Ladies and gentlemen, welcome to our 2019 second quarter result call. I'm Kescos, President and CEO, Mick Kohirander. Together with me, I have our CFO, Yuka, Ehrund and Vice President of Investor Relations, Kia MLAUs. I will first give a brief overview of our business performance, and after that, we will be happy to take questions. Our strong strategy execution increased net sales and improved profit to all time best 2nd quarter result.
In the grocery trade, growth is still clearly outpacing the market into building a technical trade division, sales through and profit increased. Acquisitions of the Fresk's building and home improvement store chain in Sweden and Larkonnens Volkswagen Audi and SEAT businesses were completed. Strong strategy execution increased net sales by 2.1 percent. Operating profit was our all time best 2nd quarter result 1000000 and operating margin went up to 4.4%. The net finance costs for the group's continuing operations totaled 1,000,000 including interest for lease liabilities of 1,000,000.
The net sales forecast continuing operations in April, June totaled 2,000,000,000 1,000,000, up 4.1% thanks to our strong growth strategy execution. Net sales increased both in the grocery trade and building and technical trade. Cescos comparable operating profit for continuing operations for the 2nd quarter was 1,000,000, up by 9,200,000. Profitability improved in the growth rate rate and building a technical trade. Despite the acquisitions and the investments carried out this year, our financial position is still strong.
At the end of June, the group had liquid assets of 1,000,000 interest bearing net debt, including lease liabilities was 1,000,000. And the corresponding net debt to EBITDA ratio was 1.0 lease liabilities were some eur 2,350,000,000. Cash flow increased significantly and CapEx increased due to the acquisitions. On this slide, we can see all the investments made this year. The most significant one is the acquisition of the Fresh Building And Home Improvement Store Chain in Sweden.
During the first half of the year, our investments totaled at 1,000,000. Return on capital employed was 9 point 5% it improved in the grocery trade. Next, we take a closer look at each of the divisions first grocery trade. Net sales growth continued strong and in comparable terms, net sales increased by 7% to more than 1,000,000,000. Growth was impacted by the positive development in customer numbers and the timing of Easter.
Which fell on to 2nd quarter. Comparable operating profit increased by 1,000,000 to 1,000,000. Profitability improved due to good sales development and good cost efficiency. K group's gross resales increased by 6.6% which clearly outpaces the market growth rate of 4.2%. Q2 sales were boosted by the timing of Easter, which fell on April this year.
Price inflation was approximately 1.5% Customer numbers grew in all chains and online sales growth was 119% in the second quarter. Our functional strategy is the reason why our sales growth is clearly outpacing the market. Good customer experience is at the core of everything we do. We use customer data to build store specific business ideas and digital services. The integration of Sommelahekaup and redesigns for the whole store network as well as all same brands have proven, successful.
Next, building a technical trade. Net sales, exploring the specialty growth rate, grew significantly by 7.1% to 1,000,006,000,000 despite Easter's negative effect. Net sales grew in Finland the Baltics and Belarus in Norway and Sweden net sales increased due to the acquisitions completed. Comparable operating profit increased by 1000000 to 1000000 the impact of acquisitions on profitability was 1,000,000 In building a technical trade focus is shifting to renovation building. Cashcroft's net sales growth was the strongest in the BalticCountries Sweden and Norway.
Comparable operating profit increased significantly. Our extensive transformation program in Sweden and the integration of the Fresxane, both proceeding according to plans. The acquisition of Resque completed in May has significantly strengthened our position in Sweden. It made us one of the leading building and home improvement store operators in Sweden and will clearly improve our profitability there. The stores operate under our new playbook brand and are especially aimed at professional breeders.
We have also improved our K, router. Fee online stores, delivery options, and utilize our extensive store network better. Positive development can be seen and online sales have grown by 109%. Next, card rate. Net sales in the card rate were down by 30 percent and the market remains challenging.
We expect the market to improve in the later half of the year. Comparable operating profit was 1,000,000 despite the market distal disturbances. We have completed the acquisitions that will increase the efficiency of our sales and service network. The Carteret market has been and new car sales have declined, not only in Finland, but also elsewhere in Europe. Consumer demand has also been weakened by uncertainties regarding car taxation and motive power.
The strategic strengthening of our sales network is proceeding well. This year, we have completed 3 acquisitions. 2018 pro form a net sales of these businesses totaled 1,000,000 and operating profit 1,000,000. Integration is proceeding according to plans and will lead to more efficient sales and service network operations. There will be significant and interesting new additions to our range of hybrid and electric cars in this and upcoming years.
And now a few comments, on the future. Our outlook is based on the IFRS standards that took effect on 1st January 2019. In comparable terms to net sales as well as the comparable operating profit for continuing operations for the next 12 months are expected to exceed the level of the previous 12 months. More than 1800 Casco employees have now moved to K Campus, our new main office building. Working in this new building enables increased collaboration across organizational founders in the spirit of 1 unified game.
Please end my prepared remarks. Thank you for your attention. We will now be happy to answer any questions you may
Our first question is from Yuta Rahmian from SEB. Please ahead. Your line is open.
Thank you. And hi, all. A question on on Ninnen and its profitability. It was year on year, not that different. So it's in a sort of robust profit improvement.
Could you walk us through why is that the case? And given that you have stated onion does have long term potential in profitability, when do you actually expect that to come true and how? Thank you.
Yeah. All in all, on in an on in an has steadily improved profitability and still this positive trend, has continued to occur in Norway. Norway has also previous time mentioned, we have had some challenges and we are just implementing more corrective measures to strengthen our performance also in Norway. That is the main reason. But all in all, we believe that we can expect also in the future in owning businesses that positive trend will continue.
And maybe to add on Mickos comment, as you know, we improved the profitability with owning NOK 1,000,000 during the second quarter and another sort of slightly negative side was also coming from Sweden. As you know, we saw the heat pack contractor business there. So obviously it had some sort of impact on the, on the, profitably operating profitability as well, but, that was sort of like another reason.
Okay. Thank you. And then the same or similar question on the DIY part of this division that had a very nice improvement year on year. So was there something that was specifically good not to be repeated in the coming quarters? Or would you say that that's kind of good solid organic improvement you've seen and that is maybe then likely to continue?
Yeah. And all in all, as you know, in building a technical trade, we can see lot of growth and profitability improvement potential. And of course, we are very pleased that current management, Jormarau Hola and his team, they have now succeeded steadily quarter by quarter to increase sales and improve profitability. We don't see any reason to believe why this positive trend will not continue also in future.
Okay. And if I ask still relating to this because you've had some loss making countries both in in the DIY parts and the onion part. So could you just remind us of which, I don't know if you want to talk about the first half of this year or the full last year. So which countries are still loss making, and, and which are sort of you mentioned them the report, of course, which are improving. But just to get the potential here in terms of getting just the losses back to breakeven or or profits?
So is it only the Sweden matter or do you have some other areas such as onion and Norway being loss making, for example?
Just where we look countries, just Sweden has been loss making over a long time, but we are now more than pleased to confirm that finally also case of Sweden will turn on black numbers and figures. And thanks to renewal measures, correcting measures in KA router, thanks to successful divestment of loss making part of Onene and and of course, thanks too. Wonderful acquisition of Frisks. We are very pleased that we succeeded to make this acquisition. And I can confirm that integration has started also very well.
And the Irma Raula and his people, they have excellent track record from successful integrations for example, your voluntary success will be SLK fast integration to our grocery division. Same same approach and same attitude we have also in Sweden. Based on that, we are very optimistic that we will see finally very good sales development, good progress in profitability. All other businesses, what we have in case corporation, profit making, no, okay, Norway. Once again, in Oregon, we have had, some challenges, but corrective measures are in process.
Okay. I think that's all on my behalf. And by the way, congrats on the new headquarters as well.
And our next question is from Nicholas Guptman from Handelsbanken. Please go ahead. Your line is open.
Yes. Hi. I thought I'd be a bit cheeky and go back to the comments around the on and business in Sweden. It's loss making on a full year basis. I think that is being confirmed and it's also confirmed in the report, but in this quarter, it would have had up positive impact on EBIT.
Is that true? And how much was that that you're sort of losing out from divesting it? In this quarter?
Sorry. Could you repeat a bit, did you refer to Olmian and Sweden?
Yes, the heat pack business, the business you sold, you said that selling that had a negative impact on comparable EBIT in the quarter?
Well, heavy loss making part of owning and that we have successfully divested, and we can confirm that owning an infra, as we call, remaining owning a business is healthy. Profitable business and our position on Swedish market on that side is also very good. Our market share is circa close to 20%.
Yes, like said.
Thanks for that. But Yep.
Yeah. Yeah. So so like I said, we still had the impact, negative impact from the loss making heat pack contractor business. During this quarter, so that did affect negatively the profitability also during the second quarter. And now when it's so obviously we have the profitable ones
in Q2. The months you had it in Q2 contributed or was loss making made it loss making in total, so to speak?
The impact on 2nd quarter, but not anymore on 3rd quarter.
Okay. And what was the full year negative impact on 2018 from the heat pack business on comparable EBIT?
It is some €1,000,000 coming losses from that business,
but it was quite big heavy loss making and had big negative impact on 2018.
Single digit minus deposits, yes.
Did you say a few €1,000,000 negative?
Yes, some 1,000,000, yes. A few million, yes.
Okay.
Thank you. And the I saw the the decline, the online and sales decline in in Poland. And also sort of things, and is that purely due to the Easter effect and the fewer working days and so on? Or is there a new trend?
No, no trend to Eastern, of course, has some negative impact and less working days. All in all, on the market, we have succeeded more or less as planned.
Okay. And are you targeting any synergies from the Fresh Group acquisition that you could share?
Yeah. We are targeting and, and we can see clearly plenty of, synergies. And as I mentioned, integration has that started as planned. And we can see that Fresks, definitely synergies coming from that side will support also improvements in K router. And we can see clearly that K router and K book as we call now Freshs business are very well supporting each other.
And just as a reminder, if you do wish to ask a question, that is 1. And there seems to be no further questions at this point. So I'll hand over back to the speakers for any final comments.
Okay. We look forward to if there are more questions coming, but a question from online, there's a question that could you give us some more color on Q4 and Q Q3 and Q4 this year and how do you expect the different segments to develop? And further on, do you believe that you can continue winning market shares in grocery And how do you see the Finnish Building And Technical trade markets? Are you lagging in Finland behind the market and what are you doing to improve this?
No, all in all, our outlook is a positive thanks to our well performing strategy, thanks to very successful implementation of our business plans everywhere. And based on that, I can confirm that we don't see at the moment any reason why this strong growth and positive development in grocery will not continue also in a future. As well as we can see clearly that building and technical trade market everywhere in Northern Europe is still favorable. In Finland, Sweden, Norway, Baltic Countries, Poland Belarus. And based on that, our expectation is that there was a positive trend from sales point of view as well as from profitability point of view will continue in our building and technical trade.
In card raider, as you know, we have European wide difficulties and sales is down everywhere in Europe. But our expectation is that already in the second half of this year, market will improve and also our product portfolio will get better and based on that, our expectation is that our sales will recover during the second half as well as the expectation is that the demand of new cars will get more and more back to normal 2020. Once again, I repeat that based on all that, what I said our outlook is very positive at the moment.
Yes. And maybe on the Finnish billing, a technical trade market, the new build is somewhat, sort of, softer than earlier, but the renovation market then sort of sort of compensates on that one. And as you know, we sell quite a bit for sort of small and medium sized companies. So in that sense, renovation for us is a good one. So even though the new build would be down somewhat the renovation market is sort of important market for us and we expect that to sort of develop well overall.
Okay.
Also a question on group common costs, do you have an estimate where those might end up for the full year?
Well, like I said, last time, quarter ago, we did expect that the 2nd quarter would be still somewhat high when it comes to the common costs going further, we do expect them to be at the lower level compared to the first half of the year. So that is our view on that side.
Lastly, a question on Easter. Do you have any comments on what Easter impact was in Q2?
No, some impact, positive impact the grocery business and the negative impact in building and technical trade, corporate level, look, we can say that slightly, slightly positive, or do you open, repeat it? Slightly positive. But not such a big impact. We are talking just a couple of millions. Okay, ladies and gentlemen.
Thank you for your participation. We have present summer day and summer evening, I wish, together with my fellow managers, pleasant afternoon evening, summer evening for everybody. Thank you very much. Bye bye.