2013 financial year
In addition to creating ICA Gruppen in 2013, we also put a lot of energy into implementing the Group-wide strategy we decided upon earlier. This process went well and clearly demonstrated that we are doing things right; customers appreciate what we do, sales are increasing and we are continuing to reinforce our already strong position in most of our markets.
One of the factors driving our improved results is the positive growth for ICA Sweden, which continued to outperform the market. Strong sales growth, a good expansion rate, positive sales development for private labels, a new and more inspiring store concept for non-food items and more efficient logistics all contributed to higher net sales and improved earnings. Rimi Baltic also continued to enjoy good sales and profit development. ICA Bank was named Bank of the Year in 2013, which is clear proof that our customers are satisfied. ICA Real Estate also demonstrated stable growth. An evaluation of our portfolio companies was conducted in 2013. This resulted in the decision to divest Forma, Kjell & Company and Cervera. Hemtex and inkClub are believed to have the potential to support the core business and will therefore continue to have the same ownership structure. Our one big disappointment was ICA Norway, which continued to experience negative sales and profit development in 2013. Turning the trend around for ICA Norway and laying the foundation for long-term profitability will be our biggest challenge by far. Some major restructuring has already taken place; we have divested the Norwegian ICA Maxi stores, introduced an extensive cost-cutting programme, defined roles and the division of responsibilities, and drawn up new strategies for private label and pricing. But the biggest challenges are reducing our sourcing costs and improving distribution efficiency. The Norwegian Competition Authority has recently notified an advance ruling that it will not approve our cooperation with Norgesgruppen. At the time of writing we are looking into the ruling and the consequences it may have for our operations in Norway.
2013 was our first year as ICA Gruppen. Our core business is grocery retail and surrounding this are other operations that support and strengthen the whole organisation, but also themselves contribute to ICA Gruppen’s profitability. The goal going forward is to ensure that we have good growth in all of the Group’s operations. We want to be even better at combining knowledge of local markets and proximity to the customers with the strength of common processes and structures. By focusing even more on taking advantage of the synergies that exist between our businesses, we will strengthen both the Group as a whole and the individual companies. The guiding principles here are our strategic priorities. They help us stay focused and on track, and in most areas we have made considerable progress. In Sweden we opened new stores in 2013 in all store formats, including Cura pharmacies, and decided to continue investing in ICA To Go, our small store format that offers ready meal solutions. In the Baltic region we established new stores and converted a number of low-cost stores into Rimi, our most important brand in the region. The grocery market in the Baltic region is growing, our position is strong and we have a sound plan for expansion in the future. We have also increased the percentage of sales of private label products, which is important in terms of both profitability and loyalty. To better support and exploit the sourcing synergies that exist within the Group, we have also created a Group-wide sourcing function. In logistics and goods transportation, we have put a lot of energy in recent years into modernising and improving efficiency in our product flows. One of the most important events in 2013 was the acquisition of ICA Sweden’s warehouse property in Helsingborg.
Another important priority for 2013 was to start working on our Group-wide values. Having common attitudes and a common approach to our basic values provides clarity for our customers about who we are, helps us make the right decisions and makes us the nimble organisation we want to be.
The change in our ownership structure when ICA Gruppen was formed also changed our financing and capital structure. Several actions were taken to replace the bridge financing that funded the acquisition of ICA. In May a new issue of shares was fully subscribed and raised a total of around SEK 5 billion for the company. During the summer, bonds were issued within the framework of ICA Gruppen’s MTN programme. This raised an additional SEK 5 billion. At the end of the year unlisted preference shares were issued in the subsidiary ICA Fastigheter Sverige AB for a total of SEK 3 billion. It's a great pleasure to be able to conclude that the level of interest and confidence in ICA Gruppen has been high in the capital market.