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 Hämäläinen. 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.

Now, Jorma, the 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 full-year and Q4 results. Yes, Kesko's results 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 €650 million to €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: 90 cents per share, payout ratio 84%.

Net sales for 2025 totaled over €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 €654.9 million. It increased by €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 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: Amount of net debt was impacted by investments in store sites and acquisitions.

Cash flow from operating activities was €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 €100 million.

Capital expenditure totaled €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 €735.7 million. We continued the investments in growth, and the main capex in 2025 were three acquisition in Denmark, store site investments in grocery trade, and the construction of Onnela, Onninen and K-Auto shared logistics center in Hyvinkää, 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. Now to Q4 results.

We saw good net sales development in all divisions. The performance in all division was in line with the expectation we had at the beginning of the quarter.

Net sales in Q4 totaled over €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% into other operating countries.

In Q4, comparable operating profit was at €174.8 million, and operating margin was 5.4%. Comparable operating profit increased in car trade and building and technical trade, and decreased in grocery trade.

Now to grocery trade in Q4: upturn in market share, profit at a good level. In Q4, like 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 2025, K-Citymarket won market share in the hypermarket segment. Customer flows continued 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 2025.

K-Citymarket non-food 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.

What comes to quality, we have done significant efforts to raise quality level together with K-retailers. Store-specific business ideas are at the core.

Special focus is on fruits and vegetables, bread, and non-food. Our digital reach has risen to a new level.

We reach 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 earning 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 campaigning continues 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 two 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 stores network will be around €200 million to €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 market.

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 the 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 €0.1 million. Share of result from Kesko Senukai was €12.1 million.

In 2025, share of result from Kesko was €19.5 million, €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 eight 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 result.

In 2025, the PPA costs related to the acquisitions were €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 sales development turned back to black figures in Q4. Onninen sales continued to grow in Q4.

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 five years or older. In sports trade, net sales and comparable operating profit decreased, but market share grew.

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 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 €650 million to €750 million. Key uncertainties impacting Kesko's outlook are developments in consumer confidence and investments 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 food service 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 90 cents per share to the Annual General Meeting.

It is proposed to be paid again in four installments. This proposed dividend represent 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. Onnela 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 attention. This was my presentation.

I guess it's time for questions now.

Thank you, Jorma, for your presentation, and now is time for questions. We will take first the questions from the conference call line, and then from the via chat function.

Please note that if you are posting questions through the chat function, there's a slight delay, be sure to post your questions so that we have time to take the questions. Please.

Hello, this is Maria Wikström from SEB. I have three questions, I'll take them one by one.

I'll start with the guidance and assumptions behind your guidance. As you guide for adjusted EBIT in the range of €650 million to €750 million, and the low end of the guidance range is slightly below 2025 EBIT.

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.

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.

Of course, if that would happen, let's say that the market wouldn't improve at all, that would be the case. Like said, we believe and of course we believe that the market will improve this year, and that's we have this €100 million range, €650 million to €750 million, and the biggest question is consumer confidence.

Then my next question is on the outlook of the building and technical trade, and if you can be more specific market by market. Which of the markets you see the biggest recovery happening in 2026?

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 first, but Sami, you can continue then. Of course, all in all, market outlook is quite similar in all countries.

Of course, we had also some differences, like in Norway, interest rate is still high. If we look 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.

Please, Sami, continue.

Thank you, Maria. Like Jorma said, I think because the worry overall is, of course, consumer confidence, and that we see in all our operating countries that is weak.

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 low.

Sweden, we believe that it's going to be better also for Sweden, overall market for 2026. Of course, still if we look the forecasts 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.

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. Overall, I would say that we are well positioned when the growth start.

Of course, this Q4 was already positive for us, I'm very happy about our performance in Q4 overall. Of course, we saw already that 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%? Is there something extraordinary, thinking that people bought more before the new price list or something like that, or is this really 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. Like I said, we saw that we are doing much better than the market, both in technical trade, but also with K-Rauta here in Finland.

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. I think nothing so special there.

Our performance was good and also market getting gradually better also.

Of course, we can say that there is 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 four and maybe December. Of course, December you have Christmas time and not so many selling days, but it was strong one.

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

Yeah. Then

my final question is on capital allocation. 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, all in all, our capex something around €400 million this year, and like said, it's clear that we will implement this grocery store site network strategy, and it means €200 million, €250 million also this year. Of course, in our strategy is that we are seeking growth in building and technical trade, especially through acquisitions, but not any comments on that one.

Of course, we are working daily on also with that topic.

Perfect. Thank you so much.

I have no further questions at this point.

Next question from the line?

Thank you. It's Miika here.

Can you elaborate a little bit more on the drivers behind profitability decline in grocery trade? We know that some of your competitors began aggressively cutting also prices again late last year.

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? In this context, did you see that you needed to respond more aggressively on pricing?

Then finally, what is your assumption of the impact of price investments on grocery trade profitability into 2026?

Thank you. 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. And 2024 spring, we decided that we have to stop lose market share and start to gain market share.

Now we have done that. Same time, we say that the EBIT level should be clearly about 6%, and of course we have done that also.

Ari, you can continue with how competitors have reacted. Of course they have.

Yeah. Thank you.

An excellent question. Of course, there is very hard competition all the time in the retail market, especially in the grocery sides.

Based on the current development of our market share, we have prices good enough now in the market, and we are gaining market share. We 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%.

About he asked also this year how we will continue, but we will continue our strategy and to have this store site network, quality, and pricing. 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.

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

We just can say that we will continue at the same level. 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.

Good part for that is that also the suppliers' side will support that. The store owners are very happy with the current strategy, we will continue this.

This will be the first year when we have a neutral effect of the store network. Last year, we had very negative effect, and still we was able to gain market share.

January is continued strong about sales side.

Yes. Last year, year ago, we we stated that we will invest together with retailers maximum €50 million what comes to our price program.

Now we have we haven't announced any any certain amount on that one, but definitely we can continue our price program, and we are also ready to react if needed.

Yeah.

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 believe that the whole market will grow and also our business will grow, and our target is to gain market share.

What comes to EBIT level, it's still very valid that clearly above 6% is our target, and this 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. If the consumer confidence picks up, there's a possibility that will support the margins in grocery trade as well.

Another part was that non-food business in the Citymarkets, because there was not winter in December. It has very strong effect for the profitability of the clothing side and sports goods.

That's one of the reasons behind the results in Q4, especially in December.

Yes.

Thank you.

Thank you. No further questions?

Oh no further questions from the conference call line. Neither I don't have any questions from the chat function.

Short and sweet. Thank you everybody for the good discussions, especially Miika and Maria.

I wish you all very good and, unfortunately, very cold [laughter] February day. Thank you.

Thank you.