Ica's results are better than expected
Good results in ICA's Q2 sends the market capitalization up by 8 per cent. Online is growing strongly from a low level and is a focus area for ICA in the years to come.
“Of course, it is impossible to know how large the proportion of online shopping in grocery will be compared to traditional stores. However, with the knowledge we now have, we believe it will end up between 7 and 12 percent by 2025,” CEO Per Strömberg told NHH during the quarterly presentation on Thursday 15 August.
Online still not profitable
“Are You making money online today?”
“The group does not make money on online shopping, nor do our merchants, at present, but we have good faith that this will deliver good profitability in a few years," Strömberg states.
Good decisions & buying power
ICA makes a lot of right decisions, has tremendous buying power and hence makes good money. The Group reports an EBIT result of SEK 975 million for the second quarter of the year, compared with SEK 951 million for the same period last year.
Despite the moderate increase, the result exceeded analysts' expectations, which were SEK 850 million. This also means that the operating margin of 3.2 per cent was better than expected 2.8 per cent, although it fell from last year's 3.3 per cent.
Net sales increased by 4.3% to SEK 30,529 million (29,258). The rate of increase applies both to ICA Baltics and to Ica Sweden, which is thus in line with the Grocery Index, which also increased by 4.3 per cent (in Sweden). When it comes to e-commerce, however, Ica increased by 36 percent against the market's 23,9 percent.
Ica's online sales during the period were SEK 572 million (420), still small compared to store sales, but beyond doubt a significant business already.
New fuel strategy
“In the second quarter of the year, we have a good earnings trend in the Group and good sales growth, with a continued high growth rate in our e-commerce,” says Strömberg.
“Another puzzle piece has also fallen into place as we sold Hemtex in May. In the quarter, we also decided on a new long-term fuel strategy, an important step in the continued sustainability work. Our change work continues at high speed to meet the demands and expectations of our customers,” he adds.
During the quarter ICA groups decided on a new fuel strategy. The goal is that all goods transport by road will be fossil-free by 2030 at the latest. In the metropolitan areas the ambition is to achieve this already by 2025.
“To achieve this goal, ICA Gruppen will increase its investments in new technology and fossil-free fuels, among other measures,” Strömberg concludes.
ICA financial facts
- Consolidated net sales amounted to SEK 30,529 million (29,258), an increase of 4.3%
- Operating profit excluding items affecting comparability was SEK 1,365 million- Earnings per share were SEK 2.56 (4.62)
- Cash flow from operating activities amounted to SEK 3,068 million (2,755)
- Excluding ICA Bank, cash flow was SEK 3.047 million (2,188)