11

INTERIM REPORT

JANUARY-JUNE

2015

PRESIDENT AND CEO MIKKO HELANDER

22 JULY 2015

KEY EVENTS IN Q2

• K-food stores’ market share is estimated to have increased

• Profitability of the home improvement and speciality goods trade continued to

improve

• Real estate arrangement was completed as planned,

positive cash flow effect €403 million

• Liquid assets rose to €843 million, Kesko has a very strong financial position

• New strategy was published

2

FINANCIAL PERFORMANCE

3

Q2/2015

Q2/2014

H1/2015

H1/2014

Net sales, €m 2,227 2,371 4,310 4,499

Operating profit, €m 176 69 72 56

Operating profit excl. non-recurring

items, €m76 68 103 87

Operating margin excl. non-recurring

items, %3.4 2.9 2.4 1.9

Net profit for the period, €m 153 54 42 42

Net profit for the period excl. non-

recurring items, €m58 52 75 66

NET SALES IN LOCAL CURRENCIES

EXCL. ANTTILA IN Q2 -2.2% AND H1 -0.8%TOTAL CHANGE FOR Q2 -6.0% AND FOR H1 -4.2%

4

5,000

4,000

3,000

2,000

1,000

0

H1/2015

4,310

H1/2014

4,499

Q2/2015

2,227

Q2/2014

2,371

€m

Reported net sales, €, incl. Anttila

Q2 NET SALES BY DIVISION

€1,149m

€797m

€277m

Grocery trade

Home improvementand specialitygoods trade

Car and machinerytrade

52%

36%

12%

5

OPERATING PROFIT EXCL. NON-RECURRING

ITEMS IMPROVED IN Q2 AND H1

6

0

20

40

60

80

100

120

H1/2015

102.9

H1/2014

86.7

Q2/2015

76.4

Q2/2014

67.6

€m

STEADY PROFIT PERFORMANCE CONTINUESOPERATING PROFIT EXCL. NON-RECURRING ITEMS

7

0

20

40

60

80

100

Q2/2015

76.4

Q1/2015

26.5

Q4/2014

61.9

Q3/2014

84.0

Q2/2014

67.6

Q1/2014

19.1

Q4/2013

66.8

Q3/2013

83.6

Q2/2013

69.8

Q1/2013

18.6

€m

RETURN ON CAPITAL EMPLOYED INCREASESEXCL. NON-RECURRING ITEMS, ROLLING 12 MO

8

0

2

4

6

8

10

12

Q2/2015

10.9

Q1/2015

10.2

Q4/2014

9.9

Q3/2014

10.0

Q2/2014

9.9

Q1/2014

9.9

Q4/2013

9.8

Q3/2013

9.7

Q2/2013

9.3

Q1/2013

8.8

%

STRONG CASH FLOW ALSO WITHOUT

REAL ESTATE ARRANGEMENT

9

-200

-100

0

100

200

300

400

500

600

Q2/2015

541.1

Q1/2015

-139.3

Q4/2014

98.6

Q3/2014

82.4

Q2/2014

79.9

Q1/2014

-138.5

Q4/2013

75.8

Q3/2013

80.3

Q2/2013

206.1

Q1/2013

-100.5

€m

Cash flow after capital expenditure

FINANCIAL POSITION

10

30.6.2015 30.6.2014

Equity ratio, % 52.2 52.3

Liquid assets, €m 843 461

Interest-bearing net liabilities, €m -359 78

Capital expenditure, €m 110 99

Return on capital employed*, % 10.9 9.9

Return on equity*, % 8.4 8.3

* Excl. non-recurring items, rolling 12 mo

11

GROCERY TRADE

11

NET SALES FOR Q2 AND H1

12

2,500

2,000

1,500

1,000

500

0

2,252

H1/2014

2,304

Q2/2015

1,149

Q2/2014

1,202

H1/2015

€m

OPERATING PROFIT EXCL. NON-RECURRING

ITEMS FOR Q2 AND H1

13

0

20

40

60

80

100

120

H1/2015

78.2

H1/2014

100.7

Q2/2015

43.3

Q2/2014

55.3

€m

GROCERY TRADE IN Q2

• K-food stores’ market share in

Finland is estimated to have

increased

• Profitability improved to 3.8% from

the first months of the year

(Q1: 3.2%)

• Sales in Russia increased by

36% in roubles

• Kespro’s market share increased

and profitability remained at a good

level

14

MARKET SHARE IS ESTIMATED TO HAVE

INCREASED SINCE APRIL, NO SIGNIFICANT

CHANGE IN THE LONG TERM

15

33.4 33.9 33.7 34.2 35.0 35.3 34.7 34.0 33.1

0

10

20

30

40

2006 2007 2008 2009 2010 2011 2012 2013 2014

%

K-GROUP’S PERFORMANCE IN THE GROCERY

TRADE HAS BEEN GOOD

• Exceptional operating environment,

consumers’ purchasing power has declined

for three years

• Due to intense competition and consumers’

decreased purchasing power, food prices

have fallen by 1% in 2015

• K-Group has succeeded by investing in

both price and quality

• As the economic cycle turns, the K-Group

will have even better preconditions for

success

16

HOME IMPROVEMENT

AND SPECIALITY

GOODS TRADE

17

NET SALES IN LOCAL CURRENCIES

EXCL. ANTTILA IN Q2 +0.1% AND H1 +1.0%TOTAL CHANGE FOR Q2 -10.4% AND FOR H1 -8.0%

18

797890

2,000

1,500

1,000

500

0

H1/2015

1,519

H1/2014

1,651

Q2/2015Q2/2014

€m

Reported net sales, €, incl. Anttila

OPERATING PROFIT EXCL. NON-RECURRING

ITEMS IMPROVED CLEARLY IN Q2 AND H1

19

-40

-20

0

20

40

H1/2015

18.7

H1/2014

-25.6

Q2/2015

30.1

Q2/2014

5.8

€m

HOME IMPROVEMENT AND

SPECIALITY GOODS TRADE

IN Q2

• Building and home improvement trade

• Market share is estimated to have

increased in Finland, Sweden, the

Baltics and Russia

• Operating profit has improved for nine

consecutive quarters

• Best profit improvement was seen in

Sweden

• In the speciality goods trade, K-maatalous

improved its result in a difficult operating

environment

20

21

CAR AND MACHINERY

TRADE

21

NET SALES FOR Q2 AND H1

22

538556

277283

0

200

400

600

Q2/2015Q2/2014 H1/2014 H1/2015

€m

OPERATING PROFIT EXCL. NON-RECURRING

ITEMS FOR Q2 AND H1

23

0

10

20

H1/2015

17.9

H1/2014

19.1

Q2/2015

11.0

Q2/2014

10.9

€m

CAR AND MACHINERY TRADE

IN Q2

• Profitability remained at a good level

despite the challenging operating

environment

• Uncertainty related to car taxation

has been removed

• Volkswagen continues as the market

leader

• Net sales growth of the machinery

trade 3.4%, profitability improved

• Yamarin boats had good sales

performance

24

MARKET SITUATION

AND FUTURE

OUTLOOK

25

0

2

4

6

8

10

12

14

16

1/0

0

7/0

0

1/0

1

7/0

1

1/0

2

7/0

2

1/0

3

7/0

3

1/0

4

7/0

4

1/0

5

7/0

5

1/0

6

7/0

6

1/0

7

7/0

7

1/0

8

7/0

8

1/0

9

7/0

9

1/1

0

7/1

0

1/1

1

7/1

1

1/1

2

7/1

2

1/1

3

7/1

3

1/1

4

7/1

4

1/1

5

Expectations for own finances

Expectation, 21st centuryaverage

CONSUMER CONFIDENCE IN FINLAND

26

odotukset omasta taloudesta seuraavan 12 kk:n kuluttua

Lähde: TilastokeskusSource: Statistics Finland

WEAK TREND IN THE RETAIL TRADE IN FINLAND

27

Source: Eurostat, excl. motor vehicles and fuels

-2

0

2

4

6

8

10

% (

roll

ing

12 m

o) Estonia

Lithuania

Norway

Sweden

Latvia

Finland

FUTURE OUTLOOK

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Estimates of the future outlook for Kesko Group's net sales and operating profit

excluding non-recurring items are given for the 12 months following the reporting

period (7/2015-6/2016) in comparison with the 12 months preceding the

reporting period (7/2014-6/2015).

The general economic situation and the expected trend in consumer demand

vary in Kesko’s different operating countries. In Finland, the trading sector’s

performance is expected to remain weak and the tough competitive situation is

expected to continue. In Sweden, Norway and the Baltic countries, the growth in

demand in the trading sector is expected to continue. In Russia, the economic

situation and consumers’ purchasing power are estimated to remain weak.

Kesko Group's net sales for the next 12 months are expected to be lower than

the level of the preceding 12 months and the operating profit excluding non-

recurring items for the next 12 months is expected to exceed the level of the

preceding 12 months.

THE TRAIN KEEPS RUNNING…

• Loss-making department store trade Anttila’s divestment

• Profitability problems in the building and home improvement trade in Sweden

and Norway clear profitability improvement

• Real estate arrangement incomplete real estate arrangement completed

• Declining food trade market share market share is estimated to have

increased

• Strategy new focused strategy

29