DIY: the growth business within Kesko?

Over the last two years the DIY segment has become an increasingly significant part of the overall Kesko business.

From the shareholder perspective DIY has a bigger growth potential than groceries.

Grocery segment is a stable business in one country with a solid market share and huge profit margin, but no significant growth potential (there is only so much that Kesko can steal market share from S-Group).

On the other hand, DIY with its focus on becoming one of the biggest DIY retailers in Europe has almost all of Europe in terms expansion potential. In fact DIY has been outpacing the grocery segment in both revenue and profit growth.

DIY is now 74% of the size of groceries. The more impressive growth can be seen in profits. The DIY segment has increased its profit margins from around 2% to 7,2% in five years. In 2021 DIY represented 40% of profits for Kesko, up from 25% only two years ago.

It will be interesting to see, when DIY becomes the biggest part of Kesko.

Contrary to groceries, the DIY segment gets a big portion of its sales from international markets. In fact, Finland is the slowest growing country, even though it is still the biggest market.

In B2C business Norway (Byggmakker) is fast gaining K-Rauta (Finland) as the biggest B2C market. Norway grew in 2021 by 56%, whereas Finland grew “only” by 11%.

Another strong growth segment within DIY is the Onninen B2B business, which grew by 19% in 2021. Onninen is already 47% of the entire DIY segment.