Strong development in ICA
The Swedish giant ICA continues to deliver. The chain takes market shares from Coop and Axfood, and profitability is good, even though earnings per share is down from last year.
“We finish in 2018 in good speed - good sales development and stable results - where Apotek Hjärtat and ICA Banken have a really nice development. ICA's store sales in Sweden also performed well at the end of 2018. Definitive market data for the third quarter show that we grew faster than the market and took market shares. We do not yet know how the market went in the fourth quarter, but our assessment is that we have grown at least in line with market growth.”
“What we can see is that the average purchases are higher and that customer visits have continued to increase. Price inflation has fallen slightly at the end of the year, but for the whole of 2018, it is higher than last year and underlying volume growth for ICA in 2018 is just over one per cent.”
“The important thing now is that we can keep up the pace. Standing still is no alternative”, says ICA’s CEO Per Strömberg (55).
E-commerce is growing strongly
ICA's e-commerce continues to develop at a good pace. In 2018, they passed SEK 1.7 billion in sales, an increase of half a billion compared to last year, that’s a growth of 42 percent!
Increasing costs in logistics (fuel and transport) is a challenge that the company believes to have control over in the long run. As for most grocery companies ICA is not yet earning money on e-commerce but trusts in payback time in the long run.
ICA’s e-commerce warehouse, which is run by British Ocado, moved to more permanent premises in Stockholm in October, but is still in a start-up phase and is thus burdening the result.
Rimi Baltic - challenging markets
Rimi Baltic's development is somewhat weaker, and the external factors continue to be challenging.
The combination of strong wage inflation and falling food prices is no good combination. Even though the profitability in Rimi Baltic is pretty good, argues Strömberg.
Apotek Hjärtat - continued strong development
The positive trend for Apotek Hjärtat continues. Increased sales of products with a favorable price picture, increased e-commerce and a developed range, which is supported by a cost-effective organization is part of the answer.
The new warehouse is up and running in Norrköping, which provides good conditions efficiency improvements.
Since November 1, Apotek Hjärtat is also part owner of “Min doktor” which is now starting its expansion phase.
ICA Banken also has a good completion of the year with continued good growth in business volume and good influx of customers - now a bit over 800,000.
ICA IN NUMBERS
- Net sales amounted to SEK 115,354m (109,408), an increase of 5.4 per cent
- Operating profit excluding items affecting comparability was SEK 4,651m (4,642)
- The operating profit excluding items affecting comparability includes previously mentioned SEK 110 million relating to structural costs within ICA Sweden and costs of SEK 26 million (54) for the previously planned integration of IKI in Lithuania.
- Profit for the period amounted to SEK 3,647 M (4,145). The result includes results from divestments and write-downs of fixed assets with a net of SEK -153 million (578)
- Earnings per share were SEK 18.05 (20.53)
- Cash flow from operating activities amounted to SEK 6,802 million (4,601). Excluding ICA Banken, cash flow amounted to SEK 6,555 M