S Group's operating result for January–June 2015 was EUR 73 million (EUR 62 million in January–June 2014).

SOK Corporation's operating result was EUR 3.3 million (EUR 1.0 million).

S Group recorded a good result, considering the difficult economic and market situation. Taavi Heikkilä, CEO of SOK, emphasises that the price reductions that have been implemented in the supermarket trade since early 2015 represent a long-term strategic change which is being implemented in line with our cooperative principle without compromise.

"We are very pleased with the first stage of price reductions, which began in January. The policy has strongly focused on favourite Finnish products. As a result, the proportion of domestic content in S Group's grocery sales began to increase early in the year. We enhanced our operational efficiency and recorded a slightly improved result, which enables us to continue with the new pricing policy," says Heikkilä.

Following the price reductions, The sales volume and customer numbers of S Group's grocery trade increased in Finland, even though its euro-denominated grocery sales decreased by 0.9 per cent year-on-year.

S Group's full-year operating result is expected to be at the previous year's level. The result depends, however, on the overall development of the economy. The Finnish Commerce Federation expects the difficult times to continue this and next year. 

"The decisions that the new government has made do not serve to increase consumers' purchasing power, even though an increase is a prerequisite for recovery in commerce and the domestic market. In this very difficult economic situation, a social contract would bring much-needed stability and enable us to avoid EUR 1.5 billion in additional cuts and tax increases – measures that would weaken purchasing power even more and hit commerce hard. If the social contract that the government is pushing for is not made, we will lose out on the EUR 1 billion of tax cuts that have been promised", says Heikkilä.

In January–June 2015, S Group's retail sales (excluding VAT) totalled EUR 5,248 million. Sales in euros decreased by 4.0 per cent.

The retail sales of the regional cooperatives decreased by 3.7 per cent from January–June 2014 and totalled EUR 4,883 million. The cooperatives represented 93.0 per cent of S Group's sales and 7.0 per cent of SOK Corporation's sales.

S Group's investments totalled EUR 281 million in the first half of the year. The largest single investment, EUR 62 million, was made in a logistics centre for the grocery trade in Sipoo. In the corresponding period in 2014, S Group's investments amounted to EUR 239 million

The total number of outlets was 1,644 at the end of June. This represents an increase of three outlets from January–June 2014.

Summary:

S Group's sales and economic development in January–June 2015

S Group as a whole

• S Group's retail sales excluding taxes totalled EUR 5,248 million in January–June 2015 (EUR 5,468 million in January–June 2014).

• Its retail sales decreased by 4.0 percent.

• S Group's (cooperatives + SOK Corporation) result before extraordinary items and taxes was EUR 78.8 million (EUR 122.2 million). The figure for the previous year includes a gain from the merger of S-Bank and LocalTapiola and sales gains from properties.

• S Group's operating result was EUR 73.3 million (EUR 62.1 million).

• Investments totalled EUR 280.6 million (EUR 238.9 million).

• At the end of June, its number of personnel was 43,282 (45,942). In 2015, S Group employs a total of around 14,000 summer employees and summer trainees through the Learn and Earn programme.

• On 30 June 2015, its total number of outlets was 1,644 (1,641).

SOK Corporation (SOK + subsidiaries)

• Net sales from continuing operations totalled EUR 3,431.7 million (EUR 3,571.2 million).

• Net sales decreased by 3.9 per cent.

• SOK Corporation's result from continuing operations before taxes was EUR 5.3 million (EUR 35.4 million).

• SOK Corporation's operating result was EUR 3.3 million (EUR 1.0 million).

• Investments totalled EUR 33.7 million (EUR 42.9 million).

• At the end of June, SOK Corporation's number of personnel was 8,737 (9,706).

S Group's retail sales by business area 1–6/2015 (VAT 0%), 5,248 million EUR

Million €

Supermarket trade *

3 625.7

Hardware trade

95.9

Service station store and fuel sales

786.8

Department stores and speciality stores

137.1

Travel industry and hospitality business *

382.3

Automotive trade and accessories

155.5

Agricultural trade

56.7

Other

7.6

S Group total*

5 248

* including retail sales in the neighbouring areas (the Baltic countries and St. Petersburg).

Supermarket trade

In January–June 2015, the retail sales of S Group's supermarket trade totalled EUR 3,626 million. This includes the grocery and consumer goods sales of the Prisma, S-Market, Sale and Alepa stores, as well as other supermarket trade units in Finland and neighbouring areas. Sales decreased by 2.2 percent year-on-year.

When considered separately, S Group's grocery sales in Finland decreased by 0.9 per cent to EUR 3,183 million. The decrease is in line with the overall market development. The consumer goods trade decreased by 8.4 per cent in Finland year-on-year, totalling EUR 549 million.

The continued economic downturn has further increased the significance of prices, even in the grocery trade. In January 2015, S Group's grocery stores began to lower prices systematically and permanently as a response to the needs of the co-op members. The Prisma stores decreased the prices of more than 400 products during January. In May, the new pricing policy was expanded to cover S-Market stores and small shops. To this point, the prices of around 1,000 key products have been lowered.

From the end of 2014, the number of supermarket trade outlets increased by five, totalling 925 at the end of June 2015.

Hardware trade

S Group's hardware trade includes the Kodin Terra and S-Rauta chains. In January–June 2015, the retail sales of S Group's hardware trade totalled EUR 96 million. In a difficult market situation, sales decreased by 12.1 per cent compared to the previous year. With regard to S-Rauta, the sales include the retail sales of agricultural outlets. The number of hardware trade outlets was 23 at the end of the year. 

Service station store and fuel sales

S Group's service station store and fuel sales are managed by the ABC service station chain. Service station store and fuel sales decreased by 10.2 per cent during the first half of the year. The decrease in sales was a result of the continued decrease in the world market prices of fuels. Sales of ABC service station stores increased by 1.5 per cent. At the end of the year, the number of outlets was 237 (441 including all of S Group's distribution outlets).

Department store and speciality store trade

The retail sales of S Group's department stores and speciality stores decreased by 9.5 per cent. At the end of June, the number of Sokos stores was 19 (including the online store), the number of Emotion stores was 34, and the number of Marks & Spencer stores was five.

Travel industry and hospitality business

The travel industry and hospitality business chains include Sokos Hotels, Radisson Blu Hotels and several restaurant chains. Retail sales in the business area remained at the previous year's level and stood at EUR 382 million.

At the end of June, there were 64 hotels and 252 restaurant outlets. The total number of restaurant outlets was 746, including units located in connection with other outlets.

Neighbouring areas (Baltic countries and St Petersburg)

The retail sales of the business operations in Finland's neighbouring countries totalled EUR 250 million, representing a decrease of 14.8 per cent year-on-year.  Sales decreased, particularly in St Petersburg, as a result of the weaker Russian rouble. 

Banking

The operating result of S-Bank Group for January–June 2015 was EUR 12.2 million, and its capital adequacy ratio was 14.3 per cent.

At the end of June, S-Bank had a total of nearly 2.8 million customers, who were in possession of 1.7 million international debit cards issued by S-Bank. Around 1.6 million customers had acquired IDs for online and mobile banking.

At the end of June, S-Bank's total funds on deposit were EUR 4,088.0 million, and its total lending was EUR 2,717.6 million. The assets managed by FIM – an S Group company providing services related to investing and asset management – totalled more than EUR 6,193.9 million at the end of June.

S-Bank is the only in-store bank in Finland. Its goal is to make the daily use of money easier for customers. This is reflected in the development of digital services in particular. S-mobiili, a mobile app for the customers of S Group's stores and banks, is an excellent example: the app has won international awards and is being continuously developed in response to users' specific needs. For example, since January 2015, customers have been able to use the app for transferring their Bonus purchase rewards to a fund. By the end of June 2015, the app had been downloaded on nearly 450,000 smartphones and tablet devices.

Co-op membership

The co-op members, or the members of the cooperatives, are the sole owners of S Group's cooperatives. Co-op membership is S Group's way of conducting its cooperative form of business and producing services and benefits for its co-op members.

The growth in the number of co-op members continued during the first half of the year. In January–June 2015, a total of 34,465 new members joined the cooperatives participating in the bonus system. At the end of June, the total number of co-op members stood at 2,180,151.

SOK Corporation's interim report will become available on 20 August 2015 **at [www.s-kanava.fi**](http://www.s-kanava.fi/)