Kesko (KESKOB) Investor Day 2024 summary

Updated Growth Strategy and Market Environment

• Strategy for 2024–2026 remains focused on grocery, building and technical trade, and car trade, with no major portfolio changes planned due to strong growth potential in all divisions.

• Strategy period shortened to 2024–2026 due to market uncertainties, emphasizing operational excellence, customer-centricity, and crystallizing competitive advantages.

• B2B share of net sales is 40% and expected to increase as strategy is implemented.

• Urbanization, climate change, digitalization, green transition, and demographic shifts are key trends shaping investments and operations.

• AI and digitalization projects will be expanded to enhance efficiency, customer experience, and drive sales growth.

Division-Specific Plans and Objectives

• Grocery trade aims to gain market share, maintain EBIT above 6%, expand store network in growth centers, and improve price competitiveness through systematic programs.

• Building and technical trade targets 6–8% EBIT margin long-term, prioritizing profitability, cash flow, organic and acquisition-driven growth, and integration in Sweden, Norway, and Denmark.

• Car trade focuses on balanced growth across new cars, used cars, and services, aiming to outperform the market and leveraging partnerships with Volkswagen Group and Porsche AG.

• Annual investments in grocery store sites will be €200–250 million, targeting larger units in urban areas and hypermarkets.

• Integration of recent acquisitions (e.g., Davidsen in Denmark, Elektroscandia in Norway) is progressing, with further consolidation opportunities identified.

Financial Performance, Guidance, and Capital Allocation

• Medium-term targets: operating margin over 6%, ROCE over 14.5%, net debt/EBITDA at max 2.5; current performance is at or near these levels.

• Cash flow and cost efficiency are priorities, with OpEx ratio at 17% and capital expenditure expected at €400 million annually (excluding acquisitions).

• Dividend policy aims for 60–100% payout of EPS, with a steadily growing payout; last year, 80% of EPS was paid as dividend.

• Balance sheet enables continued organic investments, acquisitions, and stable dividends.

• Main risks are related to macroeconomic conditions, especially interest rates and construction market recovery.