Kesko (KESKOB) Q4 2020 earnings summary

Executive summary

• FY2020 delivered record earnings and 3.6% comparable revenue growth; grocery and building and technical trade led gains, while pandemic effects varied by business.

• Comparable operating profit was €567.8M on the reported continuing-operations basis and €553.6M on an illustrative basis; less than half of the earnings improvement was attributed to pandemic effects.

• Q4 comparable operating profit reached €165.6M, up €44.6M year over year; comparable revenue grew 4.5%.

Financial highlights

• FY continuing-operations revenue was €10,669.2M, down 0.5% reported but up 3.6% comparably; Q4 revenue was €2,662.3M, down 2.6% reported and up 4.5% comparably.

• FY comparable operating profit was €567.8M versus €461.6M; reported operating profit was €600.2M, including a €46.1M gain from a consolidation change. Illustrative comparable operating profit was €553.6M versus €434.7M.

• Comparable pretax profit rose to €481.9M from €370.7M; reported diluted EPS was €1.09 versus €0.83 and comparable EPS was €0.97 versus €0.74.

• Q4 comparable operating margin was 6.2% versus 4.8%; diluted EPS was €0.31 versus €0.23.

Outlook and guidance

• FY2021 comparable operating profit guidance was €520M–€620M, compared with FY2020 illustrative comparable operating profit of €553.6M.

• Pandemic conditions and vaccination progress could materially affect economic activity, consumer behavior and demand across operating markets.

• Finnish grocery retail was expected to grow moderately; foodservice recovery depended on pandemic developments.

• Northern European renovation markets were expected to grow, while new housing construction was expected to decline overall; Finnish auto-market demand was expected to grow.