Dear all, warmly welcome virtually to Helsinki, and thank you for tuning in for Kesko's Q2 2026 Release Call. Kesko's profit improved significantly.

Technical trade as the driver is our headline. This describes well the source of the profit improvement in Q2.

We have the usual agenda today. First, President and CEO, Jorma Rauhala, will give the presentation.

After the presentation, we are happy to take questions from the virtual audience. We have here with us our Business Division Presidents, Ari Akseli for Grocery Trade, Sami Kiiski for Building and Technical Trade and Johanna Ali for Car Trade as well as CFO, Anu Hamalainen.

The questions can be posted both by phone and via chat function. All the materials related to the quarter can be found at our web page, kesko.fi under Investors.

My name is Hanna Jaakkola, responsible for IR at Kesko. I will be happy to take discussions and answer your follow-up questions after the presentation.

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

Thank you, Hanna. Ladies and gentlemen, welcome also on my behalf for this release call.

I'm Jorma Rauhala, and I have now the pleasure to present Kesko's Q2 results. Kesko's profit improved significantly.

Technical trade as a driver is our headline. In building and technical trade, profits improved clearly, thanks to technical trade sales and profit improvement.

Sales increased also in grocery trade and in car trade, but operating profit declined slightly. But now I will give an overview of our business performance and open up elements behind the result.

After the presentation, we are ready for the Q&A. Summary of the second quarter 2026.

Kesko's comparable operating profit improved. Net sales grew in all divisions.

In grocery trade, K Group stores gained market share and profitability was good despite investments. Operating profit was slightly down due to Kesko's weaker profit.

In building and technical trade, comparable operating profit increased clearly, thanks to good sales and profit development, especially in technical trade. In car trade, sales grew, especially thanks to good used car sales, operating profit was slightly down.

In June, Kesko announced that it will significantly strengthen its position in technical trade in the Nordics by acquiring Dahl's operations in Sweden, Norway and Denmark. The combined net sales of these businesses totaled nearly EUR 2.1 billion in 2025.

We are updating our profit guidance. Kesko now expects its comparable operating profit in 2026 to amount to EUR 670 million to EUR 730 million.

Previously, the range was EUR 650 million to EUR 750 million. Net sales in Q2 totaled EUR 3.4 billion.

It was up by EUR 190 million. Net sales increased in all businesses.

Rolling 12 months net sales increased to nearly EUR 12.9 billion. In Q2, comparable operating profit was EUR 194 million and operating margin was 5.7%.

Comparable operating profit increased in building and technical trade and decreased in grocery trade and car trade. Rolling 12 months operating profit was EUR 678.7 million and operating margin was 5.3%.

Return on capital employed was 10.4%. In building and technical trade, return on capital employed improved to 8%, it decreased in grocery trade and in car trade compared to the year-end.

Financial position. Cash flow from operating activities was at a good level, EUR 362 million.

It strengthened significantly, especially thanks to effective working capital management. Capital expenditure was clearly lower than Q2 2025 at EUR 127.4 million.

I'll open up investments on the next page. Net debt to EBITDA improved to 1.7.

At the end of last quarter, it was 1.9. This key figure is well below our maximum target of 2.5.

Capital expenditure totaled EUR 127.4 million. We continued the investments to strengthen our grocery trade network and the main CapEx in Q2 were store site investments.

For example, during the quarter, we opened a third K-Citymarket in Kuopio. Other investments include investments in, for example, the leasing car fleet.

Expenses increased mainly due to acquisitions. Nearly half of the increase in expenses came from the Danish acquisitions.

Despite increased costs, the cost ratio improved to 16.9%. Now to grocery trade in Q2.

Market share continued to grow. Profit was at a good level.

In Q2, net sales totaled over EUR 1.6 billion and increased by EUR 15 million. Sales to K-food store chains increased by 4.3%.

Kesko foodservice business net sales declined by 0.6%. Rolling 12 months net sales totaled over EUR 6.5 billion.

In grocery trade, comparable operating profit for Q2 was EUR 110.6 million, and it was down by EUR 700,000 due to Kespro's EUR 2.2 million profit decline. Profitability was 6.8%.

Rolling 12 months operating profit was EUR 423 million, and operating margin was the same as last year, 6.5%. Division net sales increased and comparable operating profit decreased slightly due to weaker profit in Kespro.

As mentioned, Kespro's result declined by EUR 2.2 million year-on-year. Also, it is good to bear in mind that Easter wholesale took place mainly in March this year and in April the year before.

In Q2, the total grocery market grew by approximately 2%. K Group grocery sales were up by 4.3%, and K Grocery stores gained market share in Q2.

Customer flows continue to grow. Customer satisfaction was clearly up in all our grocery store sales.

Kespro net sales were down by 0.6%, but Kespro gained market share in Q2. K-Citymarket's non-food sales up by 4.4%.

Online grocery sales up by 11.3% and online sales accounted for 4% of K Group's grocery sales. Grocery price inflation in Finland was approximately 1.2%, while price development in K Group stores was up by only 0.9%, especially thanks to our price program.

Demand for quality products and services in K Group grocery stores remained solid. Market share in grocery trade continued to grow in H1.

Market share for K Group grocery store took an upturn in Q4 2025 and growth has continued strong in 2026. As you can see in the graph, the market share was up by 0.8 percentage points in Q2.

And for the first half, it was up by 0.6 percentage points. All our chains gained market share in their size segments in H1.

Our market share growth was the strongest in the supermarket segment, which is the biggest segment in the Finnish grocery trade market. Also, K-Citymarket's non-food trade gained market share in H1 in its comparison group.

Our objective is to increase market share in grocery trade while maintaining a good profitability level of clearly above 6%. The good performance is thanks to investments made in quality, prices and store site network.

A total of 22 stores were updated and 10 new stores opened in H1. The store network is estimated to have a neutral net impact on market share in 2026.

In building and technical trade, sales grew and profit improved driven by B2B in Q2. In building and technical trade, net sales increased by EUR 176 million to over EUR 1.4 billion.

The increase was supported by the Danish acquisition, but also organically, sales increased significantly. Net sales improved in comparable terms by 9.7%.

In comparable terms, technical trade net sales increased by 14.6% and building and home improvement trade net sales increased by 6.2%. Rolling 12 months net sales were nearly EUR 5 billion.

Comparable operating profit for the Building and Technical Trade division totaled EUR 71.2 million and operating margin was 5%. Operating profit increased by EUR 20.3 million.

Rolling 12 months operating profit was EUR 201.7 million and operating margin was 4.1%. In technical trade, comparable operating profit increased in all operating countries, except for Baltic countries.

Building and technical trade highlights Q2. Net sales increased in all businesses and operating countries and were the highest ever recorded in Q2.

Profit improved, driven in particular by strong growth in technical trade. Market demand has picked up, for example, industrial projects and infrastructure construction, but remains muted in new residential construction.

In Finland, Onninen sales grew and profit improved clearly. Growth was supported by strengthening market share.

K-rauta sales grew, especially in B2B trade and profit was at a good level. In Norway, sales for Byggmakker and Onninen grew.

Onninen's profit improved while Byggmakker's decreased. In Denmark, Davidsen sales grew and profit improved.

In Sweden, K-Bygg sales growth was strong and also profit improved. In Poland and the Baltic countries, Onninen sales growth was strong.

Profit improved in Poland, but decreased a bit in the Baltic countries. The share of result from Kesko Senukai was EUR 5.4 million, and they reported only 2 months on time, April and May.

In the comparison period, the share of results from Kesko Senukai was zero in our Q2 '25 report. Retail and B2B sales for K-rauta and Onninen Finland is shown in this graph.

Onninen's Q2 sales increased clearly by 16.1%, while competitor sales development were only plus 0.6%. This is a great achievement and demonstrates Onninen's market share gain.

Onninen's prices increased in Q2 by 2.1%. K-rauta sales increased by 2.8% and also K-rauta gained market share in the second quarter.

Onninen has an excellent foundation for improving net sales and profit once the market normalizes. Megatrends support growth in technical trade, renovation of building, urbanization, the green transition and growing demand for energy solutions, technological development and digitalization support the demand in technical trade.

Onninen became part of Kesko in 2016. Since then, its net sales have grown by 56% and operating profit by 232%.

When we booked Onninen, its margin was just slightly above 1%. At the highest, margin reached 7.6% in 2022.

At the moment, when the cycle is still low, we are able to generate 4% margin. Technical trade has grown in all operating countries in 2026 and growth is expected to continue.

Technical trade sales in Q2 '26 were the highest ever. Also, Onninen's Norway sales were at the all-time highest level, which demonstrates that Elektroskandia integration has been successful.

We bought Elektroskandia in 2023. Markets in Finland and Norway are still muted, but have improved compared to before.

Markets in Sweden, Poland and the Baltics are returning to normal. For Onninen Finland, in the first half of 2026, Onninen sales have grown in all product areas and for all customer segments.

Energy solutions like solar panels, heat pumps, energy storage are the biggest growing product categories, supported by volatile electricity prices and regulation. Workwear and PPEs are new growing category for us, too.

Through investments, operational efficiency and digitalization, Onninen has managed to generate good results even in a challenging market as shown in the graph. We announced in June the acquisition of Dahl's operation in Sweden, Norway and Denmark from Saint-Gobain to strengthen our technical trade.

The combined net sales of the businesses were some EUR 2.1 billion and EBITDA EUR 146 million in 2025. The combined net sales for Kesko's Building and Technical Trade and these Dahl's businesses would have been approximately EUR 6.8 billion in 2025.

The Dahl businesses in Scandinavia have an iconic brand, good market positions and strong own brands, more than automated warehouses, extensive store networks and digital sales channels. We have strong track record in technical trade with Onninen, and we can show clear proof of improving Onninen sales and results as discussed earlier.

Like I said in the Dahl briefing, I have often been asked what would be the strategic dream target, and this truly is it. Dahl fits our current technical trade extremely well.

Decision regarding the final capital structure after refinancing the bridge loan have not yet been made. We estimate that it will be to determinate during Q3.

Currently, competition authorities have begun their process. The acquisition is estimated to be finalized by the beginning of 2027.

In car trade in Q2, sales increased driven by used car sales. In car trade, net sales for Q2 increased by EUR 1 million to EUR 353 million.

Net sales increased in used cars, services and sports trade, but decreased in new cars. Rolling 12 months net sales were nearly EUR 1.4 billion.

The comparable operating profit totaled EUR 18.4 million and decreased by EUR 3.2 million year-on-year. Operating margin was 5.2%.

Rolling 12 months operating profit was over EUR 78.1 million and operating margin was 5.6%. In car trade, net sales increased, comparable operating profit decreased due to the increase in the share of used car sales.

In used cars, sales margin are lower than in new cars. Market demand for new cars continued to be muted.

Q2 first registration of passenger cars and vans decreased by 2.7%. First registration of brands represented by Kesko decreased by 13.8% in Q2.

Also, comparison period was especially strong. Order book for new cars continued to grow and was up by some 40%, both year-on-year and year-to-date.

The strong order book we realized in sales in H2. Used car sales from dealerships were down by 2.8% in Finland.

Used car sales in K-Auto were up by 11.9%. Also, service sales in car trade increased.

In sports trade, net sales increased and comparable operating profit was at the last year's level. And now profit guidance and outlook.

We are specifying the profit guidance for 2026. Kesko Group's profit guidance is given for the year 2026 in comparison with the year 2025.

Kesko's operating environment is estimated to improve in 2026, but still remain somewhat challenging. Kesko's comparable operating profit is estimated to improve in 2026.

Kesko estimates that its 2026 comparable operating profit will amount to EUR 670 million to EUR 730 million. Kesko previously estimated that the comparable operating profit would amount EUR 650 million to EUR 750 million.

Key uncertainties impacting Kesko's outlook are developments in consumer confidence and investment appetite as well as geopolitical crisis and tensions. Outlook for 2026 remains unchanged.

The operating environment for Kesko is estimated to improve in 2026 in all divisions and all operating countries. The detailed wording can be seen on the slide.

As said, we have not changed it. Kesko's net sales and comparable operating profit are also estimated to improve in 2026 in all divisions and all operating countries.

And some last words before Q&A. Kesko's net sales grew and profit improved.

Performance in technical trade was particularly strong. Grocery trade continued to gain market share.

Profitability was good despite investments. Building and technical trade profit grew clearly driven by technical trade.

Good development was also seen in building and home improvement trade. Car trade sales development was good, driven by used cars.

Strong order book for new cars will realize in sales in H2. Kesko's biggest ever acquisition, the technical trade operations of Dahl in Sweden, Norway and Denmark is proceeding according to plans.

The crisis in the Middle East did not have significant impacts in Q2. At this stage, we estimate that the impact will be moderate in H2.

We estimate that Kesko's operating environment, net sales and comparable operating profit will improve in 2026. Thank you.

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

I have 3 questions. I'll take them one by one.

First one on the margin in grocery. When I sort of strip out the foodservice business here, it seems like the margin in grocery trade expanded 10 basis points, and that is despite the price investments you're doing.

What's driving that strong margin?

Yes. Thank you for your question.

The margin is very much what we have expected and what we have also promised that all in all, I think our grocery business is in very good shape, very positive that we gained so much market share even more than we expected and all the functions is working, but -- pretty much expected that Kespro was only minus EUR 2.2 million decrease in profit. And -- but still, we have to remember that Kespro gained market share, but the foodservice market is quite a bit slow now in Finland.

But I don't know, Ari, if you had something to do.

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

Okay. So like campaign efficiency then?

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

Okay. Good.

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

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

Okay. Fair.

I had to try. Then last one on car trade.

In the guidance, you say you expect comparable EBIT to grow in all divisions. So that includes car trade.

But in Q1 and Q2, the comparable EBIT was down double digits for car trade. So that means you expect quite significant growth in Q3 and Q4.

So what's the rationale behind that?

Yes. Good question.

And of course, we understand that what we have said, and we still very strongly believe that, that will happen. And the reason is that our order book is now 40% stronger than it was a year ago at the same time.

So latter part of this year will be very strong when it comes to new car sales.

This is Pekka from DNB Carnegie. I have a question on your '26 guidance, which implies around 6% comparable EBIT growth for the second half, which is notably slower than the 9% growth achieved in H1.

So given that the technical trade momentum seems to be picking up on that infrastructure demand and now also your comments on that car trade profit swinging to better direction in H2 on strong order backlog. So could you explain the key reasons why you didn't decide to narrow the comparable EBIT guidance range in a more positive direction?

Yes, of course, we want to be very careful when we are looking at our guidance, what we are seeing. Last summer, we had to take EUR 40 million down our upper end.

This year, we take EUR 20 million to lower end and upper end and the first half of the year has been very much what we expect. And also, we believe that the second half will continue with that one.

Of course, we hope that there could be some positive elements, especially, I would say that the building and technical trade, of course, is the biggest one where there can be bigger changes both way negative or positive way. And of course, now we are looking more positive changes than negative changes.

But that's what we are bidding and expecting for the latter part of the year.

Okay. And then you mentioned here that the crisis in the Middle East didn't have significant impacts in Q2, impact in H2 expected to be moderate.

What are these impacts? And can you quantify them?

Yes. As we saw third quarter -- second quarter, our food price inflation, if I remember right, was 0.9%.

So it didn't have any, I would say, any effect what comes to second quarter. And then latter part of the year, there could be, especially, I would say, in grocery business, something what comes to food prices.

But we believe that still this year, those possible changes will be very, very moderate. Of course, I would say that maybe next spring or something like that, we are more -- we know more about the prices and things like that.

But we are not expecting any big changes.

Okay. And then finally, on Onninen seem to have solid growth in the Baltics, but profits didn't improve.

So what was the reason for this? And what measures are you taking to improve the performance in H2?

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

Yes, I remember. Slightly weaker result, but it's mainly because we have been investing also a lot there for the logistics centers.

So we have new logistics centers in all 3 countries. And of course, there's also price pressure, but I think it should be better in the future now when we get things in the -- the volume is also increasing in the Baltics.

So I think we will -- we are in a good position there also in the future.

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

Yes.

All 3. Yes, good.

Yes.

This is Maria from SEB. I had 2 questions, which -- first one is on the Finnish consumer and what is currently your view of the Finnish consumer given that the latest consumer confidence figure was the best one in 2 years.

And then we also have had some positive market data points highlighting that the Finnish consumer demand could actually start improving from here. So what have you seen with the Finnish consumer if we talking about -- I mean, during the Q2 that do you agree that the consumer demand in Finland is improving?

And what's your view, please?

Yes. Thank you, Maria.

Yes, the consumer confidence has improved. Still it's in a quite low level.

But of course, we are trying to look at our figures and do we see some changes. But to be honest, there is not big changes, even positive or negative changes.

Of course, grocery business, we are gaining market share. And as we know, we are kind of quality player on that one, and we are selling a lot of those ready meals, high-quality ready meals and things like that.

Maybe that could be one sign of kind of positive consumer confidence. Car business, could it be very strong order book?

Maybe I hope there is some signs of consumer confidence. But for example, in K-rauta, we don't see so much positive elements in consumer.

It's mainly driven by B2B customers. But as a summary, we don't see any big changes, but let's hope, let's hope that in the coming months, we can see more on our figures on those ones.

Like we said, now the EBIT was very much driven by B2B customers.

Very interesting. And then secondly, I mean, just some color that the Senukai this quarter was reported only for 2 months results.

So what was the reason that you couldn't get the June figure in time?

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

So it was nice figures, but still we are missing it June.

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

Three on the grocery side. I guess you mentioned on food inflation that maybe moderate help in the second half.

But it does look like it's sort of falling across most markets in Europe at the moment. Is there a chance that we see lower food inflation in the second half before we start to see it rise into year-end would be the first one.

not so good, but Ari, did you get?

If I understand right, you are asking about the inflation rate in the grocery business. And it has been very modest in Finland.

And in big picture, we don't expect any bigger changes coming months. But we can see that some of the cost of the farmers are increasing and in the long term, that might have some effects.

Okay. Sorry, I hope this is a bit better now.

And also in the grocery, I mean, obviously taking some good share there. Are you starting to see any competitor response?

And has there been any changes in the sort of competitors sort of store opening schedules at all?

Yes, line is now better. And of course, we have seen that.

Of course, our competitors have also made changes in their pricing and they are following. But still a very, very strong market share, what we got in second quarter, 0.8%.

And of course, every day, all the competitors are reacting what others do, but no big changes in the big picture.

Yes, exactly like that. Competition is intense all the time, and we are making quite good market development at the same time.

And if I look about the big picture, we keep on doing same things.

Yes. And like we said earlier that -- about the store side investments, the impact -- net impact in 2026 is expected to be neutral.

But of course, competitors are opening stores all the time. So no change to that according to our knowledge.

Okay. Very good.

And the last one, just you mentioned the data. Retail Media, is that now becoming a meaningful part of the sort of profit contribution now in grocery?

Is that relevant these days?

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

Retail Media is absolutely relevant part of the profit in the grocery division. And in the long term, we also see opportunities in that area because it's the most efficient media nowadays, and you can measure it much easier than other medias.

And from point of view of suppliers, we have to build about the big picture, how we can use this data to be even more efficient in the marketing by using retail medias.

I have 2 questions from the chat function. Firstly, do you see any customer pressure?

This is a bit different than what Maria asked, but any customer pressure seems some of the bigger global retailers are experiencing a consumer crunch. So are we seeing any consumer crunch?

I think you already...

No, no, we are not seeing that one. We don't see that.

And as I discussed this earlier, consumer confidence has improved, and we hope that maybe it will be more positive, how consumers are reacting that that's a negative.

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

Yes, Kesko is satisfied with the result, EUR 17.3 million EBIT improvement. And in fact, it was the strongest EBIT improvement by quarter since first quarter 2022.

So more than 4 years, it takes. Now it's the strongest EBIT improvement.

So yes, we are very, very satisfied. Thank you.

I think we can conclude our conference call to these words. So thank you so much.

If you have any further questions, don't hesitate contacting me. Thank you.

Thank you.