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1. Company Snapshot

1.a. Company Description

Kesko Oyj engages in the grocery trading business in Finland.It operates through Grocery Trade, Building and Technical Trade, and Car Trade segments.The company's Grocery Trade segment is involved in the wholesale and B2B trade of groceries; and the retail sale of the home and specialty goods.


This segment operates approximately 1,200 K-food stores, including K-Citymarket, K-Supermarket, K-Market, and Neste K.Its Building and Technical Trade segment engages in the retail, wholesale, and B2B trade of building and home improvement, and electrical and HEPAC products, as well as trades in leisure goods.This segment operates retail store chains under the K-Rauta, K-Bygg, Byggmakker, and Onninen names, as well as leisure goods trade chains under the Intersport and Budget Sport names in Finland, Sweden, Norway, and the Baltic countries.


The company's Car Trade segment imports, markets, and retails Volkswagen, Audi, SEAT, CUPRA, Bentley, and Porsche passenger cars, as well as Volkswagen and MAN commercial vehicles in Finland.This segment is also involved in car leasing activities; and the provision of repair and maintenance, spare parts, and accessories services, as well as charging network for electric vehicles under the K-Charge name in Finland.Kesko Oyj was founded in 1940 and is headquartered in Helsinki, Finland.

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1.b. Last Insights on KESKOB

Kesko Oyj's recent performance faces headwinds from increasing regulatory pressures. The company's updated packaging policy aims to make all own-brand packaging recyclable or reusable by 2029, aligning with EU regulations. This move may lead to short-term costs and complexity. Furthermore, the Finnish loyalty market's growth, driven by sustainability and digitalization, may not entirely benefit Kesko, as it must invest to stay competitive. With no recent earnings release available, investors monitor Kesko's strategic adjustments amidst evolving market dynamics.

1.c. Company Highlights

2. Kesko's Q3 2025: Strong Performance Across Divisions

Kesko reported a robust Q3 2025, with net sales totaling over EUR 3.2 billion, up by EUR 201 million. The comparable operating profit was EUR 208.1 million, and the operating margin was 6.4%. Earnings per share (EPS) came in at EUR 0.35, beating analyst estimates of EUR 0.305. The company's return on capital employed was 10.6%. Kesko's revenue growth was driven by all businesses, with a rolling 12-month net sales increase to almost EUR 12.3 billion.

Publication Date: Oct -31

📋 Highlights
  • Updated 2025 Profit Guidance: Kesko raised its comparable operating profit forecast to EUR 640–690 million, up from previous expectations, driven by improved performance across all divisions.
  • Grocery Trade Recovery: Achieved a 6.6% rolling 12-month EBIT margin, with a 3.6% K Group sales growth and a price program cutting costs on 1,200 products boosting sales.
  • Building & Technical Trade Growth: Net sales rose EUR 106 million (1.3% comparable growth), but margin contraction to 5.8% due to pricing pressures and weak market conditions.
  • Car Trade Profit Surge: Operating profit increased EUR 4.9 million to EUR 22.7 million (6.4% margin), with sales up EUR 60 million despite a challenging market.

Segmental Performance

In Grocery Trade, net sales increased by EUR 36 million, with rolling 12 months net sales totaling EUR 6.4 billion. Although comparable operating profit declined by EUR 1.2 million, the company remains confident in gaining market share next year. In Building and Technical Trade, net sales increased by EUR 106 million, driven by a 1.3% comparable sales increase. The Car Trade division saw both sales and operating profit increase clearly, with a 6.4% operating margin.

Guidance Update

Kesko updated its guidance, estimating its 2025 comparable operating profit to be in the range of EUR 640 million to EUR 690 million. The company expects the operating environment and results to improve in all divisions and operating countries in 2026. As Jorma Rauhala stated, "We believe the Finnish grocery market will increase next year, and our performance will be strong when it comes to market share."

Valuation Metrics

With a P/E Ratio of 19.71 and an EV/EBITDA of 9.72, Kesko's valuation appears reasonable. The company's ROE is 14.7%, and the ROIC is 7.48%. The Dividend Yield is 4.95%, indicating a relatively attractive return for investors. The Net Debt / EBITDA ratio is 3.07, suggesting a manageable debt burden.

Outlook

Analysts estimate next year's revenue growth at 4.5%. To reach the high end of the 2025 guidance, Kesko needs to see all businesses perform better than expected and an excellent Christmas for K-Citymarket, as well as a faster recovery in the Building and Technical Trade market. With its strong performance across divisions, Kesko is well-positioned to achieve its goals.

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.68%)

6. Segments

Grocery Trade

Expected Growth: 3.5%

Kesko Oyj's 3.5% growth in Grocery Trade is driven by increasing demand for online grocery shopping, strategic expansion into new markets, and focus on private label products. Additionally, investments in digitalization, efficient supply chain management, and customer loyalty programs contribute to the growth. Furthermore, the company's strong market position and ability to adapt to changing consumer preferences also support the growth momentum.

Building and Technical Trade

Expected Growth: 3.8%

Kesko Oyj's Building and Technical Trade segment growth of 3.8% is driven by increasing demand for sustainable building solutions, investments in digitalization and e-commerce, and strategic acquisitions. Additionally, the segment benefits from a strong market position in Finland and a growing presence in Sweden and Norway, supported by a solid financial performance and efficient operations.

Car Trade

Expected Growth: 4.2%

Kesko Oyj's Car Trade segment growth of 4.2% is driven by increasing demand for new and used cars, expansion of online sales channels, and strategic partnerships with car manufacturers. Additionally, investments in digitalization and omnichannel retailing have improved customer experience, contributing to the segment's growth.

Common Functions

Expected Growth: 3.2%

Kesko Oyj's 3.2% growth is driven by increasing demand for grocery and food services, expansion of digital channels, and strategic acquisitions. Additionally, the company's focus on sustainability, cost savings, and operational efficiency have contributed to its growth. Furthermore, Kesko's strong market position in Finland and its ability to adapt to changing consumer behavior have also supported its growth momentum.

7. Detailed Products

Food Trade

Kesko Oyj's food trade segment operates in the grocery trade and offers a wide range of food products to consumers through its various store formats, including K-food, K-market, and K-citymarket.

Building and Technical Trade

Kesko Oyj's building and technical trade segment provides a wide range of building materials, technical products, and services to professional builders, contractors, and consumers.

Car Trade

Kesko Oyj's car trade segment operates in the automotive retail business, offering new and used cars, as well as car maintenance and repair services.

Home and Speciality Goods Trade

Kesko Oyj's home and speciality goods trade segment offers a wide range of home and speciality products, including interior decoration, leisure goods, and sports equipment.

8. Kesko Oyj's Porter Forces

Forces Ranking

Threat Of Substitutes

Kesko Oyj operates in the retail industry, where substitutes are readily available. However, the company's strong brand presence and customer loyalty mitigate the threat of substitutes.

Bargaining Power Of Customers

Kesko Oyj's customers have a high bargaining power due to the availability of substitutes and the company's dependence on a few large customers.

Bargaining Power Of Suppliers

Kesko Oyj has a diversified supplier base, which reduces the bargaining power of individual suppliers. The company's large scale of operations also gives it negotiating power over suppliers.

Threat Of New Entrants

The retail industry has high barriers to entry, including significant capital requirements and established relationships with suppliers. This reduces the threat of new entrants.

Intensity Of Rivalry

The retail industry is highly competitive, with many established players competing for market share. Kesko Oyj faces intense rivalry from both domestic and international competitors.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 50.26%
Debt Cost 4.43%
Equity Weight 49.74%
Equity Cost 6.99%
WACC 5.70%
Leverage 101.04%

11. Quality Control: Kesko Oyj passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Sainsbury

A-Score: 6.8/10

Value: 7.4

Growth: 7.6

Quality: 2.5

Yield: 7.5

Momentum: 7.0

Volatility: 9.0

1-Year Total Return ->

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Stock-Card
Kesko

A-Score: 5.7/10

Value: 5.6

Growth: 4.2

Quality: 3.6

Yield: 7.5

Momentum: 4.0

Volatility: 9.0

1-Year Total Return ->

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Axfood

A-Score: 5.6/10

Value: 4.2

Growth: 5.8

Quality: 4.1

Yield: 5.6

Momentum: 5.0

Volatility: 9.0

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Colruyt

A-Score: 5.2/10

Value: 7.7

Growth: 4.6

Quality: 4.3

Yield: 6.9

Momentum: 1.0

Volatility: 7.0

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Carrefour

A-Score: 5.2/10

Value: 7.4

Growth: 4.6

Quality: 1.6

Yield: 7.5

Momentum: 2.5

Volatility: 7.7

1-Year Total Return ->

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Greggs

A-Score: 5.0/10

Value: 7.1

Growth: 6.6

Quality: 5.7

Yield: 6.2

Momentum: 0.5

Volatility: 4.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

18.41$

Current Price

18.41$

Potential

-0.00%

Expected Cash-Flows