Ladies and gentlemen, welcome to Keeskoy's First Quarter 2021 Release Call. I'm Keeskoy's CEO, Mick Kohellandner. Together with me, I have our CFO, Jukka Ehlund and Vice President, Investor Relations, Hanna Jakkola. Another record quarter, we were able to increase our sales and profits significantly. I will first give a short overview of our business performance in Q1.
Thereafter, I will present a bit more longer term perspective regarding market overview and our strategic strengths. And the 3rd section of the presentation is about digital trade and online sales. At the end, we will be happy to take questions both by phone and via chat. All time high first quarter result. Sales grew in all our divisions.
Our net sales increased to €2,540,000,000 Our comparable operating profit was 116,000,000 In addition to sales growth, we have been constantly able to improve our operations and cost efficiency. Good retail sales growth continued in K Group Grocery Stores and sales development was good in Building and Technical Trade. Our strong profit development meant that we were able also to meet the medium term financial targets that were raised last year. The company was again ranked as the most sustainable grocery trading company in the world. This was the 7th time already.
Our systematic sustainability work continues. There has been some changes in the Group Management Board lately And new capabilities have been added to the team. In January, Rick Kajokio was appointed as Executive Vice President, Corporate Responsibility. Last autumn, Executive Vice President, Communications, Karolina Parthane joined the Management Board. And in April, Matti Virthane was appointed as President, Cadre.
Net sales in first quarter totaled €2,559,000,000 It was up comparably by 5.9%, thanks to our strong strategy execution. Net sales increased in all our divisions. Rolling 12 months net sales totaled €10,400,000,000 Comparable operating profit for first quarter was record high €116,000,000 And it increased by €52,000,000 It increased due to good sales development in all our divisions and improved efficiency. Rolling 12 months comparable operating profit totaled €605,000,000 All return on capital employed also return on capital employed increased in all our divisions and the target was exceeded. Return on capital employed was at the level of 13.4%.
Keeskoy's financial position is strong. Cash flow from operating activities continued to strengthen and was €155,000,000 and our liquid assets were over €300,000,000 Capital expenditure totaled SEK 44,000,000. Net debt to EBITDA, excluding IFRS 16 impact, was 0.3, clearly below the target level. Strong growth continued in grocery trade. Gross rate net sales were €1,361,000,000 and it increased by almost 40,000,000.
Rolling 12 month net sales totaled €5,771,000,000 Comparable operating profit For Q1 was record high €81,000,000 and it increased by €21,000,000 Profitability was 6% and it increased due to good sales development in all food store change and improved operational efficiency. Rolling 12 months comparable operating profit was 396,000,000 and profitability 6.9%. During the quarter, retail sales market grew by 5.8%, while K Food stores were up by 6.1%. Sales grew in all K Food store chains. During the quarter, the market share grew and was nearly 38%.
The corona pandemic has caused household consumption to focus especially on domestic retail. Demand for online grocery continued to be strong. 48% of our retail sales growth came from growth in online grocery. Our B2B business cash flow has been suffering during the corona pandemic. However, We have managed to keep our foodservice business profitable during challenging times.
In Building and Technical Trade, strong development continued in all areas. Net sales grew comparably by €108,000,000 to €924,000,000 Net sales for the Building and Technical Trade division In comparable terms in Finland, Sweden, Norway and Poland, in the Baltics, net sales decreased slightly. Net sales grew in both B2C and B2B trade. Rolling 12 months net sales was record high 3,000,000,000 €747,000,000 Comparable operating profit increased by €25,000,000 to €31,400,000 The profitability improved and was 3.4 percent. Drawing 12 months comparable operating profit was €213,000,000 and profitability 5.7%.
Construction activity has remained at a good level in Northern Europe and B2C trade has remained active. In the market in general, demand in technical wholesale did not grow in Finland and nor Sweden. Also, issues with the availability have increased in the market. However, we have been able to ensure product availability in our businesses. In Finland, good development for K Raute and Oneren continued.
Development in Norway continued strong in all operations. In Sweden, K Raute and K Book did well in the market. Sales and profit development were well in the sports trade. In card rate, demand is recovering and sales are up. Net sales for the Q1 totaled €260,000,000 and grew comparably by €37,000,000 Rolling 12 months net sales were €930,000,000 Comparable operating profit For Q1, in card rate was €11,200,000 and it increased by €5,100,000 Profitability was 4.3%.
Rolling 12 months comparable operating profit was €28,500,000 and profitability 3.1%. In the market, the first registrations of passenger cars and vans in Finland were slightly down by 0.6%. Market is returning to normal levels. Used cars continues to grow. Component shortage is a growing issue for the car industry worldwide.
We updated our strategy for the car division and are forcefully changing and developing our own operations. Sales returned to pre pandemic levels and new models are supporting sales. Order backlog is strong. Market shares for our brands are growing. Now let's have a look at the coming years.
Our growth strategy supporting strong development also in years to come. Our strategy provides a good Foundation to increase sales and improve profit also in the future, it is working well. The strategy has the key role in our success. We have been growing our sales and profitability for a long time, which is A strong indication that our growth strategy is working and being successfully executed. The profit improvement has been steady.
In the grocery trade, we are well positioned to increase sales further by utilizing our strengths also in upcoming years. We estimate that in the Finnish grocery market in the coming years, total demand may stay above pre pandemic levels and foodservice to return to a growth track. We also estimate that online growth results will remain permanently at a higher level and continue to grow. Customers value quality and good service, while price is also important. Also importance of sustainability And locally, produced food is estimated to increase.
We will continue our own strong actions, for example, by renewing stores based on store specific business ideas and utilizing customer data in everyday store operations and business development. We will continue strong development of digital services and online sales also in the future. We want to grow our lead also in full service. In billing and technical trade, strong country specific actions support growth also in upcoming years. We estimate that in the market building and renovation will stay at a good level in Finland and Scandinavia.
Going forward, the share of P2P trade is estimated to continue to grow and P2C trade to return to normal levels. Growth in digital services and online sales is estimated to continue. Market consolidation is also expected to continue. We will continue seeking profitable growth in all operating countries. In Finland, we will continue to strengthen the market leading positions of K Raute and Oninen.
In Norway, we will continue to further increase the sales and profitability of Pukmacher and Oninen. And in Sweden, we will continue to develop Kpuk, K Raute and Oninen. There is also good growth potential in the Baltics and Poland. Also in building a technical trade, we will continue development of digital services and online sales. We will also continue execution executing our growth strategy by acquisitions, especially in Scandinavia.
In card rate, transformation in mobility offers growth potential in upcoming years. Our partner Volkswagen Group is the world's leading car manufacturing company with iconic brands. The Group is investing €46,000,000,000 in electric mobility. There is Pressure to update the Finnish car stock in coming years and the focus in taxation is shifting from car ownership to use. Fully electric and hybrid cars as well as low emission combustion engine cars are also needed.
Our transformation continues. We are focusing on improving profitability, accelerating sales growth and improving customer experience as well as to grow the used car sales. We are also aiming to tighten our collaboration with the Volkswagen Group. And then the 3rd section of the presentation, Keesko is a leading operator in digital trade in Northern Europe. Our digital trade sales are nearly 1 300,000,000 and online store sales nearly €1,000,000,000 P2P is especially strong When it comes to digital trade sales, Keespro represent over 40% of all our digital Trade sales and online 35%.
Consumers grocery online service, K. Ruaka, has grown fast and is our largest online store for consumers. Building and home improvement online stores include K Raute and BUKMAKER and they are also growing. Our online stores are fast growing and profitable business. Online grocery sales have increased by 3 43%, Finnish DIY and home improvement K Rauters online sales have increased by 74% and earnings 25%.
Sports trade online sales are up by more than 100%. Rapid online growth is thanks to our functional and successfully executed digital strategy. And now to our online grocery trade. We are the biggest online grocery operator in Finland with 54% market share. Our rolling 12 months retail sales totaled €230,000,000 Sales growth was nearly 3 50%.
From customer perspective, we offer the best online grocery customer experience on the market. The application is the most user friendly and we offer the biggest selection with up to 30,000 products with competitive prices. Home delivery and pickup service is fast and reliable. 1 of K's strengths is also wide Physical store network with 1200 ks food stores operated by ks retailers. 500 of those stores offer online services today.
Our Pirka private label is the best known private label in Finland and supports very strongly also our online sales. Our loyalty program customers get tailored Relevant customer specific marketing and offers. And if we look at our strengths, Our own efficient processes and capabilities offer a solid foundation. We have extensive supply channels. The nationwide store network enables us to offer efficient home deliveries and picking is constantly becoming more efficient.
Nearly all Finnish households take part of the K Prusa loyalty program. We use Data and new technologies extensively. Also our IT and logistics are efficient and reliable. Wide ranking corporate responsibility work with a long term focus is in our core. Online sales of groceries will grow significantly in Finland during this decade.
We aim to continue to be the clear market leader in Finnish online grocery trade also going forward. And then guidance. We estimate that our comparable operating profit in 2021 will be in the range of €570,000,000 €670,000,000 Before, We estimated that the comparable operating profit would be in the range €520,000,000, 620,000,000 The illustrative comparable operating profit in 2020 was EUR554,000,000. Thank you. Now we are ready for questions.
First, we will take questions from to conference call lines. Please.
Thank you.
Our first question Comes from the line of Magnus Raman of Kepler Cheuvreux. Please go ahead. Your line is open.
Thank you, and thank you, firstly, for the presentation. I have one question for each division, I guess. So starting off with the grocery trade. You mentioned here or you're right in the report now that you were up at Trailing penetration of around 3.5%, and the market should be at roughly 3%. And you mentioned here in the presentation you expect continued strong growth ahead.
In the Swedish market, which leads in online penetration, online sales is unprofitable and margin dilutive to all the incumbents. Do you see any specific argument for a difference to Keesko here in the coming years?
Yes. All in all, we believe that Finland is following Swedish grocery trade online market, we are behind Some years, but pandemic time has very heavily boosted market growth in Finland and CAP is not anymore so big between Finnish and Swedish market. Compression to ICA, my understanding is that also in Sweden, ICA has very good position also in online business as well as in Finland. We are very happy that We have succeeded to make us a market leader and we are very confident that Our strategy also in online business works very well. Idea to combine national nationwide Store Network, our very cost efficient, reliable, logistic IT systems and excellent online services.
This strategy works and we believe that it will work also very well in future.
Right. Well, actually, in terms of ICA, they lag the market Penetration by Axwood is actually a little bit ahead if you look at the incumbents. But what is typical for EK is that they have guided for a clear negative Impact on the group operating profitability from IGA Sweden's online investments. So that was What I was alluding to when Online Now is growing a share of your business, do you see it as any material drag on Group operating profitability? Or do you think there's a difference there for your business that you would actually derive better profitability contribution than What we have seen in Sweden?
You are right. And of course, we are not so familiar with ICAS numbers. All in all, Keeskor's financial performance in grocery business seems nowadays stronger compared to ICA. But also we should remember that ICA has made very heavy investments. And also matter of the fact is that ICA's approach in grocery online business is A little bit different compared to Keeskost and Kegrops approach.
But I repeat, I'm very confident that our strategy works and we will continue on this track. And of course, it means also In Keeskot that we will continue also big investments and very strong development in online business.
All right. And then in the Building and Technical division, What is your view on valuation multiples of potential targets here following this Volume boosted pandemic time, if it has been inflated indeed, does that make Smaller bolt on acquisitions, more probable than sizable acquisitions, do you think?
No. Multiples. Multiples, of course, we should remember that good companies always have quite high multiples, As well as we should remember that inflation rate is still very low, interest of rates very low. But we have seen a lot of consolidation and we believe that the Industry Consolidation in Finnish in Northern European Building and Technical Trade Business will continue. And I feel that we are in good position also to make acquisitions in future in Northern Europe.
We are very happy when I look already completed acquisitions as well as I'm extremely happy how well my people have succeeded to integrate acquired businesses. Also based on that, We are very eager and we have also high confidence that this development will continue. And there are still Lot of small, medium might come also in future, some bigger players who will be for sale. We continue. We are optimistic that this consolidation will continue.
All right. That's clear. If I understood you rightly from the presentation, you believe more in potential acquisitions or consolidation in this Yeah. In the Scandinavian market from your perspective than the rest of Europe. Did I get that right?
No. No. I didn't comment rest of Europe because our target and priority number 1 is to participate consolidation of building a technical trade business in Northern Europe. But when I look, Northern European countries, definitely, we can see biggest potential in Scandinavia, because in Finland market is already Quite much consolidated. Our market position is very strong in technical trade as well as in DIY business.
But Sweden, Norway, Denmark, we can see great opportunities there for KESSCO.
All right. And then finally then on the car trade business. What is your view of the trend with direct to consumer car retail or retailing models being evaluated by major car brands at the moment, Perhaps in the wake of the Tesla sales model success, is there any risk that Volkswagen decides to pursue such strategy as well, specifically for its electrical Range?
We don't see that risk also based on Volkswagen Group Strategy what they have communicated and published, they have very clearly presented that they will invest heavily on new technology. And thanks to that, we can see already today very attractive models coming from all Volkswagen Group branch. As well as in Volkswagen Group strategy, they have made also very clear that Partners like us are needed also in distribution and after sales services of Volkswagen Group Products.
All right. That's quite clear. But do you expect there to be any shift in the terms where you dissect Profit or margins in terms of balance between new car sales and aftermarket in an electrified fleet, so to speak, Provided that aftermarket is perhaps a much lesser frequency of aftermarket visits for the electrical fleet.
No, but as I said, my answer was that we don't see any risk coming from Volkswagen Group Saite or let's say risk what you described, but definitely as also we have communicated and as I have stated also today in my presentation, Car Industry, distribution of cars and all activities and businesses related Cars are changing rapidly and that is also main reason why we have renewed our strategy and why we put more and more efforts also to modernize and to develop further our current division.
All right. Thank you very much.
Thank you. Our next question comes from the line of Frederik Iverson of ABG.
Hi, Mikko. A few questions For me, starting in grocery trade. So I think sales to the k Food stores are More than 15% above the 2019 levels. And I think it's fair to say that they are somewhat boosted by the pandemic. And when I look at the margin on a 12 month rolling basis, it's up 1.5 percentage points versus Q1 2019.
And my question is, I'm just trying to get a sense of the sustainability of this margin if we assume that k Food Sales sort of normalize at some point?
I think that it's very useful to look our numbers Starting from 2015 also in grocery business and especially very important to recognize that We have very steady, very stable development, operational development sales development of sales as well as profitability and its consequence of our Growth strategy. And once again, and again, I remind that we have not yet, not at All succeeded to complete our growth strategy in grocery business. We are extremely happy that today I believe more or less 50% maybe a little bit more than 50% of K retailing entrepreneurs follow and implement successfully store specific business ideas. And thanks to that, they are growing and gaining market share. But we have still plenty of entrepreneurs and K Food Stores, where we need to make A lot of homework to bring also those stores in line with our strategy.
And based on that, we can see Lot of potential. At the same time, also important to remember that very steadily we have succeeded year after year to improve also cost efficiency, also in grocery business. And it is actually very strong development also on that side. And 3rd very important element, all in all, digital services, customer Customer data in everyday business. And I'm ready to claim that we are nowadays also 1 of forerunners in European Grocery Trade Business and definitely, we will continue also on that track.
Right. Just to follow-up on that. You referred to the gradual improvement from 2015. And when I look at 2015, you were at 3.8%. And then in 2019, that was slightly below 5%, actually 4.8%.
So quite slow improvement, although quite fairly Stedla, I guess. But now all of a sudden, you're at 6%. So I'm just trying to understand what happened. Are you saying that this margin Is sustainable even though volumes could decline, say, 10%?
Of course, bigger sales volumes Helleb, and we see clearly that we have still potential To gain market share, we have still potential to increase volumes as well as we should remember that our food service business due to pandemic time has lost heavily also sales volume. And we are very confident that the foodservice market will Very quickly also recover after pandemic. All in all, I remind that We have growth strategy in all businesses also in grocery business, and we are working very hard to continue growth also in a full business.
Okay. Let me go on then. On the Building and Technical trade, if just focusing on the Building and Home Improvement part, I think it grew 10% like for like. Are you able to give us the price component of those 10%?
It varies in different countries and in B2C and B2B business. But all in all, also price development has been positive, But major part of this growth is coming from strong demand in different Countries as well as from the fact that also building and technical trade in most of businesses, most of countries, We are also gaining market share.
So you mean that the major part is coming from volumes and not price Of those 10%?
But from volumes, but also some positive price development we have there.
Right. Because we've heard some of your peers talking about the price inflation on the back of the raw material Inflation we see at the moment and actually guide for quite significant price hikes over the Coming quarters, is that what we should expect from your side as well?
Yes. We have Similar expectations, but let's see.
Yes. Excellent. And then, I'm lastly curious to hear about your Strategy in Norway and how you're coping with the restrictions there?
Sorry, could you repeat? Restrictions In Norway?
Yeah. Yeah. Yeah. Within the B and T business in Norway.
Yeah. Yeah. Yeah. It was quite a situation in previous months, but our people did again great job also in Norway and They succeeded store by store share customers from Courtyard and That way we succeeded to avoid hurdles and negative impact coming from those restrictions, as well as we succeeded also save health of our customers as well as our own personnel. They did a great job, I must say.
Excellent. Thank you. That's all my questions.
Thank you.
There are currently no further questions on the phone. So I'll hand back to our speakers for any online questions.
Thank you so much, operator, and Frederik and Magnus. Actually, there are no further questions from the chat. So any Last comments or wishes?
Ojuka, maybe I'll make any
last wishes before the
Chris and me. Great start for year 2021. 2020 was also great year, but of course, it was great that we started so strongly also this year. Let's continue. Strategy works, but still as I told, we have still so much to do.
Thank you for your participation, Jukka, Hana and myself. We wish you Pleasant spring afternoon and evening. Yes. Stay safe.
Thanks, Paul.
Thanks, Paul. Thanks, Paul.
Thanks, Paul.