in Car Trade in Q3. Market, demand for new cars stayed muted. Q3 first registration in Finland were minus 24.4%, Net sales and comparable operating profit decreased as market continued to be challenging. Profitability remained at a good level. New car sales were down, but in new car orders the share of brands represented by Kesko grew. Used car sales were up. K-Auto’s markets share strengthened significantly. Service sales continued to grow. Acquisition of Autotalo Lohja was completed in September. In sports trade, net sales and comparable operating profit increased and market share strengthened. Our business portfolio in Car Trade is balanced, 47% of K-Auto sales were new cars, 32% used cars and 21% services. And now to profit guidance 2024 and outlook for 2025. Kesko’s operating in environment is estimated to remain challenging in 2024. Kesko’s net sales and operating profit are estimated to remain at the good level in 2024, despite the challenges in the company’s operating environment. Kesko estimates that its comparable operating profit in 2024 will amount to €630 million to €680 million. Previously, the comparable operating profit was estimated to amount to €620 million to €680 million. The profit guidance specification is based on third quarter positive profit development in Building and Technical Trade. Outlook for 2025. The operating environment is estimated to improve in 2025 and cash cost comparable operating profit is also estimated to improve in 2021 then 2025. In Grocery Trade B2C Trade and the Food Service market are estimated to remain stable. In 2025, the comparable operating margin for the Grocery Trade division is estimated to stay clearly about 6%, despite the investments in price and stores site network in accordance with Kesko’s strategy for ’24, ‘26. In Building and Technical Trade, the cycle is expected to improve in 2025 from the historically low levels. Profitability in the Building and Technical Trade division is estimated to improve, compared to 2024. In Car Trade, new car orders are expected to stay at the low level in 2025. Demand for used cars and services is estimated to remain good. Profitability for the Car Trade division is estimated to remain at a good level in 2025, despite weak demand for new cars. Well, this was my presentation. Thank you. I guess, it’s time for questions now.
Hanna Jaakkola: Yes, thank you, Jorma, for your presentation. And now it’s time for questions. Like you said, let’s turn to the conference call line first.
Operator: [Operator Instructions] The next question comes from Maria from Wikström (sic) Maria Wikström. Please go ahead.
Maria Wikström: Hi. Thank you for taking my question. This is Maria Wikström from SEB. I have three questions. I mean, firstly, on the 2025 guidance, I think you are the probably the first company to actually guide for ’25. And wanted to have a little bit more color. Firstly, if you will – if you have included these three acquisitions from Denmark in your guidance, and if you could little bit elaborate what kind of consumer environment you are picturing for ‘25 in your guidance, please?
Jorma Rauhala: Yes, thank you for your questions. And, what comes to next year? We haven’t included those three targets. What we are now acquiring. And as we stated, we see that Building and Construction Market will recover, of course, we have to remember that it’s now in historically low level. So, but, we expect that that market will improve in every country, right, in every 8 countries. So that’s the – I would say, the biggest the biggest change what will happen. In Car Trade, no big changes. We see that still new cars will be quite low level. What comes to next year in the Finnish markets. And in for the Grocery business, the market is quite stable, but also in that side, we could kind of expect that that it wouldn’t be worse than this year. Because of consumer confidence and salary increases and things like that. So I would say that that all three divisions, mainly pinning on Technical Trade there we can see some more positive trends, but also Car and Grocery business not any negative signs.
Maria Wikström: Okay. Thank you. And then, a bit more detail on the Building and Technical Trade, I think, in your number, we have seen the DIY part already to see a pickup. And I think that was say, quite evident if we look at the like this month’s results from Sweden. But what kind of lag you see for the Technical Trade to show a pick up as well, I mean, across your markets?
Jorma Rauhala: I got started. Maybe some we can continue, but if we look our figures, last quarter figures, so whole year figures, there is not any big differences between Building and Home Improvement and Technical Trade. So they are kind, of course, hand-in-hand with what comes to market, but Sami, maybe you can continue.
Sami Kiiski: Yes, thank you, Jorma. It’s exactly like Jorma said, the big picture for Technical Trade is pretty much saving all our operating countries. But of course, still more differences and of course, we have little bit different market share so, or how we concentrate also in the business-wise, do we have more key buck or and – but big picture is same.
Maria Wikström: Thank you. And then my final question on the Grocery Trade. I mean, you have indicated that you will be investing in prices in order to gain some of the lost market share. So, with the investment in prices, I mean, how you are going to match the negative FX on profits from lower prices in order to, as you guide for, clearly about 6% margins for ‘25 and ‘26. So can you give a bit more color on these impacts? And how you’re going to compensate?
Jorma Rauhala: Ari, would you like to have this one?
Ari Akseli: Yes, thank you for excellent question. And we could say that when we are investing into the prices, it always bring more sales at the same time. So that’s the good part. And the other part is that we have new income sources, like a data business, and also media businesses. And these are bringing new incomes at the same time. So we think that ill will have some kind of negative effect, of course, but because of these factors, it is – it will be not so big.
Maria Wikström: Thank you very much. Thanks for the questions at this point.
Hanna Jaakkola: Thank you for your questions. Is there any new questions on the line? Yes, please go ahead.
Operator: The next question comes from Svante Krokfors from Nordea. Please go ahead.
Svante Krokfors: Good morning, and thank you for the presentation. Svante Krokfors from Nordea. Question still regarding the price investments. What should we think about the timing on the Grocery side and how will you monitor this so that that we don’t see any kind of negative developments starting in Grocery’s EBIT margin?
Jorma Rauhala: Yes, Ari, I think you can take this one. As we stated that the price investment will be visible early next year, but you can continue from here.
Ari Akseli: Yeah. I think that the most important factor how we are doing this pricing, new pricing is that we use a lot of data. So we put targeted offers and we can always calculate very clearly what is the effect of each and every offers. So, and at the same time, we have new incomes coming then we are able to increase the sales. And also, all the store owners are participating to this price program. So, they also put in effort for that.
Svante Krokfors: Thank you, and then, you mentioned you had some on Building a Technical Trade you mentioned some issues in Elektroskandia and bid market? Could you elaborate a bit on this? And what kind of measures have you taken?
Jorma Rauhala: So I can start and Sami can continue. But, as we have said earlier, that Elektroskandia and Onninen integration was maybe the biggest integration what have in Kesko’s history. Even [Indiscernible] integration was kind of easier. But it was very challenging, but we managed. We managed very well and we ended that integration, let’s say May, June. But we have some delays in logistics. But Sami, you can open a little bit.
Sami Kiiski: Thank you for the good question. And like Jorma said, it has been and still rather big integration. It’s more related to our Logistics and also how we have two warehouses there and how we do our shipments to our customers and it has been little bit delays in shipments and also how we treat our, so-called, split orders in a way.
Jorma Rauhala: I think we, well, I would say that, we are very close to what comes to market the development, not any, any big crisis on that one? But that will open a little bit of a big market also.
Sami Kiiski: Exactly. And Norway is a market also having troubled waters in a way and I think we are well positioned there. We see mainly that maybe we are little bit losing market share in consumer business, but that has been also our strategic choice that we want to concentrate more B2B and there we are well positioned and we don’t see any big changes. Pretty flat development for us.
Svante Krokfors: Thank you. And lastly, a question regarding the EPBD directive by the energy performance of Buildings Directive. Have you made any internal analysis how this could impact the Technical Trade side?
Jorma Rauhala: Sami, can you? And I think we don’t have any calculation about that one. How that could be effect to us, but of course, that could be positive one for us. But we are not counting so much on that, what comes our outlook for next year.
Svante Krokfors: Okay. Thank you. That’s all for me.
Operator: The next question comes from Calle Loikkanen from Danske Bank. Please go ahead.
Calle Loikkanen: Good morning. Good morning, and thank you for taking my questions. I have two questions. A bit of a follow-up to the previous ones. Firstly, starting on the Grocery Trade, when do you expect the market share losses to start turning to a flat or even growth?
Jorma Rauhala: I hope we have to, Ari can you do the sales, but I did it. It’s in our strategy in this strategy period.
Ari Akseli: Exactly like that in – during this strategy period especially because network development takes time.
Calle Loikkanen: Okay. Okay, that makes sense, but do you think – do you think you have to revisit the strategy that you have? I mean, consumers have been very price-sensitive and price-focused and probably that, maybe that doesn’t changed in the coming years. So, do you need to – do you think you need to adjust the strategy that you have in Grocery Trade in terms of pricing and market share?
Jorma Rauhala: I don’t think so, because we don’t count on that somehow the market would remarkably improve that the consumer would be any so price-sensitive. It’s included in our strategy that our consumer continues to be price-sensitive. It would be a positive surprise if that will really improve. But like I said, we will make those in investments. And of course, price investments, we can see those effect earlier. Of course, we believe, and we trust that next year – this year, we will lose less market share than last year and of course, next year will be better. And latest on our strategy period ’26, I think that we will gain market share.
Calle Loikkanen: Okay, okay. That’s helpful. Thank you. And then, on the Building and Technical Trade, looking at the Q3 margins, can you elaborate on what the margins would have been if we exclude the acquisitions?
Jorma Rauhala: Exclude acquisition, what it’s all?
Calle Loikkanen: Yes
Jorma Rauhala: Okay. Okay. Then, it’s mainly Davidsen. So no, not big. Davidsen was okay. Davidsen is a little bit better, what we expected, but I would say that no, major differences. Yeah.
Calle Loikkanen: Okay. That’s all for me. Thank you.
Operator: The next question comes from Miika from DNB Markets. Please go ahead.
Miika Ihamäki: Good morning. It’s Miika here from DNB. Solid results in Building and Technical Trade, despite the challenging market. I was wondering if there was anything temporary that helped your performance during the quarter. And is it reasonable to expect continued profit growth for Q4 in the division?
Jorma Rauhala: There was not any special item. But it was, I would say that why it was better than we expected. Q3 was because of sales, sales but it was better than we expected and also gross margin. And cost are very good in our our control. What comes in Q4, it includes our guidance.
Miika Ihamäki: Maybe I’ll try with your lower end kept price at high end impacts. Could you open up the positives and negatives for the remaining Q4 and what is needed to reach the high point of your guidance?
Jorma Rauhala: So I didn’t hear the start, but
Hanna Jaakkola: Changed the range, at the lower end. And comments on that.
Jorma Rauhala: Yeah, that’s the reason why we increased that one was Building and Technical Trade. The Q3, EBIT was much better than we expected also Car business peer Building and Technical Trade no any negative surprises on that. But I would say that are little bit positive surprises on that one. But when they started? Of course, we – on that time, we believe that the second half of the year will be stronger. The first part of the year especially in Building and Technical Trade. And that we can see now. Q2 was better what comes to sales Q3 was better now and of course we believe that this kind of trend I would say, how much what will be to sales are EBITDA change difficult to estimate that one. But I believe that the positive trend all-in-all will continue this end of year and next year.
Miika Ihamäki: Excellent. Thank you.
Operator: The next question comes from Rob Joyce from BNP Paribas (OTC:) Exane. Please go ahead.
Rob Joyce: Hi, good morning. Thank you very much for taking my questions. Just the first one on Grocery. Can you give a little insight into what is going on in this sort of competitive situation. Market. Could you maybe just give us a little insight into what’s going on in the sort of competitive situation in the market? And then also on inflation, you mentioned that’s been pretty low in the quarter. What’s your expectation for the food price inflation from there? Thank you.
Jorma Rauhala: Okay. Thank you. Ari, you can take this one.
Ari Akseli: Yes, thank you. Market continues to be pretty silencing and quite much price-driven. That’s going to say, but, I think it’s actually positive sign that that the price inflation has gone down, because if you look in there additionally then the importance of the prices start to go down. Because customers has been so worried about this high inflation of the food price. I think it’s, it’s promising. But at the same time, there is lots of new store openings in the market, especially in the hyper market size. And I think that the customers they are still looking, better offers And they are dividing their shopping basket. They are looking opportunities for the better of offers it’s for me each and every store. I think this is the big picture about the market. But at the same time, we can see that some of the customers are looking convenience. They are using more fast deliveries. They are buying more for their daily meals. And looking for quality. So, it’s divided.
Rob Joyce: Okay. And just on the outlook for food inflation from here, do you think it’s going to trending positive or is it going to continue to fall?
Ari Akseli: I think it’s very difficult to estimate. But I think it’s going to be quite stable.
Rob Joyce: Okay. Okay. And then, just a while ago you on Grocery, and you mentioned data and media are starting to be contributors. Can you give us an idea of the sort of size of contribution you expect from those businesses in ‘24 and maybe 25, please?
Ari Akseli: Yeah. First, you have to say that this is totally new income stream for us. And we are not giving exact figures. But the EBIT of these businesses are to double-digits millions annually, and it’s growing all the time.
Rob Joyce: Okay. Very helpful. And then, final one from me, just at a Group level. It looks like if I take the midpoint of the 2024 guidance, versus next year’s consensus, it’s about a 5% EBIT growth consensus expecting, is that broadly what your ‘25 guidance is thinking about?
Jorma Rauhala: No, we – I don’t say any of that’s specific figures, but we have given our outlook for next year.
Rob Joyce: Okay. All right. Appreciate it. Thank you.
Operator: The next question comes from Fredrik Ivarsson from ABG. Please go ahead.
Fredrik Ivarsson: Thank you. Good morning, team. Just a one question and sorry to come back on the price investments. But I sort of struggled to understand the timing of this. Why aren’t you cutting prices already in Q4? What’s the reason for waiting?
Jorma Rauhala: I can start but, Ari, you can continue. We will do, of course, and we have done some in Q3. We will do some extra pricing investments also in Q4. But the idea is that we are starting ’25, because we want to plan that very well and also cooperation with the retailers. So we won’t have any sort of kind of price campaigns start of the year. So we want to make – we – of course, we have also benchmark out of – they did in Sweden and how did they did that, but I would like to continue Ari.
Ari Akseli: I think the big picture is exactly like you say that we are aiming long term sustainable price program. And it takes time to build and how to participate store owners. How to participate suppliers and how build all the factors in the program. So, this is how to manage at the same time, good profitability and also start to gain market share.
Fredrik Ivarsson: Okay. That’s clear. Many thanks.
Hanna Jaakkola: Thank you for a lively discussion from the conference call line. And let’s turn to the chat function. I have a couple of questions here. I will start with from Arttu Heikura from Inderes asking to which extent price campaigns or price competition impacted Grocery Trade’s profitability in Q3? So Ari, you’re talking about that.
Jorma Rauhala: So, Ari?
Ari Akseli: Yes, like, you can see from the numbers, that was quite good in there by EBIT side. And I think that they had some negative impacts for the couple of millions you can say, but at the same time, because we have these new income streams coming from Media and Data business. It was very balanced.
Hanna Jaakkola: Very good. And then, about the Grocery Store site network, what is the net of new grocery stores in ’25? We comment on the new stores, but we don’t comment the closings in the…
Ari Akseli: Yeah, we don’t comment the closings because they are confidential information.
Jorma Rauhala: But of course, those one will be very small ones.
Ari Akseli: Yeah, they are usually very small amounts, very low profit stores in the rural areas typically.
Hanna Jaakkola: That’s clear. Could you elaborate on market share development in Building and Technical Trade?
Jorma Rauhala: I can start and maybe some of you can continue, if I don’t remember all of those. But I would say that what comes in Finland, if you look year-to-date, K-Auto has gained market share year-to-date. What comes to Onninen, we have gained market share in heater products, and AC products, but lost a little bit in electric products. But that’s mainly because of kind of customer mix. And then, in Sweden, I think K-Bygg also gained a little bit market share. In Norway, as we stated, Byggmakker’s and Onninen lost a little bit. In Poland, I think we have gained also in Baltic and in in Denmark very, very close to what comes to market, yes, it’s a little bit, maybe less.
Hanna Jaakkola: So yes, very good. No big differences there?
Jorma Rauhala: No big.
Hanna Jaakkola: Yeah. And then, has the trend of recovering sales in Building and Technical Trade continued also in October?
Jorma Rauhala: Yes and we have – I would say it’s all that there hasn’t been any surprises.
Hanna Jaakkola: Yeah. Very good. Well, regarding outlook 2025, could you specify the outlook for Grocery Trade? Are you expecting flat sales compared to ‘24? And we are not guiding sales in our outlook but commenting the EBIT bit here so.
Jorma Rauhala: Yes.
Hanna Jaakkola: So I guess, you have to figure it out from our wording here. Then Magnus Råman from Kepler Cheuvreux asks, can you comment roughly how much Building and Technical Trade division operating profit came from Davidsen? But we don’t give any country-specifics. But he continues, or otherwise, can equipment, which driver behind your improvement to flat operating profit growth year-on-year in overall Building and Technical Trade was most important? Was it Davidsen or improvement in Finland, which one because we commented that it was from the both.
Jorma Rauhala: Both, but improvement in Finland, I think that’s clear.
Hanna Jaakkola: So Improvement in Finland is the answer.
Jorma Rauhala: Yes.
Hanna Jaakkola: I don’t have any further questions here. Any further questions on the conference call? I know, then, I will thank you for the lively discussion. And if you have any further questions, don’t hesitate to calling me or sending me emails or anything. I’ll be really happy to discuss the, great results with you. Any last comments Jorma, for the audience for your side?
Jorma Rauhala: Yes, thank you, Hanna. Thank you, all for the participation and questions. Yes, I’d like to underline that Q3 performance was a good level and it’s nice to see signs of recovery in the markets. I look forward to the end of the year and also next year, ‘25 with confidence. I wish you all a nice day and a rest of the week. Thank you.
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