Kesko (KESKOB) Q1 2020 earnings summary

Executive summary

• Record Q1 comparable operating profit of €65.1m, up €7.6m YoY, as revenue grew 5.8% despite COVID-19 disruption from mid-March.

• Food retail and building/technical trade grew; automotive comparable sales and profit declined as demand weakened late in the quarter.

Financial highlights

• Continuing-operations revenue was €2,540.4m, up 5.8% reported and 4.0% comparable; comparable operating profit was €65.1m vs. €57.5m.

• Reported operating profit was €65.9m vs. €51.6m; comparable PBT was €32.7m vs. €34.6m, while reported PBT rose to €33.1m from €28.8m.

• Net income was €26.6m vs. €22.2m; continuing-operations EPS was €0.35 vs. €0.28, while comparable EPS was €0.33 in both periods.

• Operating cash flow was €135.7m vs. €157.0m; excluding the prior-year €48.3m pension-fund surplus refund, operating cash flow increased €27.0m operationally.

Outlook and guidance

• FY2020 comparable operating profit guidance is €400–450m, below FY2019’s €461.6m; revenue guidance was withdrawn due to COVID-19 and global economic uncertainty.

• Food demand is expected to remain strong, with growth in grocery stores and especially online grocery; foodservice and non-food retail sales are expected to decline.

• Construction and technical trade demand is difficult to forecast; weaker economic conditions are expected to affect business customers, while both new and used car sales are expected to fall YoY.

• Investment cash flow will be adjusted to below €200m for 2020; broad cost and workforce measures are being used to protect profitability and cash flow.