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Annual report 2013

Impact on society

Kesko's operations generate economic benefits for shareholders, personnel, retailers, suppliers and service providers and their employees, customers, as well as municipalities and states. Kesko develops and provides trading sector services, employs people directly and indirectly, and buys, sells and arranges the manufacture of products.

Kesko’s current store network is comprehensive. Kesko’s chain operations comprise about 2,000 stores in Finland, Sweden, Norway, Estonia, Latvia, Lithuania, Russia and Belarus. About half of the Finnish population live within less than a kilometre of a K-food store.

Kesko aims to influence the development of its sector by participating in the activities of international and Finnish trading sector organisations.

Read more about Kesko employees’ activities in organisations.


 

Did you know?

Kesko was formed when four regional wholesaling companies that had been founded by retailers were merged in October 1940. Throughout its 75-year history, Kesko has played an important role in building Finnish society. Over the decades, retail store types have developed along with the development of society; general stores located in the countryside were replaced by self-service stores and, as urbanisation increased, by hypermarkets and chain operations.

 
Good financial standing creates shareholder value

Kesko’s share capital is divided into A and B share series, and the shares are listed on Nasdaq Helsinki. Most of the large shareholders are long-term owners of Kesko. There are several retailers among the large shareholders.

An absolute prerequisite for success in business is financial profitability. The most important value created by the company for shareholders is the generation of economic value added.

Kesko’s financial position is very strong. At the end of 2014, Kesko’s liquid assets were about €600 million and the balance sheet was net debt-free, which provides an excellent basis for developing the company.

The yield of Kesko’s B share has increased by an average of 10% per year during the past five years.

Kesko was listed on the Helsinki Stock Exchange in 1960. Kesko is a good dividend payer: it has distributed dividends every year except for one (1967) since it was listed.

Kesko’s dividend policy is to distribute 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. During the past five years, the dividend distributed has been an average of 79% of the earnings per share excluding non-recurring items.


Taxes paid by Kesko benefit society

Kesko is a significant taxpayer: in addition to paying income and real estate taxes, Kesko collects, reports and remits indirect taxes, such as value added taxes and excise duties.

The impact of the K-Group and its 45,000 employees on the municipal sector is significant. Municipal taxes paid by employees account for a considerable proportion of the municipalities’ tax revenue.

In 2014, there were K-food stores in 275 towns and municipalities in Finland. Real estate taxes for the business premises used by Kesko and the K-Group are paid to the municipalities the premises are located in. Some of the income taxes from Kesko’s and K-retailers’ business are distributed to those municipalities where they operate.

Suppliers are important partners

Most of the economic benefits from Kesko’s operations – about 84% of Kesko’s net sales – go to suppliers. Kesko’s purchases from them totalled €7.6 billion in 2014.

In 2014, Kesko had around 21,800 suppliers and service providers (annual purchases of at least €1,000). Approximately 10,200 of them operate in Finland, about 8,500 in Kesko’s other operating countries and about 3,100 elsewhere.

Purchases of domestic products and services generate economic benefit to the country and promote local work. Kesko buys the majority of the products it sells from Finland. In 2014, the purchases of all of Kesko’s companies from suppliers operating in Finland were €5,203 million, accounting 68.3% of Kesko Group’s all purchases. Direct purchases by K-retailers from Finnish regions totalled €567 million.

Nearly 160 firms across Finland manufacture Pirkka products. This production offers many local companies an opportunity to expand their market to cover all of Finland. Some examples of such firms and products are Pielispakari in Nurmes with their hand-crimped Pirkka Karelian pasties and Ruoveden Herkku with their Pirkka cognac mustard.

The success of the Finnish retail trade also provides national manufacturers with opportunities to expand outside Finland. For many Finnish companies, Rautakesko is a distribution channel and a partner for taking their products and services to international markets.


Kesko creates jobs

At the end of 2014, Kesko had 23,794 employees. In all, Kesko and K-retailers employ around 45,000 people in eight operating countries. In recent years, Kesko has strongly expanded its business in Russia, where operations include the food, building and home improvement, and sports trades. At the end of 2014, Kesko had 3,338 employees in Russia.

Read more: Employees, GRI section

Read more: Employees are our most important asset


Impacts of Kesko’s operations in Finnish regions

Click on the names of the regions to see the impacts of Kesko’s operations on the map

Map of Finland
  • Central Finland
  • Central Ostrobothnia
  • Kainuu
  • Kanta-Häme
  • Kymenlaakso
  • Lapland
  • Northern Karelia
  • Northern Ostrobothnia
  • Northern Savo
  • Ostrobothnia
  • Pirkanmaa
  • Päijät-Häme
  • Satakunta
  • Southern Karelia
  • Southern Ostrobothnia
  • Southern Savo
  • Uusimaa
  • Varsinais-Suomi
  • Åland

Åland

€ million

Kesko’s purchases of goods

28.6

K-retailers’ direct purchases of goods

0.0

Kesko’s and K-retailers’ capital expenditure*

0.0

Salaries paid by Kesko

0.0

Salaries paid by K-retailers

0.0

Taxes paid by K-retailers

0.0

The figures are for those K-retailers whose accounts and payroll are managed by Vähittäiskaupan Tilipalvelu VTP Oy, representing around 85% of K-retailers’ total business volume.

* Incl. increase in lease liabilities of K-retailers' equipment

Sum 28.6

Yhteensa
000

Varsinais-Suomi

€ million

Kesko’s purchases of goods

652.0

K-retailers’ direct purchases of goods

55.0

Kesko’s and K-retailers’ capital expenditure*

7.1

Salaries paid by Kesko

23.5

Salaries paid by K-retailers

33.0

Taxes paid by K-retailers

2.6

The figures are for those K-retailers whose accounts and payroll are managed by Vähittäiskaupan Tilipalvelu VTP Oy, representing around 85% of K-retailers’ total business volume.

* Incl. increase in lease liabilities of K-retailers' equipment

Sum 773.3 

Yhteensa
674,2

Uusimaa

€ million

Kesko’s purchases of goods

2,967.4

K-retailers’ direct purchases of goods

147.3

Kesko’s and K-retailers’ capital expenditure*

81.4

Salaries paid by Kesko

261.5

Salaries paid by K-retailers

114.4

Taxes paid by K-retailers

10.1

The figures are for those K-retailers whose accounts and payroll are managed by Vähittäiskaupan Tilipalvelu VTP Oy, representing around 85% of K-retailers’ total business volume.

* Incl. increase in lease liabilities of K-retailers' equipment

Sum 3,582.1

Yhteensa
3092,6

Southern Savo

€ million

Kesko’s purchases of goods

31.6

K-retailers’ direct purchases of goods

13.9

Kesko’s and K-retailers’ capital expenditure*

1.2

Salaries paid by Kesko

4.3

Salaries paid by K-retailers

11.5

Taxes paid by K-retailers

1.0

The figures are for those K-retailers whose accounts and payroll are managed by Vähittäiskaupan Tilipalvelu VTP Oy, representing around 85% of K-retailers’ total business volume.

* Incl. increase in lease liabilities of K-retailers' equipment

Sum 63.4

Yhteensa
31,2

Southern Ostrobothnia

€ million

Kesko’s purchases of goods

255.1

K-retailers’ direct purchases of goods

35.3

Kesko’s and K-retailers’ capital expenditure*

0.7

Salaries paid by Kesko

5.1

Salaries paid by K-retailers

12.3

Taxes paid by K-retailers

0.8

The figures are for those K-retailers whose accounts and payroll are managed by Vähittäiskaupan Tilipalvelu VTP Oy, representing around 85% of K-retailers’ total business volume.

* Incl. increase in lease liabilities of K-retailers' equipment

Sum 309.4

Yhteensa
277,1

Southern Karelia

€ million

Kesko’s purchases of goods

5.6

K-retailers’ direct purchases of goods

14.9

Kesko’s and K-retailers’ capital expenditure*

7.7

Salaries paid by Kesko

5.3

Salaries paid by K-retailers

12.0

Taxes paid by K-retailers

1.1

The figures are for those K-retailers whose accounts and payroll are managed by Vähittäiskaupan Tilipalvelu VTP Oy, representing around 85% of K-retailers’ total business volume.

* Incl. increase in lease liabilities of K-retailers' equipment

Sum 46.6

Yhteensa
9,9

Satakunta

€ million

Kesko’s purchases of goods

106.6

K-retailers’ direct purchases of goods

27.2

Kesko’s and K-retailers’ capital expenditure*

7.5

Salaries paid by Kesko

4.0

Salaries paid by K-retailers

15.2

Taxes paid by K-retailers

0.9

The figures are for those K-retailers whose accounts and payroll are managed by Vähittäiskaupan Tilipalvelu VTP Oy, representing around 85% of K-retailers’ total business volume.

* Incl. increase in lease liabilities of K-retailers' equipment

Sum 161.4

Yhteensa
108,1

Päijät-Häme

€ million

Kesko’s purchases of goods

128.7

K-retailers’ direct purchases of goods

32.5

Kesko’s and K-retailers’ capital expenditure*

7.1

Salaries paid by Kesko

8.7

Salaries paid by K-retailers

12.5

Taxes paid by K-retailers

0.7

The figures are for those K-retailers whose accounts and payroll are managed by Vähittäiskaupan Tilipalvelu VTP Oy, representing around 85% of K-retailers’ total business volume.

* Incl. increase in lease liabilities of K-retailers' equipment

Sum 190.2

Yhteensa
129,4

Pirkanmaa

€ million

Kesko’s purchases of goods

318.0

K-retailers’ direct purchases of goods

28.7

Kesko’s and K-retailers’ capital expenditure*

4.9

Salaries paid by Kesko

25.0

Salaries paid by K-retailers

32.4

Taxes paid by K-retailers

2.6

The figures are for those K-retailers whose accounts and payroll are managed by Vähittäiskaupan Tilipalvelu VTP Oy, representing around 85% of K-retailers’ total business volume.

* Incl. increase in lease liabilities of K-retailers' equipment

Sum 411.7

Yhteensa
332,3

Ostrobothnia

€ million

Kesko’s purchases of goods

134.1

K-retailers’ direct purchases of goods

8.6

Kesko’s and K-retailers’ capital expenditure*

2.2

Salaries paid by Kesko

4.8

Salaries paid by K-retailers

8.5

Taxes paid by K-retailers

0.6

The figures are for those K-retailers whose accounts and payroll are managed by Vähittäiskaupan Tilipalvelu VTP Oy, representing around 85% of K-retailers’ total business volume.

* Incl. increase in lease liabilities of K-retailers' equipment

Sum 158.8

Yhteensa
133,7

Northern Savo

€ million

Kesko’s purchases of goods

162.8

K-retailers’ direct purchases of goods

30.3

Kesko’s and K-retailers’ capital expenditure*

3.4

Salaries paid by Kesko

11.2

Salaries paid by K-retailers

19.6

Taxes paid by K-retailers

1.4

The figures are for those K-retailers whose accounts and payroll are managed by Vähittäiskaupan Tilipalvelu VTP Oy, representing around 85% of K-retailers’ total business volume.

* Incl. increase in lease liabilities of K-retailers' equipment

Sum 228.6

Yhteensa
149

Northern Ostrobothnia

€ million

Kesko’s purchases of goods

108.0

K-retailers’ direct purchases of goods

41.5

Kesko’s and K-retailers’ capital expenditure*

6.9

Salaries paid by Kesko

16.1

Salaries paid by K-retailers

25.3

Taxes paid by K-retailers

2,1

The figures are for those K-retailers whose accounts and payroll are managed by Vähittäiskaupan Tilipalvelu VTP Oy, representing around 85% of K-retailers’ total business volume.

* Incl. increase in lease liabilities of K-retailers' equipment

Sum 199.9

Yhteensa
103,1

Northern Karelia

€ million

Kesko’s purchases of goods

23.8

K-retailers’ direct purchases of goods

22.3

Kesko’s and K-retailers’ capital expenditure*

0.3

Salaries paid by Kesko

4.2

Salaries paid by K-retailers

11.3

Taxes paid by K-retailers

1.6

The figures are for those K-retailers whose accounts and payroll are managed by Vähittäiskaupan Tilipalvelu VTP Oy, representing around 85% of K-retailers’ total business volume.

* Incl. increase in lease liabilities of K-retailers' equipment

Sum 63.4

Yhteensa
26,7

Lapland

€ million

Kesko’s purchases of goods

19.0

K-retailers’ direct purchases of goods

25.3

Kesko’s and K-retailers’ capital expenditure*

0.9

Salaries paid by Kesko

5.5

Salaries paid by K-retailers

17.4

Taxes paid by K-retailers

1.8

The figures are for those K-retailers whose accounts and payroll are managed by Vähittäiskaupan Tilipalvelu VTP Oy, representing around 85% of K-retailers’ total business volume.

* Incl. increase in lease liabilities of K-retailers' equipment

Sum 69.9

Yhteensa
15,8

Kymenlaakso

€ million

Kesko’s purchases of goods

44.1

K-retailers’ direct purchases of goods

16.9

Kesko’s and K-retailers’ capital expenditure*

1.3

Salaries paid by Kesko

6.2

Salaries paid by K-retailers

11.7

Taxes paid by K-retailers

1.0

The figures are for those K-retailers whose accounts and payroll are managed by Vähittäiskaupan Tilipalvelu VTP Oy, representing around 85% of K-retailers’ total business volume.

* Incl. increase in lease liabilities of K-retailers' equipment

Sum 81.2

Yhteensa
44,0

Kanta-Häme

€ million

Kesko’s purchases of goods

93.9

K-retailers’ direct purchases of goods

24.5

Kesko’s and K-retailers’ capital expenditure*

0.9

Salaries paid by Kesko

4.4

Salaries paid by K-retailers

10.8

Taxes paid by K-retailers

0.5

The figures are for those K-retailers whose accounts and payroll are managed by Vähittäiskaupan Tilipalvelu VTP Oy, representing around 85% of K-retailers’ total business volume.

* Incl. increase in lease liabilities of K-retailers' equipment

Sum 135.1

Yhteensa
100,7

Kainuu

€ million

Kesko’s purchases of goods

4.7

K-retailers’ direct purchases of goods

6.3

Kesko’s and K-retailers’ capital expenditure*

1.0

Salaries paid by Kesko

1.4

Salaries paid by K-retailers

6.5

Taxes paid by K-retailers

0.6

The figures are for those K-retailers whose accounts and payroll are managed by Vähittäiskaupan Tilipalvelu VTP Oy, representing around 85% of K-retailers’ total business volume.

* Incl. increase in lease liabilities of K-retailers' equipment

Sum 20.5

Yhteensa
2,6

Central Ostrobothnia

€ million

Kesko’s purchases of goods

43.0

K-retailers’ direct purchases of goods

14.8

Kesko’s and K-retailers’ capital expenditure*

5.1

Salaries paid by Kesko

1.9

Salaries paid by K-retailers

4.5

Taxes paid by K-retailers

0.7

The figures are for those K-retailers whose accounts and payroll are managed by Vähittäiskaupan Tilipalvelu VTP Oy, representing around 85% of K-retailers’ total business volume.

* Incl. increase in lease liabilities of K-retailers' equipment

Sum 70.0

Yhteensa
46,0

Central Finland

€ million

Kesko’s purchases of goods

52.1

K-retailers’ direct purchases of goods

21.5

Kesko’s and K-retailers’ capital expenditure*

3.6

Salaries paid by Kesko

9.3

Salaries paid by K-retailers

17.8

Taxes paid by K-retailers

1.7

The figures are for those K-retailers whose accounts and payroll are managed by Vähittäiskaupan Tilipalvelu VTP Oy, representing around 85% of K-retailers’ total business volume.

* Incl. increase in lease liabilities of K-retailers' equipment

 

Sum 106.0

Yhteensa
62,4

Economic benefit generated by Kesko and K-retailers to Finnish regions in 2014









Region Kesko’s
purchases
of goods
K-retailers’ direct
purchases
of goods
Kesko’s and
K-retailers’ capital
expenditure¹
Salaries
paid by
Kesko
Salaries
paid by
K-retailers
Taxes paid by
K-retailers
Total
€ million






Southern Karelia 5.6 14.9 7.7 5.3 12.0 1.1 46.6
Southern Ostrobothnia 255.1 35.3 0.7 5.1 12.3 0.8 309.4
Southern Savo 31.6 13.9 1.2 4.3 11.5 1.0 63.4
Kainuu 4.7 6.3 1.0 1.4 6.5 0.6 20.5
Kanta-Häme 93.9 24.5 0.9 4.4 10.8 0.5 135.1
Central Ostrobothnia 43.0 14.8 5.1 1.9 4.5 0.7 70.0
Central Finland 52.1 21.5 3.6 9.3 17.8 1.7 106.0
Kymenlaakso 44.1 16.9 1.3 6.2 11.7 1.0 81.2
Lapland 19.0 25.3 0.9 5.5 17.4 1.8 69.9
Pirkanmaa 318.0 28.7 4.9 25.0 32.4 2.6 411.7
Ostrobothnia 134.1 8.6 2.2 4.8 8.5 0.6 158.8
Northern Karelia 23.8 22.3 0.3 4.2 11.3 1.6 63.4
Northern Ostrobothnia 108.0 41.5 6.9 16.1 25.3 2.1 199.9
Northern Savo 162.8 30.3 3.4 11.2 19.6 1.4 228.6
Päijät-Häme 128.7 32.5 7.1 8.7 12.5 0.7 190.2
Satakunta 106.6 27.2 7.5 4.0 15.2 0.9 161.4
Uusimaa 2,967.4 147.3 81.4 261.5 114.4 10.1 3,582.1
Varsinais-Suomi 652.0 55.0 7.1 23.5 33.0 2.6 773.3
Åland 28.6 - - - - - 28.6
Total 5,179.2 566.7 143.5 402.3 376.8 31.8 6,700.3








The figures are for those K-retailers whose accounts and payroll are managed by Vähittäiskaupan Tilipalvelu VTP Oy, representing around 85% of K-retailers’ total business volume.
¹ Incl. increase in lease liabilities of K-retailers' equipment
               


Economic benefit generate as excel in the GRI section.

CASE: CHRISTMAS KETTLE HELPS THOSE IN NEED

 

Translator Taija Mäentaka and Communications Officer Kristiina Seppä from the Group Communications were kettle guards at the largest Christmas kettle in the world at the Helsinki railway station.

Translator Taija Mäentaka and Communications Officer Kristiina Seppä from the Group Communications were kettle guards at the largest Christmas kettle in the world at the Helsinki Railway Station.

For the second time, Kesko and K-stores were the main national partner of the Finnish Salvation Army’s Christmas kettle collection in 2014. The funds raised will be used to support those in need and acquire vouchers to be used at K-Group stores. Some of the funds will also be used to organise camps and provide regular support throughout the year.

This time, Christmas kettles were highly visible nearby and within K-food stores. There was a kettle at nearly every K-citymarket. Kesko people also volunteered to man the kettle, and representatives of the Group Legal Affairs and the Group Communications units headed to the Christmas kettle at the Helsinki Railway Station.

“People were keen to talk to us, donating money and clothing, linen and children’s games. I saw smiles on their faces and hardly any sign of Monday morning rush,” says Saara Helminen, Kesko’s Corporate Counsel, one of the kettle guards.

In 2014, the Finnish Salvation Army donated about 20,000 gift vouchers for K-Group stores. The donation granted from the funds reserved for donations by Kesko’s Board of Directors was directed toward the operations of the children’s holiday home in Nummela and the reception centre for the homeless on Castréninkatu, Helsinki.

Kesko and K-stores will continue to be the main partner of the Salvation Army’s Christmas Kettle collection in 2015.

 

 
 

Other charity campaigns

  • K-retailers, who were the main partners in the Red Nose Day collection, raised more than €356,000. The amount could provide reading skills to 35,000 children + video
  • Participation in bottle return raffles at K-food stores’ bottle return machines was further improved in 2014. Donating money to charity is already possible in 200 K-food stores.
  • For each Pampers product sold in the stores in November and December 2014, Procter & Gamble and K-food stores together donated a sum to UNICEF corresponding to six tetanus vaccines.
  • Pirkka and K-food stores participated in the Pink Ribbon campaign of the Cancer Society of Finland again in 2014. For every Pink Ribbon bunch of flowers purchased at K-food stores during the campaign, Pirkka donated 20 cents to the Cancer Society.
 

K-retailers were the main partners in the Red Nose Day collection: