Dear all, warmly welcome virtually to Helsinki, and thank you for tuning in for Kesko's Q3 2026 release call. Our headline today is Kesko's Profit Improved Significantly. Technical Trade Continues as the Driver. This describes well the source of the profit improvement. We have the usual agenda today. First, President and CEO Jorma Rauhala will give the presentation. After the presentation, we are happy to take questions from the virtual audience. We have here with us our business division presidents, Ari Akseli for Grocery Trade, Sami Kiiski for Building and Technical Trade, and Johanna Ali for Car Trade, as well as CFO Anu Hämäläinen. The questions can be posed both by phone and via chat function. All the materials related to the quarter can be found at our website kesko.fi under Investors. My name is Hanna Jaakkola, responsible for IR at Kesko.
I will be happy to have discussions and answer your follow-up questions after the presentation. Now, Jorma, the virtual stage is yours. Please.
Thank you, Hanna. Ladies and gentlemen, welcome also on my behalf to this release call. I am Jorma Rauhala, and I have now the pleasure to present Kesko's Q3 results. Kesko's profit improved significantly. Technical Trade continues as a driver is our headline. In Q3, net sales and comparable operating profit grew in all divisions, but the biggest profit improvement was indeed in Technical Trade. Now I will give an overview of our business performance and open up elements behind the result as well as present our updated guidance and new outlook for 2027. After the presentation, we are ready for the Q&A. Summary of the third quarter 2026. Net sales and comparable operating profit grew in all divisions. In Grocery Trade, K Group stores gained market share and comparable operating profit grew slightly despite investments.
In Building and Technical Trade, comparable operating profit increased significantly, especially thanks to Technical Trade. Sales and profit in Building and Home Improvement Trade developed positively, especially in Denmark, Norway and Sweden. In Car Trade, sales increased and comparable operating profit improved slightly. Kesko has obtained the necessary authority approvals for acquiring the Dahl operations in Sweden, Norway and Denmark. The acquisition is expected to be completed on November 2, 2026. Profit guidance was updated. Kesko now expects its comparable operating profit in 2026 to amount to EUR 690 million-EUR 730 million. Net sales in Q3 totaled nearly EUR 3.4 billion. It was up by EUR 167 million. Net sales increased in all businesses. Rolling 12 months net sales increased to over EUR 13 billion for the first time ever. In Q3, comparable operating profit was EUR 231.4 million and operating margin was 6.8%.
Comparable operating profit increased in all divisions. Rolling 12 months operating profit was EUR 702.1 million and operating margin was 5.4%. Return on capital employed was 10.6%. In Building and Technical Trade, return on capital employed improved to 8.9% thanks to increased earnings. Return on capital employed decreased in Grocery Trade and in Car Trade compared to the year-end. Financial position. Cash flow from operating activities was at a good level, EUR 331.4 million. It strengthened significantly, especially thanks to increased earnings. CapEx was clearly lower than in Q3 2025 at EUR 95 million. I will open up investments on the next page. Net debt to EBITDA improved to 1.5x. At the end of last quarter, it was 1.7x. This key figure is well below our maximum target of 2.5x. CapEx totaled EUR 95 million.
We continued the investments to strengthen our Grocery Trade network and the main CapEx for store site investments. For example, during the quarter, we opened several renovated K-Citymarkets. Other investments include investments in, for example, the leasing car fleet. In comparison period, we booked the last investments in logistic center Onninen. Expenses. Expenses are well under control. Personnel costs increased especially due to salary review round in autumn in Finland. Last year it was in spring. Despite increased costs, the cost rates remained at 15.7%. Now to Grocery Trade in Q3. Market share continued to grow. Profits were at a good level. In Q3, net sales totaled nearly EUR 1.7 billion and it increased by EUR 45 million. Sales to K Food store chains increased by 3.7%. Kespro's Food Service business net sales declined by 1%. Rolling 12 months net sales totaled nearly EUR 6.6 billion.
In Grocery Trade, comparable operating profit for Q3 was EUR 118.9 million and it was up by EUR 1.4 million. Profitability was 7%. Kespro's operating profit declined by EUR 2 million- EUR 20.5 million. Rolling 12 months operating profit was EUR 424.4 million, and operating margin was at the same level as last year at 6.5%. In Q3, Grocery Trade divisions net sales increased and comparable operating profit improved slightly. The total Grocery Trade market in Finland grew by approximately 0.6%. K Group grocery sales were up by 1.8%. K Group grocery stores gained market share in Q3. Customer flows and main shopping basket sizes continue to grow. By main shopping baskets, we refer to bigger baskets with several food categories, including protein products for main meals. Kespro's net sales were down by 1%. Kespro continued to gain market share. K-Citymarket's non-food sales were up by 3.8%.
Online grocery sales were up by 10.9%. Online were 3.9% of K Group grocery sales. Grocery price inflation in Finland was approximately 1.5% in Q3 and 1.4% for January-September 2026. Demand for quality products and services in K Group grocery stores remained at a good level. Market share in grocery trade continued to grow. Market share for K Group grocery stores took an upturn a year ago, and the market shares gain have continued every month since October 2025. All K Group grocery chains have gained market share in their size segments in 2026. Our market share growth has been the strongest in supermarkets, which is the biggest segment of the Finnish Grocery Trade market. The good performance is thanks to our strategy execution, the investments in store quality, prices, and store site network. Store network plays a key role in growing our market share.
A total of 67 stores in all three sites will be updated and 26 stores, new or replacements, opened in 2026. Plans for 2027 include 68 store renovation and 30 openings of new or replacement stores. In Building and Technical Trade, sales grew and profit improved, driven by B2B trade. In Building and Technical Trade, net sales increased by EUR 94 million to over EUR 1.3 billion. Net sales grew in comparable terms in all businesses and all operating countries. Net sales improved in comparable terms by 6.4%. In comparable terms, Technical Trade net sales increased by 10.5%, and Building and Home Improvement Trade net sales by 3.1%. Rolling 12 months net sales were over EUR 5 billion. Comparable operating profit for the Building and Technical Trade division totaled EUR 93.8 million , and operating margin was 7.1%. Operating profit increased by EUR 22.1 million .
Rolling 12 months operating profit was EUR 223.8 million , and operating margin was 4.4%. In Technical Trade, comparable operating profit grew in all countries. In Building and Home Improvement, comparable operating profit fell in Finland due to weak consumer sales, but stayed at a good level. Comparable operating profit grew in Denmark, Sweden and Norway. In the Building and Technical Trade division, net sales grew in all operating countries in Q3. Profit improved in particular thanks to strong sales in Technical Trade and in Building and Home Improvement Trade in Denmark, Norway and Sweden. The share of result from Kesko Senukai also supported the profitability improvement. Market demand has picked up in industrial projects, data centers, and infrastructure construction, for example, but remains muted in new housing construction and B2C trade. In Finland, in Technical Trade, Onninen sales grew and profit improved. Growth was supported by strengthening market share.
In Finland, in Building and Home Improvement Trade, K-Rauta sales grew in B2B trade, but profit was down due to muted B2C trade. Sales to consumer account for approximately 40% of K-Rauta sales, clearly more than in other countries. In Norway, Onninen sales grew and profit improved clearly. Byggmakker sales grew and profit improved. In Denmark, Davidsen sales grew and profit improved significantly. In Sweden, K-Bygg sales growth was strong and also profit improved. In Poland and Baltics, Onninen sales growth was strong and profit improved. The share of result from Kesko Senukai was EUR 14.1 million , and this figure includes both Q3 and June. In the comparison period, Kesko Senukai's share of result was reported for the whole January, September 2025, and it was EUR 7.4 million . In addition to good sales development, the share of result increased due to change in the accounting treatment of supplier bonuses.
Previously, the majority of bonuses have been recorded in Q4, and now they have been recorded throughout the year. Retail and B2B sales for K-Rauta and Onninen Finland is shown in this graph. Onninen's Q3 sales increased clearly by 12%, while competitor sales development was 1.4%. In Onninen Finland, also price increased. K-Rauta sales decreased by 0.4% in Q3, and competitor sales decreased by 0.6%. As I said earlier, the sales development for consumers have been soft. Reasons for soft B2C sales may include muted residential market and increased interest rates. B2B sales are stronger and K-Rauta's strongest categories include heavy building materials like timber. Now to Kesko's biggest acquisition ever. Kesko is acquiring the Technical trade operator Dahl's companies in Sweden, Norway, and Denmark from Saint-Gobain. The combined net sales of the businesses to be acquired totaled out some EUR 2.1 billion in 2025.
Kesko announced in September that the European Commission had approved the acquisition unconditionally. Other required approvals had already been obtained earlier. Kesko expects the acquisition to be completed on 2nd of November. Kesko's Board of Directors is planning to begin a rights issue after the transaction is completed. In the share issue, only B shares would be offered to holders of both A and B shares. Kesko will arrange an extraordinary general meeting tomorrow in which the board seeks authorization to issue a maximum of 12 million new B shares. The board was authorized by the 2026 AGM to issue 33 million shares, so the maximum number of new shares that could be issued would total 45 million. In car trade, sales increased and profit improved. In Car Trade, net sales for Q3 increased by EUR 29 million- EUR 384 million.
Net sales increased in new cars, used cars and sports trade, but decreased in services. Rolling 12 months net sales were over EUR 1.4 billion. The comparable operating profit totaled EUR 23.5 million and increased by EUR 0.8 million year-on-year. Operating margin was 6.1%. Rolling 12 months operating profit was EUR 78.9 million, and operating margin was 5.6%. Car Trade division net sales increased and comparable operating profit improved slightly in Q3. Market demand for new cars picked up. Q3 first registration of passenger cars and vans were up by 14.5%, and first registration of brands represented by Kesko were up by 23.9%. K-Auto's order book for new cars continued to grow in units. It was up by nearly 70% year-on-year and by some 65% year-to-date. The conversion of the stronger order book into sales depends on the availability of cars.
Delivery times are typically three to four months or six to eight months for some models. Used car sales from dealerships in Finland were down by 2.7% in units, while K-Auto's used car sales increased by 3.4%. Service sales in car trade decreased slightly. In sports trade, net sales grew while comparable operating profit decreased. Profit guidance and outlook. We are specifying the profit guidance for 2026. Kesko estimates that its 2026 comparable operating profit will amount to EUR 690 million-EUR 730 million. Kesko previously estimated that the comparable operating profit would amount to EUR 670 million-EUR 730 million. The profit guidance does not include impacts from the Dahl acquisition on the comparable operating profit. Key uncertainties impacting Kesko's outlook and developments in consumer confidence and investments appetites, as well as geopolitical crises and tensions.
The operating environment for Kesko is estimated to improve in 2027 in all divisions and all operating countries. Kesko's net sales and comparable operating profit are also estimated to improve in all divisions and all operating countries. In Grocery Trade, B2C trade is estimated to pick up slightly and the foodservice business to remain stable. In 2027, the comparable operating margin for the Grocery Trade division is estimated to continue to be clearly above 6%, despite the investments in price and the store site network. The comparable operating profit for the Grocery Trade division is estimated to improve in 2027 compared to 2026. In Building and Technical Trade, the cycle has gradually improved, but it has remained muted in new housing construction. In 2027, the cycle is expected to continue to improve.
The comparable operating profit for the Building and Technical Trade division is estimated to improve in 2027 compared to 2026 in all Kesko's operating countries. The division's comparable operating profit is expected to improve even excluding the impact of the Dahl acquisition. In car trade market, demand for new cars is expected to pick up compared to 2026. The net sales and comparable operating profit for Kesko's car trade are estimated to improve in 2027 compared to 2026. Some conclusion to summarize the presentation. Net sales grew and profit improved in all three divisions. Grocery Trade continued to gain market share, good profitability despite investments. Clear profit growth in Building and Technical Trade driven by technical trade. There was also positive development in Building and Home Improvement Trade, especially in Denmark, Sweden, and Norway. Good sales development in car trade and strong order book in new cars.
Kesko's biggest ever acquisition. The Technical Trade operations of Dahl in Sweden, Norway, and Denmark is expected to be completed on the 2nd of November. Share issue is under planning. We estimate that Kesko's operating environment, net sales, and comparable operating profit will improve in 2027. Thank you. This was my presentation. Now, I guess it's time for questions.
Yes, thank you, Jorma. Indeed, it's time for questions. Let's first turn to the conference call line, but I would like to remind that if you pose a question using the chat function, there's a slight delay, so please be as quick as possible to have your questions ready. Now, conference call line, please.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Fredrik Ivarsson from ABG Sundal Collier. Please go ahead.
Thank you. Good morning. I have a few. I will take them one by one. First, a more general question. When we look at the food retail market, it grew around 0.5% in Q4, whereas food price inflation is 1.5% . That means volume mix is minus one, roughly. This looks like a big step back in Q3 when I compare it to previous quarters. I wonder, what was your read into that number in terms of consumer behavior?
Yes, grocery market grew all in all. It was that 0.6% Q3, and our sales growth was 1.8%, and we clearly gained market share. But of course, yes, it is clear that the total growth was less than the food inflation. But Ari, do you see some elements behind that?
I think the key elements are that customers are still looking value for money. They are looking for campaigns. They are looking better solutions and offers for themselves, and that is the main reason. Customers are still a little bit nervous. But at the same time, there is also some promising signs in our sides, because the quality offering is appealing more customers.
Okay. But you did not see weakening consumer behavior in Q3 versus previous months?
No, it was about the same level, if you look about general figures.
Okay, good. Second on the guidance. When I look at the full year guidance, mid-range implies Q4 EBIT growth of around 5%, and that could be compared to the run rate of around 10%. Is that just you being cautious, or have you seen any weakening signs during the last months?
No, we haven't seen any weakening signs, and of course, we have also to take account this Kesko Senukai last year. Kesko Senukai last quarter was, if I remember right, it was EUR 12.4 millio . As I told earlier, it was mainly because of the supplier bonuses. But now they have booked already throughout the years those bonuses. This is definitely one reason that Q3 was kind of stronger now. Then because of that, Kesko Senukai also Q4 will be a little bit weaker. But all in all, we don't see any big changes when it comes to trend. Of course, each division has a little bit different those coming months.
For Grocery, for example, December is very important when it comes to K-Citymarket non-food, when it comes to Building and Technical Trade, especially December is very all in all weak when it comes to sales month. But no, we don't see any big changes.
Okay, good. Thank you. Third question on the margin in building and home improvement. It was up almost one percentage point, and that is despite a quite low like-for-like of 3%. What were the main drivers for that strong margin in Building and Home Improvement?
Of course, one was this Kesko Senukai. You have to bear in mind that one.
No, excluding then. Okay.
Sami, do you want to add something on that?
Yes. Thanks, Fredrik, for the good question. Little bit the big picture, of course, it showed that the particularly Technical Trade, the sales was in good shape, I would say so, and the price effect was also positive overall. And of course, we have been taking good care of our businesses, so the cost levels are in a good level. And of course then when the sales are increasing, the results are getting better also.
Okay. Just thought that the one percentage point looked quite steep given the fairly low like-for-like, but okay. I read into the cost control statements there. Last, just a housekeeping one. Given that Dahl now from November, how should we model working capital movements in Q4?
Anu, would you take this one?
Yes. I would say that it's difficult really to say at the moment, but I would look at the sort of in general, the Kesko Group numbers and then on top of that, what we know already is that Dahl's working capital should be on a good level, but we have not yet sort of published our numbers for working capital, so we need to come back to that later on.
Okay. That is fair. That is all my questions.
Yes. Thank you.
Thank you, Fredrik. Any further questions in the conference call line? No, I do not see any. I have one question at the moment from the chat function, so I am reading. What are the key operational priorities for the next quarter?
Okay, maybe I will start and then colleagues can continue. All in all, of course, we continue to execute our strategy and of course, most probably we will close our Dahl deal next Monday. Of course, the aim is that customer work is not disrupted at all. I would say all in all, in the big picture, those are the big things what we are doing. Maybe, Ari, you can start and Sami and Johanna then, do you have some specific?
Yeah. Maybe the most important factor is that keep in mind the seasonality of our business, especially with the Citymarket non-food business. If I think about what is the key thing there, most of the profit of the Citymarket non-food is coming during November and December. They are really important during this period. At total, strong execution in Christmas sales, including assortment, availability, and commercial activities. These are the key operational priorities for the next quarter.
Yeah. For us, of course, the focus is still to serve our customers well and this Q4 is for us a bit more smaller quarter, of course, and we have minus one business day even in October. Still, of course, important to focus to serve the customers well in both businesses and all countries. Of course, taking good care of our availability. We are building up, of course, this is that kind of business that we are now building up our availability for next year also. That is important priority. Of course then, preparing for next year.
Of course, shortly about this Dahl, if and when this will happen, of course then to take good care of our new businesses and get to know our new colleagues and get to know our business there then better and of course then take care that we have business continuity there also in the short run and start from there.
Thanks, Sami. Johanna.
Yeah, and in the Car Trade operationally, of course, the most important is to succeed in sales and to create great customer experience every day. In addition to commercial activities, the focus areas are at the end of the year, of course, the used car inventory management and production planning for new cars with the car manufacturers.
Okay. Thank you, Johanna.
Thank you. I see that there's one question coming on the conference call line, so please go ahead.
The next question comes from Miika Ihamäki from DNB Carnegie. Please go ahead.
Hello, this is Miika from DNB Carnegie. Can you hear me?
Yes, we can, Miika. Go on. Hi.
Great. I was just wondering if you can give any quantification on the data center related sales in Onninen Finland and which product categories are involved, and also whether Onninen is benefiting from infrastructure data center related demand outside of Finland too.
Yes, good question. But I think Sami, you can take this one.
Yeah. Thanks, Miika, for the good question. We don't provide the actual numbers, of course, for these businesses particularly, but I can say that it has been good activity. And of course, product-wise, cables are a big part of the business. Cable covers, I mean pipes also. And then, of course, this kind of water and sewage business also, which is around the data center. So that is important for us also because it's not only the data center, it's what's happening around the data center. And of course, it's a lot of infra also. So that has been positive for us in Finland and Norway particularly.
Yes. So that also in Norway it's important for us.
In Norway also it's important.
Yes. That's true. Yes.
Now, of course, in Norway we are an electric business.
Yeah.
It is important. Here in Finland, where we are in both businesses, then it is good for both businesses, of course, for pipes and of course, HEPAC and then electric side.
Yeah.
Okay. What sort of margin for those products if we think about the typical mix for Onninen? Is it a good margin business or would you say that the margin development in the division is driven by the overall sales development through, and then operating leverage?
Okay, interesting. Sami, do you have something on that one? Of course, I understand that a lot of different products they are buying.
Yes.
That is not Cables are most important one, but also a lot of other products.
In general, I would say so, that in cables and these kind of maybe the gross margin is a little bit lower normally. Also if it is a project sales, margin can be a bit lower normally. But more or less it is a normal business, what we have. We try to be profitable in all the businesses where we are in with all the products.
Okay, and then for Technical Trade also on the price outlook. A lot of input costs have been on a rise. Can you talk about the price inflation trend for you in the quarters ahead? Is this supportive for the business?
Yes. Maybe Sami, Johanna, maybe some more details. All in all, if I am right, something like 2%-3% could be the price inflation, what we can see next year. Of course, there can be some changes, but at least first quarter, or how you see?
Yeah. It is like Jorma said that we are expecting 2%-3% price effect inflation basically. But these are little bit challenging times to give that kind of forecast because we have these geopolitical happenings here and there. That, of course, affects the raw materials also quite greatly when it comes to different kind of products. But overall, we are expecting that positive trend-
Yeah. Yeah.
-for the price inflation.
Of course, big differences between product categories.
Yes, exactly.
But all in all, it could be that level.
All in all.
Yes.
Okay, and then lastly, if you can give us an update at the progress at Onninen. How have the utilization rates improved? How does this translate to your competitiveness, et cetera?
Yes, Sami.
Now we have more or less one year behind us. Of course, it's a big, I would say factory, not only the warehouse. It has been progressing nicely. Of course, we are still building up some of the capabilities also and efficiency. But I would say overall, it's a great logistics center. We have a lot of still possibilities there to even develop further. But I would say that it has been a very good start. I would like to thank our people also who has been working very hard there with Building and Technical Trade on the inside, but also with the Car Trade side. But it's a great warehouse and we are still improving.
It's true that especially we are seeing those positive signs when the volumes will increase.
Yes.
For example, 2021, 2022, when volumes were very high and we operated with four or five different warehouses. Now we can use only one warehouse and then we can see those positive elements more clearly.
That is true. Also we can, of course, do a little bit more advanced services to our customers.
Yeah.
When it comes for the electric side, for example. We can do a little bit pre-assembling also there. It has been great facility, or it is great facility.
Yeah.
Still to improve.
Yes.
Okay, thanks. If I may, just one more for Home Improvement trade. How does the outlook vary across countries? Can you rank the markets from strongest to weakest at the moment and discuss the key growth factors for 2027 there?
Thanks. Good question. It differs quite greatly, I would say. Probably what we can see for the activity at the moment and also for the forecast, Sweden for Building and Home Improvement business will be probably the best country for 2027 because there is already activity in the market. Also a bit for new residential construction site. The other countries also, like I said, diverse. Norway, actually the outlook is slightly worse than it was half a year ago also. The forecast centers are forecasting that there will not be any big development. Shortly about Denmark. I think Denmark will be overall country's health, and the market is health. Of course, still, we would like to see better development in the market. It is a double-digit growth, single-digit growth, what they are forecasting now for Denmark.
Finland, I believe the forecast is somewhere between 4%-5%, depending a little bit of the forecast center which you are following. That is mainly driven by other activities than new residential construction. That is in the short-
Summary, Sweden and Denmark are stronger,
Stronger
Finland and Norway were the same level.
Exactly.
Yeah.
That's a good summary. Yes.
Thank you very much.
Miika, I see one call coming up. Please.
The next question comes from Fredrik Ivarsson from ABG Sundal Collier. Please go ahead.
Yes. Thank you. Quick follow-up from me on the supplier bonuses from Senukai. What was the level in 2025 of those?
We do not exactly amount of those supplier bonuses, but we know that last year they booked at least most of those supplier bonuses in Q4, and now they have booked those bonuses throughout the year. That is the biggest difference. We do not know how much the total amount of those is.
Okay. Was that also the case in 2023 and 2024, i.e., they booked it all in Q4?
Yes, if I remember right, mostly they have done like that. That in last quarter, they have booked those ones, and now this year, throughout the year. That is the change. But all in all, of course, the business has been good there. And already now there is something, EUR 19 million or something like that is our share of those nine months. And last year, whole year was something like that, EUR 19 million, EUR 20 million.
For nine months, we have now EUR 19.5 million from Kesko Senukai, and last year was in total EUR 19.5 million. The thing is with the supplier bonuses, that they really tend to book them in last quarter, but now this year, they have booked it throughout the year, which is the proper way to do it. Due to this, the last quarter might not be on the same level as it was last year, like EUR 12.1 million. This is why we are a bit cautious because we do not really know.
Okay. Fair enough. Thank you.
Thank you. Any further questions? No, there are no more questions. Then I would like to thank everybody, Miika and Fredrik, for good questions and discussions. If you have any further questions, do not hesitate calling me. Thank you.