Finnish retailer Kesko, who records around one-fifth of its net sales in the ailing Baltic markets, has seen overall group sales for the first nine months of 2009 contract with 13.3% to EUR6.3 billion (USD9.2 billion). 8.6% of this decline was attributable to Finland and a staggering 30% related to sales abroad.
Kesko’s food retailing contradicted overall group sales, by recording a 3.7% increase in value. However, with estimated food inflation in Finland of some 5%, Kesko food retail lost market share on volume. The real problem for Kesko in 2009 lies in its non-food trade where they are heavily involved in the agricultural machinery trade and automotive sales. With the freeze-up of credit, corporate investments in new machinery were among the first to be hit by the downturn.
Despite dwindling sales, Kesko managed to record healthy profits of EUR100.3 million (USD145.9 million) compared to EUR280.9 million (USD408.6 million) for the same period in 2008. The recorded profit comes as a result of cutting investments and costs. Among other things, Kesko decreased its personnel costs by 8%, reducing the number of employers from 24,870 to 22,086 and reducing stock, thereby freeing up capital for the continued operations.
The combination of economical uncertainty and the abovementioned cost cutting measurements has meant that Kesko is projecting zero growth for the coming year.