Dear friends, welcome to Kesko's Investor Event. We are currently in Hakkila, Vantaa, which is the heart of grocery trade logistics. We have seen today two logistics centers, one in Hyvinkää called Ornella and this one here in Vantaa, Hakkila. We have heard presentations regarding Ornella and Finland, the warehouse Ornella and also logistics in grocery trade. These materials will be available, are available at the moment, in our website kesko.fi under Investors, so you can find the materials there. We have now our President and CEO Jorma Rauhala's and CFO Anu Hämäläinen's presentations as we are halfway of our current strategy period. After both presentations, it is time for questions. You can either ask here in the audience or via the chat function you can find on the website. There is a slight delay, so please pose your questions as soon as you have one.
Without further ado, Jorma, the stage is yours.
Thank you, Hanna. Ladies and gentlemen, dear friends, welcome. Solid execution of growth strategy continues in all business divisions. We are halfway over our strategy period and I have been Kesko's President and CEO one and a half years. So what? K Group in nutshell, three divisions, €15 billion sales, eight operating countries and close to 120,000 shareholders. If you look at figures dividend by division, we can see that grocery trade €6.4 billion sales and I would say quite strong operating profit 6.7%. Building and technical trade €4.4 billion net sales and 3.8% rolling 12 months operating profit. I think if we compare for example this building and technical trade operating profit to some of our competitors, we can see that we are doing quite okay. Many of our competitors are making losses because we know the construction environment has been very, very weak.
Car trade €1.3 billion net sales and operating profit 6%. I think the same is valid what comes to car trade. If we are looking over 6% operating profit, it's quite good figures when you are looking this car business environment in Finland, where we operate in car business. If you look at the sales and profit figures for 2021, 2022 and compared to 2023, 2024 and also now 2025, we can see 2021, 2022 those exceptional good years. All the other business divisions were in good shape and the market was strong, especially in building and technical trade. The construction market was so strong that we improved our profitability very much 2021 and 2022. For example, building and technical trade reached more than 7% EBIT 2021, 2022. Last part of 2022 construction business, construction market collapsed.
That we can see also in our figures 2023, 2024 and also this 2025. Still our guidance is this year €640 million- €700 million. This is what we are aiming for in medium term. Operating margin over 6%, return on capital employed over 14.5% and good balance sheet keeping net debt to EBITDA below 2.5%. If we look at the megatrends and current operating environment, I'd like to highlight these six topics. Global political and economic uncertainty. This is reason partly this is a reason for business and consumer confidence. Business and consumer confidence is low. It was good to hear this morning that in Finland it has little bit improved both business and also consumer confidence, but still low level urbanization and demographic changes. This affects a lot of our grocery store network strategy that we need to have those new stores in growing centers.
Individuality and effortlessness. At the same time, for example, grocery, the market is very price driven. It is very interesting that our customers are using more and more fast deliveries. More than 3 million fast deliveries last year and also growing this year. It's definitely not the cheapest way to buy your food. This kind of polarization shows that people also want to have effortlessness. Also, ready meals are growing quite nicely. Climate change and green transition. Of course, we have to do our own job. We have to reduce our CO2 emissions and we are investing in that one. At the same time, this gives us some business opportunities, especially when it comes to energy efficient construction business. Only then RK Route and other of our companies are operating in that business area. Digitalization and AI. We want to be a forerunner when it comes to generative AI.
I'm so pleased to see latest figures because we have only a couple of months. We have had those copilot licenses. Our employees have those ones. Already now in a couple of months they have created more than 200 copilot agents which are helping their daily base work. We want to be very active on that one. To take Finland as an example, we see a lot of positive signs in the operating environment. Interest rate 2%. It shouldn't be any problem. Consumer inflation also 2%. Unemployment rate has increased a little bit. Purchasing power has increased and will increase also next year. Everything should be in place, but t his consumer confidence is still at a low level a s I mentioned earlier, it has improved a little bit this morning l atest news. Finns are saving. Here is a longer term trend of consumer confidence and saving rate in Finland.
We have seen now a longer period of low consumer confidence since 2022. On the other hand, consumers have now €4 billion more in Finnish bank accounts than a year ago. Then strategy. Let's look at our strategy published Summer 2024. First, before diving into our strategy, some self-reflection about what McKinsey published about the growth possibilities of Finnish large cap companies. Since the growth in Finnish companies has been low in a global context, there are some questions. Is our strategy working? Are we able to grow? Does our culture support growth and feed our appetite for sales? First one, this appetite for growth. If I'm looking at our Kesko strategy, we are targeting that we should gain market share in every eight countries in every business. I think we have emphasis that targets what comes to growth. W illingness to invest.
Are we investing? T his year €200 million, €250 million when it comes to grocery store side network, a lso next year. Onela we visited this morning, close to €300 million investment. Acquisition this year, something like €150 million. Also last year, €150 million. We will renew all our IT systems. I think we are investing for growth. Culture. Does our culture support growth and feed our appetite for sales? This was a good one and I was thinking a lot of that one. This survey gives an example, especially I would say in U.S., if you have some excellent highest performing employees, some of those, let's say for example into B2B sales or some other specialists, it's normal that they can earn much more than their superior. This is not the culture mainly what we have in Finland, maybe also in Kesko if there is some.
Let's say for example some B2B salesperson and very good one, excellent one. Then we are thinking how he or she would continue with us. Let's promote him or her to Sales Manager, give a little bit more salary and then he or she starts to make some administrative works. This is quite normal what happens. This was kind of the kind of that I noticed that yes, we have something to do on that area and we have started also to do something. It was good to go through that survey. This is the way I lead Kesko. Strategic targets to highlight delivering profitable growth and strengthening market position in all business and all countries. Competitive advantage, operational excellence. This is very important, critical and also very difficult. It means it includes our daily processes, store concepts, assortment and pricing, management, product availability, delivery accuracy, and so on.
All of those normal processes, t hose are so important in retail business. Those who have visited today, our Onnela or also this logistics center, I think you can believe that one, that those processes are so important, how efficient we are on those functions, h ow good is the quality, for example, delivery accuracy, availability of the products, s o important. I f you are excellent on those ones, you will gain market share. It will be your competitive advantage. Sustainability. Sustainability strategy was updated in last autumn. It is integrated into our businesses and also bonus systems. Our vision is to enable sustainable choices for our customers and drive change in the whole value chains. This is important because if you look at those CO2 emissions, only 2% or less than 2% comes from our own operation, so-called scope one and scope two.
It is so important that we are having change in our whole value chain. Let's look at the grocery trade. In grocery trade, all the elements are in place. The issue had been the market share loss. Our target is clear: aim to gain market share in grocery trade. At the same time, profitability will be clearly above 6% and it's doable. Those two targets are doable. Three main measures we are doing: strengthening store-specific business ideas, developing store site network, and improving price competitiveness. Of course, continue good development in QuestPro. Our receipt for market share growth: quality, price, and network. Somebody has asked me if the price program is enough to gain market share. I have answered no. It needs also quality and store site investments. It needs all of those three elements. First, store site network. We need to invest in the store site network.
We do it by focusing on crowd centers, annual investments as stated before, €200 million– €250 million and b y 2030, the store site network will be updated in the right locations and meet upcoming legislative requirements related to energy efficiency and greenhouse gases. Here are some examples. We talk a lot about hypermarkets, but we develop and invest into the whole network. The latest one which we opened a couple of weeks ago was K-Citymarket Ideapark Lempäälä. The first, let's say, three weeks has been excellent and the next one will be opened, I think it was November, in Lahti Paavola, but in all chains new stores and also w e will renew the old current stores. Price program. Our target is to remove obstacles for buying as the market is still price driven. Prices reduced on over 1,000 branded products and some 200 Pirkka private label products in January 25th that we made.
We have continued to have good campaigns and targeted offers and those funds will continue. What are results so far? Profitability rolling 12 months 6.7%. Sales has increased. Double-digit growth in sales of products with reduced prices. Customer numbers up. Average purchase has increased for several months. Room for improvement. Still, when it comes to in-store visibility, we also had good progress in campaign sales. This program works well, and we will continue executing long term. Quality is in our DNA. It's our competitive edge. We are a quality player in the market, but there is too much variation between stores when it comes to quality, and we have agreed with our retailers that this is topic number one. What we have to do? We have to improve our quality in every store. We have to crystallize our store-specific business idea.
The strength of retailers lies in their local presence, selections, and fast response times. Key actions what we are doing include further crystallizing the store business idea, revamping specific products categories such as fruit and vegetables, bread, and K-Citymarket non-food items. This is the most important one, and I also see good progress on that one. Welcome to market share development. Our actions are yielding results, and we see positive market share development. We don't yet have September figures, of course, a couple of days still left in September. Already now, we can say that Q3 will be much stronger than H1, and we are satisfied when it comes to market share development in Q3. K-Citymarket has been performing better than the market the whole year and a lso what is important, K-Citymarket has performed better than other players in the hypermarket sector. K-Citymarket is the clear winner when it comes to market share.
All in all, if you look at the Finnish grocery market as a whole, we see some signs that consumers are spending more money on food now than in H1. We see in overall market figures faster growth now than in H1, and our sales numbers have been clearly stronger than in H1. As an example, we see sales growing in fruits and vegetables, fish, and other service counter products as well as ready-made meals. Could it be that consumer confidence still is at quite a low level, but c ould this be the first area where they are using more money? I don't know, but there are some signs of that. Instead of yet having a new car or having a new house, maybe they are spending more money when it comes to food. Let's see. We have some promising signs of that.
Kesko as a quality player in the market is in an excellent position when consumer behavior changes. It's good to remember that we also have Kespro, the clear market leader in the food service business. Kespro is doing very well, gaining market share, and as I said, is the clear market leader. Of course, this consumer confidence is also having an effect on what comes to food service business, all in all. People are not using so much money in restaurants this year, but we believe that kind of megatrend is that people are eating more and more outside of the home, and we are in a very good position when that happens a gain. B uilding and technical trade is the growth driver for Kesko. If you look at the weak markets, we have done well, o ur profitability is good.
The need for construction has not disappeared. I n Finland at extreme rate, w e have been focusing on securing profitability, and of course, big differences between countries. First, if you look at Finland, we know Onninen and K-Rauta are both clear market leaders. I would say very profitable company, i f you compare those companies, they're competitors, so just continue to do daily work, be active with customers, improve all processes, and when the market will improve, also those figures will improve again. Sweden and Norway are different story. We have made several acquisitions previous years, and still we have some work to do with those integrations, but Norway is very promising now. Both Onninen is gaining market share and Byggmakker in B2B sales is in line when it comes to market development, and the profitability has, and EBIT has improved quite nicely this year. Sweden, we still have work to do with our K-Bygg chains.
As you know, we closed our K-Rauta store and network and we decided to continue with K-Bygg, and still the work to do with that one. Denmark, I will come back on that one. Still, we are continuing to make those acquisitions in the northern part of Europe, especially in Sweden, w e need some scale. Still, our long-term strategy target of 6%- 8% EBIT is still valid and doable. The growth in this business has been boosted by several acquisitions. Some most important one, of course, Onninen 2016 was a real game changer, of course, 100% B2B business. We have all the builders merchant business before that one, and then building and technical trade also. Onninen has been an excellent, excellent story. Then, kind of in Norway, Skattum and Gipling were the first ones that we changed the whole business system.
We used to have those retailers in Byggmakker chain, but then we acquired first Skattum and Gipling and then Carlsen Fritzøe, and now we operate 70% of that business. The whole business has changed. Then Fresh Group in Sweden was a game changer, that w e had this loss-making Keratoc chain and now we have closed that one and K. Buek is our brand in the B2B sector. A couple of years ago, two years ago, Electroscandia in Norway, and now we are clear market leader when it comes to electric wholesale business, and of course, Denmark, those four acquisitions. This is our Denmark story. One and a half years ago, we acquired Darwichain. January 21st, we closed that one and since that we have made three more acquisitions and n ow we have something like 20% market share in Denmark where we are covering whole Denmark when it comes to logistics and store network.
So Denmark has been a very, very good story. Then this is probably a familiar picture to you all. The latest one is Q2 figures. I don't yet have Q3 figures. B ut as I said, we do not have Q figures yet. If we look at the sales figures so far, we are estimating that both K Route and Onna sales development is close to zero like. This means that Onna and Finland sales development in Q3 is expected to be best in two years. We can see some positive signs, but not any big change yet but l et's see the official figures after some weeks now. If we look at the latest margin for building and technical trade, 3.8 rolling 12 months, and our long-term target of 6%- 8%, the question is, is this doable? Looking back, pre-COVID, year 2019, the construction market was very strong that time and we made 2.7% margin.
We reached strong years, more than 7% EBIT, but now, like said, when the construction market is at a historically low level, we are making 3.8 margin. It means that we have improved our processes, acquired several companies, and strengthened our position in different markets. This means that we are in excellent shape when the market really turns, so our long-term target is still valid and reachable. Excellent performance in a challenging market in the car trade. Car trade strategy is quite simple. We are focusing on outperforming the market in all businesses, like said, new cars, used cars, and services. Some figures: all those car trade business areas are profitable and we seek further growth in all of them. First registration of passenger cars, France represented by Kesko, up by 32.4% versus the overall market performance of -5.4% in the first eight months.
Growth in used car sales has also clearly outperformed the market, totaling nearly 70% over the past three years. Seeking growth from multiple sources in the service business including, for example, damage repair, servicing of older cars, and EV charging. To summarize my presentation, good overall development despite challenges in the operating environment. Good performance has several positive signs in car sale trade. The turn in construction cycle has been slower than we anticipated at the start of the year, as we said in Q2, but is happening. Market for car trade still weak, but our own performance excellent. If I reflect the overall spirit, what we have in Kesko and K Group, I see positive change in commercial spirit and can-do attitude. The cooperation between Kesko and retailers is better than ever despite a challenging market. This I can state with my 33 years career in Kesko.
Looking ahead, I believe we are in excellent position in all our three divisions. Thank you. This was my part, and I think Anu Hämäläinen, our CFO, will continue. After that, we can have those questions. Thank you.
Thank you very much Jorma. My name is Anu Hämäläinen and I want to welcome you all on my behalf as well. Driving cash flow and productivity. T hat is highly important to us. This is our comparable EBIT bridge. Those of you who have seen this slide before, we used to start this earlier from 2019, before COVID, before we had COVID. We wanted to show how the figures are developing, b efore the COVID times. I f I would go back, then we would be talking about EBIT of a bit more than €400 million, which would also show here increase but w e wanted to take another kind of view to the numbers. What Jorma said or showed on his slide, good performance despite the challenging market. We are living in challenging times. We are still having war. We had very high inflation, which has now stabilized.
We had high interest rates, which have also stabilized. We also had weak consumer confidence, which is still continuing. As said, challenging market. If you look at the numbers here, we are talking about 2023 EBIT, €712 million. Now, in the end of June, rolling 12 back was €645 million. There is a difference of close to €70 million. Even though the numbers look or seem to be weakened, we still have some positive things here. L ike for example, Davison Group, they are bringing + €10 million to our EBIT. Margin has been also increasing even though these kind of challenging times, so w e haven't suffered on the margin side. Kesko Senukai is showing -€4 million, but you need to remember we don't have the numbers for this year in this rolling 12, so w e are lacking six months numbers from Kesko Senukai. Growth is coming from other companies than Davison.
Our sales has been going down excluding Davison, and that is also showing here. O ur operational efficiency -€52 million. The majority of that is coming from two things. One is personnel costs and the other one is depreciations. If we take these two together, we are talking about other costs that are impacted by this, to this €52 million, it's less than €10 million. It's really coming from these kind of salary increases and depreciations, and o f course, we need to remember that there has been also other smaller items here as well. Net sales was €12.1 billion, w hat Jorma just mentioned, including Davison Group. O ur gross margin was 14.6%, so i f you compare that to these kind of 2021 numbers or 2022 numbers, we are pretty much on the same level on gross margin. In 2021, we had the same 14.6%. In 2022 the gross margin was 14.7%.
We are on that level. OpEx is 17.5% and it has been impacted by the lower sales as well as the costs coming from, for example, from acquisitions. The majority of these kinds of increases is really coming from the personnel costs. Other key figures: EBIT percentage 5.3%. What was mentioned here, good profitability in a historically weak cycle. Return on capital employed 10.7%. I believe some of you are really wondering when looking at Jorma's slide that we are talking about 14.5% as our target. Can that be reached? We need to remember that if we take the capital employed and we use the highest EBIT, what we had made like in 2022, €850 million, we are talking about 13.5%. We are not that far off. It really requires market recovery, it requires consumer confidence recovery. Net working capital to sales 3%.
As said, it also has been impacted by lower sales as well as working capital, kind of inventory type of things. Operational efficiency and productivity are highly important to us. I'm not going to this cost ratio here as you saw it earlier, but here you can see the quarterly figures for that. Our operating expenses rolling 12 months since June this year was €2.1 billion. Of that, the biggest parts are coming from personnel costs, so 41%. The personnel expenses 41% and then depreciations close to 27%. If we think about depreciations, we also need to remember that the depreciations are including also IFRS 16 depreciations, meaning rents as well. Of that, when we think about those kinds of numbers, a bit more than 60% of the depreciations is coming from that.
IT costs are close to 6% and we also need to remember that IT CapEx has been changing to costs due to the fact that we have been doing or we have nowadays more of these kinds of SaaS services, Software as a Service, as well as we are doing a lot of own development and that development is booked in the costs. Jorma was talking about also this kind of development, what we are doing. We are really booking these kinds of IT CapExes, which used to be IT CapExes when you purchased the whole system and have it capitalized, so n owadays it's more like costs because we are doing a lot of own development at the moment. We need to have focus areas here as well and put some effort, for example, to organizational efficiency and productivity.
We need to look at our processes and the automation that we can do and also the a rtificial intelligence and generative AI is highly important to us. We are using a lot of artificial intelligence, for example, for our customers, for our suppliers, for our K retailers. AI is really in the core of our business, what we are doing. Jorma was talking about Copilot. We have been putting effort on Copilot as well, and we can see impact also from that side. We are investing in our future. We are investing, for example, on store sites, new stores, remodel stores, like you saw in the earlier slides. From €200 million- €250 million on grocery site is used for store sites. Those are these kind of, you could say, planned CapEx investments. We looked at earlier what kind of things we need to do in 2026, for example.
Then we have also these kind of opportunities, opportunity type of things. On the lower part of this slide, you can see that there has been, w e have acquired some store sites in Espoo and Salo as well. Those are these kind of opportunities that we think that are also good for us to buy, and those are on top of this €200 million- €250 million if there are these kind of opportunities available. We are also investing in logistical capabilities like Onnela, what we saw today. We are also investing in technology to improve our customer experience, to improve our cost efficiency, and of course really to improve our productivity. When we talk about cost efficiency, cost efficiency also always means that we are lowering our costs.
But with the productivity, which we are also looking at, which is important, we are really looking at what can we do more with the costs that we have today. This is highly important to us. As you can see, the IT CapExes have been lowered here. We are also investing in leasing, fleet, and EV charging network. Of course, we are also investing in acquisitions to really strengthen our market share and our positions in different markets. Cash flow from operating activities. Y ou can see here that we are closer to €900 million with our operating cash flow rolling 12 from Q2 this year. We have key initiatives on that side as well. One of them is maintaining good profitability going forward. We also have an initiative to really look at well-prioritized capital expenditure and project portfolio. Of course, we have initiative to improve our productivity on working capital side.
On working capital side, we are really focusing on the inventory turnover. It's really important to keep the inventory turnover on a good level. We also see that sales receivables are under control, so credit losses have been on a low level. For your information, there was a change in the Finnish Food Market Act that has led to shorter payment term periods to our grocery trade suppliers. This was valid from July 1st, 2023. This means that the negative impact is coming to our cash flow now, July 1st, during this third quarter, it's a one-off and we should get the full impact now on the third quarter. What does it mean? It means that for fresh perishable products the maximum payment term is now 14 days only. For industrial, these kind of non-perishable products, the payment term is now 30 days.
This is for your information and the full impact should be now seen on the third quarter. F inancial position. Our net debt to EBITDA is 1.8. Our gearing is 135%. If we think about our financial target of net debt to EBITDA, the maximum is really 2.5. We are well below that. As you can see, it has been increasing. Anyway, we still have some firepower to use. We also have some actions here to improve our financial position. I'm also referring to the previous slide, so it's a bit the same, that active balance sheet management, active property portfolio management. We also look at our debts at the moment and financing. We really look at the maturity of debts at the moment so that we are going to match them with our investment needs in the future.
Our dividend policy is still the same, 60%–100% of our comparable earnings per share. From 2024, we distributed 81% of that. Like Jorma said, our number of shareholders is growing, over 116,000 shareholders. We also think that our ownership structure at the moment is quite balanced. Even though we have one bigger owner here, which are the K retailers, associations and related parties, but anyway, it looks quite balanced at the moment. Thank you.
Thank you Anu and Jorma. Now it is time for questions. Any questions from the audience here, please?
Maria Wikström from SEB. Of course, know that the Board of Directors is the one who decides the dividends, that you have your policy, but g iven that we talked a lot about the investments today and you have had quite high investment levels, over €600 million lately, and now we talked about there might be or there will be a new warehouse investment in 2030. Thinking a little loud here because you also showed that the operating cash flow was, I think, roughly €870 million, and then you had last year's CapEx was €670 million, t hat would be €200 million of free cash flow, which is about €0.50 per share, and you'll be paying out €0.90 per share. What would you kind of think about that? Are you willing to increase your indebtedness just to pay out dividends, or rather prepare for future investments and possibly for acquisitions?
Sometimes you can't do all the things at the same time.
Do you have any ?
Yes, I can start. I see the dividend discussion, like said, the board is suggesting the dividend and AGM is really approving it. We need to have this kind of discussion with the Board of Directors. Of course, as you have seen, if I put back the slide, this one, you can see our issue is also that during COVID time we stopped investing. The thing is really that we need to do it now. Of course, what we need to also do is to really find a balance there. I fully understand what you are saying but r egarding the dividend, I think it's more like we'll see how it goes with the Board of Directors.
While I am still holding the microphone in my hand, I go for another question. You said that there might be some early signs of improved consumer confidence in the grocery trade business. Would there be any early indications or signs on the building and technical trade that the bottom would be here?
Yes, as I showed and told, especially told that we can see in grocery, I think those signs that the whole market has been better. Now, what comes to July and August, also our figures have been better. We have performed very well when it comes to market share development, and also those fish and fruit and vegetables, ready meal, things like that. I see some signs on that area. In building and technical trade, I would say that not any big changes yet. One positive was that most probably Q2 to Q3 will be best in two years. Still, we are waiting, I would say pick a change.
Who's next there, please?
All right, thank you. It's Joonas Häyhä from OP. Firstly, a related question to the first by Maria. I'm sure M&A remains part of the long term strategy. How do you think about the rest of the strategy period? Until 2026, you've recently carried out the three Danish acquisitions. I guess my question here is really, is the kind of route during the last part of the strategy period organic, or are you still actively kind of looking for new M&A targets? What's the kind of game plan on that side?
Yes, of course. I would say that of course in Finland we don't have any need for acquisition. Also, we are not allowed to make anything. Norway, I think we are in good position. We are market leader in electric side because in technical trade we are number three in Birchmarker. Scale is enough, not need for acquisition on that area. Also, Denmark, we still have work to do about integration of those four companies. Sweden could be the one that we need some scale. There is no hurry to any acquisition. Of course, if we manage to find some good target, of course it's possible and it's still in our strategy. You never know will it happen next year or 2027 or when it will happen. Still, we are seeking those funds. Like said, mainly in Sweden now.
Okay, thank you. You have the 6%- 8% margin target for the building and technical trade division. Can you share any top time frame? When do you see that being realistic? Are there any other elements aside from growth or the cycle kind of turning that are contributing to that, to reaching that target?
Of course, it needs that the cycle will turn and be better and b etter one. Of course we are improving all our processes now. Like I said, we are in much better condition than we were in 2019, before COVID time. I can't say exactly years or figure when it could be reachable. We have to bear in mind that even today best, best companies of ours is doing the 6%. It's really doable. I wouldn't say next year, it will take some time, but not so many years if market turns.
Thanks for the presentation. This is Fredrik Ivarsson from ABG. T aking along to the investment discussion. We saw the grocery warehouse now and you have some automation of course, but still quite a bit of manual picking and so forth. Have you considered going more full-blown automatic within groceries? Some of your Swedish neighbors have done so.
Yes, they have done that one. We are quite pleased with the situation we have now. Was it one year ago we increased our automatic share of this warehouse, and we are quite happy with what the situation is now. We don't have any plans for some big change on that one. Maybe this multi-micro-fulfillment center could be one option we have using here now, the latest one, but we don't have any plans in coming years on that one.
Thank you.
I have one question here from the pad before we continue in the audience. Does possible peace and reconstruction of Ukraine have effect on building and technical trade division in positive or negative? How do you see that?
Yes, definitely. Of course we all hope that the peace will come there. I see, all in all, definitely positive, all in all what comes to consumer mind and things like that. Also to construct on business, I think that there will be some price increases, and when that happens the construction activity will increase in Ukraine. We are doing already some business from Poland, in Poland to Ukraine, but it's not much to be honest. Still not so easy market. A lot of corruption has been there and still is there. We are doing that, but definitely only positive effects.
Very good, please.
Svante Krokfors from Nordea . Thank you Jorma and Hanna for the presentation. First question to you, Jorma, and you have a long history at Kesko and you have seen the relationship between Kesko and the K retailers. Have you made any changes to that since you came to Kesko? How would you describe the relationship between Kesko and the K retailers currently?
Yes, as I mentioned, I have been 33 years in Kesko and of course been very active with retailers now more than 10 years. Like I said, I think the cooperation between retailers is best ever, w hat I have seen. W e have direct discussion, if we have some problem, we discuss what is the problem now. Last week we had a lot of retailers visiting our K campus there and the only topic was quality, how we will increase the quality of K store. They fully agree how we should do that together. We have to remember everything is how we can do together. We can blame retailers that you are not performing, they can blame us. We should together improve our processes and things like that. The cooperation is so good and we can discuss also about difficult topics.
We have raised the topic like this that have lost market share. We have to face that. Now what we have to do and it's very good to see now those promising figures what we have now in Q3.
And you see that there i s room still to improve the ways that you develop the store specific concepts that have been quite important in your history in developing?
Yes, that's the case. We know that we have those excellent stores. We have some part of our stores are excellent. Of course, we have those stores that are not performing good enough. We will have those changes when it comes to retailers. We have a lot of hundreds of, I would say, performance is okay, but okay is not enough. We have to be better. We won't be the price leader. We have to be quality leader. Okay is not enough. We have a little bit better and that's doable. We can see. I have visited a lot of stores and it's so nice to see those good stores, what you can see there and how passionate they are for this work, what they are doing with the whole family there maybe in some store.
Of course, I have visited also many stores that I understand that yes, at least in that store we are losing market share. We have to do something differently, although continuous improvement.
Thank you. The last question, perhaps more to Anu regarding you mentioned active property portfolio as part of effectivizing the balance sheet. I think lately you have been doing more buying property, strategically important property. Could you also consider divesting properties?
Yes.
You don't want to elaborate?
I cannot yet.
Thank you very much.
Calle Loikkanen from Danske Bank. I was wondering about the profitability side. I guess if we look at the next, say, 12 months, probably the big swing factor in margins is kind of the pickup in the building and technical trade market. If you just assume that the market doesn't pick up in the next 12 months, what are the levers and drivers for you to actually improve margins? Do you think that you can continue to improve margins even if the building and technical trade market doesn't improve?
At least we have to understand that if the market is weak, always somebody wins. We have to gain market share in every business: grocery, building and technical trade. There are a lot of business opportunities there. We have to be active when it comes to customer, it's B2B sales. It depends how active you are. That's the one topic that we have to concentrate on but w e hope and we believe the market will improve. Of course, we have to continue actions like those, be active, also reduce costs, and normal business management.
Okay. Secondly, on the car trade, over the past few quarters you've outperformed the market quite a lot. I was just wondering how kind of sustainable is that kind of market share gains because you're growing in size all the time. How likely is it that we continue to see that kind of number still going forward?
Yes, valid questions. I remember when I mentioned that. That's because we have those nice new models, ID4 and ID7. Johanna Ali, our President of Car Division, said that yes, we have already those earlier. Also, how active we are on that one. I don't remember now by my heart. Of course, there will be also new models from Audi, Volkswagen, exactly, things like that. Also, how you are doing, how active you are also in that case, it depends, very difficult to say. Of course, those are quite exceptional figures. What I shown is how big is the difference between the market, but I can't give exact figures. We will be also active in future.
Please.
Arttu Heikura, Inderes. C ontinuing on car auto. Your partner Volkswagen just announced that it w ill be scaling down some of its EV production due to lower demand. Is this something that you also see on the field?
No, we don't see. I have understood that there is a low demand in Central Europe when it comes to EV cars. In Finland, was it 50 something percent what I saw increase on that one. I think this is one reason, not good demand in Central Europe. We have in Finland, and in Nordics, where good demand we have. We have a lot of opportunities to have those cars immediately delivery.
Any further questions? I have here one question that says that how is car sales and construction business doing? We already answered the question in the presentation. If there are any further questions, it's time to thank you all for active participation. Thank you for your presentation.
Yes, thank you.
Thank you.
Yes, thank you.