Growth strategy delivering results. Welcome to Kesko's fully virtual Capital Markets Day 2020. Today's agenda, we have two hours of your full attention. First our President and CEO, Mikko Helander, will go through today's headline, growth strategy delivering results. Thereafter, the President of Building and Technical Trade Division, Deputy CEO, Jorma Rauhala, presents our international business and its potential. President of our largest division, Grocery Trade, Ari Akseli's headline is Still Room for Further Profitable Growth in Grocery Trade. Thereafter, we will have a Car Trade update towards growth and better profitability by Johan Friman, President of Car Trade Division. Last but not least, our CFO, Jukka Erlund, presents creating value through growth and efficiency. My name is Hanna Jaakkola. I'm responsible for Investor Relations at Kesko.
Our aim today is to open up the strategic choices and show you why we believe that this good performance will continue. You have the great opportunity to ask questions through the chat function on your screens. I will ask a couple of questions after each presentation, but there will be a larger Q&A session after all the presentations. Without further ado, Mikko, the stage is yours.
Thank you, Hanna. Once again, it is very nice that you are participating this CMD. You are very warmly welcome. Kesko celebrates 80 years anniversary. Let's look first our 80 years anniversary film. Okay. Company Kesko, we have great history, but I can tell you very strongly, I feel that we have also great future. What is Kesko? What is K Group today? Definitely number one retailing company in Finland, and definitely also leading retailing company in Northern Europe. We have profitable growth strategy in three core divisions. We have 1,800 stores in eight European countries as well as comprehensive e-commerce business. Every day, more or less 1.9 million customers visit K stores. We have very strong financial position with good dividend capacity. Last but not least, we have been many years recognized as the world's most sustainable grocery trade company.
Our strategy works, and strategy brings profitable growth. We launched 2015 our growth strategy. Very important element in our strategy is growth. I underline importance of growth, but also strong focus. We have decided six years ago to be strongly focused retailing company, strong focus on Grocery Trade, Building and Technical Trade, as well as in Car Trade. We operate as one unified K, meaning that Kesko, K-retailing entrepreneurs seamless cooperation. As well as sustainability plays very important role in K Group's businesses. Measures and actions also to stop climate change. We have very strong strategy execution. First, we put lot of efforts to divest heavily our non-core businesses. We collected from divestments EUR 1 billion. Even more important for Kesko and Kesko's future are important successful investments we have done for time being EUR 3 billion investments to support and accelerate growth of our core businesses.
Successful acquisitions, but also successful investments to strengthen our organic growth. We have experienced, I would like to say, amazing transformation from traditional fragmented retailing company into a focused, one unified K Group. Company had plenty of different businesses, and we didn't have a very unified identity, not at all from customers' point of view. Today, Kesko K Group is modern, unified company where we fully utilize also synergies between our businesses and between our divisions. Today, consumers, customers, they recognize us much more unified company, and they highly appreciate also our orange K identity. As stated, our strategy performs well in fast-changing operating environment. Typical for this current situation, business environment is definitely globalization, industry consolidation, also retailing industry, sustainability, climate change. Everybody of us knows that those things are getting more and more important.
Faster and faster technological development is challenging, but also offering great opportunities for the company like Kesko. Multi-channel and e-commerce definitely also utmost important. Urbanization and demographic changes in Finland, in Northern Europe, as well as everywhere in Europe, are very important matters that we should keep very clear in our mind. Strategy works, and we can see also that very well from our numbers. Kesko net sales in rolling 12 months exceeded EUR 10 billion. Very proudly, I report that we have succeeded in last six years to increase net sales in core businesses over EUR 3 billion. I believe that this is very strong message that we follow, and we implement very professionally, very systematically, our growth strategy in all three divisions. We have steadily improving profitability.
Since 2014, we have seen very steady profit improvement everywhere in Kesko K Group. We are very pleased to report again all-time high profitability operating margin in last third quarter was 5%. We are expecting another all-time record result in 2020. Estimated comparable operating profit for continuing operations will be this year in range of EUR 530 million-EUR 570 million. Less than half of the profit growth is coming from pandemic-related issues, meaning that our strategy works also very well under exceptional circumstances. This means also that agility, fast response, and well-functioning retailer business model help us also in current circumstances. Both grocery trade and Building and Technical Trade, all in all, have benefited from pandemic. At the same time, I would like to remind again that we have big businesses like food service business as well as Car Trade, which have suffered heavily due to epidemic.
I'm so happy to present again strong market development in grocery trade. In grocery trade, we have succeeded steadily to increase our market share, and we are approaching 38% market share in Finland. Very impressive is this EUR 1.4 billion. The steady market growth increase means that for time being, we have increased net sales in grocery trade EUR 1.4 billion. I underline for time being. Also great development in building and technical trade, steadily strengthening market position in Finland. K-Rauta already market share approaching 43%. Onninen has been part of the family more than four years, and market share also steadily increasing in Onninen businesses. I'm so happy to present total turnaround in Sweden, thanks to successful strategy execution made by our building and technical trade. Great success story, EUR 12.6 million operating profit in last 12 months in Sweden.
Strong message that our building and technical trade implements very professionally business plan, business strategy, also in Swedish market. Also great news from Norway. Successful transformation in Norway into a strong retailing company. Also in Norway, we can see now from numbers great development. Operating profit in last 12 months in Norway, EUR 20 million. All this development, real turnaround, transformation brings also great results for our shareholder value, and return on investment, strong development. At the moment, Kesko's market capitalization is about EUR 8.7 billion. We were under EUR 3 billion when we started this journey. Also good return on investment for shareholders, more or less 270% for time being. Yesterday evening, Kesko's Board of Directors had a meeting, and in yesterday's meeting, the board set new targets for the company, new financial targets.
Comparable operating margin, new target is 5.5%, comparable return on capital employed 12.5%, and interest-bearing net debt divided by EBITDA should remain, in all circumstances, under 2.5x. We have great development in our Grocery Trade division. I would like to underline that we will continue profitable growth in Grocery Trade by improving further customer experience. Meaning that further development of stores by utilizing fully store-specific business ideas in all our grocery stores in Finland is still in future, also leading idea when we will maintain this positive development. As well as renewing the store network and further improve e-commerce services everywhere where K operates in Finland in Grocery Trade is very important also in future. Fully utilize customer data to improve customer loyalty, and to enable a seamless omni-channel experience for Finnish consumers, Finnish B2B customers in Grocery Trade also utmost important.
As well as maintaining price competitiveness and price image, we have put lot of efforts, and also in this field, I feel strongly we have succeeded. Also there we can see still a lot of potential. Growing the food service business faster and faster, and faster than the market development, as we have done 2020, as well as in previous years. That offers also great potential for our grocery business and grocery division. In Building and Technical Trade, I underline that we will continue growth and industry consolidation further. Especially, we put lot of efforts also in future to consolidate further Building and Technical Trade industry in Northern Europe. We have excellent track records from already completed investments and acquisitions. Also, we will continue improvement in profitability. Very clearly, I stress that our objective is unchanged.
We are targeting same profitability, what today best companies in Europe in this industry, Building and Technical Trade business are reporting. We continue also in Building and Technical Trade, all measures and activities further improve customer experience, as well as to improve cost efficiency in each country where Kesko operates in Building and Technical Trade business. Also in Building and Technical Trade, of course, extremely important to continue all activities and actions further develop digital sales, omnichannel services for B2B and B2C customers. In Car Trade, we are working towards profitable growth, meaning that we will lift customer experience to a new level also in Car Trade. We will further develop excellent cooperation between us and Volkswagen Group as the target to have even more seamless cooperation between both companies.
We are increasing sales with existing and new products and services, as well as we are maximizing the use of new technology in improving customer service and operational efficiency in our car business. We can see lot of potential in Car Trade by utilizing even better best practices coming from grocery and Building and Technical Trade businesses. Many times stressed that sustainability plays very important role in Kesko's strategy. Sustainability drives us in everything, whatever we do. Meaning responsible purchasing and sustainable selections for our customers, environment. Whatever we do, environment plays a very important role. Good corporate governance and finance also a very important element of our sustainability approach. Working community.
We cultivate better and better working community everywhere where Kesko and K Group work. We support fully our customers, B2C, B2B customers, sustainable business approach, sustainable lifestyle, and of course, we do utmost to be good corporate citizen in all societies where Kesko and K Group operates. I'm so pleased also to report today that Kesko's sustainability effort, sustainability work is very well recognized also internationally by Dow Jones Sustainability Indices as well as Global 100, and by many other highly appreciated bodies. This year springtime, Kesko Board of Directors set also new sustainability targets. Target setting is crystal clear, zero own emissions by 2030, meaning that first 2025 K Group will be carbon neutral. 2025/2030 period, we will offset its remaining own emissions, and by 2030 we will reach net zero emissions.
Challenging target setting, but I can confirm that also in this field we are moving very fast to the right direction. Last, I would like, ladies and gentlemen, to repeat, we continue the execution of our growth strategy without any doubts. It means in grocery trade, gaining profitable growth and increased market share by improving customer experience everywhere. In building and technical trade, maintaining growth, improving profitability, and continuing industry consolidation, especially in Northern Europe. In Car Trade, increasing sales by taking customer experience to a new level. One unified K is very important part of our successful transformation, very important element of our success. Sustainability, all measures to stop climate change.
Cultural changes are important part of our renewal story. I can confirm that we will continue measures to further develop our company culture, where keywords are courage, innovations, agility, and that way, I'm very confident that we will drive growth and renewal also in future. Ladies and gentlemen, thank you. That was my part, and I suppose, Hanna, that now we have time for some questions.
Thank you, Mikko. I have a couple of questions for you. First of all, what do you see as the biggest risks in the near term future?
Global economy in E.U. countries, economy in Finland. When you remember that we are big retailing companies, challenge, and that includes also risks. I'm not so worried about 2021, let's start from 2022, 2023. Those years might be quite challenging for everybody of us.
If you're thinking forward, what are the main growth drivers for Kesko?
Definitely same growth drivers what we have had also in the previous years. Our wonderful grocery trade, as I stated, we can see clearly that those same elements which have helped us to make Kesko very strong, very profitable, probably the most profitable grocery trade company in Europe, will help us to continue and support us to continue strong profitable growth also in future. In Building and Technical Trade, we can see also great growth potential. We have seen already very strong development, strong growth, very steady profit improvement development in the Building and Technical Trade. We should remember that European market, still market in Northern Europe in building and technical trade industry is very fragmented. Of course it means for the company like Kesko, great growth opportunities also in future.
Good. Thank you.
Thank you. Thank you, ladies and gentlemen.
Next, Jorma Rauhala talks about the great opportunities in Northern Europe and I think about the fragmented market as well. Jorma, the stage is yours.
Good afternoon. I'm Jorma Rauhala, the President of the Building and Technical Trade and Deputy CEO. A warm welcome also on my behalf to the Kesko Capital Markets Day 2020. In building and technical trade, we are the leading operator in Northern Europe. We serve three customer segments, technical professionals, professional builders, and consumers. Already some 70% of our sales comes from B2B trade. Our rolling 12 months operating margin has increased to 4.7%. Our country-specific growth strategy is working and bringing results in all of our operating countries. The strategy has now been tested during the COVID-19 pandemic. It has worked also under these exceptional circumstances. As the strategy is well functioning and bringing results, the five strategic choices made remain unchanged. Country focus with country-specific strategic actions. Serving the three customer segments according to their unique customer needs.
Synergies that are to be continuously sought between the countries and within each country. Fourth, our strategic target is profitable growth, meaning that we always need to ensure that the basics are in place to ensure continuous organic growth. Fifth, our strategy is supported by selected acquisitions to win a chosen country or customer segment. Overall, I'm very satisfied with the developments in each operating country. The COVID-19 pandemic has impacted B2C positively thanks to a real boom in consumer DIY projects. At the same time, we must remember that 70% of the division's net sales comes from B2B, where the coronavirus pandemic has not supported the market development. All in all, it's been a very strong year so far. All operating countries are performing strongly. Also, our strategic acquisition and their integrations have been successful. Year 2020 has been a strong year in Finland so far.
We have had all-time high results for K-Rauta and Onninen. Both have been able to win market share considerably. In K-Rauta, the building of the store-specific business ideas has continued. We have continued the development of stores, concepts, and digital services. For example, rollout of destination categories and increased the role of own brands that differentiate us from the market and bring better profit margin. In Onninen, the strong development as part of Kesko has continued. We have successfully acquired new customers, continued the development of digital services and store network, and expanded selections in, for example, solar panels, charging stations, and tools. I'm very happy with the development seen in Sweden, which has been a challenging market for us for many years. There has been an excellent profit improvement for K-Rauta, while K-Bygg's profit has stayed strong.
MIAB has also proven an excellent acquisition, and its profit has continued to be good as part of Kesko. Onninen's profit has also improved well. This means that our profit in Sweden has improved in all areas. Few actions I want to highlight in particular. The shift to a more local focus to bring the operation and decision-making closer to the store level and the customers. Strong development of eCom business, total renewal of logistic model, and also successful acquisition of MIAB and Bygg & Interiör that have impacted the results positively, as well as K-Bygg, which has continued on a strong track. We have also seen profit improvement in all units in Norway, especially in Onninen, but also in Byggmakker. The acquisition of Carlsen Fritzøe at the end of the summer has been an excellent move, and the company's profit has continued strong as part of Kesko.
Main actions have been significant acquisition of Carlsen Fritzøe and continued integration of businesses, effective streamlining of Onninen's operations. We have increased share of own retailing to some 70% in building and home improvement, meaning that our position has shifted from a wholesaler to retailer, which also supports better profitability. From November onwards, our business has been led by a new country director, Hilde Kristoffersen, and I'm confident that under her lead, we are able to improve our profitability also in future. In Poland , business has been able to keep a steady profit level by the consistent strategy execution, even despite the COVID-19 pandemic and restriction related to it. In Poland, we have guaranteed the positive track by strong development of eCom business, successful rollout of our modern Express stores, and increasing the level of automatization in our distribution center.
In the Baltics, we are clear market leader with Kesko Senukai. All our operations in the Baltic states are well-performing and well. We have a solid and steady track of profitable growth. Onninen has continued on the steady track despite the restriction and challenging market situation. We will continue the development of Onninen Baltics according to the successful Finnish model. As said, I'm pleased with the fact that all countries performing well. Also, all our operations, like purchasing, sales and logistics, are efficient and strongly supporting businesses. This is also one of the main reason why we have been able to improve our result on such a wide front. That was about strategy execution. Now let's move on to our further potential for profitable growth. The industry consolidation offers many possibilities for us.
In all eight operating countries in which we operate, the market size is total over EUR 31 billion, of which we have around 15% market share today. We see strong growth opportunities in the operating market. The focus of our growth is to be one of the leading operators in our current countries and in the customer segments we operate. In particular, we seek to growth into Swedish and Norwegian B2B markets, both in building a technical trade business where we already have a good existing platform. Overall, in the building and technical trade business, the markets are growing and stable but still fragmented, which offers us high potential for consolidation and growth. Moving on, let's have a look at the operating environment. Our operating environment in Northern Europe is changing rapidly. We are in pole position to benefit from the global mega trends.
Urbanization development is still strong, and the need for new residential building, especially in growing cities, continues. In all our operating countries, the maintenance backlog and investment debt is still growing, which is a trend that benefits our B2B business as whole. The whole industry is also experiencing a fast technological development. For example, residential building construction becomes increasingly technical with several Internet of Things solutions, like automated heating and lighting solutions. This increased standard of living highlights the need for more and more technical competence in the whole value chain. The increased focus on energy and environment efficiency bring us several new opportunities, from new products that enhance sustainable new energy products, like solar panels, all the way to sustainable local energy storage solutions. These especially are opportunities that are matched with professional sales competence and more and more sustainable product portfolio, especially in technical trade.
Emission reductions targets and growing electrification of the society as well as growing electric mobility brings us further business opportunities. For example, in building of electric vehicle charging stations. All in all, the industry is growing and becoming more and more technical, and this offers us many possibilities to growth. Let's look at the construction market into more detail. The total construction market, including labor, in Finland is around EUR 36 billion. The structure of the market follows almost similar structure in Sweden and in Norway. With our businesses, we operate in all the segments of the construction market. Hence, we are well-positioned to benefit from overall developments of the market, but it also buffers us against the development in just one segment. All too often, people look at the indicators related to new residential building.
However, new residential building is only around 20% of the market, as the construction market is very evenly split between new building and renovation. Our position is especially strong in renovation, which is almost half of the total construction market. In renovation projects, the margins are also more lucrative. At the moment, construction forecasts indicate that the need for renovation and maintenance will grow next year in all our biggest operating countries. Civil engineering is expected to grow in future. All in all, we are very well-positioned to benefit from the overall market development as we deliver products to all sectors. Technical trade, in essence, is volume business, where efficient logistics and sales expertise from the industry are crucial for success. This creates a high threshold to enter the technical trade business, and that is also why, for example, a sole eCom operator fails to meet the customer needs.
Our competitive advantage among technical trade professionals include comprehensive technical product assortment of 700,000 stock keeping units. Many with country and/or industry-specific technical certificates that match the different technical requirements in each operating country or industry. Almost 4,000 suppliers with best-in-class products. Over 1,500 technical trade professionals with project-based sales competence. This is people to people business, and the competence of the sales professional is crucial to success. Our professionals ensure the best customer relationship by supporting the customer daily business. Availability, the number one in importance for technical trade customers, is guaranteed with our effective distribution centers that deliver almost 40,000 order lines a day, of which 50% already happen via automated processes. We have also several customer-tailored logistics services that are tightly knit to customers' own processes. For example, in Finland, we have almost 200 smaller service warehouses on customer premises stocked with Onninen products.
The strong logistic core is supported by comprehensive store network of 131 Onninen stores that offer easy pickups to customers from all customer groups. We also consistently develop digital channels with extensive technical information about the products. The considerable part of technical trade products are already sold via electronic channels, via webshop, EDI, and punch-out solution, already bringing on compound sales almost EUR 400 million. For example, in Finland, already 20% of the sales comes via digital channels. All in all, technical trade is volume business, where logistics and professional sales are key to success. The industry will continue to consolidate, and we will continue to be a strong operator in the future as well. In the DIY and professional builders market, typically materials for renovation and constructions are big and heavy items that need to be delivered to the site quickly.
Hence, location near the sites or homes is crucial for the success within this market, regardless if you are e-com or brick-and-mortar operator. Our strong position within these customer groups is a result of comprehensive network of 331 stores in prime location with a vast selection of nearby pickup and delivery options. We clearly see that our strong competitive advantage comes from the seamless combination of the store network and online services. Customer is able to choose the right channel for him or her. Both channels also support each other. In Finland, around 30% of our customers who visit us online convert to brick-and-mortar customers. On top of the physical store network, our online services are also performing well. Online sales are growing steadily, and there is over 160 million customer visits annually. Only in Finland, we have around 40 million online visitors to k-rauta.fi a year.
The services for personal builders are also under constant development. We sell products and services to already some 185,000 personal builder customers. Professional B2B sales we develop in stores by dedicated K-Rauta PRO concept. That is aimed for B2B customers only. In digital channels, the next step is to open B2B webshop in Finland early next year. On top of that, we also have inspiring destination categories with own brands that support differentiation and higher margin. Already our own brands have sales around EUR 200 million in 2020. All in all, industry consolidation will continue, and our position will continue to be strong due to existing store network in prime locations and strong digital services. I'm confident that the combination of the store network and online services is the winning combination also in the future.
We are strongly on track on what we have promised in the value creation and firmly moving towards the target to be among the best in Europe. The main actions for continued EBIT improvement are maintaining the country focus in strategy execution, determined development of basic processes in each country, and synergies between the countries, continued development of digital services and customer experience in all channels, active acquisitions of new customers, and expanding product selections for existing and new customer. M&A with good strategic fit.
Thank you. Now it's time for your questions.
Thank you, Jorma. I have two questions here for you now. How have COVID-19 impacted Building and Technical Trade division in this year?
Yes, this year there has been, I would say, a real boom in DIY projects for consumers. That means, especially in our case, that in Finland, K-Rauta, Sweden, K-Rauta, of course, little bit K-Bygg in Sweden and Byggmakker in Norway has supported from that boom. We have same time, remember that 70% of our sales come from B2B sales, which has not supported by the COVID situation.
Okay. Good. Could you comment, you mentioned the M&A opportunities in the region. Could you please comment a bit more about that?
I think our strategy is very clear on that. First of all, where we operate, on those eight countries, where we operate, on what segments, we want to be one of the leading player. Of course, we know that in Finland, we are quite big player here, but especially this means that in Sweden and in Norway, there we want to be stronger, especially in B2B business. The strategy is quite clear.
Okay, there are opportunities?
There are huge opportunities.
Very good.
A lot of, yes.
Thank you.
Thank you.
Very well. Now, our third presentation, I will welcome Ari Akseli to join the stage. Still room for further profitable growth in grocery trade. Please.
Thank you very much, and good afternoon. I think the big question is the name of the presentation. Still room for further profitable growth in grocery trade. I know this is one of the questions you are wondering. Is there still room for growth in the grocery trade? Yes, there is, and I will show you why and how. First short presentation, who we are. K Group is the second biggest operator in grocery trade Finland, with a market share 37.6%. Our market share has been increasing during the recent years by 1.5%. Our K-food store business is based on the retailer entrepreneurship. That's very unique business model. We have some 1,250 K-food stores in Finland with some 1.7 million customer visit every day, including our digital channels. These are huge numbers.
Here you can see what are the choices of our strategy, and it's working and yielding results. We will continue at the firm execution of our growth strategy. What we want to do is to increase sales and profitability with customer-orientated approach. If you think about Finnish grocery market, we have most customer-orientated and inspiring food stores with store-specific business ideas. We have developed and invested in the store networks significantly in recent years. Later on in my presentation, I will give you more detailed information about the store network investments. At the moment, we are the forerunner in trade sector digitalization in Finland. Especially this year, we have expanded the online sales network and increased sales by big numbers. With our customer data from 3.5 million loyalty card K-Plussa customers, we are able to develop and lead our business with data.
When you think about retail business, it's all about details, how we can improve all of the details. It's based on data. While we are the quality leader and have the most inspiring food stores in Finnish grocery market, we see as important to maintain our price level and improve our price image. Our biggest advantage if comparing to our competitors is our unique business model based on retailer entrepreneurship. I will point on later on some of the advantages it's giving to us. Due to COVID-19 epidemic, it has been bumpy weather in Finnish food service market, but we still believe that eating out is growing trend in the future, and we have been able to gain market share during these difficult times. Our market share is now growing in all segments, from small neighborhood stores to hypermarkets.
These cumulative growth rates from beginning of the year until the end of October. This year, our total market share has grown by 0.3%. In the neighborhood segment, the growth has been 3.3%. This is very impressive that in all the categories, we have been able to gain market share. This is I think that if you look about the, what is the long-term most important factors when you improve the profitability of retail company, is that you are able to sell more with the same stores. When analyzing our performance, I want to highlight that we have managed to improve significantly our sales per square meter in our stores. On the left, you can see how retail sales has grown over 12% from 2016 to 2019. At the same time, the number of stores has decreased over 14%.
As a result, the sales per square meter has grown by 10%. This means that we have been able to generate organic growth in the store. Actually, we are only player in the market who has been able to do that. It's naturally very profitable when you manage to do so. It's the most important factor in retail business in the long term, based on many international results. As you know, it's not cheap to build new stores. Usually, it takes three-five years to make them profitable and up and running. Getting more out of the existing machine is much more profitable way. That's the reason why we have been investing how to do it. There has been a lot of writings how COVID-19 has boosted grocery trade and common understanding has been that grocery trade has only benefited from the COVID situation.
Actually, the impacts are different in different businesses. It's obvious that food stores, say, food store retail sales in K-food stores have grown by big numbers as people have stayed at home. The demand for online shopping has expanded, and we were able to respond that fast growth in online grocery demand. We have now 450 stores offering online services. That's more than 200 comparing to last year. This year has opened opportunities for us. We have established new services, such an offering shopping help for people over 70 years and selling restaurant meals in grocery stores. At the same time, handling the situation caused us many costs. For instance, in logistics, and therefore it has been essential for us to make some profit improvements, and we have success in doing so.
The food service provider Kespro sales decreased heavily in springtime due to COVID restrictions on restaurants and events. You will hear more about Kespro later on. There is certain rules about retail business based on my 30 years experience. One of them is that the key to sales increase is increase customer satisfaction. Find out what the customer want and deliver it. It sounds so easy, if you think about we have about 400 million customer visit in our stores, every of them are individual needs with special day. That needs to have some kind of data how to do it. We have measured our customer satisfaction systematically from 2017, we have managed to raise customer satisfaction significantly. Thanks to store specific business ideas based on customer data, our customers are more satisfied than ever.
If I look about these numbers and somebody would show them to me about three or four years ago, I think that keep on dreaming. It's not possible to get this kind of level in the stores. These figures show Net Promoter Scores from our physical stores. Customer satisfaction is actually highest at the K-Ruoka grocery online store, NPS being there more than 80. In the next video, our Chief Digital Officer, Anni Ronkainen, tells more about customer experience in online channels.
Good customer experience is very crucial for business success, both online and offline. It's a known fact that a great customer experience generates loyalty, and loyalty generates better business results. When developing digital services, it's super important to focus on customer experience. When our customers enter to our site or web services, we have only three to five seconds time to charm them. If the customer experience is bad, the customer leaves for the competitor with one click. Today's customers are really demanding. They are using global top-notch services like Google Search or global e-commerce like Amazon or on-demand services like Spotify or Netflix. They are comparing the user experience to those sites. That's why we really need to set the bar high. It's good to remember that customer experience, it's not a project, it's a journey.
In these slides, you'll see the reason why we focus improving customer experience. There is very strong correlation between sales growth and customer experience. We have 375 stores where NPS is over 71 and 384 stores where NPS is over 61. Those stores have managed to perform better than most stores underperforming the market need to focus improving customer satisfaction. There is still a lot of potential to grow both sales and profitability simply by focusing customer experience. Find out what the customers want and deliver it. One important part of maintaining and improving the good development to make sure our store network is up to date. We have invested nearly EUR 1 billion during the last three, four, five years in our K-food store network. The biggest part when integrating Suomen Lähikauppa store network to be part of the big beautiful K family.
In next year, we are planning to invest about EUR 120 million to the store network. New stores are mainly supermarkets and neighborhood stores in the growth areas and cities. 100 renewals in the pipeline as well. We have excellent track record about renewing the stores. In some case, the numbers are actually amazing. The hunger for growth comes from our unique K-retailer business model. The K-retailer entrepreneurs are very driven to be successful, and their success is our success, and it also means higher earnings for Kesko. Store-specific business idea responds to the specific local needs of each area, and it's based on the customer data. I want to highlight that roughly 50% of the stores have fully adopted the customer-specific business idea, and there is still a lot of potential with the other 50%.
Here is great example how we can do it more efficient way, or how we can help our store owners do it much more efficient. New data-based tools support store-specific business idea and speed up growth. We use data-based tools that help us create a more efficient way to how build tailored store-specific selections and optimizing pricing in the store level. To get the idea that if we are able to just add average shopping basket by EUR 1, and we have about 400 million customer visits, it means EUR 400 million extra sales. That's not the promise. The tool are easy. One-click solution for recommendations and decisions for the store selections. As an example, in average, by choosing a product recommended by our handheld selection tool, sales is about 4x higher than sales from the products tools recommends taking out of the selection.
If you think about that, we have already done this kind of decision in the stores almost like a 600,000, and it's happening all the time. We are the Finnish market leader in online grocery sales. Sales of our online food sales grew during this year by 400%, and our market share is now over 55%. Our focus is to continue the development of online sales and its profitability and also deepen the store specific business idea also in online. We have and will further develop easy-to-use tools for managing online products, information, and selections. Not to forget, we are improving efficiency in collection and logistic operating models. Here is one more important elements in our profitability improvements. An improvement potential is our own brands that counts about 20% of our sales. Own brands are important also in better differentiation and price image.
We offer today more than 3,000 products and over 1,000 of them made in Finland, which is important for our customers. Compared internationally, the share of own brands products are still low. I think that general European level is between 25%-40%, so there is a lot of potential. There is still untapped potential in premium category, which has grown the most during this year. Year-to-date development almost 20%. Traditionally, the focus has been in the mid-range private label products like a Pirkka. We are also putting focus developing further our price fighter brand, which is K-Menu. Here is something very beautiful, good food coming from the stores. How we have gained new customers. One of the key elements, it stays only K sales. The products only from K stores are indeed bringing new customers. They bring better margins, and it's the way to differentiate our stores.
The selection differentiation supports store specific business idea and margins. Products that set us apart from the competitors raise average shopping basket and leads to more commitment existing and new customers. For example, if you think about this classic pizza. The price level is about EUR 8 . It's so good that if you taste one time, you come back. Comparing to the traditional frozen pizzas, which prices are between EUR 3- EUR 4 , it means that sales is actually doubled, and customers are happy. In recent years, new product-related restaurant brands have been successful, and their range is expanded. Here is a couple of examples. Naughty BRGR, Hook, Jim Lim by Farang, and so on.
Good example how only from K store products can interest and even become topic conversation is Taste of India meals. From beginning, they were huge success and also made headlines internationally in 56 countries. Wow! From food stores to foodservice. This year has been difficult for the foodservice market. We believe that the strong growth trend in the foodservice market will come back after COVID-19. The picture tells the story. We also have video where Mika Halmesmäki, Director responsible for Kesko's Foodservice, will open up the past year and future plans.
Kesko is a leading food service wholesaler and forerunner in Finland. Our market share in Finnish food service is about 42% in the wholesale segment. As we know, wholesalers represent only 50% of total food service market. The potential to grow is very big. Our net sales have come down compared to last year, and this year has been challenging. We have still managed to grow our market share even to 47%. Eating out is a global mega trend that will continue to grow despite the epidemic. We have seen this also in Finland, where potential growth is very big. In the future, our customer needs will be more unique. In the future, Kesko will be a service platform that enables each customer to choose the services they need more individually. No more preset services for everyone offered by the same way.
At the same time, the customer gets everything they need from one wholesaler, one-stop shopping model. Our ability to offer individual service has a big potential, and we want to be a first player on the market to offer 100% service experience to our customer.
Dear audience, I would like to summarize why Kesko's Grocery Trade has still a lot of growth potential. Like Mika said earlier, Kesko has been gaining market share all of this year, and I think that it will recover the market and then Kespro is in very strong position to gain in more sales. Utilizing our well-functioning store-specific business ideas in all stores is opening big opportunities. Utilizing even more deeply new data tools in all stores. Thirdly, developing in-store food halls with great examples about sushi, pizza, hamburgers and so on. Developing and improving the efficiency of online sales. In addition, we are planning to make significant investments in digitalization and developing and renewing store network.
Thank you very much, and now it's time for questions.
Thank you, Ari. I got a comment from online that this guy is amazing. We can start with that. I have two questions for you as well. What do you see as the biggest obstacles for further profitable growth going forward?
If you look about the past of the Kesko history, there used to be different ideas of the independent store owners, entrepreneurs and Kesko, what will be the future plans and choices. Nowadays, we are like a big part of the same K family, one integrated K Group. Nowadays, actually, there is great opportunities to develop new ideas and do the develop in the store level. It's much more like that how we prioritize things because it's limited number of things that we can bring to the stores, and we have to think about prioritizing of all the projects and ideas. At the same time, that's also one of our benefits because we have independent store owners. They can develop something in new areas and we can look at, "Okay, sales going up. That's good.
Maybe we can benchmark and spread it all over to Finland.
Okay. Thank you. Then one more time, could you please crystallize where do you see the biggest potential in grocery trade?
I think it's in here in this slide that number one is store-specific business ideas. As I told earlier, about 50% of the stores are now executing it. There's other 50% which is still trying to do. Even some of the stores has been developing the sales like double during the last three years. They are still growing. We can see that there is huge potential. Secondly, our new database tools, they are so promising and results are looking really good. How we get every stores to use them in every day in every decision-making. That way customers will really see that our selections are exactly right for me and the pricing level is exactly right. Thirdly, differentiation in selections. These kind of Naughty burgers.
If you think about the normal hamburgers you can buy from grocery stores, they are like a three for EUR 1, and nobody really don't like them. You have a Naughty BRGR, and everybody like about that.
Thank you very much. I'll come back to the more questions on Grocery Trade after Jukka and Johan's presentations. Now it's time for our third division, Car Trade. Johan Friman, please, stage is yours.
Good afternoon to all of you. As the heading is saying, "Towards growth and better profitability." As you all know, this has been a very challenging year for the car industry globally, in Europe, but also in Finland. Anyhow, our rolling operating profit will be, or is at, just about EUR 26 million at the moment. I think all in all, we have, because so different things that we did in the spring, managed to achieve in the end, good results. We have a very strong product or brand portfolio with all the Volkswagen Group brands, except one at the moment, and we are believing that this will bring us to more success in the future. On this slide, I want to show to you that we are optimistic about the future. We see a large growth and profit potential in the market.
This picture is actually showing how the EBIT pool in 2019 in the Finnish car industry was composed. In the remaining parts, the orange, the light orange, and the even lighter orange. Used car trade, in aftersales, and in financing and leasing, there's a lot of EBIT potential for us, for the years to come. We have decided to focus on the following topics. We want to focus our business to Finland. We are very happy that we are the chosen partner from the Volkswagen Group in Finland, Volkswagen being the biggest car manufacturer in the world. We are also confident, since we have last year made acquisitions to enlarge our dealer network.
Now when the market is estimated, actually yesterday, we got the new official forecast for 2021, and the estimation is that the market will grow with some 10% next year. Our priorities for the coming years, as my colleagues have been also saying before me today, we want to make a step change in customer experience. We want to put Kesko's Car Trade into a new, unique level that has not been seen before in Finland. We also believe that we can strengthen our foundation, and especially with the large network, we have all the possibilities to sell much more from our premises than what we have been doing so far. New cars, used cars, aftersales, et cetera. Also the synergies coming from the K Group is very important for us in the future.
As said, being the partner with Volkswagen Group offers us fantastic opportunities for the future. Better customer experience. Here I would like to use the sentence, from good to great. We want to put our targets to a totally new level in Finland in the future. Really finding out which are the pain points in the customer journey at the moment, whatever channel is used, showroom, online, et cetera. This, we will do also through a cultural change in our Car Trade. I said before, we have a large own retail network. Through this network, we are definitely planning to sell much more used cars in the future as what we have been doing today.
We also believe that we have unique opportunities in the aftersales business for older car fleets, also in accident management, but also for brands that are not our brands at the moment. Thirdly, becoming the clear market leader in electric cars. Actually, I just got today the information that in November, Volkswagen passenger cars in Finland had a market share in electric cars of 35.4%. We are really taking market shares in that segment. Of course, we want to grow also through new products and services. The Volkswagen Group is presenting, at the moment, a wide range of new models, both in 2021 and after. Especially, we believe that all the new full electric cars and plug-in hybrid cars that are coming from our different brands will actually support us in getting better market shares.
We know at the moment in Finland, that the plug-in hybrids have already passed diesel cars in new car sales. This development is now continuing. We have also been very successful with our own leasing company. We passed 3,000 cars a few weeks ago. We believe that this good development will continue also next year. Two years ago, Kesko decided to start investing in charging facilities in combination with our food stores and DIY stores. This has also been very good for the business, I think both for Ari's business, also for the car business. This is something that we will continue. Finally, I think I said already that the partnership with the Volkswagen Group will actually be a very important driver for our market share growth in the future. Volkswagen Group is investing heavily into electric cars in the coming years.
Actually, officially said close to EUR 50 billion by the end of 2025. The Volkswagen Group is also financially very strong and in a good position to further develop their products. Thank you for your attention. Now I guess I will also get some questions.
Yes, you will. [Non-English content]
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Yes, we can go back to English. I had a couple of questions, like I said. Consumers' interests have been shifting in this year towards used cars. What does that mean for the entire industry and for us?
Well, I believe that this is really a kind of a corona effect, because when we look at the figures in Finland, actually the used car sales this year, January to November, has increased only with 0.5%. I mean, also the used car business was hardly hit in March, April, May. Of course, now after the summer, it has been a kind of booming because we know that people feel much safer in their own cars. At the same time, we have to remember that new car sales have suffered because of the corona, because of the fact that the factories were shut down for two to three months in the spring. I strongly believe, and as just said, the market is estimated to grow with more than 10% next year, that also new car sales will start booming again.
Okay. One question we quite often get from investors when visiting investors, what kind of synergies do you expect to find with Kesko's other divisions?
I look at the clock, and I only have 1.5 minutes left.
You have time.
I try to be quick.
You have time.
I think there's still a huge potential that we haven't used. Still mentioning a few, I think this K charging has been a very good cooperation between the two other divisions and the Car Trade, and that's really helping the three of us. We have also been doing cross-selling. Of course, the two other divisions, they have also their own partners and customers that some of them are very big, and we have managed to sell cars to those also. As a new actually pilot thing, we are now planning next year to start in the countryside next or actually in the hypermarkets in the countryside, to have smaller showrooms, like pop-up showrooms, maybe showing one or two cars in areas where we are not with our own car retail.
Good. Thank you.
Thank you.
Now we have the last presentation. Our CFO, Jukka Erlund, will talk about the growth and efficiency.
Good afternoon, ladies and gentlemen, and on my behalf as well, my name is Jukka Erlund and CFO in Kesko Corporation. I have the pleasure to present my presentation regarding the financials with the topic Creating Value through Growth and Efficiency. Let's start with the financial KPIs. We've had a solid growth in pretty much all fronts. The top line has grown around 3% during 2019 and 2020. At the same time, our operating margin has improved from 4.1% to 5%, which was the previous target for that one. The same goes for the return on capital employed. We've improved that to 11%, which was also the previous target for that one. I'm also especially happy with the cash flow generation. Cash flow from the operating activities has increased from EUR 750 million to more than EUR 1.1 billion, which is up by some 50%.
At the same time, also the net debt to EBITDA has remained at a very healthy level at 0.5x, excluding the IFRS 16 liabilities. We are targeting for further improvement in the financials. As you know, yesterday evening, we set our new targets for the profitability side. Operating profit, EBIT margin, the new target is 5.5%, so 0.5% up from the level that we reached in September. For the return on capital employed, the new target is 12.5%, and that was increased from the 11% by 1.5%. As we have heard today, the target is to find more growth. We have a growth strategy, but at the same time, we also have initiatives to improve our gross margin and cost efficiency as well. The net debt to EBITDA target was kept at the same level as previously, so at the maximum of 2.5x.
Looking at the operating profit, a bit more in detail. We have comparative illustrative numbers here for 2018 and for the last 12 months ending in September 2020. We can see that our profitability has been lifted up by more than EUR 100 million. Around two-thirds from that is EUR 66 million, has come from growth. In addition to the growth and growth strategy, like I said, we have also had initiatives to improve our gross margin and cost efficiency. We can see that also EUR 14 million is coming from the gross margin side, and then EUR 13 million from the operational efficiency, OpEx efficiency. In addition to those, also EUR 17 million is coming from the acquisitions during 2019 and 2020, mainly from the acquisitions that we've done in Building and Technical Trade in Sweden and Norway.
Altogether, a bit more than EUR 100 million, and on the margin side from 4.1%-5.0% margin. A few words regarding our costs. We target for further reducing our unit costs, especially in the new normal. This has been truly an eye-opener for us as well this year, and the way how we think about our processes, how we are organized, how we use technology, et cetera, is definitely something that we will be working on for the coming months and years. As you can see from the right-hand side, our cost ratio went up a bit during the first half of 2019, mainly due to the fact that our sales in Car Trade went down somewhat. Ever since then, the cost ratio has been going down and we target for further improvement on that one.
If you look at the left-hand side of the page, you can find that our cost base is EUR 1.7 billion. There's quite a bit of potential to further improve our cost efficiency. Around 40% of our cost base is personnel expenses , which means that around EUR 700 million are our personnel expenses . Like I said earlier, we definitely target to find new ways of working, new ways of having more standardized processes, new ways of utilizing technology, et cetera. The other cost categories are also highly important. IT costs, marketing expenses, and property maintenance, for example. We definitely have targets to be more efficient in those areas as well. Looking at our CapEx, as you can see, our CapEx during the last three, four years has been somewhere there between EUR 250 million and EUR 300 million.
For the upcoming years, our CapEx plans are between EUR 200 million and EUR 300 million . When it comes to the store side CapEx, the focus is more on renewals, like Ari said today, for example. We definitely want to offer the best possible customer experience in the stores, and we've been very happy with the CapEx, capital expenditure, that we have been doing during the past years in that relation. Obviously, we will still be opening up also new stores, but the focus is more on the renewals. Technology is highly important part of our strategy execution, and we are investing heavily to the technology, automation, et cetera. Two things. First of all, to improve our customer experience, not just online, but also in-store technology. The other side is the efficiency part. How to run our processes with a higher automation, for example.
Also worth mentioning, like Johan said, we have been investing to our leasing fleet, so we will continue on that one and invest to the leasing fleet also going forward. Regarding acquisitions, we definitely target for further acquisitions also, especially in the Nordic market and Building and Technical Trade, especially in order to boost our market shares, in order to get the scale effects and utilize the synergies like we have done in our past transactions. We continue the measures to improve our cash flow generation. As you can see, our cash flow generation from operating activities was around EUR 750 million during year 2018. The last 12 months, like I said, we've been at a bit more than EUR 1.1 billion, which means that that's up by 50%. There's two important areas. The first one is obviously improving the profitability side.
As we've been hearing today, we have a very clear growth strategy and strategic initiatives to boost our growth. We also focus on improving our gross margin and our cost efficiency. Like I said, for example, through increased automation and more efficient processes and organizations. Thirdly, I would mention realizing the synergies from our past acquisitions and the potential future ones. Also, highly important areas, the net working capital. We've been quite successful releasing cash from our net working capital side, both the inventories and receivables, but especially from the payable side, for example, using the supply chain finance programs. Lastly, obviously, we want to prioritize our CapEx and be really good on the capital allocation to put capital where it really makes the best returns. Balance sheet, we have a good strong balance sheet, which definitely enables our strategy execution.
Like I said earlier, our net debt to EBITDA level without the IFRS 16 effect is currently at 0.5x, the maximum target is at 2.5x. That basically means that our additional net debt firepower is more than EUR 1 billion. For us, this enables both our organic investments as well as potential acquisitions in line with our strategy, but also a good dividend for our shareholders according to our dividend policy. Looking at the ownership base, as you can see, during the last four years, the international owners' proportion has increased a bit more than 10% from the Kesko B share. At the same time, the domestic household owners' proportion has come down slightly. It's worth mentioning that at the same time also, the number of the registered Finnish owners has increased quite a bit, actually more than 30% to almost 55,000 shareholders.
I'm happy to say that we are one of the favorites among the female investors as well. Last but not least, about dividend, we have a solid dividend track record. As you know, our dividend policy states that we aim to distribute a steadily growing dividend of some 60%-100% from our comparable earnings per share, taking into account company's financial position and strategy. That's exactly what we've been doing throughout the past years, and this is also our aim for the future to be able to deliver this kind of dividend.
Thank you. This was about the financials, and maybe, Hanna, you have some questions.
Yes, I do. I have first couple of questions before the Q&A session. You talk about the cost reductions there. How much of that is sustainable going forward?
Well, if we think about this year's cost, obviously, there are some costs that during the lockdown period have been pretty much frozen and so on, certain temporary layoff type of cost reductions or so on, which we are not maintaining, obviously, because we want to run the business according to our strategy and so on. A lot of the cost savings actually are something that we are targeting in the future as well. Like I said earlier, definitely the target is to, in this new normal situation, to look at how we are organized, how we run our operations, how we run our processes, how can we standardize them, and especially utilize the technology.
We have invested quite a bit new technology, as well we have had earlier the ERP systems, et cetera, but also lately bought a lot of different kind of new technologies like software robotics and process mining, et cetera, and definitely want to be more efficient in our process going further as well. There's quite a bit of potential. Yeah.
Very good. The cash flow generation, the graph looked really nice. Going forward, is there still room for further improvement? If so, how?
Well, definitely we target to have a good cash flow generation. Like I said earlier, the main key drivers are definitely improving profitability. That's what we are targeting for, and yesterday we set our new targets for that one. That's definitely the one part. The other part is still the net working capital. We still have a lot of potential in that one to free up some cash flow from the net working capital as well. We'll continue that one, for example, the supply chain finance programs, et cetera.
Very good. Thank you. Now let's have the Q&A. I ask all the gentlemen to join Jukka and myself to the stage. There's plenty of good questions coming from the chat. Please note that there's a small delay when sending the questions, I don't see them immediately. It's good to get a lot of good questions. Good. Thank you all for the great presentations.
Thank you. Our pleasure.
I'm just worried about your schedule. We have so many questions that we might be here till evening.
We have a half an hour.
Oh, okay. We don't need to answer all questions.
Well, let's see. Now first, about the financial targets. There's a question about what is the primary source driving the target in increase of return on capital employed to 12.5%? What kind of assumptions does this include on sales growth as well as capital expenditure?
As Jukka mentioned already, business itself, and especially, of course, strong positive development coming from Grocery Trade, coming from Building and Technical Trade. Of course, in Car Trade, as Johan explained very well, we have still plenty of potential. Extremely important that we continue very systematic, very professional implementation of our great growth strategy, especially in those two biggest divisions.
Good. Your financial targets or our financial targets talk about medium term. Is that two to three years or four?
Yes. We have medium term. Medium term means medium term. It is not long term. I think that two, three years is quite short, but five years is quite long. Maybe somewhere between that.
Fair enough. You mentioned that half of the Actually, it's less than half of the 2020 profit growth stems from positive COVID-19 effects. Would you mind sharing the estimates COVID impact on revenues, meaning net sales?
No, we don't, because we don't know. Believe me, it is not at all easy to understand those impacts. Jukka, our finance people, our businesses, they have made already great job when they have studied very carefully those impacts. When we report that less than half, it means less than half. It means at the same time that without the COVID impact, we would been again, good position further improve our profitability. That is very strong message that our growth strategy works and our guys, they do excellent work everywhere in Kesko, K Group, on that side.
About the 2020 COVID-19 impact again linked to staycation boom. How much of Building and Technical Trade EBIT is linked to this staycation? Split between the impact, less than half.
Biggest positive impact coming from Building and Technical Trade as Jukka, Jorma already explained. At the same time, as we presented already in grocery, especially in grocery chains, we have very positive impact coming from COVID, but at the same time, very badly COVID hit our wonderful food service, Kespro business. Again, I remind that the Car Trade suffered heavily due to COVID.
Yeah. Correct. Kesko has growth strategy. How does acquisitions fit into the picture? It seems acquisitive track is over in food trade. Where will the acquisitions be directed in the future?
No. We haven't any doubts. We put more and more efforts to consolidate further Building and Technical Trade industry in Northern Europe. Jorma explained that very well. Also I repeat that we can see still lot of potential, especially in consolidation of Swedish, Norwegian, Northern European Building and Technical Trade. Especially we are targeting companies who has a very strong B2B presence and position on markets. I remind we have definitely wonderful growth potential also organically in Grocery Trade as well as in Building and Technical Trade. Again, I repeat that in Car Trade we can see definitely big potential to raise our profitability to the new level.
Good, thanks. About acquisitions, you talk about having several potential targets. Do you have something in particular now as we speak?
No. As mentioned, we have several. We are working very systematically. Our people are searching continuously those interesting targets. I remind that we have completed and we have integrated successfully plenty of those acquired companies. I repeat, we can see plenty of potential, also near-term potential, especially in consolidation of Building and Technical Trade in Northern Europe.
Thank you. Again, Building and Technical Trade in DIY market, it has been very strong in most countries due to the pandemic. What are your market expectations when looking into 2021?
All in all, we are expecting that this pandemic unfortunately will continue. It's not over very soon. We are estimating that 2021 is similar than 2020. Hopefully, in the second half, we will see that pandemic is over and life and living will get slowly back to normal. More back to normal, we are expecting life is globally maybe starting from 2020.
In Building and Technical Trade, 70% of sales is B2C. What is the EBIT distribution between B2B and B2C? Sales and EBIT change.
Both are very strong at the moment. Both are steadily improving profitability, but maybe, Jorma, you can open a little bit more this division.
I think it's not B2B or B2C question because, for example, in Finland, K-Rauta is split 50/50 to B2B, B2C and it's doing very well. We can take also Onninen in Finland, 100% B2B doing excellent EBIT. For example, in Sweden, K-Rauta, mostly consumer business, but not doing so well. It's mostly a question about what is our situation in that business, in that company, not B2B, not B2C question.
Good. The biggest challenge has been turning around Sweden in the past few years. As Sweden is now back in black figures, what are the next focus areas? Secondly, how much online is from Building and Technical Trade sales?
Jorma explained already in his presentation that in all operating countries, in Building and Technical Trade, we have still plenty of room for profit improvements, but also plenty of room for growth, organic growth as well as growth based on acquisitions. Of course, wonderful that today we are in position that we have so strong foundation in Sweden, Norway. Traditionally, we have been very strong. Our operational financial performance has been already long time strong in Finland, but now it is very strong everywhere. Of course, it means that we are now much, much better prepared to expand our Building and Technical Trade everywhere in Northern Europe.
In Building and Technical Trade, what do you estimate the share of renovations of the division sales to be?
Jorma, maybe you can open that.
I think it's impossible to say because our customers, mostly we have those small and medium construction companies. Of course, they are doing both. They are doing renovation and new buildings. That's why we are saying that our part is quite high in renovation, is that our main customers are those small and medium size. Normally, those big construction companies are making those very big new buildings.
Fair enough. We see that most peers are investing into automatization. I think this is grocery trade question. Given the accelerated growth within online on the track of COVID-19, is there something that we are looking into the automatization?
Investing on what?
Automatization.
Yes. Very important. Also on that side we are working. Ari, maybe you can open a little bit more, but not too much.
Okay. We are happy with the current business model actually, and most important that customers are happy. Of course, we are checking out what is the newer development in the area, and we are looking all the possible way how to make logistics and collection more efficient way, and I think that we need to do some investment, but not the big.
How much do you expect online sales to increase during upcoming years and how you aim to maintain the profitability level with the higher online sales?
I'm supposing grocery.
Grocery, I guess so.
As I mentioned, pandemic probably will disturb our life more or less all next year or at least first half and some problems coming also to the second half. Based on that, we are expecting that this, let's call amazing growth in e-com will continue. This year we are in 400% and next year, Ari, what is your guess?
We like nowadays like a three-digit numbers.
Okay.
Maybe more than 100%.
I strongly support your idea.
Very good. I guess this is for grocery, but also for Building and Technical Trade. Can you still increase the share of private labels? If yes, how high can it go in three to five years?
Yes. Answer is yes. Definitely, there is a big potential. Jorma, please.
Yes. In our industry in Finland, we have quite a high share in private label, but also here we can increase a lot of them. Especially in Sweden and Norway, we have huge potential. I think that we will gain a lot of better margin in the coming years from that area.
Any comment from Grocery Trade side on private labels?
We are aiming to increase the share of the private label. I think there is big potential in the future, but it's up to customers. We just set the table and they make the final choice. I think the offering is getting better and better every day.
Yes. Ari, we can again remind people that, for example, this Premium private label, Pirkka Parhaat. Amazing development, very strong growth, highly appreciated high-quality products by consumers, and of course also from our business point of view, profitability point of view, also very nice product category.
Yeah. The growth has been more than 20%, and they are actually bringing more customers to us. Customers are very satisfied with the quality of the products. We think there is big potential in the future.
Yeah, they are delicious. Grocery Trade, can you still improve sales per square meter despite the recent leap?
Yes, definitely.
Yes. We have many tools how to do it, actually we are sharing the goals with our store owners nowadays, it has been very impressive to see how fast we have been able to do it. Because the numbers are so big.
It works very well. There is, as Ari explained, still a lot of room for improvements. The formula works very well. Increase sales and reduce square meters. That means very strong development also on profitability side.
How far are you into journey of leveraging benefits of existing network through internal efforts like store-specific business ideas, NPS? Halfway or further? How would you describe the competitive environment?
Very good question. I can tell you that this is some kind of topic that we have on the table continuously when we discuss about future. We can confirm that this job will end never. We can always improve further customer satisfaction, customer experience. I must remind you that it is amazing turnaround what we have seen, how well our people, Kesko people, retailing entrepreneurs have succeeded to improve customer experience. As Ari very well presented, that all stores where we have seen this turnaround, sales development is amazing. There is a lot of potential. Ari, maybe you want to open a little bit more that potential.
Yeah. Maybe the rough estimate could be that about 50% is current situation.
Yeah.
50% is potential. Think about what can mean in real life, for example, like our K-Citymarket Pirkkala. There was a renovation three years ago, and now the sales is doubled. Same store, same location.
Big hypermarket.
Big hypermarket, but double sales.
Järvenpää.
Järvenpää.
The best grocery store in the world. How much they have improved?
They have almost doubled the sales.
Almost doubled.
Yeah. The best store in the world.
Yes.
Good. What is the share of electric vehicles currently, I think, in the market in general? Where will it be in 2030?
2030? Okay.
If we had a crystal ball.
Let's let Johan to tell this secret.
We start with 2025. Volkswagen Group estimates that in 2025, the share of plug-in hybrids and full electric cars will be around 50%. Five years from that, I don't know. Of course, it's impossible to say, but my guess would be 70%, 80%.
Very high. At what areas should we succeed in order to get the car business into right track?
I see that the most important is customer experience as very strongly many times stated by Johan myself, that we have definitely also in Car Trade big potential when we lift the customer experience to the new level. It's not a secret that car industry, all in all, globally, has not yet done such a great jump to improve customer experience. In our target settings, priority number one in Car Trade is now to make this a big jump, and we are progressing.
One more Car Trade question here. What kind of growth are you expecting from leasing activities within Car Trade?
Johan, you can take, but please tell first this development. We started two years ago and great development for audiences to understand the future potential.
As Mikko said, we started two years ago from scratch, and now we are at like just about 3,000 cars at the moment. I think one segment that we see that is increasing very rapidly is private leasing. Instead of buying the car, private consumers want to lease the car, and I think that will continue in the future. I said in my presentation that the market growth for next year is estimated to be around 10%. I think our leasing company will grow much quicker than what the market will grow.
Thank you. Kesko has on 17th of September 2020 announced that it no longer exercises the type of control referred to in IFRS 10 over Kesko Senukai, and has therefore classified Kesko Senukai as a joint venture from 1st of July 2020 onwards. What has changed in the ownership or management of Kesko Senukai during 2020 that has caused such reclassification?
Yeah. Now, what has changed? The change is that Kesko and co-owner of Kesko Senukai, we don't share anymore same future vision. Due to that reason starting from this year, we have been in negotiations how Kesko Senukai should be managed and further developed, and those discussions continue. Good news is that also Kesko Senukai is from operational point of view, financial point of view, very well performing, growing, taking market share. Profitability also very good, meaning that day by day businesses are well-managed also in Kesko Senukai. As I said, we continue negotiations and one day, I don't know yet when, but one day we will reach resolution somehow, and we will fix those problems between us and our co-owner.
Thank you. Detailed questions. What is the normalized free cash flow level that can be expected going forward?
Okay. Jukka, please. We are also very eager to hear.
I think we have given fairly enough guidance already today and yesterday evening when it comes to our finances. The most important thing is that we have a growth strategy. We have a return on capital employed target of 12.5%, and we have a 5.5% operating margin target, and we have said that we will have a CapEx of EUR 200 million-EUR 300 million. That pretty much tells you about the picture. I've said earlier today that we have some potential more when it comes to the net working capital and so on. Those are the areas where we work and sort of frames in a way.
Thank you.
Jukka promised that on your behalf.
Good. How much you have benefited from temporary reduced employee retirement payments, so-called TyEL, in 2 020?
Jukka, do you remember?
Yeah, less than EUR 10 million during this year. We had certain businesses where we had quite challenging situation during the lockdown, especially in the foodservice business, for example, and also partially in Car Trade, for example, and so on. We had those temporary layoffs, but now when the business is up and running and so on, so much less in a way.
Much less. How much is the profit to come from acquisition synergies? What criteria is used in allocating capital?
It varies. It depends on acquisition. All in all, we have gained synergies more or less as planned. Most important is that we have succeeded to acquire good companies, good businesses. Very important that we have allocated investments, businesses where we can grow, where we can become even stronger and businesses where we can compete against best other European players. This strategy works. I guarantee that we will continue on this track. Based on that, we can expect also good success in future acquisitions.
Can you elaborate on the risks for potentially weaker global economy that you see in 2022, 2023? Does your updated midterm financial targets with the expected operating profit margins of 5.5% include such effects?
We see that thanks to this turnaround, thanks to our well-performing growth strategy, thanks to very strong financial position, what Kesko has those challenges and issues coming from slow economy, those things offer us great opportunities because Kesko is today in so good shape that when sooner or later we will face in Europe those challenges coming from weak economy, we are in good position fully benefit that situation.
Thanks. For your Building and Technical Trade divisions, what market growth are you expecting next year weighted by your different exposures? It's a bit details.
Yeah. Again, I remind that we are expecting that 2021 will be quite similar year compared to year 2020, especially in grocery as well as in building and technical trade. We are expecting that 2021 will be better year for Car Trade. No big change in short term. In building and technical trade, we are not expecting any more growth next year.
What are the biggest changes to strategy, way of working or consumer behavior due to COVID that you expect to stick even after returning to the new normal?
Good, very difficult question. Who knows what will be the new normal? Who knows how long this pandemic will last, and who knows how badly this pandemic will hurt global economy, our economy here in Northern Europe? We are optimistic because, again, I repeat that Kesko K Group is in utmost good shape, and I'm very confident that whatever we will see in future we will succeed thanks to our well-performing strategy, thanks to excellent 43,000 employees who are working every day in K Group. We are unique retailing company, even in European scale. Our grocery trade is probably the most profitable grocery trade company in Europe. Our building and technical trade is moving fast and going towards among the best European players. All that means that compared to many other companies, we are extremely well prepared to face whatever will happen in the market.
Good. Couple of questions still. Time goes quite fast. Here is a question about the private labels in Finland. What is the key reason that Finnish private labels shares lag compared to broader Europe than even Sweden? This is grocery trade question.
Ari, please.
I think in the past, the offering wasn't good enough, because we didn't have good selection in the premium category. Now when we are offering that, we can share that share is getting higher and higher, because there was nobody there in that area. Actually, that's the grow area.
Of course, for us, this is, again, a great opportunity, as Ari explained also in his presentation, because matter of the fact is that clearly the best, well-known, and strongest private labels in Finland are owned and operated by Kesko.
Yeah.
ESG question: what are the biggest positive change that you are making in E, S or G? Environmental, Social, and Governance .
When we discuss from sustainability, corporate responsibilities, I would like to underline importance of transparency. Whatever you do as the leading retailing company, you should keep very clear in your mind that all your operations, all cooperation between you and your partners has to be transparent. We have put lot of efforts in Kesko to make all our operations very transparent, and this is definitely main reason why we are so highly appreciated and our sustainability work is also well recognized globally.
Thank you. The last question here is, any special dividend expected to celebrate the 80th anniversary?
Very difficult question. Due to that reason, we have CFO here.
We have a solid or very clear dividend policy. Yeah, I think that's important.
Very good.
Very good answer.
Thank you, gentlemen, and thank you, audience, for the great number of questions. There are also videos online, extra videos for you to see a little bit more about our business and, for example, this store-specific business idea.
Thank you.
Have a look.
Thank you. Thank you, Hanna, for organizing this nice occasion. Guys, stay well.