Recovery of hotels and restaurants strengthened S Group’s operating profit (FAS) – market share in grocery trade grew while operating profit fell

Recovery of hotels and restaurants strengthened S Group’s operating profit (FAS) – market share in grocery trade grew while operating profit fell

In 2022, S Group’s operating profit improved by 16% from the previous year, when the coronavirus weighed down the result, to EUR 325 million. The good performance was driven by the rapid recovery of the travel industry and hospitality business after the period of restrictions. The grocery trade held to its co-op price promise, with an operating profit below the previous year’s level, despite a significant increase in customer numbers, sales and market share. Nearly half a billion euros in bonuses and other cash benefits was paid to co-op members.

13.2.2023

The combined operating profit of regional cooperatives and the SOK Corporation (IFRS) was EUR 325 million in 2022, up by EUR 45 million from the previous year. S Group’s retail sales before taxes grew 9.2% to 13.5 billion euros. Cash benefits to co-op members amounted to EUR 484 million.

“We’ve had a challenging year that has required an exceptional sense of responsibility. The difficult economic situation underlined the core mission of the cooperative. We didn’t maximise our profits, but we improved our own operational efficiency to keep the inevitable price increases affordable for consumers. We paid out a record amount of bonuses and other cash benefits to our customers – almost half a billion euros. In 2022, more than half a billion euros more was also transferred through us to the domestic food supply chain after we opened new price negotiations in February and March,” says Hannu Krook, CEO of SOK.

Rapid growth in demand boosted recovery from the pandemic

Alongside Russia’s war of aggression in Ukraine and the ensuing energy crisis and exceptionally high inflation, the other major watershed of the year was the end of Covid-19 restrictions. Demand for services rebounded rapidly in the spring. Hotels and restaurants experienced the sharpest increase in demand, with sales up by more than 47% from the previous year. Hotels had a positive result for the year as a whole, but restaurants still made an operating loss due to tight coronavirus restrictions in January and February. However, the end of the year showed that S Group’s travel industry and hospitality business, which has developed its network and services throughout the pandemic, is in strong form.

The trend was similar in the department store and speciality store trade, as customers returned to city centres and brick-and-mortar stores. The operating profit for the business area developed positively, with overall sales up by almost 6% from the previous year. In 2022, the Sokos fashion trade performed well ahead of the market, and after the long pandemic period, customers were also very interested in cosmetics and hair products again.

The spring also saw an increase in footfall at ABC service stations. Both car wash services and the network of ABC charging stations expanded, reaching more and more customers. However, full-year traffic volumes remained below pre-pandemic levels as hybrid work became established and fuel prices rose, which slowed the recovery of ABC restaurants. The ABC chain increased both its market share and sales in 2022. Overall, sales increased by more than 28% compared to 2021, and the chain’s operating profit improved on the previous year.

S-Bank Group achieved the best result in its history. The operating profit was EUR 44.7 million, compared to EUR 24.8 million in 2021. The number of card purchases made with S-Etukortti Visa cards increased significantly and was 20% higher than in the previous year.

Grocery trade, online grocery shopping and foodservice wholesale outperformed the market

Supermarkets increased their sales by 4.3% from the previous year. However, its operating profit did not reach the level of 2021. Supermarket sales include S Group’s grocery trade, Prisma’s consumer goods trade and hardware trade. As expected, sales in the consumer goods trade levelled off as the pandemic came to an end, and the demand for services and speciality stores recovered. Towards the end of the year, demand was weighed down by accelerating inflation, which was reflected in consumers’ purchasing behaviour.

In 2022, sales in S Group’s grocery stores grew at a pace that outperformed the rest of the Finnish grocery market every month. The price promise was strictly adhered to, and the operating profit in grocery trade remained below the previous year’s level, despite a significant increase in customer numbers and sales. In the online grocery trade, S Group returned to its clear market leader position. In the foodservice wholesale trade, Meira Nova also significantly outperformed the rest of the market, with sales growth of 27%.

“This challenging year has also seen many successes in all our business areas. The investment in our network and services has paid off. The results are reflected in high customer satisfaction and growing customer numbers. In grocery trade, we expect our market share to have grown by about one percentage point. Our core promise of affordable prices and successful concept changes in our chains make us attractive,” Krook says in summary.

Over half a billion invested in Finland

In 2022, S Group’s total investments amounted to EUR 556 million. In particular, the investments focused on the service network, online shopping and digital services. Major investments in our places of business included renovations in the Sale chain and Prisma supermarkets, as well as three new Prisma supermarkets. A total of 12 new or renovated hotels and dozens of restaurants were also opened in 2022. Prisma and Sokos, which celebrated their 50th and 70th anniversaries respectively, opened new online stores.

The ABC Charging Network more than tripled in size during the year, and become the largest CCS network in Finland. S Group had 110,000 solar panels at the end of the year, and S Group’s latest wind farm project in Luvia, Eurajoki, was announced in the autumn.

“We’re a stable operator with a long-term approach, even in times of uncertainty. Next summer, we will employ up to 17,000 young people as summer workers. Although the future is uncertain, with concerns about economic trends and consumer purchasing power, we believe in the competitiveness of our services,” says Hannu Krook.

Key figures in 1–12/2022

Regional cooperatives + SOK Corporation 1–12/2022:

  • Retail sales before taxes totalled EUR 13,465 million (previous year, 12,330 million).

  • The operating profit (FAS) was EUR 325 million (280 million).

  • Investments totalled EUR 556 million (784 million).

  • The total number of co-op members at the end of the year was 2,512,159 (2,471,637).

  • Cooperatives paid a total of EUR 414 million (379 million) in Bonus to co-op members.

  • An average amount of 193 euros was paid to co-op member households during the year, including payment method- benefit, return of surplus, interest on the membership fee, and Bonus.

  • The number of personnel was 40,875 (39,861) at the end of the year. This figure is based on active employment relationships.

  • The total number of outlets at the end of the year was 1,984 (1,909).

SOK Corporation (SOK + subsidiaries), 1–12/2022:

  • Net sales (IFRS) stood at EUR 8,434 million (7,797 million).

  • The operating profit (IFRS) was EUR 25 million (20 million).

  • Investments totalled EUR 81 million (127 million).

  • At the end of the year, the number of employees was 5,686 (6,038). This figure is based on active employment relationships.

S Group’s retail sales excluding taxes, Jan–Dec 2022

Percentage changes from 2019, the time before the coronavirus crisis, are included for comparability.

Business areaSales (EUR million)Change in comparison to Jan–Dec 2021 (%)Change in comparison to Jan–Dec 2019 (%)
Supermarket sales*9,698.8+4.3+15.6
Service station store and fuel sales2,281.6+28.2+32.8
Travel industry and hospitality business*727.6+47.4-13.7
Department stores and speciality stores259.0+5.9-10.8
Others497.5-3.7+1.5
S Group total13,464.5+9.2+14.8
Supermarket sales include S-Group’s retail trade, Prisma’s consumer goods trade and hardware trade.

*The figure includes sales in the Baltic countries and Russia. Business in Russia has ended. Prisma and hotel business operations in Saint Petersburg were sold in June 2022.

SOK Corporation’s financial statements bulletin for January–December 2022 will be published on s-ryhma.fi on 13 February 2023. S Group’s annual and responsibility reviews and SOK Corporation’s financial statements for 2022, including notes, will be published in March 2023.

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