Kesko Oyj (KESKOB) Earnings Call Transcript & Summary

Good afternoon, everybody, and welcome to Kesko's Investor event. Welcome all of you here at our headquarters, K-Kampus here in Helsinki and all of you behind the screens, too. Updated growth strategy, ensuring success in a challenging market environment. That is our topic today. It was 1.5 years ago, we hosted an investor event last time, and a lot has changed since. There have been changes in our management. We have a new captain on the boat. Our CEO and President, Jorma Rauhala, started 1st of February, and there have been other changes in management too and also in the market environment. My name is Hanna Jaakkola and I am responsible for Kesko's Investor Relations. So if you look at the agenda, first, Jorma will go through Kesko's strategy in a group level. And then we will jump to Grocery Trade, which is our largest division, followed by Building and Technical Trade, our international business; and then thirdly, Car Trade and that is presented by Johanna Ali, Sami Kiiski is heading Building and Technical Trade and Ari Akseli Grocery Trade. We will conclude the presentations with numbers. CFO, Anu Hämäläinen, will present the numbers at the end. And after the presentations, there is a good time for questions. We will take questions after the presentations. But without further ado, the stage is yours, Jorma. Please.

Ladies and gentlemen, welcome also on my behalf. I'm Jorma Rauhala, Kesko's President and CEO since 1st of February this year. So 4 months' experience now in this position. So I have quite a long career in Kesko of more than 30 years, and my previous job was President of Building and Technical Trade. Before that, I was president of Grocery business. And before that, I was a chain director in KCT market and also I have been a Managing Director in Kespro, so a very long career in Kesko. I'm very confident that I'm the right person to lead Kesko's growth strategy with my colleagues very successfully. So K Group today, first of all, what is the difference between Kesko and K Group. When we are talking about K Group, it includes also, for example, retailers figures, when it comes to employees and retail sales and things like that. So we have 3 divisions, Grocery Trade, Building and Technical Trade and Car Trade. Retail and B2B sales, some EUR 16 billion, 45,000 employees and 8 operating countries. Amount of shareholders now more than 112,000 and it has increased quite nicely. Then Kesko key figures, last year figures, net sales EUR 11.8 billion, operating margin 6%. And I would like to highlight, if you look at this pie in the middle, the share of B2B trade. So 40% of our total net sales is B2B sales. And I think this can be quite a surprise to many who doesn't know so well Kesko, because Kesko is very well known as a consumer grocery business in Finland. But like I said, B2B is 40%. And when we implement our current strategy, that share will increase year-by-year. Then highlights of the strategy. So first of all, some guiding principles of updated strategy. Kesko has a good effective strategy with no need for major changes '24-'26. No changes to be made to current business portfolio. Good growth potential remains in all 3 chosen business divisions. In the strategy review process, focus was on crystallizing competitive advantage for the businesses, with special focus on the customer perspective. Due to uncertainties in Kesko's operating environment, the strategy period is shorter this time around, extending from '24 to '26. When we look at our operating environment and megatrends affecting Kesko. Of course, first of all, interest rates and inflation. Weak consumer and business confidence. And of course, we can see that the lower construction activity and price-driven consumer behavior, especially when it comes to grocery business. But now, of course, we know that the inflation has came down already quite nicely in Finland, but still we are waiting that the interest rates would also decrease. Urbanization, migration to growth centers drives K Group's store site network development. I will open that more precisely later, but this is very important for us. Climate change and green transition, of course, increasing sustainability regulation reporting, but also some business opportunity when it comes to energy efficiency and energy infrastructure investments. Some demographic changes, aging population, increasing role of senior citizen customers, smaller households, immigration and availability of employees. I would say that today, availability of employees is not a big issue, but I am quite sure that it will be a bigger issue in coming years. Effortlessness, convenience emphasized in consumption habits -- ready meals, eating restaurants, express deliveries. For example, last year, we made more than 2 million fast deliveries in cooperation with Wolt. So quite many consumers, more and more consumers, want to have a delivery, let's say, in 20 minutes. It's not enough to get the delivery tomorrow. So in 20 minutes, 25 minutes. So this is a big change, and we are in good position on that one. Digitalization and AI. Increasing need for high-class digital services, fully utilizing the AI potential, improving process efficiency, more personalized customer experience. We are using, I would say, quite good when it comes to AI, but we will start -- in autumn, we will start a project where we will go through all our main processes, and we'll look, if there are some opportunities to use AI even more. Then, Kesko's growth strategy in one page. This is kind of my most important one page. This is guiding how I lead Kesko. The leading and most attractive trading sector growth company in Northern Europe, this is our vision. What comes to strategic targets; delivering profitable growth, strengthening market position in every countries, every businesses, building a focused B2C and B2B business portfolio. This means that we have a clear strategy where we operate in B2B business and we are in B2C business. Increasing customer value. Then competitive advantage, operational excellence. This is the most important one, the most critical one and the most difficult one. This means our daily processes like store concept, assortment management, pricing management, product availability, delivery accuracy, these kind of things. But we know that those are the most important for our customers. And we manage quite well on those ones but also in future, we really want that this is our compete advantage. Omnichannel customer experience. We believe a combination of physical stores and e-comm, because customer makes the decision, customers decide. And we have good examples that in some businesses, the share of digital tools and e-comm is more than 60%, but we have also some businesses that the share is only a couple of percentage points. But like I said, customer makes the decision. Key retailers is a real competitive advantage here in Finland in grocery business, consumer grocery business, K-Rauta and Intersport. And this is our operating model in Finland on those businesses. But elsewhere, we have a business we run ourself. We manage the business by Kesko, but with Commercial Spirit. Forerunner in sustainability. Of course, we have a lot of discussion that could sustainability be a competitive advantage. And we decided that, yes, it can, because we can see, let's say, every week or every day that, for example, we win some B2B customer because [indiscernible] forerunner in sustainability. Trusted K Brand, good example that if we open a new used cars outlet, and the K Brand is so strong that immediately, we have good sales figures. Our businesses; grocery trade, building and technical trade, car trade. And purpose, every day, when I wake up and I start to work, what is my most important work? My work is to support our employees, colleagues to produce best trade services. So customer and quality in everything we do. So this is a summary when it comes to Kesko's growth strategy. Of course, we have very specified strategies when it comes to division and different businesses. But this is for all as a guiding line. Then let's go to the grocery trade. In brief, in consumer business, we are #2 in Finland. Kespro is the leading full service provider, clearly #1 in that area. We have 1,200 stores, more than 700 K Group grocery stores offer online services. Last year figures, net sales, EUR 6.3 billion and operating margin 7%. Grocery trade strategy, of course, [indiscernible] open this more, but if we put it in one slide, aim to gain market share in grocery trade. Key actions, strengthening store-specific business ideas, because this is our clear competitive advantage. Focusing on strengthening chosen competitive advantage and raising the quality levels of stores. Developing store site network. Targeted investments in the store site network focusing on growth centres. Improving price competitiveness, strengthening price competitiveness and improving price image. Continuing good development in Kespro, further strengthening Kespro's market-leading position. So store site and price investments will have a slight impact on grocery trade profitability in upcoming years. However, EBIT development will be stable and profitability clearly above 6% despite investments during the strategy period. Next one, you can see the video where 2 key retailers tell about their store business idea. [Presentation]

Grocery trade store site investment. Focus on growth centres. Urbanization is expected to accelerate in Finland. On the right side, you can see the population projection until 2040. So you can see the big difference between different areas in Finland. So long-term store site investment program to ensure Kesko's competitiveness and market share development. In upcoming years, annual investment of EUR 200 million to EUR 250 million per year. Key objectives; to focus store site network in growth areas and larger units. We have to remember that when we acquired [indiscernible], we got a lot of those neighborhood stores. So now what we need now is those larger units. To open new hypermarkets, especially in the Helsinki metropolitan area; to improve customer experience, sales efficiency and the profitability of the stores; to improve the online shopping experience. By the end of decade, the store side network will be updated in the right locations and meets upcoming legislative requirements related to energy efficiency and greenhouse gases. Then Building and Technical Trade in brief, a leading operator in building and technical trade in Northern Europe, B2B trade accounts for more than 80% of net sales. And our biggest country is Finland, then it's Norway and then Denmark and Sweden. Net sales, last year, EUR 4.2 billion and operating margin 5.1%. You can see the big difference if you compare 2022 when the net sales was EUR 4.6 billion and operating margin was 7.1%. So you can see the big change in construction market in last year. So acquisitions have played a significant role in international growth. First of all, if I picked Onninen, we acquired Onninen in 2016. And Onninen that day operated in 7 countries, half of countries were loss-making when we acquired that. Now the situation is totally different. All the countries are profitable and also market share has gained quite nicely. Then Norway, Skattum, Gipling and Carlsen Fritzoe, which we acquired in 2018 and 2020, was a kind of -- we changed the whole business model. We used to have a wholesale model in Norway, but now we own the business. That was a big change. And the wholesale model, what we have those agreements with retailers was something like that, the EBIT maximum was something like 2%. But '21, if I remember right, we did something like 6% EBITDA. But of course, it has decreased now because of weak construction market, but totally a different situation now. Then Sweden, we used to have a loss-making K-Rauta for more than 2 decades. 2019, we acquired Fresks Group and we kind of implemented or built a platform for B2B business. And since that, we have made some 10 bolt-on acquisitions in Sweden. And end of this year, we operate only with 1 brand K-Bygg. And then our latest one, Elektroskandia in Norway and Davidsen in Denmark. So Elektroskandia, Kesko acquired Elektroskandia, Norway, in March 2023. And it was one of the most significant distributors of electric cars in Norway, net sales down EUR 250 million. The deal made Onninen market leader in electrical wholesale in Norway, with a market share of over 40%. Green transition and technical requirements support demand for electrical products. Integration now completed and full synergy potential starting to materialize. We implemented that integration at the end of May. Then Denmark, Kesko acquired 90% of the previously family-owned Davidsen company. Davidsen is something like EUR 400 million business, market share in Denmark 9%, but the important thing is that in southern part of Denmark, we have now some 30% market share. Plenty of potential for further consolidation on the Danish market. It's very fragmented market. Good opportunities for growth, both organically and via acquisitions. And Davidsen part of Kesko since first of February this year and has developed well according to plans. And next video, our Counter Director, [indiscernible], will tell our cooperation, how it has started. [Presentation]

So building and technical trade summary, focusing on securing profitability and generating cash flow. Key actions; in Finland, continuing growth and winning market share. Both companies Onninen and K-Rauta are in very strong position. They are market leaders, very good profitability compared to competitors. And when the market will recover, they are in a very good position. Sweden and Norway, stabilizing and improving business performance, integration of acquired companies. Denmark, finalizing the integration of Davidsen and improving performance through growth. Growth through acquisition, M&A to boost profitable growth in Northern Europe, and I would say that especially Sweden and Denmark are in our priority list. And our long-term strategic target of 6% to 8% EBIT margin is still valid. I show this slide because I remember when I started as a President of building and technical trade in 2018, and we made a new strategy. And at that time, our operating margin was something like 2%, 2.4%. And then we set a long-term target to reach 6% to 8% EBIT. And to be honest, on that time, it seems to be quite far. But 2021, we reached 7.1%. Also 2022, we reached 7.1%. And last year, very soft market, still we reached 5.1% EBIT. So I see this 6% to 8% target is very valid in long term. Then Car Trade in brief. So we have 3 businesses in Car Trade, new cars, used cars and services. So net sales is something like EUR 1.1 billion and operating margin was last year 6.8%. And if you look this sales split last year, our share of new cars was 54% and used cars and services together 46%, but if we look first quarter of this year, it was vice versa. So services and used cars was already 54%, and I see a lot of opportunities, especially on that area. Car trade focusing on performing better than the market in all businesses. I like that one, in all businesses. Key actions; continuing with growth strategy. Major turnaround and continuous development establish a robust foundation for the next strategy period. Maintaining the balanced business portfolio; new cars, used cars and services. Cooperation with the Volkswagen Group, continuing the good cooperation with the Volkswagen Group and Porsche AG. Sports trade, continue as a strong market leader in sports trade in Finland. Solid EBIT development and #1 brand awareness and preference. Then Kesko's medium-term financial targets remain. Operating margin, comparable. Our target is over 6%. Last year, we reached 6%. Return on capital employed, comparable, over 14.5%. Last year figure was 13.4%. Interest-bearing net debt to EBITDA, excluding IFRS 16 impact, at maximum 2.5. And last year, it was 0.7. So those targets remain. Then sustainability is integrated into our business. We didn't make any new sustainability strategy this spring because we made this in spring 2022, and this is very valid. And I would say 2 main kind of decision -- what has changed. First is vision. We enable sustainable choices for our customers and drive change throughout the value chain. Because, for example, if we look at those greenhouse gases, something like only 1% comes from our own access like logistics store site. 90-something percent comes from the production of the product, what we sell. So of course, the whole value chain is important. And the second thing is that now sustainably has integrated into our business. Someday, it used to be kind of headquarter office but sustainability office. But now it's daily work of thousands of people and that is how it should be. Then Kesko Group Management Board. So many changes and kind of chain reaction, I would say, there. Because when I started as President and CEO on 1st of February, it meant that we need a new President for Building and Technical Trade. Then Sami Kiiski started on 1st of April on that position. But Sami's previous job was President of Car Trade. So we needed a new one for Car Trade. And in fact, today, we have announced and appointed that Johanna Ali was appointed President of our Car Trade business. And once again, congratulations Johanna, because it was released today. So those changes and also then our new CFO, Anu Hämäläinen started on Saturday, first of June also. And then we have Lasse Luukkainen, who is now responsible about our legal and sustainability. So 5 changes in that, but all of those are very experienced and know very well Kesko. And I'm very happy, pleased and satisfied what kind of management team I have now. Then Kesko strategy summary. Our business portfolio is set to remain stable, with focus on 3 core divisions. Targeting growth and profitability improvement as outlook strengthens in construction in '25-'26. In grocery trade, focusing on maintaining profitability and gaining market share. In building and technical trade, focusing on securing profitability and generating cash flow. In car trade, continuing with growth strategy in new cars, used cars and services. Highlighting the importance of people and culture and balance sheet moderately leveraged. So this is my part. And now I think Hanna will come and Ari, maybe after that.

Yes, exactly. I have one question for you before you can take a seat on the stage. As a CEO, from your point of view, what do you see as the biggest risks when executing this updated strategy you just presented?

I would say it's quite clear that if something happened in operating environment because we trust that the construction market will start to recover, let's say, maybe end of this year and next year should be much better if there would be some surprises that interest rate doesn't decrease or something like that and the construction market would start to improve, that would be the biggest risk I see.

Very good. Thank you, Jorma, for the presentation, and let's move on to grocery trade. Ari Akseli, the stage is now yours, investing to gain market share while maintaining good profitability.

Good afternoon, everybody. I think the headline tells the story that you are wondering, how we are able to gain market share at the same time and keep the good profitability. Good part in this business is that food is something that everybody needs every day, that makes it solid business. We are #2 in Finnish grocery retailing market and #1 in the food service market. And we have a number of world-class grocery stores. Actually, we have a couple of stores which are only nominated stores in Scandinavia in grocery areas, which has like a store of the year Citymarket Järvenpää, Citymarket Turku Länsikeskus and so on. What are the megatrends in grocery trade? Buying power is still low and the customer confidence is also quite low. Price is still important. But at the same time, customers are looking how to make their life easier. Offers and campaigns are important to drive customer flows and daily competition is hard. And at the same time, demographic changes, people are aging, concentrated in the growth areas like Helsinki City area, Turku [indiscernible] and so on. Growing number of smaller households, growing importance of the seniors and immigrants. And this has, of course, reflected the changes in our store network. Megatrends in consumption, people are eating more and more outside the home and convenience is more and more important. And for some customers, also the personal wellbeing is important. And this is something that we use to -- more based on data that we are able to provide every customers exactly what they are looking for. So importance of AI data and digitalization is growing all the time. And this also opens new business opportunities in several areas like marketing and using this data and doing cooperation with the suppliers. Competition is very hard in Finnish market. All the operators are investing heavily to the store networks, and at the same time to the prices and selections in the stores. Also very hard competition in the nonfood online sales. So this is the summary. The vision is that we are the most attractive grocery stores in Europe, the most personal and valued customer experience. How we do it? Keep on maintaining strong profitability and cash flow, EBIT clearly more than 6%, gaining market share, delivering customer value. Controlled, long-term development of store site networks, investments like EUR 200 million to EUR 250 million yearly. And we keep on doing excellent shop and gaining more market share for Kespro. Advantages, K retailer's entrepreneurship and winning store-specific business ideas. This is something very special with our business model. Modern and competitive store network, e-commerce and services to support growth. Most attractive customer-driven grocery stores, especially in the fresh products. Departments like fruits and vegetables, breads, [indiscernible] meats and so on, they are especially important for the customers. We are very advanced at how to use technology and AI to improve the customer experience and efficiency. And we are the most sustainable grocery trade company in the world. We have a very balanced portfolio. We have K-markets for the neighborhood stores market -- K-supermarkets and K-citymarkes for the biggest market areas. And Kespro for the food service market. And one of the questions we have got already is that how the hell Kespro can keep on gaining more market share and be very profitable in this area. That is something that [indiscernible] will open in the next video. [Presentation]

In the nutshell, find out what the customers want and deliver it. So grocery trade summary; maintaining profitability, gaining market share, developing store site network. We have very long-term plans how to develop the store networks until year 2030. And main idea is that we open stores where the customers are coming, in the growth centers, and we are updating the store network to be larger stores. Improving prices by systematic program, financed by both Kesko and K-retailers and also, of course, by suppliers. Raising the level of store-specific business ideas, focusing on fixing the basics, actively monitoring store performance. We have the best stores in Finland. And actually, they have been noticed by international level. But at the same time, there's too much variation. Improving fresh departments, restoring competitiveness in selected fresh departments. Investing in omnichannel and personalized customer experiences utilizing advanced technology, AI, to further develop processes and improve efficiency and customer experience. Inventing new business models for new sources of incomes by using K-Group's ecosystem, for example, media and data businesses. This has been growing heavily and [indiscernible] much of new opportunities in this area and keep on gaining more market share for Kespro with the profitable way.

Very good. Thank you, Ari, for the presentation. And also one question for you before you can take your seat there. You mentioned several strategic actions in your presentation here. In the end, if you have to pick one, what would be the most effective...

When you think about retailing. Retailing is [indiscernible]. So the whole package matters. Everything is important for the customers. But we will start by raising the bar of the store-specific business idea to new level. And at the same time, we have very extensive price program. And after that, it takes longer time to open new stores because store network is about 50% of the success.

Thank you. And again, let's move on to our building and technical trade, strengthening our position for future growth, Sami Kiiski, stage is yours.

Thank you, and good afternoon from my side as well. My name is Sami Kiiski and I'm President of Building and Technical Trade here at Kesko. The future looks actually very bright and interesting for us. I have recently visited some of our countries and seeing our local people there and some of the partners and, of course, sites and also businesses. And I see that we are very well positioned for future growth. And of course, we are supporting and helping our customers and even societies to tackle some of the future challenges, but of course, taking full advantage of opportunities. So very much looking forward to that. Then let's look at the megatrends shaping our business. Of course, economic cycle. As we all know, we are in the building and construction and even housing markets, which affect our business, and that's very much capital intensive business. And of course, the interest rates and ability and willingness to invest plays a big role here. As we stated already before, we believe that recovery will start and in 2025, the cycle will turn. And then, of course, market environment, outside of Finland particularly, is creating possibilities for further industry consolidation. Then, of course, increasing investments, both in green transition, but also urbanization is creating big, big opportunities to our businesses and our partners and customers. So there's a growing demand for energy usage and demand is actually growing quite rapidly. And at the same time, commodities and businesses should go away from the fossil fuels. And that means, of course, that there's a big and fast development of technologies related to clean transition, and we are playing a big part of that, of course, also. And then increasing investments for energy infrastructure, but also urbanization is creating other kind of infra investment needs, and there's actually quite high need for electric grid and also water and sewage investments. And of course, people like Ari also mentioned, people are moving more and more to cities and businesses moving to cities, and that creates great possibilities to us also. Then renovation business, there's a high underlying demand for renovation and of course, technical infrastructure investments there as well and need for renovation is growing steadily as we can see that. And at the same time, as Jorma mentioned also in his presentation, this is coming more and more professional driven business. And I have to mention also that there's a big opportunity to our business through this EU regulation, which is coming. So this will be quite much regulative environment also when we go to the future. That means that building and construction needs to be much higher level when it comes to climate matters and also how we build and how we use these buildings. Then, of course, the digitalization and technologisation. As we all know already now, our homes are getting smarter, but also how we build up the buildings and constructions is getting smarter and smarter. There are different kind of technologies to measure, for example, how much time is needed to do some processes. And of course, the technological transformation is playing a big part. We see that digitalization and use of AI is helping a lot of companies, but you need to be able to invest also to those matters, and that's improving efficiency, of course, then in the later stage and customer service. This is our strategy. One major leading operator in building and technical trade in Northern Europe. Our targets. We are a growth company. We want to grow in a profitable way. We still see that winning market share in all our operating countries and businesses is possible very much so. And of course, we are looking for targeted acquisitions as Jorma also presented in his presentation. And then very hard of our business and mindset is also that we are delivering customer value through our businesses and offerings. Then our competitive advantages. We believe that this country-specific strategy is delivering good results. That means that we can do local adaptations according to our customer needs, according to our business needs and according to our building and home improvement needs or technical trade needs in any given market where we are operating. And of course, then availability is key in our business and delivery accuracy also according to our customer demand. And then the best customer experience and proactive sales. I like also this proactive sales sentence a lot and I believe in this, a little bit more about that later. And then enabling, of course, sustainable choices to our customer is very key. And we see also that here the regulatory environment is playing big part and also our customers are demanding and needing us to provide more data also here. And then digital services and improved customer efficiency, we will show you also one video after this page, and you will see a little bit what we are doing with one minute there. And then balanced portfolio. But now let's hear about our Onninen story. [Presentation]

What a great customers we have and what a great company this Onninen is. Okay. Then this is last page of my presentation to summarize our strategy. Of course, like I said, profitable growth, both organically and through M&As, very important, and we see that we can win the market in all our operating countries. Now of course, we all know that it's a low cycle in our business. And at the moment, we are very much focusing also that how we can secure our profitability and generate also cash flow. And of course, Jorma already mentioned, but this is very key for us that our strategic target is between 6% to 8% in operating margin, and this is very much valid still. K-Rauta and Onninen, we are clear market leaders here in Finland, but also we see that there's a market in that kind of situation that there's a lot of room to improve and do even better sales. We have store-specific business idea there as well. We have a destination categories where we are winning to market at the moment also. And then we are focusing, of course, the growth centers. Even this year, we are opening a new K-Rauta in greater Helsinki region, and that's the big outlet which we are opening. Of course, in Onninen market share, we're going to increase by getting more knowledge, getting better offering and, of course, doing better sales to green transition products. And there also, we see that we can still grow our store network. So Onninen Express stores. And also, as you saw already in the video, we are very much focused and ready to invest on our customer-focused digital solutions. Then Sweden, stabilizing business performance. There we are in the process of converting our K-Rauta, which we have announced before already to K-Bygg and that means basically that we are also renovating and will be changing the setups of our current stores and network and building up this kind of B2B environment and platform where we're going to then success in the later stage, and already, now we can see that, that is working quite well. But of course, there's also room for improvement. And also in Sweden, we are looking for suitable acquisitions and achieve economics of scale. So getting bigger and more relevant to our customers. Norway, implementing business performance improvement programme. This is already now today working in Byggmakker and there, we clearly want to be better locally and also be stronger and drive better EBIT and grow also. We have been finalizing this year Onninen-Elektroskandia integration. We had a quite successful ERP integration during May. We still have some integration otherwise to do. But we see that this is also a super good platform to start to grow and be more close to our customers there. Then Denmark, you saw our country manager [indiscernible] presenting also, and I was visiting Denmark last Thursday, Friday. And of course, the Denmark as country is very strong position at the moment, and companies are very international there and healthy companies. We believe that Denmark will be one of the key drivers in our business also in the future. And we are well positioned already now. And we are, of course, targeting to be a national-wide player there through M&As. All countries, all in all, all proactive sales. So we see a little bit that this is the mindset. If the market is down, for example, 5% to 10%, there's still 90%, 95% left and somebody is always winning and somebody may be losing. So we want to be on the winning side, clearly. Then margin and cost management. We are careful even now following our stock and what is there and making relevant moves. But this is, in a way, daily business as well. Then digital solutions driving excellence in there and also we are investing there all the time for customer experience. So thank you from my side.

Very good. Thank you, Sami Kiiski. A lot of different actions and sources for growth. But where do you see the main source of improving profitability, if you look at the actions you presented.

Of course, we can do that in everywhere. But the key is, of course, that we succeed in Sweden and Norway. So implementing these structural programs there and, of course, taking advantage of the platforms which we have there. So I would say Sweden, Norway, very important for us and then Denmark.

And now we will see a true Investor Relations dedication by Johanna Ali coming here after sports injury. So presenting us Car Trade, accelerating growth in all 3 businesses. Take your time, please, Johanna.

Thank you. And good afternoon also on my behalf. Let's now move to the smallest division in Kesko, but maybe the most emotion oriented business, car trade has always. Always when customer visits in our stores for any reason, there's always strong emotions involved. If you look the megatrends in car industry and car trade automotive business, they are really global ones. And I want to highlight that these are relevant for Finland and for the Nordics, but really a global ones. For example, used cars, the business is growing. It's actually from 2 perspectives. First of all, the value of used cars is increasing due to the fact that newer cars are imported to Finland as a used car. And then also the business volume itself. Because the value is higher, it's more professional. And traditionally in Finland, used car trade has mainly been from -- or the bigger part has been from consumer to consumer, but now when the value is higher, the car is newer, it's much more common to do it from company to a consumer. Fuel revolution has been a topic already for a while, and maybe also a topic that people have to thinking that, is it happening or not? I can highlight that it's really happening. Electrification is here, and it's really fast in the Nordics and in Finland. And we have a great position in electrification due to the fact that we represent the brands who are really strong in EVs. Then, of course, new players and new roles are visible in the market. New players first, for example, all know the Chinese brands coming to this business and taking role, but also the roles within traditional players and for example, distinction between the importer and dealer is changing. And then there are like, let's say, more like a common trend for all the businesses like macroeconomical and digitalization, which are, of course, really valid also for the Car Trade and both affecting strongly on consumer behavior. How these all cases then are reflecting to our strategic summary for coming years. Our vision, we know that we are in a really interesting business, like I said, strong emotions in automotive business always. We want to be the leading and the most interesting in that sector. Targets are clear, really clear. We want to win the market in all the businesses. We are present providing a strong sales and EBIT. We want and we will improve the customer and employee experience, loyalty and experience is really a strong driver in this business. And we want to be the #1 in brand awareness and preference as a K-Auto. Then the targets are, let's say, strong, but also the competitive advantage is to base our journey to reach those targets are really clear. We have a balanced business portfolio what was also already mentioned by Jorma and really strong position in the entire value chain. Due to the many changes in the last strategy period, our operational efficiency is strong. And the pace of digital development is great. We have a strong partnership with Volkswagen Group and Porsche and both manufacturers are now having a great product portfolio and product portfolio developing exactly to the direction of what is the consumer demand. And of course, K Group's strength and synergies are really like a strong driver for us. Let's take, for example, in the used cars, the K brand and the trust and reliability related to that one is a strong driver in used car business. And our businesses are new cars, used cars and services, like I already mentioned. Let's look now a video about the services and also giving a picture, the wide range of services that we are providing and also the development or the modernization in our services. [Presentation]

Yes, customer centricity is really the key. Here still in the nutshell, the main message. So first of all, we see that there is no need for a major change in the strategy due to the fact that we had a strong previous strategy period. And we just focus on ensuring that the development continues and the development will be as fast as it used to be now during the previous strategy period. We ensure the balanced business portfolio; new cars, used cars and services, to be present in the whole value chain and to provide business and profitability in all parts of it. We already heard that Jorma likes the comment that we want to grow, grow faster than the market in all the 3 business areas, and that's exactly the plan. We built the plan for organic growth. But of course, we investigate potential M&As as an opportunity, but those are not a must to realize this plan. And then last but not least, really a key element in our strategy is to have even stronger focus on our own people and staff. This is really a people-oriented business. What we do and especially in the services, in maintenance function, we are really selling the professionalism and time of our employees and we want to create even stronger winning team culture and believe that by doing that, the best professionals then want to work with us, they want to work in winning teams. And then the best teams, of course, provide the best customer experience and best business. Thank you.

Thank you, Johanna. And the same question to you, as I also asked Ari and Sami, where do you see the most growth potential, you have used cars, new cars and services? How do you see that?

Yes. Yes, of course, what was already mentioned was clear, we want to grow in each of them, but the biggest growth potential I see in used cars and services. The scale of the business is bigger and also the opportunities what we have and what we have done in the past, what we still see as a development opportunities there are the best.

Thank you so much. And now at this point, I would like to say that you can send your questions via chat function, the ones watching this through the webcast, it takes some time before I get the questions through the function or through the chat. But now last but not least, the favorite area of all the investors, numbers, focusing on cash flow and efficiency, CFO, Anu Hämäläinen, the stage is yours.

Thank you, Hanna. Hello, everybody here in Kampus as well as online. My name is Anu Hämäläinen and like said before, I have been working in this position from 1st of June, so a couple of days and my previous work life has been 3.5 years now here in Kesko. And before that, approximately 20 years in Wartsila as total. In the middle, I was working also on the investment banking side and also on the construction business. So focus on cash flow and efficiency. Profitability bridge. You can see here 2019 illustrative EBIT, so meaning that we have adjusted the 2019 numbers so that we have Kesko Senukai, it's treated as a joint venture. We start EUR 436 million and growth from there until now, the first quarter 2024, has been EUR 117 million. This growth is coming from the sales increase, what we will see on the next slide as well. And also there has been, as you know, these kind of exceptional times due to the coronavirus, so COVID-19 as well as inflation has been doing good things for our growth as well. But we also know that on the building and technical trade side, the situation is not as good today as it was a couple of years back. And this is one of the reasons why the margin is only EUR 35 million here on this bridge. OpEx efficiency has been EUR 88 million. And what we have been doing here is really looking at our costs very much. We have also been looking at indirect purchasing processes and these kind of things. So we spend some time to really look at how we manage our costs in Kesko. The acquisition shows minus EUR 3 million. And here, we need to remember that we have been purchasing also companies to building and technical trade during the times when times were better. And today, still, even though we think about building and technical trade numbers today, and we are on minus EUR 3 million in acquisitions during these 5 years. So I think that we are still on a very, very good level. So as such, I think that when times move to better direction in the future, I believe that these numbers will show much better numbers. On other plus EUR 13 million, that includes Kesko Senukai among others. So we end up into EUR 686 million as profitability bridge. Key figures. Net sales, it has been increasing a lot during 2019, 2022 and stayed on a very stable position, you could say here. As you know, our grocery trade sales is really stable. On the building and technical trade, it has lowered a bit. And on the car side, it has been on a really good level as well during these times. So as such, I would say that the net sales is also on a nice level, thinking about what is the situation in the world right now and also on the interest rate side. So I think that the numbers are showing that we are really strong doing the right things here. Gross margin has been varying between 14.2% and 14.7% approximately. On that side, I think also that we have been doing pretty good things. Because at the moment, we are on a good level on that side as well. OpEx has stayed also on a good level. We have been coming down from the 2019 year to approximately 17%. So still when thinking about when our sales will start to go up again, I think this number will look better as well. EBIT has -- like we said in the beginning that our EBIT target is between 6% and 8%. We are still on 6% level. So very happy with that. The ROCE percentage is showing a bit more than 12%, 12.5%. I believe that also in the future -- if we think about the situation that we have been saying that 14.5% is our sort of the target during the cycle, I think that in the end of the cycle, we are going to be there, hopefully. And then now we need to remember that we are on the bottom of the cycle, probably here as well with our figures. Net working capital to sales is showing close to 3.5. It has been increasing, but of course, when the sales start to increase, probably in the future, so it will also show different numbers then as well. But I think that, in general, when looking at all these numbers, during this kind of times, we have been doing a good job. When looking at the operational efficiency, operating expenses, our expenses are approximately EUR 2 billion, personnel expenses is 40% of that. We need to remember that K-retailers, they have their own personnel. So they are not included in this number. Property maintenance and other costs, approximately 10-ish percent. Marketing expenses 10-ish percent. Also on the marketing expenses side, we need to remember that K-retailers are paying the most of that because this marketing expenses is mainly grocery trade. Our cost ratio is showing approximately 17% at the moment. And I think that also here, as you know, when thinking about the whole operating expenses amount, so there is a lot of possibilities here to decrease also this cost ratio as well in the future. So we have to look at all these kind of possibilities that we have on the indirect purchasing side processes and these kind of things. So looking at those kind of things in the future, I believe that we are able to show good figures in the future as well. Capital expenditure rolling 12 months is EUR 776 million. As you can see, during the corona times, COVID-19 times, 2020, 2021, we have been doing less capital expenditure as what we have been doing now. The store sites are one of the biggest ones here. As you can see, they have been increasing all the times. We need the store site improvement. And then on the other, which is the bottom part here, it includes Onninen and K-Rauta's logistics center as well as our leasing car portfolio. And on the top part, you can see the acquisitions there. So we have been doing a lot of acquisitions now during the couple of years. So ICT is really staying on the same level pretty much. And if I need to think about, for example, let's say, this year's and next year's capital expenditure, I would say that we are on a EUR 400 million level perhaps, so that all the acquisitions are excluded as well as the sort of ad hoc if we buy some kind of stores or land plots or something like that. So those are excluded now from this amount. Cash flow. Cash flow from operating activities has been quite stable. If we look at the whole thing here, we really have these kind of key initiatives regarding the cash flow. We need to maintain good profitability as well as we need to improve our working capital efficiency and especially, we need to concentrate on our inventory. So inventory is really important. Though we need to also remember that our business is like that, that we need to have inventories. Especially B2B business, we need to really have inventories to be able to sell it. We also need to prioritize the CapEx and, of course, the project. So really have a look at which CapEx we do and which projects we do. So these kind of things. Our financial position. Net debt/EBITDA is 1.1. Our maximum target level is 2.5. So we really have firepower still there of approximately EUR 1 billion. Our gearing has been now 121%. But we need to remember that our balance sheet is strong. So it enables us to do really this kind of organic investments as well as acquisitions in line with our strategy. Also, we are able to pay our dividends according to our dividend policy. And here, you can see our dividend policy. So for this year or for 2023, we paid EUR 1.02 per share in 4 installments. And our aim is really to steadily grow our dividends of some 60% to 100% of our earnings per share. And as you can see, the numbers here, last year, we paid 80% of our EPS as dividend. This is my last slide. So just showing you our number of shareholders growing. We have been really looking every month. So does it turn down, but it hasn't. Also May was increasing, so we have really 112,000 shareholders approximately at this time. So as you can see from January 2020, it has really been a nice increase on that side. Our ownership structure is really balanced at the moment. So 33% is coming from the foreign ownership. Our Finnish institutions are 34% and our retailers' association and related parties is 7%, which is 19% actually of the votes because they have so much A-shares. Our households are owning 26%. So I hope I did it in time.

Very good. Thank you, Anu. Same question to you as I asked Jorma. From your point of view as a CFO, what do you see as the biggest risks for Kesko?

Well, biggest risks, I would say that perhaps the world situation and the market at the moment, because it is influencing on our businesses as well as, of course, the interest rates. We have been really waiting for interest rates to go down, and they are postponing it all the time. So it's really like I'm waiting for them to really go down so that perhaps people start to invest more as well as the companies. So it's really impacting on the companies as well as people.

Very good. Thank you. You can take a seat. I'll sit down here as well. And now it's time for questions, and let's take questions, first from the audience. Please raise your hand. And my humble request is one question at the time. So easier to answer. Calle here, please.

Calle Loikkanen from Danske Bank. I was wondering you have 3 divisions, pretty different to each other. So what sort of synergies are you really seeing between the divisions and does it make sense to have all of them under the same roof?

Okay. I can take this one. So of course, I think that we have to remember Kesko's history. We used to have several of businesses, even industries. And 2015, we decided to focus on those 3 divisions and we divested a lot of businesses since then. I would say that why we have those 3 businesses is not because of synergies. All of those businesses are strong, profitable, we have growth opportunities on all of those. There are some synergies, not so much, but there are some synergies, what comes, let's say, some IT synergies, synergies in logistics, cost right, also in sourcing, some synergies, but not so much. But where there are those synergies, of course, we utilize them. But we have to also be very careful that if there is no synergies, I would say that even these synergies. For example, Onninen in Poland and grocery Finland doesn't have so much common. But let's say, there are some synergies, but each of those are independent kind of businesses, and we have to run like they are independent businesses. But of course, we gain if there are some synergies.

All right. That's good. And then if I continue on the margin side or the profitability side of things and perhaps starting with grocery trade. First of all, you mentioned that the margin target is clearly above 6%, and I was just wondering what that word clearly really means?

Clearly, it's clearly above 6%. Yes, that is what means.

Then perhaps continuing on the grocery trade. Do you think that you can improve the EBIT margin during the strategy period from, let's say, the 2023 level despite that you want to strengthen the market share, and you want to be investing in the store network as well. So is it doable to improve from '23 during the strategy period.

I think it's going to be challenging if you look about the margin. But if you look about euros, then it can be done. Because, of course, we need to invest through the store sites and we need to invest through the price program. But if you look about the reason behind why we are a so profitable company, the main reason is growth. If you are able to grow the business, then you get more euros. And that really matters.

Yes, absolutely. I agree. And then perhaps touching on the same topic on the building and technical trade. The strategic EBIT margin target is 6% to 8%, is that for the strategy period? Or would you need more time to get back to those margin levels?

Yes, I can take that one. This was kind of a long-term target. So I would say that little bit longer than this strategy period, 2.5 years, but it's not impossible that we can be quite close. Of course, it depends how the market will recover. But like said, we have reached already 7.1% in 2021 and 2022. But it's a long-term target, but we could be quite near at the end of this strategy period.

Of course, we are also investing for future growth. So we believe we have the logistics center coming as mentioned here also, and we think that we can improve our profitability in the longer term.

Next question from the -- there.

Svante Krokfors from Nordea. First question goes to Jorma. Regarding the management changes that you have had recently, what strikes me is that it's mostly internal recruitment? Should we read something from this like that you don't need any bigger changes as you alluded to strategies in place, just sometimes it's good to have an outside view also.

Yes, that's true. Like I mentioned, when I changed the position, kind of chain reaction started and, of course, every time -- every of those 5 positions, I was one of those, was very carefully looked inside candidates and also outside candidates. And that was also in all of those positions what we have made and -- but the end result of that has been that we have so good candidates inside house and then it's clever to do so. And I think it's also very important to our employees, all of people that they can see that there are a lot of possibilities in Kesko and I'm very, very happy how we have performed. But of course, we know that there can be different times also when you are making new strategy or implementing that one. Do you need a kind of new sources, new ideas or what. But of course, we can see also the for example, Sami, your background is seen in some other businesses before Kesko, the sports trade and car trade, now building and technical trade. So also new ideas, I think, from different businesses where you come. But every of those were very carefully. And I would say that, for example, Johanna Ali appointed today, and there was a lot of good candidates, a lot of good candidates also from outside. But the decision was easy, so Johanna is the best one of those.

And then second question regarding the energy performance of buildings directive, which now has become a law. Could you elaborate a bit on what that means for -- or what do you think it means for BTT growth going forward, but also what it means for Kesko when it comes to investments into grocery properties, for example.

[indiscernible] opportunity for BTT and maybe Ari can continue about grocery business, what it means [indiscernible].

Exactly. I believe there's a big opportunity for us ahead because the regulation is actually quite hard to say so. So it's coming in force in 2030. But partly already in 2028, if I remember correctly. And that means that all the new constructions, all the new buildings has to meet these standards, but also it means that some of the old, let's say, buildings or -- yes, basically, buildings have to be renovated so that they meet these new emission targets and also that the heating, for example, and cooling is done with the new kind of solutions. So I believe that there's a great potential, and this is covering also all our operating countries. And I think we are in a good position to take advantage of this. We have very professional people also here and then our platforms are very much suitable for these kind of products.

And I think this is one of the reasons behind that we have this store network program for year 2030. And it's a good opportunity for Kesko. At the same time, have renewal of the stores and better located stores in their own centers. I think it's going to be good for us in the long term.

And perhaps a question to Ari, you mentioned that store-specific ideas will be the most important of the topics that you had there. Is it still easy to find new ways to implement new ideas or it is getting increasingly difficult to find new ideas.

I think this differentiation is critical for us. And I think it's challenging. At the same time, we have brought so many new things to the market, like sushi meals for example and restaurant level meals as a general. But at the same time, we have built up a very unique business platform and tools for the store owners, how to build up store-specific assortments, pricing and that has built so many capabilities for us, differentiates us, our operation in the store levels, which is not so easy to copy because also the structure of independent store owners is supporting that. And we can see the results that the stores that are using these very model AI-based tools, you can see all the numbers are getting better, especially the most important numbers like gross margin per square meters.

I want to maybe add that also that every time you don't need something new like sushi or something like that. Quite often, those are kind of basic processes when you improve those ones, quite often, it is enough, but there's a lot of room also to improve that one.

Yes. That was an excellent point. In many cases, when we can see big changes in sales during that new stone over come to stores. And we ask, what hell you did do? I put the basic right.

Any further questions at this point here.

This is Miika from DNB. Given that AI continues to be very topical today and a little bit following on the previous question. So can you just a little bit explain how and what is your plan to maximize the benefits of data and AI. And if you can provide concrete examples to demonstrate that you are ahead of the competition in these areas.

Could this be by division by division, if you want to have some examples. Ari can start and...

Yes. A good example is, for example, customer experience. If you look about in the past, history, where you start to do things based on the focus on certain customers. It was very expensive, for example, in marketing or how do you tailor your store-specific business ideas. Now it's getting close to 0 in our system. A good example also is that how you are doing marketing. You are able to reach every customer with the messages which are relevant for them. And at the same time, you can cut off the cost of making these ads. We have a couple of examples like cutting off 90% of the cost of the producing marketing, 90% of...

Yes, little bit same kind of examples. But to give some concrete from our business, I believe Onninen was here a good example that we have 20 million lines. So 80% of the lines sales are coming through online orders, and there's a lot of improvement what we have done with machine learning and AI. And I believe it's also the mindset there that the whole company, for example, building and trade that we use this AI. And we are learning all the time. We have special teams already now learning. They are ahead of the whole organization and they are learning new ways to use the AI. And particularly, we see that it's interesting that what we can do with the processes because we have already so much this data and how we can help our processes to get better and simplify also somethings.

Yes. From the Car Trade, maybe the best example of what we already do is the stock management and purchase of used cars are most -- mainly related to used cars. Both used car prices and daily management of the prices, how to follow the market and how to follow the old stock, that's much helped by AI and also the purchase of used cars. For example, the consumer is providing his or her used car. Can you buy this one? So in the past, we always needed human being to price it, but now we can utilize also the AI.

I can add also that, like I mentioned that in autumn, we will start a project and we will go through our main processes and look how AI could support those. But at the same time, it's important to look, should we change those processes because it can be that the old process is not okay if you just try to use AI. So if you have to change some processes, but that we will concentrate also not.

And a quick follow-up on that. So a long list of benefits coming from artificial intelligence and data analytics. So now given your financial targets, so how much do they rely on your internal measures, like these benefits you discussed and then markets improving in '25 and '26.

I don't know, do you want to answer. But I think, of course, both, of course, especially in building and technical trade, we are waiting that market situation will improve and that maybe is the bigger part. But then, of course, our own measures, but in car business and grocery, I think that the market situation won't change so much. But if you want to add, please.

Yes, both, both. But own operations is, of course, I think it's always a good base to develop your business, thinking first, your own operations and then look to market.

And maybe I also would like to add new incomes coming from the media business and also from data business. They are increasing.

Alex Kershteyn from SwanLake Capital. I'm wondering, do you have any strategy now for Baltics, because you're represented only in one segment in Baltics. Maybe you can make some acquisitions and maybe some news from Kesko Senukai, if you can comment.

Yes. So when it come to Baltics, of course, we have 2 businesses there. We have Onninen in all of countries, and we made the strategy of those quite similar what we have in Finland also. But what comes to Kesko Senukai, we didn't update our strategy this spring. So our Kesko Senukai strategy is as it has been.

And do you think you can make any acquisitions in other sectors in Baltics?

We can make.

Any acquisitions, [indiscernible].

Of course, it's possible. Like I said, of course, acquisition is, of course, in our toolbox, but we prioritize Scandinavian countries, if we have prioritized -- especially in Sweden, we need more scale. In Denmark, we will have a lot of opportunities. In Baltics, our scale is quite good. That's not a main problem there. I don't say no, but we prioritize now Scandinavian countries.

Maybe to add from the Car Trade that import of SEAT and [indiscernible] of course, also in the Baltics and is a crucial part of our business as well.

I can ask a couple of questions here from the chat while you're thinking of your next question here in the conference room. A lot of questions about the grocery trade margin, the same as we have already heard here, but I will summarize here, for example, what makes you so confident that you can grow market share and maintain profitability of at least 6% whilst making these investments and improving price perception. And since the grocery trade growth strategy requires a lot of investments. What makes you so confident was the question?

We can maybe both answer. But if you look how we are performing right now, what comes to grocery market. First quarter, I would say that we were not so close. We were also much behind what comes to a market-to-market situation or market growth quite close. And as we know, we haven't invested in new stores. When we invest in those new stores, of course, those will help what comes to market share more next year and 2026. But of course, we have made our calculation and we know how much we can invest on prices, how much we can invest on new stores and still keep that very nice margin, clearly above 6%. But maybe Ari, I don't know if you want to continue?

I think you get the big picture. And also you have to consider about the new earnings coming from the media businesses and from data businesses. And at the same time, when you are able to increase sales in this type of market, it is very challenging for the quality player like Kesko. And when you look in the future and economic environment will get better, it opens us more opportunities.

Thank you. There's a question, grocery industry data from last month suggests that food prices in Finland were flat or slightly down. And however, market volumes increased 4%. Would you agree with this assessment? And could you comment on any consumer shopping habit or trends changing? Or have you noticed changes?

I can say that if you think about prices, they are flat. That's about flat now. But there is lots of variation depending upon the categories. Prices of the fresh products has come down. But at the same time, there are several categories where prices are going up like [indiscernible] and for example, [indiscernible] and so on. So there is lots of variations. And if I look about the future, this also opens window for Kesko because usually, when the prices are increasing, it's very challenging for Kesko to gain market share, but when it's more stable development, then we have window of opportunities.

Any comments on the shopping baskets or shopping habits changes there?

Maybe you can say that if I look at just the situation right now, when sun is shining and people are going out and doing more barbecue and drinking a little bit better. Sun is shining for us too when you look up at the numbers, because average shopping basket is higher than when people have dining together and have barbecue together.

Very good. A couple of questions here. M&A was mentioned in Car Trade. What are you buying? Services, used car inventories or dealerships. So what is the M&A in Car Trade.

I would say that all of those possibilities for and opportunities for us, all of those 3 areas, what we have.

Yes, exactly. Like mentioned, M&As are not a must, but as an opportunity and opportunity in all the areas.

Question directed to Sami. What do you see currently in the market trends? Do you see light at the end of the tunnel?

Good question and a little bit hard to answer. But at least, I can say that after 3 years or so, with K-Rauta here in Finland, K-Rauta consumer sales in May was positive. So we had a small positive there. Not the overall K-Rauta business but consumer business. And of course, you can see that, that is a little bit light already. But of course, we need to be careful that the market is still very, let's say, challenging and it's difficult to get this kind of short-term forecast. But at least this kind of light, we can see. And of course, I think countries will differ also when we proceed and go beyond 2024.

So you agree with the -- are you saying that when sun is shining, it also shines in K-Rauta.

Also in K-Rauta, we are in seasonal business, and that's a good business in that respect that have been 20 years in the seasonal business that you see quite quickly if the market is there or not when the season starts. And it feels a little bit the market is there.

It's interesting what Sami just mentioned that, of course, I very carefully also follow those figures and yes, it was, in fact, 3 years ago, '21 May when K-Rauta Finland Consumer business started to decrease every month by month and now was the first month, it was a little bit positive. I agree that we can say that has the trend now changed. But maybe some positive elements and maybe some, let's say, those smaller B2B customers, maybe also that maybe the renovation part is maybe a little bit some positive, but of course, not new building, new resident buildings. There is not any light on that tunnel yet.

Any questions at this point from the conference room? No, I'll continue. There's a detailed question. Is there any option of bonus program for Scandinavia managers maybe coming from the [indiscernible] interview here referring to...

Bonus program for them...

Program, yes, for Scandinavia -- option or share program for -- like Kesko share program for the...

I would say that, of course, those key players like counter directors, of course, they are key players, and we have good package for them.

Good. And let's see, will you consider profitability level when deciding on the size when we do these growth investments in grocery stores. So profitability level when we decide what type of store we are building, meaning a network.

Yes, it's always considered when we do the investing decisions. And generally, you can say that profitability of the bigger store is higher than smaller stores, and now we are investing more to the bigger stores.

This is to Ari, directed. If you need to choose one, is it market share or profitability?

I think that we are always optimizing this. We don't want to have market share at any price because we are optimizing EBIT level, market share and investments. And I think that's that makes any investor happy.

Fully agree with Ari. [indiscernible], but fully agree.

Yes. It's a follow-up was, you aim to do both, but are you happy with flat margin and a small increase in market share? That's right?

Maybe so that we are not targeting some 40% market share. But we'll be happy when we can change the situation that we are not losing. We will start to gain market share.

Question from Sweden, first, thanking for the good presentations and asking in Sweden, would you prefer growth through acquisitions within building and home improvement or within technical trade in order to generate economies of scale, which one, technical trade or building an home improvement?

I think both of our businesses and companies, they are in the very interesting state. And of course, I believe that we would like to have even smaller scale, therefore, both building and home improvement, but also in technical trade. But of course, technical trade is also -- we can do that business also very well. And I believe that there we are strong in electric grid market, but we would like to also have a little bit more offering to our great customers.

Question, do you have a margin target for car business? And why not if not, because we didn't disclose.

I would say that at least, of course, our margin for whole company is more than 6%. It's very valid also in car business, and I see a lot of opportunities to make much better also on that side. Was it rolling 12 months was 6.5%, if I remember right.

But within the guideline between 6% and 8%.

In grocery trade, you mentioned new revenue earnings from you media and data business. Can you comment about this media and data business and new revenue streams in the future.

Yes. I think that if you think about retail, it's much run by traditional retailers. And if you think about what is the biggest change. It's change in media now that traditional leaflets and newspaper ads, they don't work anymore. But we have tools how to reach customers, very specific way. And it's very easy to measure. So all the suppliers are very keen to invest in these areas. And they see us like a media. And if you think about the margins in that side, they are more than double when you do the additional grocery. And when you go to the data, if you think about suppliers. When they have new launches, about 90% of the new launches, these products which are launched, they are not in the market after 2 years. But if they are using this data and develop products using our data together with us, about 80% of them are still in the market. And we have several success cases when we have done close cooperation with companies like [indiscernible] and these companies, which are using this data, they are more profitable. And I think that this learning curve is saying that there is much opportunities and margins in there, they are much better than in traditional commerce.

Any questions here now at this point. Here, one. Thank you.

Svante Krokfors, Nordea. I would ask about -- I mean, M&A is -- clearly, we will see M&A on the BTT side in Denmark or Sweden, I guess, the most likely ones -- we have seen the share prices going up on construction-related companies. Have you seen any changes in the M&A pricing environment? Has the bottom been reached already? Or will you still be able to acquire at attractive multiples.

Do you want to...

I can comment a little bit in general way. And of course, that say it so that it might be that now it's good timing to get great companies with a reasonable price or they are at least available some. But then, of course, good companies might be that you get a bit better price. But that is good to mention also that the great companies are not always available and now might be that there's more opportunities, but maybe Jorma [indiscernible].

I think the timing is good for us now if we find some good targets, and I'm quite confident that we will find. And I think it was quite good also that we didn't implement so many acquisitions in peak times, '21, '22. So we'll exit. But I think it's, for example, now, of course, we know that there are not those private equity companies. They are not there right now. Let's say, if we find some good targets, there are not so many competitors targeting those ones.

And then there was a question about logistics centre in [indiscernible]. Do you have any comments on that?

No, we haven't made any decision yet on how to go. We have this land plot and it's good. We have this very good land plot there, but no decision made yet.

Very good. Could you briefly go through where each key country is in the construction cycle, meaning Finland, Sweden, Norway and Denmark construction cycle. Do we...

Different cycle all those countries.

Green shoots there in any of the countries.

[indiscernible] countries that are [indiscernible].

Is there difference between...

Differences between countries at the moment.

Yes. Of course. Yes, Sweden is recovering and a little bit the housing market also, as I understood is recovering in Sweden. I believe that, of course, we need to be difficult when we say it, but it might be that Sweden, Denmark and Norway is recovering faster than Finland, for example.

So Poland, most probably will be quite strong because there are a lot of those EU money what they [indiscernible] investments . But I would say that Finland is maybe, especially when it comes to residential buildings. New residential buildings, Finland is maybe the most difficult position in that area.

Time will tell. Thank you. Any concluding questions from the conference. In that case, I would like to ask Jorma for any closing remarks. You have any thoughts you would like to leave the investors with.

Yes. I think that, of course, when I started 1st of February, and we have some discussion also with the Chairman of Board of Directors and what kind of strategy work process we will have and it was quite a clear decision that our business portfolio is good, and we are not planning any changes on that one to have some new businesses or divest something. So it was a kind of a starting point, and then we decided to focus on current businesses and what I really like is those competitive advantage. I trust good strategy implementation and those competitive advantage has to be clear. And one example was this operational excellence. It doesn't sound so fancy or things like that. But most often, that is the most important reason why some customers choose us, especially B2B customer, also consumer, how you so delivery accuracy, your product availability, all of those processes. And I want to deep dive those processes. It's hard work, but when we do those, then we can rely that we can reach our targets. But we have, I think, very good processes and also, especially in grocery retailers was very involved also this process is also in care out and -- but I'm happy to end result and tomorrow morning, we will also present this to our employees. And during summer and autumn time, we will go through also our other processes like HR strategy and communication strategy and kind of those functions that support our businesses, we will also go through those. But I would say that those guidelines, what I mentioned when I started those 3 guidelines was quite important. But also this quite short period. This was 1 year sort of period than normal what we have because of this operational environment, if there will be some changes or things like that, but I would say, summarize like that.

Thank you. Then I would like to thank everybody for the lively discussion. And if you have any further questions, I will be available to help you with those, and you can find my details online. Thank you.

Thank you.

Thank you.