The combined operating result (FAS) of regional cooperatives and SOK Corporation for January–June 2023 was EUR 149 million, showing an increase of EUR 83 million year-on-year. S Group’s retail sales before taxes grew by 7.3% to almost EUR 6.9 billion.
SOK Corporation’s operating result (IFRS) for January–June turned positive, being EUR 38 million. The improvement of more than EUR 60 million was based especially on the hotel company Sokotel’s recovery from the coronavirus pandemic and S-Bank’s significant development.
“The recovery of our coronavirus-ravaged businesses from the pandemic has continued this year as well. Alongside the strong recovery of hotels and restaurants, the positive increase in sales in practically all operations driven by higher customer volumes helped improve our operating result. These are times when the strengths of a cooperative are highlighted: competitive prices, the benefits of co-op membership and success in the product and service range and network modernisation attract consumers. This is particularly reflected in grocery trade,” says Hannu Krook, CEO of SOK.
S Group’s investments grew from the previous year by more than EUR 50 million, amounting to EUR 309 million in January–June. They were distributed evenly between different parts of Finland and were targeted at the development of the service network, online shopping, digital services, and energy efficiency.
During the first half of the year, a record-breaking amount of EUR 213 million was paid to co-op members in bonuses, up by roughly EUR 20 million from the previous year. A new record was also reached in the number of summer employees, as roughly 17,000 young people gained valuable work experience at regional cooperatives and in other S Group companies.
In grocery trade, stronger development of sales than the rest of the market continued for the third year
In S Group’s supermarket trade, both sales and the operating result improved in January–June year-on-year. Consumers’ decreased purchasing power and increased caution were reflected in supermarket trade through a higher price awareness and a shift to more affordable products. In consumer goods trade in particular, purchases are weighted carefully, and they may also be postponed. Despite the challenging operating environment, consumer goods trade at Prisma stores increased in January–June from the previous year.
In grocery trade, keeping the price promise and the modernisation of the network drove customer volumes and sales to a significant increase. At S Group’s grocery stores – Prisma, S-market, Sale and Alepa – sales developed better than the rest of Finland’s grocery trade market during each month of the first half. Growth has been faster than the market for three years now. In addition, growth of online grocery shopping accelerated during the first half of the year. At best, monthly growth was as much as 20% quicker than in the previous year.
Sales of Meira Nova Oy, S Group’s food service company, also grew faster than the market during the first half.
Hotels and restaurants improved their results significantly – the planned VAT increase threatens recovery in the future
S Group’s travel industry and hospitality business improved sales and the operating result considerably from the year before. The fast pace continued in July, with sales breaking a new record. However, there is still a lot of catching up to do to return to the pre-pandemic level. Successful investments in the network, digital channels and concepts have speeded up the recovery.
During the first half of the year, positive development was seen in the restaurant business in particular. The popularity of fast food is growing, with S Group’s many restaurant concepts, including Pizza&Buffa, being a perfect fit for this demand. In Mikkeli, the first restaurant of the Babista chain specialising in high-quality kebab has been welcomed enthusiastically. In the accommodation business, event, group and leisure travel has especially picked up the pace. In contrast, international business travel is recovering more slowly.
“The recovery of hotels and restaurants is excellent news after the hard coronavirus years. Immediately afterwards, they have been challenged by the difficult economic situation and the impact of the war in Ukraine on global travel. The planned increase in the VAT rate from 10% to 14% would be a true setback for the accommodation business in this situation. Finland should give services time to recover,” Krook says in emphasis.
Positive development in department store trade and service station store and fuel sales – new Sokos to be opened in Vaasa in 2024
S Group’s service station store and fuel sales improved in January–June from the previous year driven by increased mobility and more active group travel and public events. As a result, demand for the ABC chain’s services increased along with its customer volumes. Restaurants and stores at ABC service stations and their car wash sales showed positive development. The ABC charging network expanded significantly during the first half of the year, with sales of electric car charging being five times higher than before. The operating result of service station store and fuel sales for January–June fell slightly short of the previous year’s level, and sales fell due to the decrease in the market prices of fuels.
At department and speciality stores, the steady recovery from the coronavirus pandemic was maintained as people continued their return to city centres. Both sales and the operating result developed positively in January–June. Online shopping experienced significant growth, especially during the second quarter, driven by the new Sokos.fi online shop. The product groups of beauty and clothing performed particularly well. Being on a strong path towards development, Sokos is also modernising its network, and Osuuskauppa KPO will open a completely new department store in Vaasa in 2024. The store modernisations of Emotion, the largest speciality beauty store chain in Finland, are also making good progress.
“Alongside the positive development of sales and results during the first half, the summer season was an overall success for S Group. Even though the economy and consumers’ purchasing power involve future uncertainties, our outlook for the rest of this year is a positive one. We expect the operating result of S Group and SOK Corporation to improve from the previous year,” Hannu Krook says.
Key figures in January–June 2023
Regional cooperatives + SOK Corporation, January–June 2023:
Retail sales before taxes totalled EUR 6,888 million (6,419 million in the previous year).
The operating result (FAS) was EUR 149 million (66 million).
Investments totalled EUR 309 million (253 million).
The total number of co-op members at the end of June was 2,531,756 (2,481,525).
Bonuses paid totalled EUR 213 million (194 million).
The number of active employment contracts was 48,128 (47,870) at the end of June. (The figure includes S-Bank.)
The total number of outlets at the end of June was 2,008 (1,949).
SOK Corporation (SOK + subsidiaries), January–June 2023:
Net sales (IFRS) stood at EUR 4,428 million (4,034 million in the previous year).
The operating result (IFRS) was EUR 38 million (-23 million).
Investments totalled EUR 30 million (42 million).
At the end of June, the number of personnel was 6,256 (5,997).
SOK Corporation’s interim report will be available at S-ryhmä.fi on 29 August 2023.