SOK Communications and publications 17 August (5)

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1 Communications and publications 17 August (5) Cleared for publication at 12:00, 17 August 2006 The S Group reports growth in sales and number of customer-owners earnings trend stable The number of the S Group s customer-owners grew further in the first half, when 59,000 new members joined the cooperative enterprises. Members were paid EUR 108 million in Bonuses in the first part of the year, an increase of 21 per cent on the same period a year ago. In January June, the S Group s retail sales grew by 13.2 per cent year on year. In the grocery trade, sales jumped by a hefty 15.8 per cent. In January June, the S Group posted aggregate profit before extraordinary items of EUR million. Earnings were somewhat lower than a year ago, but higher than the budgeted target level. The S Group s retail sales in January June totalled EUR 4,690 million, up 13.2 per cent on the same period a year ago. The S Group s grocery sales grew by 15.8 per cent. Bonuses totalling EUR 108 million were paid to customer-owners, an increase of 21 per cent. The cooperative enterprises belonging to the Bonus system gained 59,000 new members in January June, bringing their total membership to 1,559,602. The S Group s aggregate profit before extraordinary items was EUR million, down EUR 17.8 million. The cooperative enterprises profit before extraordinary items was EUR million, an increase of EUR 6.9 million. SOK Corporation s profit before extraordinary items was EUR 29.3 million, down EUR 24.7 million. The S Group s aggregate earnings in the current year are estimated to be roughly on a par with the result posted in A salient feature of the S Group s cooperative enterprises and SOK Corporation in the first half of the year has been strong growth in operations and the number of customers in tandem with major investments to expand our operational reach and our ability to serve customer-owners. The cooperative enterprises earnings improved on last year, whereas strategic investments cut into SOK Corporation s earnings. The S Group has maintained its good earnings level and financial position. The full-year result in 2006 will come in at around the earnings level reached in 2005, observes Kari Neilimo, SOK s chief executive. An important driver of the growth in the S Group s retail sales has been the considerable increase in the number of customer-owners. What s more, customerowners are increasingly making the bulk of their purchases at S Group locations. In the first half, the cooperative enterprises paid their customer-owners EUR 108

2 Communications and publications 17 August (5) million in Bonuses, an increase of 21 per cent year on year. The growth in retail sales has also been given a boost by the acquisitions that were made in the grocery, motor trade and accessories and hotel and restaurant business areas in the first part of the year. Now that the Inex Group has become an SOK subsidiary, this has also lifted the S Group s sales, says CEO Kari Neilimo. The S Group strengthens its position in the grocery trade The S Group s retail sales in January-June came to EUR 4,690 million, up 13.2 per cent on the same period a year ago and outpacing the market average by a considerable margin. The 15.1 per cent sales growth in the supermarket trade and, especially, the 15.8 per cent increase in grocery sales were considerably ahead of the market average. This means that the S Group has gained market share in the grocery trade. The sales trend of the other business areas can likewise be considered satisfactory, to say the least. The biggest growth in sales was the 21.7 per cent figure for the service station store and fuel trade, comments CEO Kari Neilimo. The department store and speciality store business reported growth of 7.9 per cent, the hotel and restaurant business 8.3 per cent, the motor trade and accessories business 9.9 per cent and the agricultural trade 5.1 per cent. SOK Corporation s business units in the Baltic countries showed a further favourable sales trend, up 9.4 per cent. Grocery sales in the Baltic area increased by 11.4 per cent. The S Group s market position has strengthened in a number of business areas. Only the motor trade and accessories business, despite an increase in sales, did not reach the targets set for it, observes Kari Neilimo. The cooperative enterprises gain 59,000 new customer-owners in January June Bonus sales by the S Group totalled EUR 2,867 million in the first half of the year, up 15 per cent. Bonus sales accounted for 62.3 per cent of the entire S Group s sales in Finland (60.8%). Members were paid EUR million in Bonuses (up 21%). In the first half of the year, 59,000 new members joined the cooperative enterprises belonging to the Bonus system, and their total membership at the end of June was 1,559,602. The S Group covered 64.9 per cent of Finnish households (61.6 per cent). The S Group s nationwide Bonus partners include Elisa Corporation, Hertz car rentals, Isku Interior Oy, Matkatoimisto Oy Matka-Vekka travel agents, the

3 Communications and publications 17 August (5) Silmäasema chain of opticians and the Tapiola Group of insurance companies. Purchases by members from partners granting a Bonus increased by 15 per cent and reached EUR 447 million. Customer-owners member investments with the cooperative enterprises savings funds amounted to EUR million at the end of June, an increase of EUR 24.2 million on the same period a year earlier. The S Markets are Finland s largest grocery chain With 395 locations at the end of June (+23), the S Markets are still both the S Group s and the country s largest chain of grocery markets. The chain s aggregate sales excluding fuels amounted to EUR 1,254 million, up 12.4 per cent. The Prisma hypermarkets continued their strong sales growth. Sales reported by the chain, excluding restaurants, fuel outlets and other additional services, amounted to EUR 968 million, an increase of 10.6 per cent. There were 47 Prismas at the end of June. In addition, four Prismas are operating in Tallinn. The Sale and Alepa chains had aggregate sales of EUR 265 million, an increase of 11.5 per cent. The chain had 282 locations (+22). There were 78 ABC service station stores and 197 ABC unmanned stations. The number of unmanned stations also includes those in operation at the market stores. All in all, there were 313 fuel outlets (+9). The service station store and fuel trade reported sales of EUR 536 million, up 21.7 per cent. There were 20 Sokos department stores at the end of June. The Sokos department stores posted consumer goods sales of EUR 144 million, an increase of 5.9 per cent. The Sokos Hotels chain comprised 38 hotels in Finland as well as the Sokos Hotel Viru in Tallinn. The Radisson SAS chain comprised 7 hotels, and there were 6 spa hotels in the Holiday Club Hotels chain. In addition, the S Group had three smaller hotels. The S Group operated 239 separate restaurants and cafes (+9). There were a total of 293 hospitality locations (+16). The number of restaurants and cafés was 550, including units that operate in hotels, supermarkets and service station stores. Hotel and restaurant sales in Finland totalled EUR 322 million, an increase of 8.3 per cent on the same period a year ago. Hotel operations generated sales of EUR 90 million, an increase of 6.1 per cent. Restaurant sales amounted to EUR 232 million, a gain of 9.2 per cent. The sales figure includes units operating in hotels and supermarkets. The motor trade had 48 locations (+2). Sales were EUR 418 million, up 9.9 per cent. In addition, SOK operated units in the motor trade in Estonia and Latvia.

4 Communications and publications 17 August (5) The agricultural trade had 151 locations, of which 131 were Agrimarkets, 8 were machine centres and the other 12 were agricultural and hardware stores. The agricultural trade had sales of EUR 566 million, an increase of 5.1 per cent. The S Group had 1,461 locations in Finland at the end of June. In addition, there were 11 locations in the Baltic countries. Acquisitions affect SOK Corporation s earnings SOK Corporation s net turnover in January-June totalled EUR 3,265 million, up 60.9 per cent on the same period of last year. The increase in net turnover was due mainly to the purchase of shares in Inex Partners Oy. The Inex Group became an SOK subsidiary from the beginning of March. Operations abroad accounted for 3.0 per cent of SOK Corporation s net turnover. SOK Corporation s profit before extraordinary items and taxes was EUR 29.3 million, a decrease of EUR 24.7 million. The weaker earnings were attributable mainly to the lower capital gains on the sale of fixed assets. The rapid growth in SOK Corporation s business and service operations is reflected in the higher net turnover figure, which has increased by a whopping 60.9 per cent year on year. Concurrently, the number of SOK Corporation s personnel has increased by 3,935 employees during the first half, totalling 9,338 people at the end of June. The major investments made in the first part of the year have been a factor in weakening SOK Corporation s earnings, but the operating earnings trend is nevertheless above the budgeted target. Furthermore, the earnings trend of some business areas has not reached the previous year s level, observes Kari Neilimo. SOK Corporation s investments in fixed assets amounted to EUR 164 million in the first half (34.9). Major outlays were for the purchase of shares in Suomen Spar Oy and Inex Partners Oy as well as for the purchases of the Holiday Club chain s operations in Finland and the acquisitions of car dealerships. SOK Corporation s complete Interim Report is available online at the address For additional information, contact: CEO Kari Neilimo, tel Jukka Salminen, Senior Vice President, SOK Administrative Division, tel

5 Communications and publications 17 August (5) Suso Kolesnik, Senior Vice President, SOK Communications and Publications, tel