Kesko Oyj — Earnings Release 2020

Jul 10, 2020

Kesko Corporation issues a positive profit warning and provides preliminary information on its second-quarter net sales and comparable operating profit

Kesko Corporation issues a positive profit warning and provides preliminary information on its second-quarter net sales and comparable operating profit

Kesko raises its guidance for the comparable operating profit for its continuing
operations, issued in connection with the company’s interim report on 28 April
2020. Kesko now estimates that the comparable operating profit for its
continuing operations will be in the range of €430-510 million in 2020. Before,
the company estimated that the comparable operating profit for continuing
operations would be in the range of €400-450 million.

In the second quarter of 2020, net sales for continuing operations totalled
approximately €2,815 million (Q2/2019: €2,781.4 million) and the comparable
operating profit totalled approximately €155 million (Q2/2019: €122.5 million).
Net sales and the comparable operating profit increased especially in the
building and technical trade division. In the grocery trade division, net sales
and profitability have developed well despite the decrease in sales in the
foodservice business. The figures are based on preliminary unaudited
information. Kesko will publish its 2020 half year financial report on 23 July
2020.

Guidance upgrade rationale

The profit guidance upgrade is based on better than anticipated net sales
development in the building and technical trade division in various operating
countries as well as in the grocery trade. Consumer sales have developed better
than anticipated during the exceptional circumstances surrounding the epidemic.
B2B sales have also continued stronger than anticipated in both building and
home improvement stores and Onninen. Retail sales for all the grocery trade
chains have developed better than anticipated, compensating for the decrease in
sales in the foodservice business.

In addition to the foodservice business, net sales have clearly decreased in the
car trade. Adjustment measures carried out have enabled the company to manage
the situation and costs in its various business operations under the challenging
circumstances.

Although conditions surrounding the coronavirus have improved in Kesko’s
operating countries, it is hard to predict the development of the epidemic
situation and its economic impact. Therefore, the range for the guidance on
comparable operating profit for 2020 is still wide.

The previous outlook and guidance for 2020, issued in connection with the
company’s interim report on 28 April 2020, was as follows:

“Outlook for Kesko Group's continuing operations is given for year 2020, in
comparison with year 2019. Due to the COVID-19 pandemic and global economic
uncertainty, the company estimates that its comparable operating profit for
continuing operations will amount to €400–450 million in 2020, thus falling
somewhat short of the 2019 comparable operating profit of €461.6 million. The
company does not issue a guidance regarding net sales.

Kesko estimates that consumer demand for food will remain good despite the
exceptional circumstances brought on by the COVID-19 pandemic. Sales are
expected to grow in grocery stores and especially in the online sales of
groceries. In the foodservice business and home and speciality goods trade,
sales are expected to decrease.

Under the current circumstances, it is difficult to provide assessments on sales
development in the building and technical trade. A weakening in the overall
economy is expected to be reflected in sales to B2B customers. In addition,
restrictions on store opening hours affect country-specific sales development in
the building and technical trade division. In the car trade, both new and used
car sales are expected to decrease compared to 2019.

Due to the weakened economic situation, Kesko has initiated extensive cost
adjustment measures to ensure profitability and secure cash flow. The measures
include temporary personnel lay-offs and extensive adjustment of other costs.”

Further information is available from Jukka Erlund, Executive Vice President,
Chief Financial Officer, tel. +358 105 322 113, and Hanna Jaakkola, Vice
President, Investor Relations, tel. +358 105 323 540

Kesko Corporation

DISTRIBUTION
Nasdaq Helsinki Ltd
Main news media
www.kesko.fi

Attachments: