Kesko Stock

Dear all, warmly welcome virtually to Helsinki, and thank you for tuning in for Kesko's Q2 2026 Release Call. Kesko's profit improved significantly. Technical trade as the driver is our headline. This describes well the source of the profit improvement in Q2. 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 Hamalainen.

The questions can be posted both by phone and via chat function. All the materials related to the quarter can be found at our web page, kesko.fi under Investors. My name is Hanna Jaakkola, responsible for IR at Kesko. I will be happy to take discussions and answer your follow-up questions after the presentation.

But now Jorma, the virtual stage is yours, please.

Thank you, Hanna. Ladies and gentlemen, welcome also on my behalf for this release call. I'm Jorma Rauhala, and I have now the pleasure to present Kesko's Q2 results. Kesko's profit improved significantly. Technical trade as a driver is our headline. In building and technical trade, profits improved clearly, thanks to technical trade sales and profit improvement. Sales increased also in grocery trade and in car trade, but operating profit declined slightly. But now I will give an overview of our business performance and open up elements behind the result. After the presentation, we are ready for the Q&A.

Summary of the second quarter 2026. Kesko's comparable operating profit improved. Net sales grew in all divisions. In grocery trade, K Group stores gained market share and profitability was good despite investments. Operating profit was slightly down due to Kesko's weaker profit. In building and technical trade, comparable operating profit increased clearly, thanks to good sales and profit development, especially in technical trade. In car trade, sales grew, especially thanks to good used car sales, operating profit was slightly down.

In June, Kesko announced that it will significantly strengthen its position in technical trade in the Nordics by acquiring Dahl's operations in Sweden, Norway and Denmark. The combined net sales of these businesses totaled nearly EUR 2.1 billion in 2025. We are updating our profit guidance. Kesko now expects its comparable operating profit in 2026 to amount to EUR 670 million to EUR 730 million. Previously, the range was EUR 650 million to EUR 750 million. Net sales in Q2 totaled EUR 3.4 billion. It was up by EUR 190 million. Net sales increased in all businesses. Rolling 12 months net sales increased to nearly EUR 12.9 billion. In Q2, comparable operating profit was EUR 194 million and operating margin was 5.7%. Comparable operating profit increased in building and technical trade and decreased in grocery trade and car trade.

Rolling 12 months operating profit was EUR 678.7 million and operating margin was 5.3%. Return on capital employed was 10.4%. In building and technical trade, return on capital employed improved to 8%, it 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 362 million. It strengthened significantly, especially thanks to effective working capital management. Capital expenditure was clearly lower than Q2 2025 at EUR 127.4 million. I'll open up investments on the next page.

Net debt to EBITDA improved to 1.7. At the end of last quarter, it was 1.9. This key figure is well below our maximum target of 2.5. Capital expenditure totaled EUR 127.4 million. We continued the investments to strengthen our grocery trade network and the main CapEx in Q2 were store site investments. For example, during the quarter, we opened a third K-Citymarket in Kuopio. Other investments include investments in, for example, the leasing car fleet. Expenses increased mainly due to acquisitions. Nearly half of the increase in expenses came from the Danish acquisitions. Despite increased costs, the cost ratio improved to 16.9%.

Now to grocery trade in Q2. Market share continued to grow. Profit was at a good level. In Q2, net sales totaled over EUR 1.6 billion and increased by EUR 15 million. Sales to K-food store chains increased by 4.3%. Kesko foodservice business net sales declined by 0.6%. Rolling 12 months net sales totaled over EUR 6.5 billion. In grocery trade, comparable operating profit for Q2 was EUR 110.6 million, and it was down by EUR 700,000 due to Kespro's EUR 2.2 million profit decline. Profitability was 6.8%. Rolling 12 months operating profit was EUR 423 million, and operating margin was the same as last year, 6.5%. Division net sales increased and comparable operating profit decreased slightly due to weaker profit in Kespro. As mentioned, Kespro's result declined by EUR 2.2 million year-on-year. Also, it is good to bear in mind that Easter wholesale took place mainly in March this year and in April the year before.

In Q2, the total grocery market grew by approximately 2%. K Group grocery sales were up by 4.3%, and K Grocery stores gained market share in Q2. Customer flows continue to grow. Customer satisfaction was clearly up in all our grocery store sales. Kespro net sales were down by 0.6%, but Kespro gained market share in Q2. K-Citymarket's non-food sales up by 4.4%. Online grocery sales up by 11.3% and online sales accounted for 4% of K Group's grocery sales. Grocery price inflation in Finland was approximately 1.2%, while price development in K Group stores was up by only 0.9%, especially thanks to our price program. Demand for quality products and services in K Group grocery stores remained solid.

Market share in grocery trade continued to grow in H1. Market share for K Group grocery store took an upturn in Q4 2025 and growth has continued strong in 2026. As you can see in the graph, the market share was up by 0.8 percentage points in Q2. And for the first half, it was up by 0.6 percentage points. All our chains gained market share in their size segments in H1. Our market share growth was the strongest in the supermarket segment, which is the biggest segment in the Finnish grocery trade market. Also, K-Citymarket's non-food trade gained market share in H1 in its comparison group. Our objective is to increase market share in grocery trade while maintaining a good profitability level of clearly above 6%. The good performance is thanks to investments made in quality, prices and store site network. A total of 22 stores were updated and 10 new stores opened in H1. The store network is estimated to have a neutral net impact on market share in 2026.

In building and technical trade, sales grew and profit improved driven by B2B in Q2. In building and technical trade, net sales increased by EUR 176 million to over EUR 1.4 billion. The increase was supported by the Danish acquisition, but also organically, sales increased significantly. Net sales improved in comparable terms by 9.7%. In comparable terms, technical trade net sales increased by 14.6% and building and home improvement trade net sales increased by 6.2%. Rolling 12 months net sales were nearly EUR 5 billion. Comparable operating profit for the Building and Technical Trade division totaled EUR 71.2 million and operating margin was 5%. Operating profit increased by EUR 20.3 million. Rolling 12 months operating profit was EUR 201.7 million and operating margin was 4.1%. In technical trade, comparable operating profit increased in all operating countries, except for Baltic countries.

Building and technical trade highlights Q2. Net sales increased in all businesses and operating countries and were the highest ever recorded in Q2. Profit improved, driven in particular by strong growth in technical trade. Market demand has picked up, for example, industrial projects and infrastructure construction, but remains muted in new residential construction. In Finland, Onninen sales grew and profit improved clearly. Growth was supported by strengthening market share. K-rauta sales grew, especially in B2B trade and profit was at a good level. In Norway, sales for Byggmakker and Onninen grew. Onninen's profit improved while Byggmakker's decreased. In Denmark, Davidsen sales grew and profit improved. In Sweden, K-Bygg sales growth was strong and also profit improved.

In Poland and the Baltic countries, Onninen sales growth was strong. Profit improved in Poland, but decreased a bit in the Baltic countries. The share of result from Kesko Senukai was EUR 5.4 million, and they reported only 2 months on time, April and May. In the comparison period, the share of results from Kesko Senukai was zero in our Q2 '25 report. Retail and B2B sales for K-rauta and Onninen Finland is shown in this graph. Onninen's Q2 sales increased clearly by 16.1%, while competitor sales development were only plus 0.6%. This is a great achievement and demonstrates Onninen's market share gain. Onninen's prices increased in Q2 by 2.1%. K-rauta sales increased by 2.8% and also K-rauta gained market share in the second quarter.

Onninen has an excellent foundation for improving net sales and profit once the market normalizes. Megatrends support growth in technical trade, renovation of building, urbanization, the green transition and growing demand for energy solutions, technological development and digitalization support the demand in technical trade. Onninen became part of Kesko in 2016. Since then, its net sales have grown by 56% and operating profit by 232%. When we booked Onninen, its margin was just slightly above 1%. At the highest, margin reached 7.6% in 2022. At the moment, when the cycle is still low, we are able to generate 4% margin. Technical trade has grown in all operating countries in 2026 and growth is expected to continue. Technical trade sales in Q2 '26 were the highest ever. Also, Onninen's Norway sales were at the all-time highest level, which demonstrates that Elektroskandia integration has been successful. We bought Elektroskandia in 2023.

Markets in Finland and Norway are still muted, but have improved compared to before. Markets in Sweden, Poland and the Baltics are returning to normal. For Onninen Finland, in the first half of 2026, Onninen sales have grown in all product areas and for all customer segments. Energy solutions like solar panels, heat pumps, energy storage are the biggest growing product categories, supported by volatile electricity prices and regulation. Workwear and PPEs are new growing category for us, too. Through investments, operational efficiency and digitalization, Onninen has managed to generate good results even in a challenging market as shown in the graph. We announced in June the acquisition of Dahl's operation in Sweden, Norway and Denmark from Saint-Gobain to strengthen our technical trade.

The combined net sales of the businesses were some EUR 2.1 billion and EBITDA EUR 146 million in 2025. The combined net sales for Kesko's Building and Technical Trade and these Dahl's businesses would have been approximately EUR 6.8 billion in 2025. The Dahl businesses in Scandinavia have an iconic brand, good market positions and strong own brands, more than automated warehouses, extensive store networks and digital sales channels. We have strong track record in technical trade with Onninen, and we can show clear proof of improving Onninen sales and results as discussed earlier.

Like I said in the Dahl briefing, I have often been asked what would be the strategic dream target, and this truly is it. Dahl fits our current technical trade extremely well. Decision regarding the final capital structure after refinancing the bridge loan have not yet been made. We estimate that it will be to determinate during Q3. Currently, competition authorities have begun their process. The acquisition is estimated to be finalized by the beginning of 2027. In car trade in Q2, sales increased driven by used car sales. In car trade, net sales for Q2 increased by EUR 1 million to EUR 353 million. Net sales increased in used cars, services and sports trade, but decreased in new cars. Rolling 12 months net sales were nearly EUR 1.4 billion.

The comparable operating profit totaled EUR 18.4 million and decreased by EUR 3.2 million year-on-year. Operating margin was 5.2%. Rolling 12 months operating profit was over EUR 78.1 million and operating margin was 5.6%. In car trade, net sales increased, comparable operating profit decreased due to the increase in the share of used car sales. In used cars, sales margin are lower than in new cars. Market demand for new cars continued to be muted. Q2 first registration of passenger cars and vans decreased by 2.7%. First registration of brands represented by Kesko decreased by 13.8% in Q2. Also, comparison period was especially strong. Order book for new cars continued to grow and was up by some 40%, both year-on-year and year-to-date. The strong order book we realized in sales in H2.

Used car sales from dealerships were down by 2.8% in Finland. Used car sales in K-Auto were up by 11.9%. Also, service sales in car trade increased. In sports trade, net sales increased and comparable operating profit was at the last year's level.

And now profit guidance and outlook. We are specifying the profit guidance for 2026. Kesko Group's profit guidance is given for the year 2026 in comparison with the year 2025. Kesko's operating environment is estimated to improve in 2026, but still remain somewhat challenging. Kesko's comparable operating profit is estimated to improve in 2026. Kesko estimates that its 2026 comparable operating profit will amount to EUR 670 million to EUR 730 million. Kesko previously estimated that the comparable operating profit would amount EUR 650 million to EUR 750 million. Key uncertainties impacting Kesko's outlook are developments in consumer confidence and investment appetite as well as geopolitical crisis and tensions.

Outlook for 2026 remains unchanged. The operating environment for Kesko is estimated to improve in 2026 in all divisions and all operating countries. The detailed wording can be seen on the slide. As said, we have not changed it. Kesko's net sales and comparable operating profit are also estimated to improve in 2026 in all divisions and all operating countries.

And some last words before Q&A. Kesko's net sales grew and profit improved. Performance in technical trade was particularly strong. Grocery trade continued to gain market share. Profitability was good despite investments. Building and technical trade profit grew clearly driven by technical trade. Good development was also seen in building and home improvement trade. Car trade sales development was good, driven by used cars. Strong order book for new cars will realize in sales in H2. Kesko's biggest ever acquisition, the technical trade operations of Dahl in Sweden, Norway and Denmark is proceeding according to plans. The crisis in the Middle East did not have significant impacts in Q2. At this stage, we estimate that the impact will be moderate in H2. We estimate that Kesko's operating environment, net sales and comparable operating profit will improve in 2026.

Thank you. This was my presentation. Now I guess it's time for questions.

[Operator Instructions]

The next question comes from Fredrik Ivarsson from ABG.

I have 3 questions. I'll take them one by one. First one on the margin in grocery. When I sort of strip out the foodservice business here, it seems like the margin in grocery trade expanded 10 basis points, and that is despite the price investments you're doing. What's driving that strong margin?

Yes. Thank you for your question. The margin is very much what we have expected and what we have also promised that all in all, I think our grocery business is in very good shape, very positive that we gained so much market share even more than we expected and all the functions is working, but -- pretty much expected that Kespro was only minus EUR 2.2 million decrease in profit. And -- but still, we have to remember that Kespro gained market share, but the foodservice market is quite a bit slow now in Finland. But I don't know, Ari, if you had something to do.

The big picture. And I think one of the reasons why we are able to gain such a good margin in this challenging market is that we are using so much data how to contribute in the market.

Okay. So like campaign efficiency then?

Extremely efficient because of use of data and strong customer focus.

Okay. Good. Second question on the Dahl business, given the sort of earnings uplift that you see in your own technical trade operation at the moment, what kind of earnings uptick would you expect for Dahl in 2026? Is that in line with your own assumptions for B2C or technical trade?

Sorry, but we can't comment on a Dahl's figure 2026.

Okay. Fair. I had to try. Then last one on car trade. In the guidance, you say you expect comparable EBIT to grow in all divisions. So that includes car trade. But in Q1 and Q2, the comparable EBIT was down double digits for car trade. So that means you expect quite significant growth in Q3 and Q4. So what's the rationale behind that?

Yes. Good question. And of course, we understand that what we have said, and we still very strongly believe that, that will happen. And the reason is that our order book is now 40% stronger than it was a year ago at the same time. So latter part of this year will be very strong when it comes to new car sales.

The next question comes from Miika Ihamaki from DNB Carnegie.

This is [ Pekka ] from DNB Carnegie. I have a question on your '26 guidance, which implies around 6% comparable EBIT growth for the second half, which is notably slower than the 9% growth achieved in H1. So given that the technical trade momentum seems to be picking up on that infrastructure demand and now also your comments on that car trade profit swinging to better direction in H2 on strong order backlog. So could you explain the key reasons why you didn't decide to narrow the comparable EBIT guidance range in a more positive direction?

Yes, of course, we want to be very careful when we are looking at our guidance, what we are seeing. Last summer, we had to take EUR 40 million down our upper end. This year, we take EUR 20 million to lower end and upper end and the first half of the year has been very much what we expect. And also, we believe that the second half will continue with that one. Of course, we hope that there could be some positive elements, especially, I would say that the building and technical trade, of course, is the biggest one where there can be bigger changes both way negative or positive way. And of course, now we are looking more positive changes than negative changes. But that's what we are bidding and expecting for the latter part of the year.

Okay. And then you mentioned here that the crisis in the Middle East didn't have significant impacts in Q2, impact in H2 expected to be moderate. What are these impacts? And can you quantify them?

Yes. As we saw third quarter -- second quarter, our food price inflation, if I remember right, was 0.9%. So it didn't have any, I would say, any effect what comes to second quarter. And then latter part of the year, there could be, especially, I would say, in grocery business, something what comes to food prices. But we believe that still this year, those possible changes will be very, very moderate. Of course, I would say that maybe next spring or something like that, we are more -- we know more about the prices and things like that. But we are not expecting any big changes.

Okay. And then finally, on Onninen seem to have solid growth in the Baltics, but profits didn't improve. So what was the reason for this? And what measures are you taking to improve the performance in H2?

Yes, the sales was strong, but Sami, do you -- but it was very slight decrease in EBIT, but do you remember?

Yes, I remember. Slightly weaker result, but it's mainly because we have been investing also a lot there for the logistics centers. So we have new logistics centers in all 3 countries. And of course, there's also price pressure, but I think it should be better in the future now when we get things in the -- the volume is also increasing in the Baltics. So I think we will -- we are in a good position there also in the future.

Yes, that's true. We have a new center at least in 2 countries, if I remember right.

Yes.

All 3. Yes, good.

Yes.

The next question comes from Maria Wikstrom from SEB.

Yes. This is Maria from SEB. I had 2 questions, which -- first one is on the Finnish consumer and what is currently your view of the Finnish consumer given that the latest consumer confidence figure was the best one in 2 years. And then we also have had some positive market data points highlighting that the Finnish consumer demand could actually start improving from here. So what have you seen with the Finnish consumer if we talking about -- I mean, during the Q2 that do you agree that the consumer demand in Finland is improving? And what's your view, please?

Yes. Thank you, Maria. Yes, the consumer confidence has improved. Still it's in a quite low level. But of course, we are trying to look at our figures and do we see some changes. But to be honest, there is not big changes, even positive or negative changes. Of course, grocery business, we are gaining market share. And as we know, we are kind of quality player on that one, and we are selling a lot of those ready meals, high-quality ready meals and things like that. Maybe that could be one sign of kind of positive consumer confidence. Car business, could it be very strong order book? Maybe I hope there is some signs of consumer confidence. But for example, in K-rauta, we don't see so much positive elements in consumer. It's mainly driven by B2B customers. But as a summary, we don't see any big changes, but let's hope, let's hope that in the coming months, we can see more on our figures on those ones. Like we said, now the EBIT was very much driven by B2B customers.

Very interesting. And then secondly, I mean, just some color that the Senukai this quarter was reported only for 2 months results. So what was the reason that you couldn't get the June figure in time?

I don't know, [indiscernible], do you any specific reasons, but we didn't get that on time on the June figures, but it's good that we have those April and May figures, and those were quite strong. It was 5.4% EBIT, if I remember right. So it was nice figures, but still we are missing it June.

Yes, tight reporting. I don't have further questions.

The next question comes from Rob Joyce from BNP Paribas.

Three on the grocery side. I guess you mentioned on food inflation that maybe moderate help in the second half. But it does look like it's sort of falling across most markets in Europe at the moment. Is there a chance that we see lower food inflation in the second half before we start to see it rise into year-end would be the first one.

[indiscernible], not so good, but Ari, did you get?

If I understand right, you are asking about the inflation rate in the grocery business. And it has been very modest in Finland. And in big picture, we don't expect any bigger changes coming months. But we can see that some of the cost of the farmers are increasing and in the long term, that might have some effects.

Okay. Sorry, I hope this is a bit better now. And also in the grocery, I mean, obviously taking some good share there. Are you starting to see any competitor response? And has there been any changes in the sort of competitors sort of store opening schedules at all?

Yes, line is now better. And of course, we have seen that. Of course, our competitors have also made changes in their pricing and they are following. But still a very, very strong market share, what we got in second quarter, 0.8%. And of course, every day, all the competitors are reacting what others do, but no big changes in the big picture.

Yes, exactly like that. Competition is intense all the time, and we are making quite good market development at the same time. And if I look about the big picture, we keep on doing same things.

Yes. And like we said earlier that -- about the store side investments, the impact -- net impact in 2026 is expected to be neutral. But of course, competitors are opening stores all the time. So no change to that according to our knowledge.

Okay. Very good. And the last one, just you mentioned the data. Retail Media, is that now becoming a meaningful part of the sort of profit contribution now in grocery? Is that relevant these days?

Yes, Retail Media and mainly that is in our grocery business. But Ari, you can continue on that one, yes.

Retail Media is absolutely relevant part of the profit in the grocery division. And in the long term, we also see opportunities in that area because it's the most efficient media nowadays, and you can measure it much easier than other medias. And from point of view of suppliers, we have to build about the big picture, how we can use this data to be even more efficient in the marketing by using retail medias.

I have 2 questions from the chat function. Firstly, do you see any customer pressure? This is a bit different than what Maria asked, but any customer pressure seems some of the bigger global retailers are experiencing a consumer crunch. So are we seeing any consumer crunch? I think you already...

No, no, we are not seeing that one. We don't see that. And as I discussed this earlier, consumer confidence has improved, and we hope that maybe it will be more positive, how consumers are reacting that that's a negative.

And lastly, one more question to conclude. Is Kesko satisfied with the results?

Yes, Kesko is satisfied with the result, EUR 17.3 million EBIT improvement. And in fact, it was the strongest EBIT improvement by quarter since first quarter 2022. So more than 4 years, it takes. Now it's the strongest EBIT improvement. So yes, we are very, very satisfied. Thank you.

I think we can conclude our conference call to these words. So thank you so much. If you have any further questions, don't hesitate contacting me. Thank you.

Thank you.

Welcome to this special briefing. Just a moment ago, Kesko announced that it will acquire Dahl's operations in Sweden, Norway and Denmark from the French company, Saint-Gobain. Through the transaction, Kesko will significantly strengthen its position in technical trade business in the Nordics. But without further ado, I will hand over to President and CEO, Jorma Rauhala. Please, Jorma, the stage is yours.

Thank you, Hanna. Welcome also on my behalf. These are indeed great news. We have had a very busy weekend and the acquisition was actually signed just a moment ago. I'm very pleased to announce that our long-term strategic target to grow significantly, particularly in technical trade is now becoming a reality. For years, we have been looking for major acquisition opportunities, especially in technical trade in the Nordic region and attractive targets are extremely rare. When I have previously been asked what would be a strategic theme target? It would be exactly this. Dahl is a strong player in Sweden, Norway and Denmark with no overlapping operations. Technical Trade is based on centralized logistics, strong digital services and skilled personnel. This is exactly what we are now acquiring.

After the completion, this acquisition will take us to the next level in the growing technical trade business in Nordics, and I'm extremely pleased and happy. Now to our presentation. Kesko strengthens technical trade by acquiring the operations of Dahl in Sweden, Norway and Denmark. Like I said, Kesko has been seeking notable large acquisition targets, especially in Nordic technical trade for years. Interesting companies rely available. Kesko has agreed to acquire the Dahl technical trade companies in Sweden, Norway and Denmark from Saint-Gobain. The combined net sales of the companies to be acquired totaled some EUR 2.1 billion and EBITDA EUR 146 million, making this the largest acquisition in Kesko's history.

The companies to be acquired are an excellent fit for Kesko's growth strategy. They will complement Kesko's current building and technical trade business and strengthen our position in Nordic technical trade. Right timing. underpinned by megatrends, there is a significant growth potential in technical trade in the stable and affluent Nordic markets. The Dahl acquisition in brief, primarily a strategic acquisition. Supports Kesko's growth and strengthening of profitability synergies, not the main driver. Significant sales and earnings growth potential, strengthening market and megatrends that supports growth benefits derived from higher volumes, strong own brands, continuous digital development, respecting Dahl's history and valuable brand. Preliminary plan is to likely integrate the acquired businesses, which would continue as separate business units under their existing brands.

Transaction price, the debt-free transaction price is EUR 1.2 billion, excluding lease commitments or EUR 1.518 billion, including lease commitments. Financing. Kesko will initially finance the acquisition in full using bridge financing, which will be refinanced with equity and debt once the completion of the transaction is secured, while maintaining the interest-bearing net debt-to-EBITDA ratio below 2.5, excluding the IFRS 16 impact. The plan is for the equity component of the financing to be implemented through a share issue estimated at approximately EUR 500 million to EUR 700 million. Authority approvals, the completion of the acquisition is subject to approval by competition authorities as well as the fulfillment of certain other conditions. Timetable, the acquisition is estimated to be finalized by the beginning of 2027.

The acquisition marks the beginning of the next chapter in Kesko's growth story. Kesko sees net sales of some EUR 20 billion in the early 2030s through the acquisition and growth strategy execution. Building and technical trade would become Kesko's biggest division following the acquisition. Net sales expected to amount to nearly EUR 10 billion in the early 2030s. Long-term profitability target for building and technical trade continues to be 6% to 8%. Growth in technical trade supported by megatrends, renovation building, steady growth in renovation building and in renewing technical infrastructure.

Urbanization, building new technical infrastructure, dense urban development, green transition, increasing EU regulation and volatile energy markets, growing demand for energy solutions, technological development and digitalization, construction becoming more technical, smart building technology solutions. Dahl is an iconic leading operator in technical trade, a company with over 160 years of history. Our current business in technical trade, Onninen has 113 years history and Kesko has 85 years old history. So Dahl has 160 years old history and very respected among technical trade B2B customers. A leading operator, especially in HPAC products and infrastructure construction. Combined net sales of businesses to be acquired in Sweden, Norway and Denmark, some EUR 2.1 billion. Digital accounts for 35% of sales, combined network of some 190 stores, 3 automated central warehouses, some 2,700 employees and over 70,000 customers.

Dahl has a strong foothold in HPAC and infrastructure products, stable business. More than half of sales come from renovation building and 1/3 from infrastructure construction and 100% is B2B trade. Particularly strong HPAC and infrastructure product sales. Over 50% of sales come from HPAC products, some 25% from sewage and plumbing network infrastructure products. Strengths, modern technical trade expertise, extensive product portfolio, own brands, good availability and reliable deliveries, efficient logistics, skilled technical sales staff, good digital services. Good strategic fit, no overlap with Kesko's existing operations in Sweden, Norway or Denmark would complement our current product offering considerably.

What would the acquisition mean for Kesko's building and technical trade division? A significantly stronger foothold and sales growth in technical trade in the Nordic countries, raising technical trade share of the division net sales to 65%, raising B2B trade shares of the division net sales to 88% raising international operation share of the division net sales to 71%, strengthening the stable infrastructure and renovation building business. Stronger expertise in technical sales and technological expertise, expanding our offering with Dahl's modern and extensive product portfolio, for example, own brands. Synergies due, for example, higher purchase volumes. Kesko nearly triple its sales volumes in HPAC products from Onninen's current EUR 1 billion. So profit improvement in line with the division's operating margin target of 6% to 8%. Kesko gained strong expertise in technical trade and experience in major integration by acquiring Onninen.

Of course, it could be asked how we manage this kind of business, what we -- what is the Dahl. But I think we have quite nice track record what we have done with Onninen. So Onninen has been part of Kesko since 2016, successful integration in 7 countries, operates under the independent Onninen brand, strong expertise in technical trade, strong development of digital and logistics capabilities, extensive store network and skilled sales staff, business-specific strategies in each country. So Onninen's net sales have grown by EUR 820 million or 56% and operating by 232% as part of Kesko. So if we look at Kesko today, so grocery business is the biggest division, something like EUR 6.4 billion and building and technical trade, a little bit less than EUR 5 billion.

After this acquisition, building and technical trade would be your biggest division with almost EUR 7 billion. And then if we look how this technical trade business is in its countries, we can see that very stable business set in Finland and in Norway, we would be clear #1 and in Sweden and Denmark, #3 operator in technical trade. So key takeaways. Kesko has been seeking notable large acquisition targets, especially in Nordic technical trade for years, interesting companies rarely available. Dahl is a leading technical trade company in the Nordics with a long history, a strong and well-respected brand, a comprehensive and efficient distribution platform and a stable business model. The business to be acquired are an excellent fit to Kesko's growth strategy. The acquisition would complement the current building and technical trade business and clearly strengthen our position in technical trade in the Nordics. A strategic acquisition, the largest in Kesko's history that supports growth and strengthening of profitability. So -- and I think now it's time for questions.

Thank you, Jorma, for your presentation. Yes, it's time for questions. Please ask your questions using the chat function. There's a slight delay if you ask a question before I see it. But now it's a perfect time for that. I will ask one question, which I got before. Can you describe what's the difference between Dahl and Onninen and what is difference between technical trade and building and home improvement trade, just like briefly basic things.

Yes. First of all, Dahl, for example, in Norway, it's only HPAC products. And Onninen in Norway only electric products. That's the main difference. Dahl is only HPAC products. Onninen Finland has both HPAC and electric products. That was the first answer. And the difference between building and...

Home improvement business.

Of course, first, I would say that customers are totally different. They are different customers. And in building and home improvement, we have also consumer as customers. But building the technical rate is only B2B business. Maybe also one difference is that this technical rate is based on kind of central warehouses, automated central warehouses, digital orders, but the building and home improvement, it's very much based on store network business. I would say those are main differences.

Very good. One the question here. What does the deal imply for your net debt to EBITDA, excluding IFRS 16 target? And is there an impact on your dividend payout? So dividend and the target of net debt to EBITDA?

Yes. Net debt to EBITDA, as we told, our target is that we can keep them below 2.5. And of course, temporarily, it can be a little bit higher before -- when we take this kind of bridge financing first. What comes to dividend policy, we don't have any reason to change our dividend policy, 60% to 100%. Was it so that Anu and Sami should join us.

Yes. We -- at this point, if we get more questions there, I could ask our Building -- Head of Building and Technical Trade, Sami Kiiski; and CFO, Anu Hamalainen, to join us as we are now getting more questions probably. Thank you. And I, my name is Hanna Jaakkola. If you have any questions after the presentation, you can contact me. I'm responsible for Investor Relations. Very good. And then there's a question about the profitability. Profitability development of the acquired businesses during the past 5 years. Can you comment on targeted synergies and time line -- synergies, time line and profitability?

Profitability, yes, we have agreed with the seller that we are not disclosing the historical figures. But I could say so that, of course, Dahl's profitability was much higher than, for example, '21, '22, '23 when we are comparing now '25 figures. As we know, '25 has been extremely weak market. Also, we can see that from our figures. So I would say that those go quite hand-in-hand when it comes to Onninen figures and Dahl figures. So very, very low seasonal cycle now, and we really much believe that the market will improve in coming years.

Very good. And then was synergies and time line.

Yes. So first of all, this is not a synergy case. We have made many acquisitions, and I think we know how to implement those ones. We have to bear in mind that Dahl is a great company. It's a great company, very strong in Sweden, quite nice businesses in Denmark and Norway. We shouldn't disturb that business. The market will recover and our kind of first, what we are doing is carve out the business out from Saint-Gobain operations. There are some common operation in Dahl, Saint-Gobain, something like HR, IT and things like that. This is the first what we'll do.

And that's crucial because we shouldn't disturb the business. And of course, we are seeking also synergies. And I would say that the most important one, of course, is sourcing, sourcing and private label, also IT and things like that. What comes about those synergies, of course, the timing, of course, the sourcing is the first one. Of course, we start that immediately after closing that deal. But for example, other possible synergies from IT come a little bit later. But we already know that, for example, our IT systems, our cost level is quite low compared to Dahl. So there are some potential in there.

Very good. There's plenty of synergy questions, but this was a good answer.

I think that -- like I said, it would be so easy to say that we are gaining so much synergies. But we know how to do this business. We know which are the synergy case, which are carve-out case. And we know that because those businesses, those companies, they are doing well. They are doing well and the market will improve. And those EBIT will improve significantly after that. But of course, we are also searching synergies.

Very good. There's a question about the EBITDA margin. Dahl's EBITDA margin is 7.1%, similar to your own building and technical trade division, 6.8% in '25. If margins are already comparable, where exactly does the value creation come from? And can you quantify the expected synergy benefits in absolute terms?

I think we already discussed about the synergies. But all in all, the whole deal is a strategic deal. It's -- it is not so easy to acquire these kind of companies. Like I said, that was the best what you can get from the market. And this is kind of growth story about building and technical trade and whole Kesko. And we know that the market has been now very, very weak, and we can see already that the market will improve. And I'm very confident that also Kesko's building and technical trade figures, also Dahl figures will improve in coming months and years.

Yes. And of course, Dahl is technical trade, and that was the whole building and technical trade to our figures.

That's true.

So it's not comparable in the business-wise.

That's true, yes.

How does Dahl Nordics business develops in '26 versus '25? Wondering if there have been signs of the cycle turning. So any news about spring '26 compared to last year? And is there.

Sami, do you have those figures? And can we disclose those figures. But of course, we can see from our figures that the market has.

Exactly. We can describe the market.

We can describe the market and 2026 numbers we don't disclose from Dahl business. But of course, we can see the market that activity levels are step-by-step coming better, so increasing. Of course, new buildings still not much happening to say so, the starts of the new residential building starts. But in general, we see that activity is going in the right direction. And of course, we need to remember that this business, what is also great in Dahl business is that it's much of that -- half of that is renovation -- building renovation business and also infra business, which is stable, and we see a lot of opportunities there.

Very good. Thank you. There's a question about what is the tax rate of Dahl. I don't know, Anu, do we have the figure?

Actually, we do not disclose that. But the thing is really that if I were you, I would be like using the local tax rates what we have in the countries.

Very good.

This we already discussed, but if there's anything you want to add, can you talk about potential earnings accretion? Even at the top end of the equity raise, should we assume low single-digit earnings accretion? So how earnings potential and also in the light of equity raise, we discussed already what are the potentials. We don't get any synergies, exact synergies. Any other comments you would like to add at this point?

I think we are pretty much there what Jorma already said so...

And we don't have any details about the equity issuance yet.

Exactly.

So we will come back to that. Was Dahl's '25 earnings more distressed if comparing to Kesko's technical trade business in total? So '25 Dahl, Kesko difference in profitability?

Yes. As you mentioned already, our figures include also home building and technical trade. But I see that all in all, we can see the same pattern what has been in Dahl and with Onninen, if you're looking at '21, '22, '23 and now since '24, '25, '26, they have been very, very weak markets. And I see that we can see the same trend in the figures, what we have on the figures. And also, we can see that the market has now started to improve.

Very good. And what is the expected closing time line? And is there any reason to anticipate remedies from competition authorities?

Yes. We think that this will be closed end of this year. And if you look at this competition situation country by country, first, Sweden there shouldn't be any problem. We are only -- our only is in electric intra business and not so big one. In Norway, we are strong in electric products, electric business, but we are operating at all in HPAC business. In fact, we have a small HPAC business some years ago, but we divested that one in Norway. And Denmark, of course, we don't have at all that kind of business. So there shouldn't be any problems with that one.

How many locations Dahl have in Sweden, Norway and Denmark?

So it was all in all 190, but Sami, do you remember how much in different countries?

Yes, different countries, we can check that, but 190 and of course, Sweden being the biggest. So I would say, 88 stores or pickup stores.

Sweden, yes. And I think that, of course, stores are important. We have those stores, but I see that even more important are those automated warehouses. They have excellent automated warehouses, especially in Sweden, Norway and also in Denmark. And that's the heart of the business.

Exactly. Very good. I can come back to the questions that if -- we will put in Q&A afterwards. I take these questions and answer this later on as well on our website, if anything is unanswered. What risks do you see from the transaction?

I would see so that this acquisition don't have any special risks. There are kind of normal risk what you -- every time you have when you are making those acquisitions. Like said, this is kind of a carve-out case, but there is nothing new, I would say so. They have some cooperation in Dahl with Saint-Gobain, like I mentioned, in HR, IT, finance, something like that. So first, we can carve out that from the Saint-Gobain businesses. And then we -- very light integration.

One example is that those country directors, for example, in Sweden, Norway and Denmark, they will report direct to Sami, our President of the division. They won't be part of our current setup. That's why we don't want to disturb current business, and we don't want to disturb this business because we also know if you try to put them together, you most probably will have also some problems. And we want have to those ones because we can see that the market will be -- will recover, and we want to take everything out of that.

Very good. So we have a lot of experience from acquisitions and how to do them.

Yes.

How about Dahl in Finland? Will Saint-Gobain continue long term with Dahl in Finland? That is not our...

Yes, we are not disclosing that one. But of course, for us, it was clear that it was not possible to us to acquire Dahl Finland because Onninen is so strong in Finland.

Does Dahl have similar EBIT margins to building and technical trade of Kesko? We don't disclose the EBIT margins in this year.

We already discussed about that one that can I say that Sweden is very strong even last year, Dahl Sweden and in Norway and Denmark, there are, I would say, more potential there on those.

There's a question about Dahl's earnings in Denmark, they has been close to 0 in '24, '25. How can you plan -- how do you plan to make it profitable?

Of course, the first reason why the EBIT has been maybe that level is the market. Of course, we know that one. And if we look the differences between Denmark and Dahl Denmark and Sweden, for example, I think that maybe they haven't kind of in Denmark cut enough costs when the market kind of collapsed, maybe they didn't cut the cost enough. And the one difference is also the share of private label in Sweden, it's much higher than in Denmark. But I would say those 2 are kind of normal business cases.

Very good. Then I have one last one. So if you have any further questions, now it's time to ask those. What is the interest rate on the extra debt you need to think of?

Well, the question is really that are we talking about the bridge financing or the final financing? So from the bridge financing perspective, I would say that we are pretty much on the margin level on the same level as what we have in Kesko today already. And of course, the future refinancing is really depending also on the market conditions, but our aim is to keep it on the same level as we would be like having normally without this kind of deal. So -- and if we think about our average interest rate at the moment, we are at 3.3 to 3.5 percentage points on average level on this kind of financing today in Kesko.

Very good. Thank you all. I think that was it. No further questions. If any questions, don't hesitate contacting me. And I will put, like I said, the Q&A to the website later on. Thank you so much.

Okay. Thank you.

Thank you.

Dear all, warmly welcome virtually to Helsinki, and thank you for tuning in for Kesko's Q1 2026 Release Call. Strong sales and profit in all divisions is our headline. So a good start for the year despite turbulent times.

We have the familiar agenda. First, President and CEO, Jorma Rauhala, will give the presentation. After the presentation, we are happy to take questions from you. We have here with us our business division presidents, Ari Akseli for grocery trade; Sami Kiiski for building and technical trade; Johanna Ali for car trade; as well as CFO, Anu Hamalainen.

The questions can be asked both by phone and via chat function after the presentation. All the materials related to the quarter can be found at our web page, kesko.fi, under Investors. My name is Hanna Jaakkola. I'm responsible for IR at Kesko. I will be happy to have a discussion and answer your follow-up questions after the presentation.

But now, without further ado, 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 Q1 results. Strong sales and profit in all divisions is our headline. In grocery trade and in building and technical trade, sales and profits improved. In car trade, sales grew, but operating profit declined a bit. But now I will give an overview of our business performance and open up elements behind the results. After the presentation, we are ready for the Q&A.

Summary of the first quarter in '26. Kesko's comparable operating profit improved. Net sales grew in all divisions. In grocery trade, K Group stores gained market share. Profitability was strong despite investments. In building and technical trade, comparable operating profit increased, even though the market remained challenging. In car trade, our market position improved. Sales growth was strong, especially in used cars. Operating profit decreased slightly. The current situation in the Middle East did not have a significant impact on Kesko's operations in Q1, but a prolonged conflict could weaken consumer confidence and purchasing power. Overall, the first quarter performance was in line with our expectations. We repeat our guidance for 2026 and expect the comparable operating profit to amount to EUR 650 million to EUR 750 million.

Net sales in Q1 totaled over EUR 3 billion. It was up by EUR 201 million. Net sales increased in all businesses. Rolling 12 months net sales increased to nearly EUR 12.7 billion. In Q1, comparable operating profit was EUR 102 million, and operating margin was 3.4%. Comparable operating profit increased in grocery trade and in building and technical trade and decreased in car trade. Rolling 12 months operating profit was EUR 661.4 million, and operating margin was 5.2%. Return on capital employed was 10.2%. In building and technical trade, return on capital employed was at the same level as in 2025. It 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 at EUR 78 million. It strengthened significantly, especially thanks to effective working capital management. Capital expenditure totaled EUR 113.5 million. I'll open up investments on the next page. Interest-bearing net debt increased year-on-year as a result of investments in acquisitions, logistics and grocery trade store site network. Net debt-to-EBITDA was 1.9x, well below our maximum target of 2.5x. Capital expenditure totaled EUR 113.5 million. We continued the investments to strengthen our grocery trade network and the main CapEx in Q1 were store site net investments. For example, during the quarter, we opened a new hypermarket in Kivistö, Vantaa, in Helsinki metropolitan area. Other investments include investments in, for example, the leasing car fleet.

Expenses. Expenses increased mainly due to acquisitions. Approximately half of the increase in expenses came from the Danish acquisitions. Despite increased cost, the cost ratio improved.

The big topic in the market and media is now the war in Iran. Let's look at the potential impacts of the Middle Eastern conflict on Kesko in the second quarter. It is impossible to estimate further as the situation may change rapidly. In the short term, there are no significant impacts on our businesses. But if the crisis prolongs, it could weaken consumer confidence, purchase power and corporate investments, and increase costs.

In Q2, for grocery trade, rise in cost of freight, both purchasing freights to the warehouse and delivery freights from the warehouse to the stores and customers. No significant impact on food prices in Q2, but a prolonged situation would have a cost impact on agriculture and the whole food chain. In Q2, for building and technical trade, rise in costs of purchasing freights and delivery freights, rise in the prices in particular of oil-based products like pipes, cables and insulation products. For car trade during current quarter, rise in fuel prices could have a positive impact on demand for electric cars. Demand may also focus especially on used cars.

Now to grocery trade. We gained market share and result was strong. In Q1, net sales totaled nearly EUR 1.6 billion and increased by EUR 72 million. Sales to the K-food stores chains increased by 6.2%. Kespro's foodservice business net sales declined by 0.6%. Rolling 12 months net sales totaled over EUR 6.5 billion. In grocery trade, comparable operating profit for Q1 was EUR 78.4 million, and it increased by EUR 5.6 million. Profitability was 5%. Kespro's operating profit declined by EUR 1 million. Rolling 12 months operating profit was EUR 423.7 million and operating margin was the same as last year, 6.5%.

As said, grocery trade net sales increased and comparable operating profit improved. Most of the Easter wholesales took place in March since the Easter was in early April. Last year, the Easter sales was entirely in April. In Q1, total grocery market grew up by approximately 2.9%. K Group grocery sales were up by 4.4%. K Group grocery stores gained market share in Q1. Customer flows and average purchase continue to grow. Also, customer satisfaction was clearly up in all our grocery store chains.

Kespro's net sales were down by 0.6%, but Kespro gained market share in Q1. K-Citymarket non-food sales were up by 4.4%. Online grocery sales were up by 10.5% and online sales accounted for 4.6% of K Group's grocery sales. Grocery price inflation in Finland was approximately 1.5%. Price development in K Group stores was up by only 1%, especially thanks to our price program. Demand for quality products and services increased in our grocery stores.

In the grocery trade, long-term strategic investments in quality, price and store site network are delivering results. For the first time since the pandemic, we saw growth in the grocery trade across all 3 fronts. Sales increased, operating profit improved and market share strengthened. Our target in grocery trade is to strengthen market share while maintaining good profitability, clearly above 6%. Market share development for K Group grocery stores turned in summer 2025 and positive progress has continued in 2026. As you can see in the graph, the market share gain in Q1 was 0.5 percentage points. All our store chains won our market share in Q1 in their size segments. The good performance is thanks to the investments in quality, price and the store site network. In 2025, the net impact was clearly negative. Net impact in 2026 is expected to be neutral.

In building and technical trade, sales grew and result improved. In building and technical trade, net sales increased by EUR 114 million to over EUR 1.1 billion. The increase was supported by the Danish acquisitions. Net sales improved in comparable terms by 4.2%. In comparable terms, technical trade net sales increased by 5.3% and building and home improvement trade net sales increased by 3.3%. Rolling 12 months net sales were EUR 4.8 billion. Comparable operating profit for the building and technical trade division totaled EUR 14.5 million and operating margin was 1.3%. Operating profit increased by EUR 2.8 million. Rolling 12 months operating profit was EUR 181.4 million and operating margin was 3.8%.

In technical trade, comparable operating profit increased in all operating countries. In building and technical trade, net sales increased and profit improved. Sales margin also improved. Market demand continued to be muted, especially in new residential construction. There is a pickup in construction activity in Finland, for example, in infrastructure construction, industrial projects and data centers. In Finland, in technical trade, Onninen sales grew and profit improved clearly. Growth was supported by strengthening market share.

In building and home improvement trade in Finland, K-Rauta sales grew slightly and profit was at a good level. In Norway, sales for Byggmakker and Onninen were close to last year's levels. Onninen's profit improved while Byggmakker's decreased. In Denmark, Davidsen sales increased and profit improved. Exceptionally cold winter impacted negatively Davidsen sales in January, February. In Sweden, K-Bygg sales growth was strong and also profit improved. In Poland and the Baltic countries, Onninen sales growth was strong and profit improved.

Retail and B2B sales for K-Rauta and Onninen, Finland, is shown in this graph. Onninen's Q1 sales increased clearly by 11%, while competitor sales development was negative 1.5%. This is a great achievement and proof of active sales work in this muted market. In Onninen, Finland, also prices increased for the first time since June 2023. In Q1, prices increased by 0.3%. K-Rauta sales decreased by 1.4% in Q1 and competitor sales decreased by 0.6%. Good to note that in comparison period, sales development was strong.

In car trade, good sales development was driven by used cars. In car trade, net sales for Q1 increased by EUR 17 million to EUR 331 million. Net sales increased in used cars, services and sports trade, but decreased in new cars. Rolling 12 months net sales were nearly EUR 1.4 billion. The comparable operating profit totaled EUR 16.1 million and decreased by EUR 1.8 million year-on-year. Operating margin was 4.9%. Rolling 12 months operating profit was EUR 81.3 million and operating margin was 5.9%. In car trade, net sales increased, comparable operating profit decreased due to the increase in the share of used car sales.

In used cars, sales margins are lower than in new cars. Market demand for new cars continue to be muted. Q1 first registration of passenger cars and vans increased by 0.1%. First registration of brands represented by Kesko increased by 1.5% in Q1. The order book for new cars has strengthened clearly, especially in March, and the current order book is expected to convert into sales over the next 6 months. Used car sales from dealerships were up by 1.1% in Finland. Used car sales in K-Auto were up by 18%. Also, service sales in car trade increased.

In sports trade, net sales and comparable operating profit increased, also market share grew stronger. To highlight some of the latest new electric car models from K-Auto, this brings new launches to include the CUPRA RAVAL and Volkswagen ID. Polo. Cars in these lower price segments have been long awaited as they open up an entirely new price category for us. Sales of ID. Polo begin today.

And now profit guidance and outlook. Profit guidance stays intact. Kesko Group's profit guidance is given for the year 2026 in comparison with the year 2025. Kesko's operating environment is estimated to improve in 2026, but to still remain somewhat challenging. Kesko's comparable operating profit is estimated to improve in 2026. Kesko estimates that its 2026 comparable operating profit will amount to EUR 650 million to EUR 750 million.

Key uncertainties impacting Kesko's outlook are developments in consumer confidence and investment appetite as well as geopolitical crisis and tensions. The operating environment for Kesko is estimated to improve in 2026 in all divisions and all operating countries. Kesko's net sales and comparable operating profit are also estimated to improve in 2026 in all divisions and all operating countries.

In grocery trade, B2C trade is estimated to pick up and the foodservice business to remain stable. In 2026, the comparable operating profit margin for the grocery trade division is estimated to stay 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 2026 compared to 2025.

In building and technical trade, the cycle is expected to improve moderately in 2026 from an exceptionally low level. The comparable operating result for the building and technical trade division is estimated to improve in 2026 compared to 2025 in all Kesko operating countries.

In the car trade market, new car sales are expected to remain muted compared to long-term levels, but to nonetheless grow compared to 2025. The comparable operating profit for Kesko's car trade division is estimated to improve in 2026 compared to 2025.

To summarize the first quarter and the presentation. Kesko's net sales grew and profit improved, an excellent performance in a turbulent operating environment. Strategic actions are yielding results in grocery trade, growth seen on all fronts for the first time since the pandemic. Net sales increased, profit improved and market share grew. In building and technical trade, net sales and comparable operating profit improved in all operating countries except Norway. Good sales development in car trade, driven by used car sales, strong order book in new cars, an excellent quarter for sports trade. We estimate that Kesko's operating environment, net sales and comparable operating profit will improve in 2026 despite global turbulence.

Thank you. This was my presentation. I guess it's time for questions now.

Thank you, Jorma, for your presentation. And now it's time for questions. We will first turn to the conference call line, but you can also post questions using the chat function. And there is a slight delay, so please type your question as soon as it pops up into your mind. But now conference call line, please?

[Operator Instructions] The next question comes from Fredrik Ivarsson from ABG Sundal Collier.

I have 2 questions. First, I want to come back to what you said regarding the market expectation in Finnish grocery. You said you expect B2C trade to pick up. And I wonder if you could sort of clarify exactly what you mean with this statement. Do you expect the growth rate from 3.9%, I think it was -- or sorry, 2.9%, to pick up in the coming quarters? Or do you expect volumes to grow more? Or yes, if you could give some more color on that statement first. That's my first question.

Okay. Thank you for your question. And I think that all in all, if we look at the situation what we have in Finland, we know that consumer confidence is very low, and we can see that consumers are not so willing to buy, for example, a new house or a new car or things like that. And also, they are not using so much money on restaurants. But what we can see is that they use maybe a little bit more money in the grocery stores. And like I said, maybe not going to restaurants, maybe not buying a car, but let's eat a little bit better. I think that's the reason that we can see and we believe that the consumer grocery market will be a little bit stronger.

To add a little bit, yes, in outlook for 2026, we are comparing to last year. So last year was quite muted, especially in the beginning of the year for grocery trade. So the volumes picked up H2 last year in the grocery business.

Yes. Excellent. And second question, I wonder if you could give a stab on your assessment on the calendar impact to the margin in grocery trade, obviously, had a little positive impact from the early Easter.

Okay. Yes, we know that early Easter this year, and last year, it was entirely in April. But Ari, maybe you can a little bit open this Easter situation.

Yes. Thank you for the question. And I think the biggest impact was for the sales side, especially in the wholesale side. And in Easter time, people usually buy a little bit more expensive food. For example, share of the lamb is a good example about that. And we can see some effect for the Easter, but it's very difficult to estimate it by gross margin side, what is the exact effect for that, especially in the sales side and maybe a little bit more expensive products.

Yes. I appreciate it. It's a tough assessment to make. And maybe if I could sneak in a last question. If you could comment on the sort of current trading within the BTT market as of now? I guess, spring has come and the market is sort of seasonally picking up after the winter. So what you see currently in the market?

Yes, good question. Of course, we can see it. If you look at the first quarter in all our countries, when it comes to building and technical trade, we saw that January and February was kind of extremely cold weather. Especially in Denmark, it was the coldest weather in 16 years. But then March already was a little bit better. And we see some -- I would say that the trend has continued. When it comes to April, we still have a couple of days left. But especially, I would say the technical trade has been quite strong in all countries. And of course, warm and early spring helps a little bit also that we can see that, for example, people are going to the summer cottage and doing some gardening and maybe some renovation. But not any big change, but not any negative, I would say, so when it comes to building and technical trade and all in all, our customers behaving.

The next question comes from Miika Ihamaki from DNB Carnegie.

This is Miika from DNB Carnegie. The first question is on the building and home improvement trade. There the profits were somewhat soft, and you mentioned that comparable operating profit in Finland decreased slightly. How do you see the outlook in Finland for this business for the rest of the year? Was there any specific reasons for this weakness? Has something changed? And also that would you expect that the comparable operating profit will increase from the last year also in this business, as that is implied in your guidance?

Okay. Sami, you can also answer, but especially you asked about building and home improvement, especially in Finland. First of all, of course, we have to remember that our K-Rauta business is very strong. Also, our profitability is very strong. I would say, not so big changes on that one. And all in all, we believe that the trend of consumer behavior, if nothing special will happen in this Iran situation, we believe, as we have stated also in that business, that the market will be stronger this year, both sides, when it comes to consumer and also B2B customers. But Sami, would you like to add something about that?

Sure. Thank you, Miika. And, of course, this is indeed even our peak season. It's actually off-season for us, as you know, quarter 1. And of course, we see also, like Jorma said, that activity is getting better, and it's actually coming I think mainly related to renovation and also some infra also when it comes to in general, but particularly in building and home improvement, of course, this was also a particularly cold period even in Finland. Quite many construction sites were closed. So actually, we see that it's getting better and quite positive feeling about the market. But of course, we need to see a little bit more months, because spring is, of course, important. But activity is getting better and we can see that we're also getting more orders from our small and midsized customers.

And then my next question would be that if the conflict in the Middle East continues to disrupt, keeps the freight rates high, oil price volatility continues to affect logistics, energy, et cetera. So I know that this is quite hard for you to answer, but given that you now saw limited impact in Q1, what level of extra costs from energy, freight, et cetera, could you expect to land in the coming quarters? If you can give any hints on this one?

Yes. Of course, very good question. And as we stated, I would say that there was any significant -- or I would say any impact of the first quarter. We have to remember that this crisis started beginning of March. But of course, we can see already now what will happen in Q2. And also now April is kind of behind us. And the first thing what we can see in the grocery business is what we mentioned is rise in freight, both kind of inbound purchase and also delivery freights. But impact of those ones is not so big, that some may be minor impact when it comes to food prices.

And already now we can see that there won't be any big changes in food prices when it comes to Q2. Then Q2, if we look at building and technical trade, the freight cost hasn't so big impact. But there, we can see already certain products, some kind of oil-based products like pipes and cables and some insulation products, there has been already, in fact, quite big price increases, and we can see that those will continue also in May and June. So of course, in short time, those could even support a little bit our sales. And then what we mentioned about car business, we can't see any effect yet. Maybe people can be -- consumer can be a little bit more interested about electric cars.

But okay, then if this crisis prolongs, what will happen? I would say that maybe we are talking about Q3, Q4, of course, so difficult to kind of think what could happen, what will happen about interest rate, inflation, all in all, these kind of things. But if it would be only the oil price, there will be, of course, some impact all in all, food prices and things like that. But let's see. So difficult to say what will happen on that time. But now we can see this first quarter very clearly. And also, I would say also Q2, we know what will happen and not any dramatic topics for us.

The next question comes from Joonas Häyhä from OP.

It's Joonas from OP. Firstly, regarding the grocery trade. Obviously, timing of Easter supported earnings this year. But can you elaborate what was the earnings contribution from K-Citymarket non-grocery sales in Q1? As if I recall it right, you had somewhat muted sales due to weather-related reasons in the last quarter.

Okay. Ari, you can take the K-Citymarket and non-food.

Yes. K-Citymarket, of course, it has good benefit for it that we have a little bit warmer spring time this year. It supports sales in the non-food, especially in the clothing side, and also in some other categories. So it was positive, but not so big positive impact, maybe a little bit extra sales, especially these kind of categories like clothing and maybe gardening.

And non-food sales were up by 4.4% for K-Citymarket in Q1, and we are not disclosing the earnings on that.

Yes. I think that the biggest positive we can now say is in the beauty categories, we have been adding more assortment, especially K-Beauty and so on.

Okay. And then regarding BTT, any comments regarding the margin outlook in technical trade, as I think you previously mentioned, tight price competition. And more specifically, in Sweden, if I look at the Q1 numbers, earnings apparently improved in the Swedish technical trade, even though sales declined quite a lot. So can you open this development a bit?

Yes. All in all, I can start and Sami can continue, especially what comes to Sweden after me. But all in all, I think that I have earlier said that when it comes to last year, what happened in building and technical trade, especially in technical trade that sales volumes decreased, prices decreased and also we have some pressure in our gross margin. But now we can see already that the volumes start to increase. And now in fact, in Finland, in Onninen, we saw first time since it was '23 June, if I remember right, first time since that, there was some price increases already now. And also, we can see that there is not so much pressure anymore when it comes to gross margin. So kind of last year, we have, kind of, 3 negative elements. And this year, those start to be a little bit positive elements. But then about Sweden, especially Sweden, of course, we have big changes there, but Sami, please.

Thank you, Joonas. And about Sweden technical trade was the question and more Onninen. So of course, quarter 1 also very difficult weather conditions there. Actually, we are mainly in the infra business there, in electric grid, and there a little bit the same story that they were not able to put up electric grids or renovate those ones. And of course, the whole market was also minus 8.5% in Sweden technical trade market, which we are following, which is relative to our business. But of course, now during March also, already, we see that the activity came back. So we are not so worried about that situation there. We think that we are well positioned also in electric grid market in Sweden and activity should be actually increasing also, because there's a lot of deficit also in the electric grid business in Sweden in general.

Okay. And then finally, regarding car trade, you're guiding for improving earnings this year, but in Q1, earnings declined. So how do you expect to close the gap during the rest of the year?

Okay. Johanna, please, you can take this one.

Yes. Thanks for the question. Yes, the first quarter was a bit behind comparison period. But like mentioned, the order book for new cars is relatively strong, and those will be resulted to the financial figures in coming 6 months. So that's a good base for our estimation and also the new product launches, what's also mentioned in the presentation. We estimate them to have a strong effect on our figures. In used cars and services, business is more stable, and we see a positive development in those as well. So I think the estimation is well based on the current performance and known information.

The next question comes from Rob Joyce from BNP Paribas.

I dropped off for a second, so apologies if this has been asked. But on the grocery division, can you comment on -- even I guess, excluding the Easter estimate, it looks like March was particularly strong. Can you comment on whether that strength has continued into April in the Grocery division? And have you seen any competitive response yet -- elevated response to your incremental share gains over the last 2 quarters?

And then the second one, we've kind of touched on, but just specifically, within your own consumer, have you seen any response since the Middle East conflict really picked up? Any changes in behavior from the consumer?

Okay. Mainly grocery this question, but all in all, what comes to the latter part of question about Middle East and the consumer behaving, I would say that we don't see any changes on that one. I would say that, of course, consumer confidence has decreased, but we don't see any changes on that one. Even more important is that if there is a warm weekend, for example, people are going to their summer cottages and eating well and make some renovations and things like that. But Easter side and grocery, Ari, you can take this one.

Yes. Of course, Easter is like a celebration and people usually spend more money for their food in that time, especially. The good part for us is that barbecue is now increasing. And average spend of the food basket is higher then. And we had quite warm Easter, and it has positive effect in that side. But we can also say that about the competition, it seems to be hard all the time, but we have been able to continue with our current pricing program and keep the margins at a reasonable level at the same time. And we see that we are able to do it even this year, and that's our estimate.

He was asking about has the good performance in March been in April figures. Would you like to comment anything on April?

Yes. I already commented that kind of retail sales trend when it comes to grocery has continued, not any big changes on that one. But of course, when it comes to wholesale, we have to bear in mind Easter in there.

Yes, in the wholesale, the Easter event was something like 6% is roughly estimate about that.

No more questions from the conference call line. And also, I don't have any questions from the chat. In that case, I would like to thank you all for good questions. And if you have any further questions, don't hesitate calling me. Well, we would like to wish you a sunny and beautiful 1st of May, and please enjoy the long weekend if you have one. Thank you.

Dear all, warmly welcome virtually to Helsinki, and thank you for tuning in for Kesko's Full Year 2025 Release Call. Today's headline is Kesko's results improved. Net sales grew in all divisions, and it outlines 2025 well. In this presentation, we are also presenting 2026 guidance as well as dividend proposal for the Annual General Meeting.

Today's agenda is the following: President and CEO, Jorma Rauhala, will give the full year and Q4 presentation. 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 Hamalainen. After Jorma's presentation, we have time for questions, both by phone and via chat function. All the materials related to full year and Q4 can be found at our website, kesko.fi under Investors.

My name is Hanna Jaakkola, I'm responsible for IR at Kesko. I will be at your service after the presentation for your questions and discussions.

But now Jorma, the stage is yours, please.

Thank you, Hanna. Ladies and gentlemen, welcome also on my behalf to this release call. I'm Jorma Rauhala, and I have now the pleasure to present Kesko's full year and Q4 results.

Yes, Kesko's result improved, net sales grew in all divisions, is our headline, and it describes our 2025 well. Towards the end of the year, we saw a turnaround in performance as the third quarter result improved and growth continued in the fourth quarter.

Now I will give an overview of our business performance and open up elements behind the result. I'll also present the guidance and outlook for 2026 and the dividend proposal to the Annual General Meeting.

Kesko's comparable operating profit improved and net sales grew in all divisions. This is a great achievement, especially taking into account last year's market situation and low consumer confidence.

In Grocery Trade, we saw an upturn in market share. Profitability was strong despite investments in price, quality and network. In Building and Technical Trade, comparable operating profit grew despite a challenging market. In Denmark, we achieved strong market position through acquisitions. In Car Trade, market position grew stronger and comparable operating profit increased significantly.

Kesko estimates that its 2026 comparable operating profit will amount to EUR 650 million to EUR 750 million. In 2026, operating environment and profit are estimated to improve in all divisions and all operating countries.

We execute our growth strategy and strong growth investments will continue. Dividend proposal to the Annual General Meeting is in line with dividend policy, EUR 0.90 per share, payout ratio 84%.

Net sales for 2025 totaled over EUR 12.5 billion, and it increased by 2.3% in comparable terms. Net sales increased in all divisions in both comparable terms and in reported figures.

Comparable operating profit for last year was EUR 654.9 million. It increased by EUR 4.8 million. Operating margin was 5.3%. Operating profit increased in Building and Technical Trade and Car Trade and decreased in Grocery Trade.

Operating margin for Grocery Trade was 6.5%, which is clearly above 6%. For Car Trade, it was 6.1%. For Building and Technical Trade, operating margin was 3.8%, which is a good result in low cycle.

Return on capital employed was 10.4%. Return on capital employed increased in Car Trade, was down in Building and Technical Trade and in Grocery Trade compared to 2024.

Financial position. The amount of net debt was impacted by investments in store sites and acquisitions. Cash flow from operating activities was EUR 880 million, and it was affected by the change in the Food Market Act in 1st of July, which shortened the payment terms. The estimated negative impact of the payment term change to cash flow was approximately EUR 100 million.

Capital expenditure totaled EUR 735.7 million. I'll open up the investments on the next page. Interest-bearing net debt increased year-on-year as a result of investments in acquisition and store site network.

Net debt to EBITDA was 1.6, which is clearly below our financial target of 2.5. Capital expenditure totaled EUR 735.7 million. We continued the investments in growth and the main CapEx in 2025 were 3 acquisitions in Denmark, store site investments in Grocery Trade and the construction of Onnela, Onninen and K-Auto logistics center in Hyvinkaa, Finland.

Expenses. Expenses have increased mainly due to acquisitions. It is good to bear in mind that we gained some 760 new employees in Denmark last year through acquisitions. Expenses, excluding the acquisition, were up by only 1.6%. This is a good achievement, taking into consideration the salary increases in all our operating countries in 2025. Also, cost ratio improved slightly.

And now to Q4 results. We saw good net sales development in all divisions. The performance in all divisions was in line with the expectation we had at the beginning of the quarter.

Net sales in Q4 totaled over EUR 3.2 billion. It was up by 3.1% in comparable terms. The net sales grew in Grocery Trade by 3%, in Building and Technical Trade by 2.9% and Car Trade by 4.4%. Net sales grew by 2.9% on a comparable terms in Finland and by 3.9% in the other operating countries.

In Q4, comparable operating profit was at EUR 174.8 (sic) [174.6] million and operating margin was 5.4%. Comparable operating profit increased in Car Trade and Building and Technical Trade and decreased in Grocery Trade.

And now to Grocery Trade in Q4: upturn in market share, profit at a good level. In Q4, like I said earlier, division's net sales increased and comparable operating profit was slightly down. The total grocery market in Finland grew by 2.7%. K Group grocery sales were up by 4.2%. K Group grocery store chains gained market share clearly in Q4, but also in H2 2025.

In Q4, all our grocery chains won over market share in their segments. In '25, K-Citymarket won market share in the hypermarket segment. Customer flows continue to grow, thanks to the price program and campaigns. Customer satisfaction was clearly up for all our grocery chains.

Kespro's net sales, up by 0.4%. And again, Kespro gained market share as it did for the whole '25. K-Citymarket nonfood sales were down by 0.4%. Online grocery sales were up by 6.6%. General grocery price inflation in Finland was approximately 1.8%, but the price development in K Group stores was only 1.1%, especially thanks to our price program. Demand for quality products and services increased in our grocery stores, which may indicate a positive change in consumer behavior.

I'm very pleased that we saw the turn in market share development last year. The change can be clearly seen in the graph on this page. Also in January, good sales development continued. Our strategy is focusing on quality, price, and network is working.

When it comes to quality, we have done significant efforts to raise quality level together with key retailers. Store-specific business ideas are at the core. Special focus is on fruits and vegetables, bread and nonfood. Our digital reach has risen to a new level. We reached digitally nearly 2 million customers, and the number has increased by over 20% in 2025. This is very crucial to us as media and data business has grown significantly and offers us earnings streams.

Our price program launched in January last year. It's a long-term program, and we will continue executing it. This is also a joint effort with retailers. Also, active campaign is continuous as well as personalized offers, and we can see increased customer flows.

Our net investments will continue. In 2025, we opened or renewed 60 stores, including 2 new K-Citymarket stores. Network net impact on our market share was still clearly negative in 2025 despite new store openings. In 2026, the network impact is expected to be neutral. The network will start supporting market share development gradually in upcoming years. Annual investments in the store network will be around EUR 200 million to EUR 250 million going forward.

Building and Technical Trade in Q4: cycle is gradually recovering, sales and profit grew stronger. In Building and Technical Trade, net sales increased and profit improved in Q4. Market demand continued to be weak, especially in new housing construction. It is good to note that the market has been very difficult and many of our competitors are struggling.

In that light, our 3.8% EBIT margin is strong. Net sales grew and profit improved clearly in both technical trade and building and home improvement trade. In Q4, we could see signs of sales margin returning to normal level throughout the division.

In Finland, K-Rauta's result was strong compared to the markets. In Onninen, Finland, the Q3 growth trend in sales continued and profit close to comparison period level. In Norway, sales for Byggmakker and Onninen were close to comparison period level and profit improved for both. In Denmark, the sales development for Davidsen was good. Integration of acquired companies were completed technically and then work to increase sales and improve profitability continues. In Sweden, K-Bygg store conversions were completed.

Credit risk is well under control. Write-downs of overdue trade receivables totaled EUR 0.1 million. Share of result from Kesko Senukai was EUR 12.1 million. In '25, share of result from Kesko was EUR 19.5 million, EUR 1.4 million below the 2024 figure.

For Building and Technical Trade, profit improvements in 2025 came from countries outside Finland. This is important since nearly 60% of Building and Technical Trade division sales come outside Finland.

In Finland, both K-Rauta and Onninen are strong market leaders. In Sweden, the operations made losses, closure of B2C-focused K-Rauta chain and the conversion of 8 stores to K-Bygg did impact profits negatively. In Norway, in 2025, there was a significant profit improvement for both Byggmakker and Onninen. Onninen's market share increased in Norway. In Denmark, Davidsen has now a strong market position. Integration-related costs impacted results. In 2025, the PPA costs related to the acquisitions were EUR 5.7 million in Denmark. In Poland and the Baltic countries, Onninen has a good market position and stable profitability.

In this picture, we can see K-Rauta's and Onninen's sales development in Finland since 2019, quarter-by-quarter. Both have strong market shares. K-Rauta is the market leader in building and home improvement business in Finland, and Onninen in technical trade. This picture describes the whole market pretty well. K-Rauta's sales development turned black to black figures in Q4. Onninen sales continued to grow in Q4.

And then to the Car Trade in Q4: strong performance continued in a challenging market. Net sales and comparable operating profit increased even though the market remained challenging. Market demand for new cars was still muted. Q4, first registration of passenger cars and vans were down by 2%. First registration of brands represented by Kesko increased by 3.5% in Q4.

Our good development is a result of the extensive product and service portfolio and constant improvement of operational excellence. Market trend in sales of used cars from dealerships were up by 1.8%, and our used car sales were up by 13.3%. Also, service sales increased. We are targeting to grow, especially in damage repairs and the servicing of cars 5 years or older. In sports trade, net sales and comparable operating profit decreased, but market share grew.

And then to profit guidance and outlook. Profit guidance for 2026. Kesko Group's profit guidance is given for the year 2026 in comparison with the year 2025. Kesko's operating environment is estimated to improve in 2026 but still remain somewhat challenging. Kesko's comparable operating profit is estimated to improve in 2026. Kesko estimates that its 2026 comparable operating profit will amount to EUR 650 million to EUR 750 million. Key uncertainties impacting Kesko's outlook are developments in consumer confidence and investment appetites as well as geopolitical crises and tensions.

Outlook for 2026. The operating environment for Kesko is estimated to improve in 2026 in all divisions and all operating countries. Kesko's comparable operating profit is also estimated to improve in 2026 in all divisions and all operating countries.

In Grocery Trade, B2C trade is estimated to pick up and the foodservice business to remain stable. In 2026, the comparable operating margin for the Grocery Trade division is estimated to stay 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 2026 compared to 2025.

In Building and Technical Trade, the cycle is expected to improve moderately in 2026 from an exceptionally low level. The comparable operating result for the Building and Technical Trade division is estimated to improve in 2026 compared to 2025 in all Kesko operating countries.

In the car trade market, new car sales are expected to remain muted compared to long-term levels, but to nonetheless grow compared to 2025. The net sales and comparable operating profit for Kesko's Car Trade division are estimated to improve in 2026 compared to 2025.

Finally, the dividend proposal for AGM. Board of Directors is proposing a dividend of EUR 0.90 per share to the Annual General Meeting. It is proposed to be paid again in 4 installments. This proposed dividend represents 84% of the comparable EPS. Strong investments in growth will continue. Proposal is in line with our dividend policy to pay 60% to 100% of comparable earnings per share as dividend.

Some words to summarize my presentation and Kesko's year 2025. Nearly all businesses gained market share in 2025.

In Grocery Trade, market share turned around in H2. Customer visits have increased and customer satisfaction has improved clearly. Strategy execution continues: quality, price and the store site network.

In Building and Technical Trade, sales increased clearly. Onella Logistics Center is now in use. Construction cycle is strengthening moderately.

In Car Trade, sales development in new and used cars as well as services were good. Also, sports trade outperformed the market. All divisions are well positioned for further market strengthening.

Thank you for your attention. This was my presentation. I guess it's time for questions now.

Thank you, Jorma, for your presentation. And now it's time for questions. So we will take first the questions from the conference call line and then from the -- via chat function. And please note that if you are posing questions through the chat function, there is a slight delay. So be sure to post your questions so that we have time to take the questions.

[Operator Instructions] The next question comes from Maria Wikstrom from SEB.

This is Maria Wikstrom from SEB. I had 3 questions. I'll take them one by one. And I'll start with the guidance and the assumptions behind your guidance as you guide for adjusted EBIT in the range of EUR 650 million to EUR 750 million, and the low end of the guidance range is slightly below 2025 EBIT. So what would need to happen for you actually to hit the low end of the guidance range, so the results would not grow in '26 compared to '25?

Thank you, Maria. Good question. And I think that, of course, the main topic or issue is the consumer confidence. We believe that the market situation will improve in all countries, all divisions, but very moderately. And of course, if that would happen, let's say, that the market wouldn't improve at all, that would be the case. But like I said, we believe -- and of course, we believe that the market will improve this year, and that's -- we have this EUR 100 million range, EUR 650 million to EUR 750 million. And the biggest question is consumer confidence.

And then my outlook -- my next question is on the outlook of the Building and Technical Trade, and if you can be more specific market by market. So which of the markets you see the biggest recovery happening in 2026? And if you could a little bit discuss the outlook on the different geographies in Building and Technical Trade.

Yes. Maybe I can start with a few words, but Sami, you can continue then. But of course, all in all, market outlook is quite similar in all countries. But of course, we have also some differences, like in Norway, interest rate is still high. And if you look at Sweden, the market is quite okay, but we have our own issues, let's say, so with K-Rauta, but now it's kind of implemented this change. But please, Sami, continue.

So thank you, Maria. Like Jorma said, I think biggest worry overall is, of course, consumer confidence and that we see in all our operating countries that, that is weak. But to answer your question, where we see the positive signs, of course, Denmark, we still believe will be the strong. Of course, consumer confidence there also is low. Sweden, we believe that it's going to be better also for Sweden, I mean overall market for 2026.

And of course, still, if we look at the forecast, what we have, for example, from Forecon, still we see that Finland should be also getting better gradually, of course. And of course, I think overall, all the markets are going for better now, but of course, this new construction and particularly new residential construction is something that we need to follow carefully, and then we will see whether the bigger improvement will come or not.

But overall, I would say that we are well positioned when the growth starts. And of course, this Q4 was already positive for us. So I'm very happy about our performance in Q4 overall. And of course, we saw already that the market is getting gradually better, but I think we were also in many markets doing better than the competition.

May I just have a follow-up here, given that the December sales figure for Building and Technical Trade in Finland was surprisingly strong, up 7%. So is there something like extraordinary, so thinking that, I mean people bought more before the new price list or something like that? Or is this really like showing the early signs of a recovery in the Finnish B&T?

Maybe a little bit too early to say the big picture, but of course, it's getting better. And like I said, we show that we are doing much better than the market, both in technical trade, but also with K-Rauta here in Finland. And also, I think this is now particularly important that you have good availability and that we have been also building up all the time or keeping that in the good level. So yes, I think nothing so special there. Our performance was good and also market getting gradually better also.

And of course, we can say that there is a consolidation happening in Finnish technical trade business. And I think that we managed to gain market share quite nicely, latter part of the year, especially quarter 4 and maybe December. Of course, December, you have Christmas time and not so many selling days, but it was a strong one.

That's true. We gained market share with Onninen through Q3, Q4. But I would say it's also the market condition and also the -- our sales push, I would say, then availability and then, of course, this consolidation.

And then my final question is on capital allocation. So if you could talk about the investment needs for '26 and then your view on M&A, if we should expect more M&A during this year?

Yes. So all in all, our CapEx, something around EUR 400 million this year. And like I said, it's clear that we will implement this grocery store site network strategy, and it means EUR 200 million, EUR 250 million also this year. And of course, our strategy is that we are seeking growth in Building and Technical Trade, especially through acquisitions, but not any comments on that one. But of course, we are working daily also with that topic.

The next question comes from Miika Ihamaki from DNB Carnegie.

It's Miika here. Can you elaborate a little bit more on the drivers behind profitability decline in Grocery Trade. So we know that some of your competitors began aggressively cutting also prices again late last year. So my first question is that would you consider this is typical behavior in the market? Or does it reflect intensified competition potentially in response to the fact that you started gaining market share? And in this context, do you see that you needed to respond more aggressively on pricing? And then finally, what is your assumption of the impact of price investments on Grocery Trade profitability into 2026?

Thank you. And all in all, I have to say that I'm very, very pleased what comes to our grocery division. We have to remember that what was our issue has been, let's say, some years now is that we have lost market share. In 2024 spring, we decided that we have to stop lose market share and start to gain market share. And now we have done that. At the same time, we say that the EBIT level should be clearly above 6%. And of course, we have done that also.

But Ari, you can continue with how competitors have reacted. And of course, they have.

Yes. Thank you, Miika. Excellent question. And of course, there is very hard competition all the time in the retail market, especially in the grocery side. But based on the current development of our market share, we have prices good enough now in the market, and we are gaining market share. So we're, all the time, checking around what is the price level and do the necessary actions. But at the same time, we are able to keep the profitability level clearly above 6%.

And about -- he asked also this year how we will continue, but we will continue our strategy and to have the store site network, quality and pricing. And it's so good that we kind of share this topic with our retailers that we really understand that we have to continue with this path because we saw now the results.

But Ari, do you have anything to add about this year or pricing program?

Yes. We just can say that we will continue at the same level. But we also put more actions to the target offers for the customers, especially not just the basket prices, but we will add on target prices. And good part for that is that also the supplier side will support that. And the store owners are very happy with the current strategy. So we will continue this. And this will be the first year when we have like a neutral effect of the store network.

Last year, we had very negative effect and still we were able to gain market share. And January has continued strong about sales side.

And last year -- a year ago, we stated that we will invest together with retailers maximum EUR 50 million when it comes to our price program. Now we have announced -- we haven't announced any certain amount on that one. But definitely, we can continue our price program, and we are also ready to react if needed.

Thank you. Just on the assumption that you continue the campaigns or targeted marketing investments, price investments, now we saw that the profitability declined, you still had a strong growth in grocery. But can you still elaborate on the key assumptions underpinning that the Grocery Trade profit will actually grow this year?

Let's see. Of course, we are -- we believe that the whole market will grow and also our business will grow and our target is to gain market share. And when it comes to EBIT level, it's still very valid that clearly above 6% is our target and the 6.5% last year was that, very nicely.

Maybe to add that, last year, also due to the low consumer confidence we had, Kespro's EBIT did decline. So if the consumer confidence picks up, there is a possibility that, that will support the margins in Grocery Trade as well.

Yes. Another part of that nonfoods business in the Citymarkets, because there was not winter in December, it has very strong [ EBIT ] for the profitability of the clothing side and sports goods. So that's one of the reasons behind the results in Q4, especially in December.

Thank you. No further questions from the conference call line. Neither I don't have any questions from the chat function. So short and sweet. Thank you, everybody, for the good discussions, especially Miika and Maria. And I wish you all very good, and unfortunately very cold, February day. Thank you.

Thank you.

Dear all, warmly welcome virtually to Helsinki, and thank you for tuning in for Kesko's Q3 2025 Release Call. Results improved, positive development in all divisions is our headline. We also updated our guidance and are giving some outlook regarding next year.

Our agenda today is the following: President and CEO, Jorma Rauhala, will give the Q3 presentation. 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 Hamalainen.

After Jorma's presentation, it's time for questions, both by phone and via chat function. All materials related to Q3 can be found at our website, kesko.fi under Investors.

My name is Hanna Jaakkola. I'm responsible for IR at Kesko. I will be at your service after the presentation for your questions and discussions. But now without further ado, Jorma, the virtual stage is yours.

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. Result improved. Positive development in all business divisions is our headline. And what we do mean by positive development. For Grocery Trade, we saw a turn for better in Grocery Trade's market share and the rolling 12 months EBIT margin was 6.6%, which is definitely clearly above 6%. Also, grocery volumes in the market increased, which is positive. We saw also demand for quality products and services increasing.

In Building and Technical Trade, the market was challenging, but we saw positive sales development in Denmark, Poland and Baltic countries. Also, Onninen sales in Finland increased for the first time in 2 years. In Car Trade, both sales and operating profit increased clearly. But now, I will give an overview of our business performance and open up elements behind the result. In the end, I'll present the updated guidance for 2025 and outlook for 2026. And after that, we are ready for the Q&A.

Summary of Q3 2025. Kesko's result improved clearly and net sales grew in all 3 divisions. The result was actually better than we expected for Grocery Trade and Car Trade, but construction cycle improvement has still been slower than anticipated and the result in Building and Technical Trade was comparable or slightly below our expectations. The sales in Building and Technical Trade were in line with our expectations, but the sales margin was lower due to continued tight price competition in a challenging market.

In Grocery Trade, net sales increased and comparable operating profit was at a good level. Sales development for grocery stores were close to market pace. In Building and Technical Trade, net sales increased supported by acquisitions. Also comparable operating profit increased. In Car Trade, net sales increased and comparable operating profit grew clearly.

Kesko's history's biggest ever construction project, the shared Onninen and K-Auto logistics center Onnela was completed on schedule and below the original budget. Kesko updates its 2025 profit guidance, and we are now estimating that its comparable operating profit will be in the range of EUR 640 million to EUR 690 million. We estimate that in 2026, operating environment and result will improve in all divisions and in all operating countries.

Net sales in Q3 totaled over EUR 3.2 billion. It was up by EUR 201 million. Net sales increased in all businesses. Rolling 12 months net sales increased to almost EUR 12.3 billion.

In Q3, comparable operating profit was EUR 208.1 million and operating margin was 6.4%. Comparable operating profit increased by EUR 6.5 million. Kesko Senukai reported in the third quarter, its joint venture result for the whole 9-month period, and it was EUR 7.4 million. Excluding Kesko Senukai's January-June figures, operating profit increased by EUR 6.6 million. Comparable operating profit increased in Building and Technical Trade and in Car Trade and decreased in Grocery Trade. Rolling 12 months operating profit was EUR 651.2 million and operating margin was 5.3%.

Return on capital employed was 10.6%. Return on capital employed increased in Car Trade, was down in Building and Technical Trade and in Grocery Trade compared to the year-end.

Financial position. The amount of net debt was impacted by investments in store site and acquisitions. Cash flow from operating activities were at the last year's level despite the change in the Food Market Act in 1st of July, which shortened the payment terms. The estimated negative impact of the payment term change to Grocery Trade cash flow was approximately EUR 100 million.

Capital expenditure totaled EUR 141 million. I'll open up investments on the next page. Net debt-to-EBITDA was 1.8. It increased, but is well below our maximum target of 2.5. Capital expenditure totaled EUR 141 million. We continued the investments in growth and the main CapEx in Q3 were store site investments in Grocery Trade and the constructions of Onnela, Onninen and K-Auto shared logistics center in Hyvinkaa, Finland.

Expenses. Expenses have increased mainly due to acquisitions. Expenses, excluding the acquisitions, were up by only 1.3%. This is a good achievement taking into consideration the salary increases.

Now to Grocery Trade, where we saw increased sales and a turn for the better in grocery market share development. In Q3, net sales totaled over EUR 1.6 billion and increased by EUR 36 million. Kespro's net sales declined by 0.2%. Rolling 12 months net sales totaled EUR 6.4 billion.

In Grocery Trade, comparable operating profit for Q3 was EUR 117.5 million, and it declined by EUR 1.2 million. Profitability was strong, 7.1%. Kespro's operating profit declined by EUR 0.8 million. Rolling 12 months operating profit was EUR 424 million and operating margin was 6.6%.

In Grocery Trade, net sales increased and comparable operating profit was slightly down. K Group grocery sales were up by 3.6%. Kespro's net sales were down by 0.2%, which was close to market pace. K-Citymarket non-food sales were up by 3.2% and profit improved. Customer flows continued to grow, thanks to the price program and campaigns. Online grocery sales were up by 9.9%, especially Click & Collect and fast deliveries increased. Online sales is 3.9% of total grocery sales for the whole 9 months period.

General grocery price inflation in Finland was approximately 2.7%, but the price development in K Group stores was only 1.2%, especially thanks to our price program. Total grocery market grew approximately 3.9%, so the volumes in the market increased in Q3. Market share development for K Group grocery stores has strengthened during the year and was close to market pace in Q3. In the hypermarket segment, K-Citymarket won over market share in January, September, and I'm very pleased with this development. Even though Grocery Trade market remains price driven, there are signs of demand growing for higher quality products and services.

Our measures are yielding results. Market share development for grocery stores is positive. I have been asked if our price program is enough to turn the market share. No, it is not. We need all these 3 elements: quality, price and network. If we look at the network, our main focus is on growth centers, and we are developing all our formats.

In September, we opened a brand-new K-Citymarket in shopping center in Lempaala close to Tampere. The next one to open is K-Citymarket Paavola in Lahti, replacing the first ever hypermarket in Finland opened 1971. In '25 and '26, we are opening 6 K-Citymarkets, 12 K-Supermarkets and 20 K-Markets to strengthen our network and market position.

Annual investments are expected to be around EUR 200 million to EUR 250 million in the whole grocery store site network in upcoming years. After Suomen Lahikauppa acquisition in 2016, our network in smaller format is extensive, and we have not opened hypermarkets in recent years. Much of the planned CapEx will be directed to hypermarkets.

By 2030, the store site network will be updated in the right locations and meets upcoming legislative requirements. We announced this morning great news about new hypermarket opening plans in Helsinki metropolitan area. Getting new suitable locations in Helsinki area is very difficult, and I'm very pleased to announce these new hypermarkets. We will open a new K-Citymarket in shopping center ready in Kalasatama next to our headquarters. New store will open latest in 2028 and replace the current K-Supermarket. The area has grown fast and is expected to grow further quite heavily in the future. Shopping center Redi will be our fifth hypermarket in Helsinki and the second close to the city center.

We have also acquired the majority of shopping center Tikkuri in Vantaa and have plans to start building a new K-Citymarket towards the end of the decade. Tikkuri is in the heart of Vantaa. This store will be the sixth in the city of Vantaa after Kivisto. Vantaa too is fast growing. In Espoo Kesko's, new zoning is now in place and construction works for the new K-Citymarket have started. The store is expected to open in 2028 and will be the third K-Citymarket in the growing and affluent city of Espoo. The common factor for all these new stores is urban shopping center location with great traffic connections for both public and private traffic.

Price program launched in January removes obstacles for buying. The price program includes affordable everyday products. Prices have been cut on total 1,200 popular products. There are also relevant campaigns and personalized targeted benefits. Results have been promising, good sales development with good profitability. Customers have found the products with reduced prices well. Customer flows and average purchase has developed well. Also, daily basic purchases have increased, not only campaign sales. We will continue the price program with a long-term focus while keeping the profitability at a strong level, clearly above 6%.

Quality is in our DNA, and the quality work is never ready. Raising the bar in quality offers significant sales growth potential. K-retailers and store-specific business ideas are our key competitive advantage. We have many excellent stores, but there is still too much variation between the stores when it comes to quality. It is critical to choose the right retailers to right locations. Rotation is normal. There are some 140 retailer changes each year.

Key actions to increase quality is further sharpen each store-specific business idea. Also, we are focusing especially on renewing certain departments like bread and fruit and vegetables as well as K-Citymarket non-food. Extensive relevant selections are created by data and AI and digital services are being developed to make everyday life easier, both for customers and K-retailers.

Now to Building and Technical Trade. Cycle is recovering, notable strengthening in technical trade sales. In Building and Technical Trade, net sales increased by EUR 106 million to over EUR 1.2 billion. The increase was supported by the Danish acquisitions. Net sales improved in comparable terms by 1.3%. In comparable terms, technical trade net sales improved by 3% and building and home improvement trade declined by 0.2%. Rolling 12 months net sales were over EUR 4.5 billion.

Comparable operating profit for the Building and Technical Trade division totaled EUR 71.7 million and operating margin was 5.8% Operating profit increased by EUR 1.6 million. Kesko Senukai reported its whole January, September figures in Q3. Excluding Kesko Senukai joint venture result for the first half, the operating profit increased by EUR 1.7 million. Rolling 12 months operating profit was EUR 170.4 million and operating margin was 3.7%. Comparable operating profit increased, thanks to positive profit development in technical trade and Kesko Senukai reporting its joint venture result.

In Building and Technical Trade, Q3 net sales increased and profit improved. Market demand was again weaker than anticipated, especially in new residential construction. Technical trade sales increased significantly, while profit declined compared to the last year. Building and home improvement trade net sales grew, thanks to acquisitions, but declined in comparable terms. Despite the increase in division sales, sales margin weakened due to continued tight price competition in a challenging market.

In Finland, K-Rauta building and home improvement trade sales decreased slightly year-on-year. In Finland, Onninen sales increased for the first time in over 2 years. Norway, sales increased for Byggmakker and Onninen also profit improved. Denmark, Davidsen sales development was strong and integration of acquired companies is proceeding as planned. Sweden, ramp-up of converted K-Bygg stores continues, and it impacts negatively sales and profit development.

Credit risk is well under control. Write-downs of overdue trade receivables totaled EUR 1.2 million. In Q3, Kesko Senukai reported its joint venture result for the whole January-September period. In Kesko's Q3 reporting, Kesko Senukai's joint venture result was EUR 7.4 million. Kesko Senukai did not report January-June quarter separately. Kesko Senukai's joint venture result for the first half was EUR 0.1 million negative due to inventory write-down. As we commented in July, in operational terms, performance was roughly in line with the previous year, and Kesko Senukai's joint venture result for the first quarter is typically negative.

We have showed this picture many times already. And here, you can see now the Q3 development. We can see K-Rauta's and Onninen sales development in Finland since 2019 in this picture. Both have strong market shares. K-Rauta is the market leader in building and home improvement business in Finland and Onninen in technical trade. K-Rauta sales declined somewhat in Q3. Onninen, on the other hand, performed well and the sales increased for the first time since spring 2023.

Here, we can see Onninen's main customer groups in Finland. Onninen serves extensively various construction segments. Technical contractors represent about half of the sales. These are, for example, plumbers and electricians. This technical contractor segment can be divided 50-50 into new construction and renovation and maintenance. 20% of sales goes to industry segment, which includes also shipyards and other industrial construction. Infrastructure represent also 20% of sales. The market in infrastructure has been better than in other forms of construction. And the remaining 10% is wholesale to retailers and other B2B customers. The fact Onninen's presence is so wide helps in different situations and cycles. The much discussed share of new residential construction is currently only about 1/4 of sales. But of course, when the cycle gets stronger, the share of new residential construction will increase.

At the moment, nearly 60% of Building and Technical Trade division sales come outside Finland and the pace of construction cycle recovery varies between countries. In the map, we can see the sizes of the businesses in each country and how net sales in comparable terms have developed in Q3 compared to Q3 a year ago. There is a clear improvement in the southern part of the map, Denmark, Poland and Baltic countries reporting strong growth figures.

Finnish sales I already presented. In Norway, Byggmakker sales have increased and Onninen were at the same level as last year. In Sweden, we still have work to do in our performance, getting the sales of converted stores up. Also, the market has been difficult in B2B business. But we see cycle turning even if the turn is lower than thought earlier.

And now some words about Onnela logistics center. The center serves mainly Onninen, but also K-Auto spare parts. Construction was completed in August, and the move and ramp-up phase is happening during the quiet winter season. The center is fully operational at the end of Q1 next year. K-Rauta central warehouse, which is currently outsourced, will move to Onninen's former warehouse, which is also located in Hyvinkaa. This gives us synergies, for example, in staff resourcing. Onnela logistics center enables growth once the market strengthens and will bring efficiency benefits as volumes grow. The timing of this project was excellent. Original cost estimate was EUR 300 million and the actual cost was less than EUR 250 million.

Onnela enables future growth. The center is clearly bigger and has more automatization than the previous warehouse. And there is possibility to expand the center in the future, too.

And now to Car Trade, where strong profit development continued. In Car Trade, net sales for Q3 increased by EUR 60 million and were EUR 355 million. Net sales increased in new cars, used cars and services, but decreased in sports trade. Rolling 12 months net sales were over EUR 1.3 billion.

The comparable operating profit totaled EUR 22.7 million and increased by EUR 4.9 million year-on-year. Operating margin was 6.4%. Rolling 12 months operating profit was over EUR 82.5 million and operating margin was 6.1%.

Net sales and comparable operating profit grew clearly despite the market remaining challenging. Market demand for new cars continue to be still muted. Q3 first registration of passenger cars and vans up by 2.5%. First registration of brands represented by Kesko, up by 18.2% in Q3. This is a great achievement, and we gained heavily market share in new car segment.

Good development is a result of attractive new car models and constantly improving operational excellence. Market trend in sales of used cars from dealerships to consumer was down by 0.1%, and our used car sales were up by 25%. Also, service sales increased. We are targeting to grow, especially in damage repairs and the servicing of cars 5 years or older. In sports Car Trade, net sales and comparable operating profit decreased, but market share grew.

And now, specified profit guidance for 2025 and outlook for 2026. Profit guidance for 2025. Kesko Group's profit guidance is given for the year 2025 in comparison with the year 2024. Kesko's operating environment is estimated to improve in 2025, but still remain somewhat challenging. Kesko's comparable operating profit is estimated to improve in 2025. Kesko estimates that its 2025 comparable operating profit will amount to EUR 640 million to EUR 690 million. Kesko previously estimated that the comparable operating profit would amount EUR 640 million to EUR 700 million.

The updated profit guidance is based on the results for January, September 2025 and the slower-than-anticipated cycle recovery in Building and Technical Trade in the third quarter. Key uncertainties impacting Kesko's outlook are developments in consumer confidence and investment appetites as well as geopolitical crisis and tensions.

Outlook for 2026. The operating environment for Kesko is estimated to improve in 2026 in all divisions and all operating countries. Kesko's comparable operating profit is also estimated to improve in 2026 in all divisions and all operating countries. In Grocery Trade, B2C trade is estimated to pick up and the foodservice business to remain stable. In 2026, the comparable operating profit -- operating margin for the Grocery Trade division is estimated to stay clearly above 6% despite the investments in price and the store site network in line with Kesko's strategy for 2024-2026.

In 2026, the comparable operating profit for the Grocery Trade division is estimated to improve on 2025. In Building and Technical Trade, the cycle has not improved in 2025 as expected at the start of the year. In 2026, the cycle is expected to improve moderately from an exceptionally low level. In 2026, the comparable operating result for the Building and Technical Trade division is estimated to improve on 2025 in all Kesko operating countries. In Car Trade market, new car sales are expected to remain muted compared to long-term levels, but to nonetheless grow compared to 2025. In 2026, the net sales and comparable operating profit for Kesko's Car Trade division are estimated to improve on 2025.

To summarize, the result was good, and there was positive development in all divisions despite the challenges in Kesko's operating environment. In Grocery Trade, strategic measures are yielding results. Market share development for grocery stores has taken a turn for the better. Kesko's market share is strong. Consumer sentiment is moving to better direction and Grocery Trade market is showing signs of picking up.

In Building and Technical Trade, sales were clearly up in Denmark, Poland and the Baltic countries. Technical trade sales grew. Construction cycle is strengthening, but at a more moderate pace than previously anticipated. In Car Trade, there was a good sales development in new and used cars and services. Sports trades outperformed the market. All 3 divisions are well positioned for market strengthening in 2026.

Thank you. This was my presentation. I guess it's time for questions now.

Thank you, Jorma, for the presentation. Let's go to the Q&A now. So I will turn first to the conference call line, please.

[Operator Instructions] The next question comes from Maria from Wikstrom.

This is Maria from SEB. I still have a few questions. I would love to have a little bit more color. I'm starting with the 2026 outlook. And especially if we look at the Grocery Trade division, you are guiding for an adjusted EBIT to pick up in '26 from '25. And already, I mean, '25, we have a quite high level. So could you discuss a bit about your confidence on the earnings growth in Grocery Trade division next year? And what are your assumptions behind this growth assumption at this point in time, please?

Okay. Thank you, Maria. All in all, about Grocery Trade, of course, we have now seen that, for example, now last quarter, Q3 was quite strong, also volume increase in the Finnish grocery market and also our performance when it comes to sales, market share and EBIT was quite nice. So we believe that more and more consumers are a little bit more confident. They are now buying more, let's say, very high-quality ready meals and fish and fruit and vegetables and things like that. So all in all, we think that the Finnish grocery market will increase next year. And also, we believe that our performance will be quite strong when it comes to market share. So no doubt about that, that what we stated that the EBIT on Grocery Trade will be clearly about 6%.

And coming back to the market share question, I think you earlier have said that even you have lost the market share on the total Grocery Trade division, you have gained market share with the hypermarket concept. What is your view on the market share development in Q3? And if, I mean, do you think -- I mean, in order to facilitate faster market share growth that you would need to initiate new pricing actions? Or would this -- what you did in the beginning of the year be enough, I mean, for now?

Yes. All in all, like I said, Q3 was very good when it comes to market share development. And the total market growth was 3.9%, and our growth was 3.6%. So we were very close on the market pace. And in hypermarket sector, we have gained market share whole year, which is very, very positive. And also now kind of supermarket segment, we were very close when it comes to market growth pace.

We are losing market share on the smaller side, those neighborhood like K-Market. And biggest reason for that is that our store network has -- we have less stores, let's say, now. But all in all, I'm very confident that now Q3 was very much better than Q1 and Q2. And next year, especially, I believe that the next year will be the year that we will gain market share, and we will continue with this price program and the whole program kind of includes our pricing system. So no -- any big changes needed on that one. But I hope this opened a little bit more that.

And then finally, I know this is a kind of a small thing in a big picture, but still wanted to get a little bit more insight on the turnaround and rebranding of the Swedish Building and Technical Trade business to K-Bygg, as you mentioned separately that, that was still eating into the profitability this year. So when do you expect I mean to reach the black numbers? And what is kind of the leeway that you see or trajectory that you see in the Sweden going forward, please?

Yes. Okay. Thank you. Sweden and K-Bygg, Sami, you can take that one.

Thank you, Maria. So first of all, of course, we see the market a little bit recovering also in Sweden and more from B2C side. So consumer business is better than B2B. And of course, we need to remember that when we did this strategic move or change to concentrate our business to K-Bygg, it's mainly B2B business. So it's 80% B2B business. And of course, that is also affecting. But yes, we see that the market is getting better. And also, we see that our performance is getting better, particularly, of course, with the, let's say, old K-Bygg and then these converted K-Rauta stores are also gradually picking up now. And of course, it's a hard job to build up the B2B business. We need to be very close with the customers and also build up our offering to that direction. But I see already positive signs also.

Continue a little bit good to understand also that is it something like 50 stores we have in Sweden, something like that. And now we are talking about 7 or 8 stores, which we have this a little bit problem, let's say, so.

Exactly.

Yes.

And then my final question is that, I mean, given that your leverage ratios were up slightly on the -- after the Q3. What is currently your appetite, I mean, for further acquisitions? I think we talk now about the Building and Technical Trade segment.

Yes. Our strategy hasn't changed. So still, we are seeking growth also through acquisitions. And also, we have stated that very clearly that Sweden is the most critical one that we want to grow our business and in this Building and Technical Trade to make big changes through acquisitions. So we still are looking good targets in Sweden. Also, other countries could be possible, but clearly, Sweden is priority #1.

The next question comes from Fredrik Ivarsson from ABG Sundal Collier.

I've got 3 questions. I'll take them one by one. So first, if we could start with the slight margin contraction in BTT despite some like-for-like growth. What was the key drivers behind the slightly lower margin in B2B, please?

All in all, maybe, Sami, you can take this one. But of course, it is still a weak market situation. And when the market situation is weak, the competition is very, very tight. And let's say, so that the volume is maybe not the biggest problem now. The gross margin is kind of a challenging one. But Sami, maybe you want to continue your...

Yes. Of course, that is quite natural that this kind of environment and also this kind of, let's say, market, it's natural that the price competition is, let's say, very hard in all the markets where we are in. And of course, particularly in technical trade, we see that also. And particularly, we see that, for example, only in Finland, business setup is good. It's working well. We see more price competition, of course, in this kind of project businesses. But our model is also so that we -- a big part of that is a service business. We have wide Onninen store network here in Finland, 60 -- almost 60 stores. And we see that there, we have a very good pace also. But of course, like I said, this kind of market, the price competition is hard.

And then on the EUR 200 million to EUR 250 million store site investments, was that only in grocery or for the full group? I didn't catch that.

Grocery. Grocery, yes.

And can you remind us how this sort of stand in relation to historical levels? I recall, I guess total CapEx has been around EUR 300 million in grocery, but how much of that has been store site investments?

How about colleagues, do you remember the figures? I remember that 2020-2021, we have much less what comes to those store site investments. But Ari, do you remember

Yes. Exactly during this COVID time, it was the lowest level ever during my time in Kesko. It was something like EUR 100 million yearly. But typical level is between EUR 150 million to EUR 200 million yearly.

Yes.

So this is a slight acceleration, I would say?

Yes, we can say yes, that's true.

To add, we have been saying this EUR 200 million, EUR 250 million for quite some time now. So this was not news this time. But to reminder that, that is the level.

And also those 3 new super -- K-Citymarkets we announced this morning includes on those EUR 200 million to EUR 250 million. So no any extra investment because of those.

Yes, exactly.

And then last question on my side, on the 2025 guidance, what do we need to see in order for you to reach the high end of the guidance? I guess, midrange implies around 8% EBIT growth. But in order for you to reach the high end, what do you need to see during the last 2 months of the year?

Okay. So a couple of 3 months still to go or 2 months, let's say, so that, of course, all the businesses has performed better than we expected now. And of course, Christmas is there. If there would be an excellent Christmas, especially for K-Citymarket, and that would be -- but also it needs that the Building and Technical Trade market should recover a little bit faster. I would say those 2 are the main opportunities on that one.

Thank you, Fredrik. Anybody else on the line? Very good. There's one coming.

The next question comes from Calle Loikkanen from Danske Bank.

Just a couple of questions. If I start with the Kesko Senukai, I was just wondering about the inventory write-down that could you elaborate a bit on the reasons for this and also how big the impact of this write-down was in terms of euros?

Yes. Anu, you can take that one.

Thank you, Calle, for your question. If I put it like this, in July, we told that Kesko Senukai's Q2 figures for this year were according to last year at the same time. And it was according to that with the management report that we received. So the management report didn't show anything special. So what we did not receive back then was all figures. And for example, inventory, which is the reason why we couldn't report Kesko Senukai figures in Q2 as we need to calculate the Kesko Senukai inventory according to Kesko's inventory valuation principles.

As such, I want to emphasize that this is normal and the inventory valuation could show pluses or it could show minuses, and we haven't opened this up earlier. So we have had both pluses and minuses during the previous years as well. So there is nothing special on that side. Why we wanted to open this up was that the inventory valuation will just tell you that the Kesko Senukai is operationally doing well. So there is nothing special on that side. So the inventory valuation could be something else during the last quarter this year. So we don't want to open up, unfortunately, these kind of valuations.

But in terms of euros, I guess it was something like EUR 6 million or in that ballpark?

Well, let's say, it was negative.

And then secondly, I was wondering about the price competition in the technical trade business. And I was wondering that have you seen price competition accelerating now during this year? Or has it just continued to be that way, but you just now started kind of talking about it? And also, are you expecting any changes in the price competition now in Q4 and more importantly, in 2026?

Okay. Sami, you can take that one. But if I understand right, it hasn't accelerated. It has been like that, let's say, at least this year, not any big changes on that one. And I think it's like say, quite normal on this time when the market cycle is very, very weak. And when the market will improve, I think that also that won't be so big problem. But Sami, is that something else you want to add?

Exactly. Like you said, we saw that it started, let's say, quarter 4, 2024. And like I said already, it's a little bit connected to these projects, which I think everybody are fighting for, I mean, our customers also more when the market is like this. So it's a very price-driven market in that, let's say, segment in a way. And there, we see this price competition to be quite heavy. But other than that, it hasn't changed a lot in the big picture. And like Jorma said, we are waiting that it should gradually go, let's say, better direction when the market is recovering also.

And we need to remember also that this is also availability business. And it's not only the prices, it's also that you need to have good warehouses, you need to invest like we did now with Onnela, and this is much more than prices also. So in the long term, availability matters also.

The next question comes from Miika Ihamaki from DNB Carnegie.

This is Miika from DNB Carnegie. My first question is, you're noting here Davidsen sales development was good, creation of acquired firms proceeded as planned. I was wondering, did you realize any synergies during the quarter? If not, when are you expecting to realize them? And can you give any ballpark and naturally talk about a little bit how the integration is proceeding in Denmark overall?

Sami, you can take this one. Denmark, yes.

Yes. I -- was it the Denmark market also, first of all or?

Yes. And how the integration is proceeding.

Thank you, Miika. Good question. And like we have told, so this the closing of these 3 companies were during the 2025. And of course, we started in February, as we all remember, and then the last one came in, in June. So the integration has actually went pretty well, I would say, or at least I'm very happy that it has been a big project. As we all understand, it's a big acquisition for us. Integration has been going well. We have been keeping our most important customers also happy. IT platforms are in place. The new branding is there. So we are really the national-wide player there and ready to expand also the business. So the platform is good.

When it comes to synergies, I believe we don't open up the synergies so much. But of course, there's always synergies when we have -- when we are becoming, let's say, the big player and the national player and particularly when we are talking about B2B business and this heavy building materials. And of course, one big in a way, improvement and maybe also you can call it synergy is that we have much better logistics when it comes to growing areas like [ Zealand ] and Copenhagen area where we see more activity also now. So that's maybe to summarize of Danish business. But we are very happy to see that we are performing there and better than market also as a whole.

And then my next question is that what is your expectation on specifically Finland Building and Technical Trade profits into next year on the basis of housing market recovery? So I would like to understand how much do you -- how much is your profit recovery dependent on the housing market in Finland?

Sami, would you like to have this one?

Yes. We see also that, of course, we are also closely following what is happening with our customers and also what is happening with the housing market. I believe the message from the market has been also that it's gradually getting better, the market. And also it was, I believe, very well also opened up in Jorma's presentation that our business is not only depending of the new residential or new housing construction business. But of course, let's say, so that we are also waiting for that the market, let's say, come back or gradually improve. So then we will see, of course, that the effect will be there. It's 1/3 of our, for example, Onninen business is, in a way, connected to new housing market, and we can, of course, serve and sell much more equipment and technical and HVAC equipment and products there.

So maybe to summarize, we believe that the market will be better. Also the forecast what we are having from euro construction also is showing that the [ for a contract ] it's going to be a better market. But maybe not the first part of the year. It's going to be better when we go a little bit further 2026.

No more questions from the conference call line. I have one question here coming from the chat.

You mentioned already in Q2 report that construction recovery has been slower than expected during '25. And now in '26 outlook, you comment that it will be more moderate than previously anticipated. Has the view on construction recovery weakened further since the summer? Is the question.

Thank you. Yes, we say that Q3 was weaker than we expected in summertime. But I think that in '26, we didn't say that it would be more moderate than previously anticipated. We say that it will be moderate growth, but no change, of course, because we haven't commented earlier '26. But the change was when it comes to Q3 was weaker than we expected on July.

Exactly.

Yes.

But no more questions from the chat function, no more questions from the conference call line. I would like to thank you for very good comments and questions. And if you have any further discussion needs or questions, don't hesitate calling me. But I'd like to thank you from -- on behalf of the whole group here. Thank you.

Okay. Thank you.