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THE CUSTOMER AND QUALITY
– IN EVERYTHING WE DO

At the core of Kesko’s strategy is profitable growth in three strategic sectors: the grocery trade, the building and home improvement trade and the car trade. Kesko differentiates itself from the competition with quality and customer orientation.

In the future, Kesko will operate more strongly as a unified K-Group, which will enable us to offer customers ever better services and to operate efficiently. The strategic objective is to strengthen the customer experience for consumers and businesses at both stores and on digital channels. The key focus areas include the renewal of the chain concepts, building the best digital services in the sector and revising the K-Plussa customer loyalty system.

In the grocery trade, Kesko's strategic objective is growth in the Finnish grocery trade. The key focus area is the renewal and growth of the K-Group's neighbourhood store network, which is underpinned by the acquisition announced in November 2015, when Kesko made an agreement to acquire Suomen Lähikauppa. The K-supermarket chain will be increased by several new store sites and the K-citymarket concept will be revised. In the strategy for Russia, the objective is to increase business and improve profitability in the St. Petersburg area. Increasing the business of the grocery wholesale company Kespro is also at the centre of the strategy.

In the building and home improvement trade, Kesko's objective is to further strengthen its position in Europe. Kesko is now already the fifth largest operator in Europe and has operations in eight countries. Kesko's strategic objective is to increase the building and technical trade, which is significantly underpinned by the acquisition announced in January 2016, when Kesko made an agreement to acquire Onninen, a company specialising in the trade of HEPAC and electrical products.

The completion of the acquisition of both Suomen Lähikauppa and Onninen is subject to the approval of the competition authority and the acquisitions are estimated to be completed in the first half of 2016.

In the car trade, Kesko is the market leader in Finland. In the future, Kesko's objective is to further increase its market share in the car trade in Finland and the Baltic countries.

Kesko's other businesses, i.e. the furniture trade, the sports trade, the agricultural trade, the machinery trade and the shoe trade, will be developed with the objective of increasing their value.

The financial objective in line with the strategy is to achieve a 14% return on capital employed and a 12% return on equity.

In order to ensure competitiveness and improve profitability, Kesko's strategic objective is to implement cost savings of at least €50 million in fixed assets by the end of 2016.

Kesko estimates that in the strategy period 2015–2017, its capital expenditure in its business operations will be around €750 million, excluding possible acquisitions. 

STRATEGIC OBJECTIVES

  • Growth in the Finnish grocery trade
  • Increasing the building and home improvement trade in Europe
  • Strengthening market leadership in the Finnish car trade
  • The best omnichannel customer experience of the trading sector
  • One unified Kesko, seeking synergies

Read more about how the divisions are implementing the strategy

Financial objectives
Objectives Target level Realisation in 2015 Realisation in 2014
Return on capital employed* 14% 11.7% 9.9%
Return on equity* 12% 8.2% 7.6%
Interest-bearing net debt/EBITDA < 2.5 -1.4 -0.3
* Excluding non-recurring items
Kesko's dividend policy: Kesko Corporation distributes at least 50% of its earnings per share excluding non-recurring items as dividends, taking into account, however, the Company’s financial position and operating strategy.

ONE UNIFIED

1. Strong brand and identity

2. Efficiency

3. Customer relationships across divisional borders

Kesko's net sales by business model

Kesko’s principal business model in the Finnish market is the chain business model, in which independent K-retailers run retail stores in Kesko's chains. In Finland, all food stores, building and home improvement stores, and agricultural stores in the K-Group are run by K-retailer entrepreneurs.

B2B trade is increasingly important to Kesko.

Outside Finland, own retailing is the main business model.

Description of value creation

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WHAT DOES VALUE CREATION RELATE TO?

Read more about how we create value