Kesko (KESKOB) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales and profit decreased as expected, but cash flow from operating activities strengthened.

• Updated strategy published in June, refining targets and competitive advantages for each division.

• Management changes included new presidents for Building and Technical Trade and Car Trade, a new CFO, and EVP Legal & Sustainability.

• Kesko maintained good performance despite a weak market, focusing on cost-efficiency and strong cash flow.

• Strategy update reaffirmed focus on profitable growth in all divisions.

Financial highlights

• Q2 2024 net sales: €3,093.4 million, down 0.4% year-over-year; comparable net sales down 4.1%.

• Q2 comparable operating profit: €178.3 million, margin 5.8% (Q2 2023: €207.6 million, 6.7%).

• Cash flow from operating activities rose to €309 million in Q2 and €421.6 million in H1, driven by improved working capital management.

• Capital expenditure in Q2 was €128.4 million, mainly for grocery store network and logistics; H1 capex €457.4 million.

• Rolling 12 months net sales exceeded €11.7 billion; operating profit was €656.3 million, margin 5.6%.

Outlook and guidance

• 2024 comparable operating profit guidance narrowed to €620–680 million.

• Grocery and food service markets expected to remain stable; Building and Technical Trade to continue declining in 2024, with a turnaround expected in 2025.

• Car Trade new car sales expected to fall short of 2023, but used cars and services to grow; profitability to remain good but below 2023.

• Operating environment expected to remain challenging; key uncertainties include inflation, interest rates, and geopolitical risks.