Ladies and gentlemen, welcome to our 2017 financial statements release call. I'm Kescos' President and CEO, Pete Cohallander. Together with me, I have our CFO, Yuka Ehllund, and what President, Investor Relations, key MLAOS. I will first give an overview of our business performance And after that, In 2017, we continued on in the implementation of our strategic towards becoming a more focused and unified K group. Our net sales grew in all divisions and profitability improved compared to the year before.
Our strategic focus on the core business it by 1000000. The integration of our 2016 acquisitions Somelahi Kaupa Onene and out of Carrera has proceeded well and has increased net sales by 1,000,000,000 and operating profit by 1,000,000. At the same time and in accordance, we our strategy, we have divested several businesses in the specialty cost trade. The divested made in 2017 2016 decreased our net sales by 1,000,000,000 and increased operating profit by 1,000,000. Next, the highlights for 4th quarter.
Comparable net sales, operating profit and earnings per share grew The growth was driven by grocery trade with good sales development and significant improvement in profitability. Next briefly, our next briefly on our key performance indicators. 4th quarter net sales grew comparably by 2.6% to over 1,000,000,000. The comparable operating profit increased from 1000000 to 1000000 comparable return on capital for the rolling percent. When looking at the full year figures, our net sales were 10 1000000000 and the comparable net sales growth was 1.8%.
The comparable operating profit amounted to 1,000,000 and the margin was 2.8%. Looking at 2017, net sales and operating profit by division. Gross rate represented approximately half of the group's comparable net sales and slightly over 60% of the comparable operating profit. Excluding, especially with cost rate, all core businesses saw growth and improved profitability. The net sales and operating profit for the fourth quarter, this slide highlights the strong finish to the year by the grocery trade business.
Next quarterly sales, 4th quarter net sales declined 5.3% in comparable term sales growth of 2.6%. Looking at quarterly operating profit, 4th quarter operating profit increased from 1000000 to 1000000 the corresponding margin accrual from 2.3to3.1percent. Moving on to the return on capital employed, it was 12.2% for the group. The target level 14%, so there is still room for improvement, especially in building and technical trade. A few comments about our financial position.
At the end of the year, Equity ratio was 50.4 percent, liquid assets were 398,000,000 and interest bearing net debt 1,000,000. The net debt to EBITDA ratio is at 0.3. Cash flow from operating activities in activities was negative 1,000,000. Capital expenditure was 1,000,000 This includes real estate purchase of 1,000,000 from CashCO Pension Fund, which is to return to Tesco and estimated surplus amount of 1,000,000 in March 2018. Our financial position is strong and allows us good possibilities to develop the business in line with our strategy.
Next, I will discuss business development by division starting with the grocery trade. Market wise, we have been happy to note that the importance of quality and selections has continued to increase. Growth in the Finnish economy has supported sector growth. Consumer prices are rising moderately. 2017 was a year of strong and successful transformation.
Our strategic choices on service and quality resulted in increased sales and profitability. The successful integration of Soma Lajicapa has meant the significant synergy benefits have materialized sooner than anticipated. The extensive redesign of all our change continued according to plans. The 4th quarter highlights included growing sales in oil change, profitability was boosted by synergy benefits. We were also particularly happy with the good performance of market and cash pro and the sales of new stores being off to a good start.
In the fourth quarter, net sales in grocery trade declined by 1.6% in comparable terms growth was 4.5%. For the full year, sales grew comparably 2.4 percent to 5,282,000,000 In fourth quarter, the operating profit in grocery trade increased from 51.9 to 1,000,000, the corresponding margin was in profit increased from 175,900,000 to 203 1,000,000, the corresponding margin was 3.9%. Next, Building And Technical Trade. On the market, the situation in the Nordic and Baltic Countries is still could despite slower growth pace. Construction in growth centers continues strong.
The full year highlights include continued focus on our core businesses and the integration of Owning and proceeding well. During the year changes to start site network, prudent profit in the politics. Then 4th quarter highlights for us, while owning and sales and profit grew divestments in specialty cost rate decreased operating profit. Messer to transform operations and increase efficiency is feeding our ongoing. Next, net sales in peeling a technical rate in the 4th quarter net sales declined 10.8% in comparable terms, growth was 2.2%.
Sales in specialty costs decreased from 2 22,000,000 to 80,000,000, while sales of the core business increased from 899,000,000 to 921,000,000 For the full year, sales grew comparably 1.1 percent to 1000000 comparable growth of the core business was 3.1 percent to 1,000,000. Next, operating profit for the division. In 4th quarter, the operating profit increased from 14 point 1000000 to 1000000 operating profit in specialty costs decreased from 1,000,000 to 0.3000000, while operating profit of the core business increased from 12,400,000 to 1000000. The full year operating profit decreased from 97 900,000 to 95,000,000 business increased from 1000000 to 1000000. In building and technical trade, we are taking a stronger country specific approach to accelerate sales.
As business is increasing increasingly being done on a country by country basis, we can better take into account the local market needs and customer VCs. At the same time, we pursue stronger synergies, for example, by increasing the sales of our own brands and further and raising it to the level of the best European operators is one of our main goals for upcoming years. Moving on to Cartwright. With the market first time race relations decline slightly, on the back of the tax debate. Scrapping premiums and economic growth is expected to increase the registrations in 2018.
Our market share was 18.6%. We had strong performance in Vans. Also, the acquired positive piece has been performing very well as Sales and profitability remained at a good level. Changes in taxation means some sales were moved over to 2018 or it was strengthened and rose 20%. In fourth quarter, our net sales in Cartrate decreased from 1000000 to 1000000 Road was negative 1.4% and incomparable terms, turns negative 5.3%.
For the full year, sales grew comparably 1 percent to 1000000. Comparable operating profit declined from 1,000,000 to 1,000,000 in 4th quarter. The corresponding margin was 3.1%. The full year comparable operating profit increased from 29,500,000 to 33.1 1,000,000,000 and the profit margin accrual from 3.5% to 3.6%. Let's discuss our outlook.
In comparable terms, our net sales over the next 12 months are expected to exceed the level of the previous 12 months. However, due to divestments and restructuring, the group's net sales for the next 12 months are expected to fall below for the next 12 month period is expected to exceed that of the previous 12 months. However, investments in store openings and the designs in the expansion of logistics operations and in digital services will burden profitability during the period. Comparable earnings per share were in 2017 The post proposal for dividend is per share. This slide presents GESCO's group management board as of 1st January 2018.
Towards the end of last year, we made some notable changes to the company's upper management. Yarbroughala, who had successfully been heading the grocery trade division was appointed president of the building a technical trade division and deputy to the president and CEO. Ariaxley, who was previously in charge of commerce in the growth rate division, was appointed as President of the Division. Also, Mikael Maione, who has had a long carrier within the company, was appointed Caescos Group General Counsel. Also reporting to me are recently appointed Karlina Parton and Senior Vice President communications and identity and Eva Sarman Poja, vice president public affairs, as well as Pasi Mckinnon, Chief audit and risk officer.
Lastly, I would like to finish highlighting our long term commitment to corporate responsibility. This January, CashCall was ranked again as the most sustainable trading sector company in the world on the global 100 list. In the end of last year, we were included in the down zones sustainability indices. We highly value these recognitions and will continue our determined work towards a better society and better environment. This ends my prepared remarks.
Thank you for your attention. We will now be happy
you. Our first telephone from Handelsbanken. Please go ahead.
Yes. Hi. Thank you for taking my questions. First of all, it looks like there was very big swing in the profitability of from coming from a store manager that you made a loss of 1,000,000 last Q4. And now you make a profit of 1,000,000.
What is driving this big swing?
Yes. Thank you for your question. We are extremely happy with the Soma Laicca acquisition and also very pleased how successfully we integrated Sommelheicapa, our decision, our choice to make fast integration was definitely right decision. And now we have in larger scale completed integration and we can see a lot of synergies rolling in. At the same time, we have recognized that our very extensive neighborhood store network in Finland.
Actually, we have more or less 60% market share in neighborhood store sector supports also very strongly our hypermarkets and our medium size stores. This combination is very competitive and results we can see already in 4th quarter numbers.
Yes, maybe just to add up a little bit. The sales growth has been good throughout the year with the renewed stores and also the synergies are something that we have been able to realize both in the sourcing side as well as in the OpEx side. But let's also remember that during 2016 last quarter, and also 2017 first quarter, we also were in the middle of transforming the stores ad network. So it was a very heavy load at that point. So it really comes from both parts.
Now we have a stable, store side network there's still around 150 stores that are or that will be put to the retailers by the end of first half of this year But otherwise, the store rollouts have been done and renewed. And now we can focus on the sort of commercial side. Maybe we can also remind that our
decision made by us 2015 that could K, retailing entrepreneurs can have more than one store was definitely right. This is And we are very pleased to report that today already more than 500 stores part of that multi store concept and that decision and this development supports also very strongly our growth rate development.
All right. Thank you. And in the B And T division, are you able to give a run through of the market situation in the in your different key countries, both in terms of the B2B side, but also the B2C side, just like the demand situation.
Market situation is good. Building, contraction activities renovation activities are steadily increasing everywhere in Northern Europe which is our domestic market. And that offers us also lot of opportunities further develop, increase our sales and further improve our financial performance in Building And Technical trade division.
Okay. And lastly then perhaps these investments you're making that you mentioned in regards to the guidance, which will burden your growth next year. Could you say a bit more about these initiatives, digital initiatives and so on?
Yes, of course, you mentioned that the burden, I feel that is too strong word to describe situation, we can see that we can further improve our profit purity. But at the same time, we would like to remind that we very strongly develop all our core businesses, we speed up development of digital services And those investments in short term will have also some slight negative impact. You could open a little bit more detailed those impact
Yes. So just to be sure that everybody understands the areas are really the store side sort of renewals, which we have already started earlier, but are still sort of in the middle of the process. We will finish the store side renewals by the end of 2019. So in that sense, there are still quite a few of renewals during this year and it's really targeted for a long term sales growth. So in that sense, that is a sort of short term effect.
Then on the logistical side, we are expanding our central warehouse in our, grocery trade divisions, central warehouse due to the fact that we acquired Miller Heiko and the volume has been good. So we definitely needed more capacity in order to have a good logistical flow. And then The last one is the IT and digital capabilities naturally in the retailing environment. We have to invest to this part in order to in order to really be competitive and customer oriented in both in the store side channel as well as in the digital channel And when it comes to the sort of quantifying it, most likely, we are in the double digit figures on the impact side. So roughly from 1000000 to 1000000 coming from the investments that are sort of short term type of investments that are needed in order to really improve in further our competitiveness.
There are no further questions in
Yes. A couple of questions from the online. Do we expect any costs related to structural changes in 18, it is true that, that, last year, we did a lot of changes in our portfolio and there was, sort of this one off items going further. It, of course, depends how the how the portfolio develops and so on, but nothing I could inform at this point, which would be relevant in a way. And then, there is a question regarding the profitability regarding common functions and that there has been some volatility and whether we can give some sort of flavor on that side during last year, we were around 1,000,000, 1,000,000 and I can say that we don't expect changes on this level.
So it did include last year, some investments, as best as the digital side and so on and but overall, the level should be pretty much the same as it was in 2017. Then there's also a question regarding CapEx for 2018, which we have earlier also commented that that it's most likely that we will go below 200,000,000 in the store side CapEx and that seems to be the case going further, but we are in addition to these store side CapEx is also investing to new services, especially in our car trade as well as in our IT and digital capabilities, which will increase our CapEx on those sites. So that means that we most likely go above SEK 200,000,000 due to these car car trade CapExes as well as the ICTN. And digital CapEx is and the IT and digital CapEx is also had a shorter decrease and time. So that's one of the reasons why it also affects somewhat of our operating profit.
Then there's one question regarding the IFRS 16 implementation and impact. Well, clearly, it has an impact on our balance sheet. So that's very clear. For us, it's very important that and the key sort of KPI going further is obviously even more the cash flow generation, and we have been focusing on that one a lot. And in that sense, we will continue that work.
That's pretty much what I have to say at this point.
Any questions?
No further questions in the telephone queue, madam.
Okay, guys. Ah, now came new one, Yoko. Could you?
Do you feel comfortable with current 2018 EBITDA consensus of 4 1,000,000. Well, we I think we have commented what we have to say on regarding our outlook. So like I said, we expect operating profit to improve, but at the same time, we will also highlight it that we are We are doing investments, to the future, which somewhat impact our operating profit growth as well So in that sense, I think during this call, we have pretty much opened what we have, to say on the outlook side.
I would also like to add at this point that we have received questions on potential Capital Markets Day. And yes, we can confirm that that is under plans and we have planned that for June. So please stay tuned and we hope to reach out on that you shortly or come back to you on that shortly.
Thank you very much for your participation. Together with Yuki I wish you pleasant. Evening, we try to survive here in Helsinki. We have real snowstorm. Finally, in Helsinki City.
But once again, thank you very much for your participation. Bye bye.