S Group’s operating result (FAS) for January–June 2020 was EUR 35 million (EUR 106 million in the corresponding period last year). SOK Corporation’s operating profit (IFRS) decreased by around EUR 43 million year-on-year and was EUR 1 million. S Group’s retail sales before taxes decreased by 1% to EUR 5.6 billion during the first half of the year.
Following the outbreak of the coronavirus crisis in March, grocery sales increased immediately by 10.4%, and the monthly growth rate has since been slightly above or below 10%.
“Prisma will continue to maintain its price leadership. At the same time, we will further develop Prisma’s superior selections,” says Taavi Heikkilä, CEO of SOK.
In the consumer goods trade, Prisma’s “everything under the same roof” philosophy seems to have been the winning concept during the spring. Compared with the rest of the market, Prisma fared particularly well in the fashion trade, which faced many challenges. Prisma also outpaced market development markedly in other areas. Prisma’s sales indicate a significant change in consumers’ daily lives: people are making considerable investments in the comfort of their homes and gardens.
This investment in homes and gardens was also reflected in the good growth and profit development achieved in S Group’s hardware trade, where sales related to yard and outdoor area improvement increased strongly.
Proportionately, the highest growth was achieved in the online trade, where grocery sales more than tripled year-on-year during some months. In consumer goods campaigns, isolated sales peaks were up to 10–16 times higher compared with last year’s figures.
The online trade was particularly successful in agile development during the spring. The online grocery store expanded strongly into new areas, and Food Market Herkku opened a completely new online store in Helsinki. Rapid development was also recorded for other business areas. Measures to this effect included the development of restaurant meal orders in the ABC mobile app and the establishment of a new online store, Syökotona.fi, for restaurants.
Within the ABC chain, the coronavirus crisis had a particularly strong impact on restaurant operations. The general decrease in mobility also had a negative impact on fuel sales volumes. In late spring and early summer, sales gradually returned towards normal as restrictions were relaxed. The lifting of restrictions concerning the buffet boosted the recovery of the restaurant trade, as the ABC buffet is particularly popular among customers.
The travel and hospitality business suffered from partial restrictions in June, and sales dropped by nearly two-thirds from last year. The closures and almost non-existent travel during the spring caused sales to decrease by around 50% year-on-year during the first half of 2020. Following a positive start to the year, after several years of good sales and profits, the travel and hospitality business continued to grow in January and February, but sales plummeted between March and May.
Sales at restaurants decreased because of closures and continued restrictions after re-openings. Hotels are still suffering from a loss of customers to some extent. During the spring, the lack of business travellers affected the entire hotel network, among other factors. In some parts of Finland, hotel sales have returned to normal thanks to domestic leisure travel, but demand continues to be weak, especially in the Helsinki region, because of the lack of foreign tourists, for example. This continues to impact the sales and result of SOK’s subsidiary Sokotel in particular.
“We hope it will be possible to control the coronavirus crisis through precautionary practices, with no need for further business restrictions,” says Heikkilä.
Operational development and responsibility work continue as normal
Despite the exceptional circumstances, S Group will continue development work in line with its new strategy, which was announced at the beginning of the year.
“Our new strategy focuses on increasing the significance of cooperative activities and co-op membership through meaningful actions. For example, the renewal of the S-market chain will continue normally in accordance with our plans this year and next year. Digital development is also progressing as planned. We will also continue to pursue our ambitious climate targets, aiming for carbon negativity by 2025.
The cornerstones of our climate work include improved energy efficiency and increased use of wind power. In addition, our strong investment in solar energy has enabled us to become Finland’s largest producer of solar power.
S Group and SOK Corporation’s key figures for January–June 2020
S Group as a whole (cooperatives + SOK Corporation), January–June 2020:
Retail sales excluding taxes totalled EUR 5,595 million (EUR 5,665 million).
The operating result was EUR 35 (106) million.
Investments totalled EUR 257 (226) million.
At the end of June, there were 2,433,136 co-op members (2,407,987).
The number of active employment contracts was 38,908 (42,524*) at the end of June.
The total number of outlets at the end of June was 1,848 (1,841).
SOK Corporation (SOK + subsidiaries), January–June 2020:
Net sales (IFRS) were EUR 3,721 (3,645) million.
The operating result (IFRS) was EUR 1 (44) million.
Investments totalled EUR 32 (29) million.
At the end of June, the number of personnel was 6,725 (6,669).
* The reported number of personnel is not fully comparable with the corresponding period in the previous year, because the system and reporting method have changed. The significant decrease in the number of summer employees also affects the number of personnel.
Taavi Heikkilä, CEO, SOK, tel. +358 10 76 80200
Jorma Vehviläinen, Senior Vice President, CFO, tel. +358 10 76 80608
SOK Corporation’s full interim report for January–June 2020 will be available at S-ryhmä.fi on 20 August 2020.