B2B (Onninen & Kespro) driving growth and profitability for Kesko
As the consumer economy is cooling down, the Business-to-Business (B2B) arms of Kesko keep on growing rapidly. Both Kespro and Onninen are driving growth for Kesko. They both are also more profitable than the Business-to-Consumer (B2C) business, which are declining.
Groceries losing market share
In the grocery business Kespro remains a small part of the overall grocery business, but it drives enables the grocery segment to grow. With continuous double-digit growth, Kespro keeps on outgrowing the market. At the same time the B2C grocery segment has lost to the market growth for the last two years. This will lead to relatively big decline in market share.
The tough trading environment has lead to a decrease in the profitability of the grocery business from 8,4% to 7,6%. With more profitable Kespro growing by double-digits, it is likely that the profitability of the B2C segment declines quite rapidly.
Onninen with rapid and profitable growth in DIY
In the DIY segment the B2C business declined for second quarter in a row as the home improvement and decoration market seems to be cooling down. Similar signs were seen in the Q4 reporting of the online pure play DIY company BHG last week. The revenue decline lead to a significant drop in profit margins from 5,3% to 2,4%.
At the same time Onninen grew by 10,5% while being able to remain almost as profitable as in Q4/2021. It remains to be seen if the cooling of the housing market starts to influence Onninen.
The importance of Onninen for the DIY segment is ilustrated with profits. Onninen represents slightly more than 50% of revenue, but 2/3 of the profits.
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