In 2014, S Group's total profit before extraordinary items and taxes was €274 million, whereas the profit in the previous year was €226 million. The profit improvement was due to strict cost control and new operating models. A significant part of the improvement was also created through the merger of S-Bank and LocalTapiola Bank.
"S Group will continue to use the profit improvement gained to decrease the prices of central consumer products as announced earlier. This policy is based on our cooperative form of business, and we have clear guidelines in our strategy for pursuing it", says Taavi Heikkilä, SOK's Chief Executive Officer.
The improved efficiency of operations was particularly visible in the result of SOK Corporation. Profit before taxes for 2014 improved significantly from the previous year, totalling €42.3 million. In 2013, the profit was €5.2 million to the negative.
S Group's operating profit was €226 million, whereas in 2013 it was €196 million. At the same time, SOK Corporation's operating profit was €7.6 million, whereas in the previous year it was €32.1 million to the negative.
Like the preceding year, 2014 was a difficult year for the retail sector. Households' purchasing power weakened and consumption further declined. Despite this, S Group's retail sales reached nearly €11.2 billion. Sales only decreased by 1.4 per cent, and comparable sales by less than one per cent.
According to Heikkilä, the weak economic situation in Finland will create challenges for the coming year.
"Because of this, we hope that in addition to our own actions, the growth and vitality of the home market will be supported and decisions on taxation that might reduce the purchasing power of consumers will be avoided."
The operating profit of regional co-operatives decreased slightly to €218 million. The profit of the previous year was €228 million. The retail sales of regional cooperatives decreased by 0.7 per cent to approximately €10.4 billion. The cooperative enterprises' share in S Group's sales was 93 per cent, and in SOK Corporation's sales, seven per cent.
S Group invested €526 million in 2014. With the cost reductions in place, total investments were €47 million smaller as compared to the previous year, when investments totalled €573 million.
The number of co-op members was 2,156,828. During 2014, 83,825 new members joined the cooperatives. In total, co-op members were paid more than €360 million in Bonus rewards. The total number of S Group outlets at the end of the year was 1,643. The number grew by one from the previous year.
The weak purchasing power of the home market and the uncertainty of the Russian economy are reflected in the expectations for 2015. Despite the challenging market situation, the operating profit of SOK Corporation is estimated to also be positive in this year, as in 2014. For the whole S Group, the expected result for this year is slightly lower than in 2014.
Summary: S Group's sales and economic development in 2014
S Group as a whole
S Group's retail sales excluding taxes totalled €11,182 million in 2014 (€11,353 million in 2013). Comparable retail sales decreased by 0.9 per cent.
S Group's profit (cooperatives + SOK Corporation) before extraordinary items was €274 million (€226 million in 2013).
S Group's operating profit was €226 million (€196 million in 2013).
Investments totalled €526 million (€573 million in 2013).
The number of personnel decreased from the previous year and was 40,292 at the end of 2014 (41,784 in 2013).
The total number of outlets on 31 December 2014 was 1,643 (1,642 in 2013).
Retail sales totalled €10,373 million (€10,462 in 2013). Sales decreased by 0.7 per cent.
Operating profit before extraordinary items and taxes was €218 million (€228 million in 2013).
SOK Corporation (SOK + subsidiaries)
Revenue from continuing operations was €7,286 million (€7,317 million in 2013). Revenue decreased by 0.4 per cent.
SOK Corporation's profit before taxes was €42.3 million (€5.2 million to the negative in 2013).
SOK Corporation's operating profit was €7.6 million (€32.1 million to the negative in 2013).
SOK Corporation's investments totalled €68.6 million (€99.7 million in 2013).
The number of personnel decreased from the previous year and was 8,868 at the end of 2014 (9,353 in 2013).
Taavi Heikkilä, CEO, SOK, tel: +358 10 76 80200
Jari Annala, Senior Vice President, CFO, SOK, tel: +358 10 76 82040
SOK Corporation's financial statements can be found online at S-kanava.fi.