Kesko (KESKOB) Q3 2020 earnings summary

Executive summary

• Record Q3 result: comparable revenue rose 4.6% to €2,651.9m and comparable operating profit increased €38.2m to €181.8m.

• 9M comparable revenue rose 3.3% to €8,006.9m and comparable operating profit increased €74.4m to €402.1m on an illustrative basis treating Kesko Senukai as a joint venture in both periods.

• Strong grocery and building-trade performance, cost efficiency and recovering auto demand supported higher FY2020 comparable operating-profit guidance.

Financial highlights

• Q3 reported continuing-operations revenue was €2,651.9m, down 5.4%; reported operating profit was €224.6m versus €148.6m.

• Q3 profit before tax was €163.6m versus €123.8m; adjusted EPS was €0.33 versus €0.25, and reported continuing-operations EPS was €0.48 versus €0.32.

• Q3 operating cash flow rose to €286.6m from €191.6m; 9M operating cash flow was €844.0m versus €619.9m.

• Rolling 12-month comparable operating profit reached €509.1m versus €434.7m in 2019.

Outlook and guidance

• FY2020 continuing-operations comparable operating-profit guidance rose to €530m–€570m from €510m–€570m.

• Grocery retail and building-trade sales were expected to remain strong; auto demand had recovered from early-year declines.

• Outlook assumed the epidemic remained controlled in operating markets; renewed spread could affect business and holiday sales.

• Finnish new-car sales were forecast to grow ~10% in 2021.