Kesko to improve profitability basis for the building and home improvement trade and the home and speciality goods trade and strengthen multi-channel services

KESKO CORPORATION PRESS RELEASE 27.11.2014 AT 09.15 1(2)

Effective from 1 January 2015, Kesko will combine its present building and home improvement trade division and home and speciality goods trade division into the home improvement and speciality goods trade division to offer Finland's widest selections in the building and home improvement trade, leisure products and the agricultural trade, as well as an accessible store network.

Starting from 1 January 2015, the chains of the home improvement and speciality goods trade division will be K-rauta, Rautia, K-maatalous, K-rauta Russia, Byggmakker, Senukai, OMA, Anttila, NetAnttila and Kodin Ykkönen, Intersport and Budget Sport, Asko and Sotka, Musta Pörssi and Kookenkä.

Starting from 1 January 2015, Terho Kalliokoski will be the Senior Vice President responsible for the home improvement and speciality goods trade.

The Management Board will be composed of: Timo Pesonen, Vice President for building and home improvement Finland, including the K-rauta, Rautia, Asko and Sotka chains; Pavel Lokshin, Vice President for building and home improvement Russia; Alo Ivask, Vice President for building and home improvement Norway, Sweden, Estonia and Latvia; Arturas Rakauskas, Vice President for building and home improvement Lithuania and Belarus, including the Senukai and OMA chains; Timo Heimo, Vice President for e-commerce and IT, including NetAnttila and Kesko's other non-food online stores, online services, IT, project management, customer relationship management, analytics and research; Antti Meriläinen, Vice President for agricultural trade, including the K-maatalous chain; Jukka Koivunen, Managing Director of Anttila Oy, including the Anttila and Kodin1 department store chains; Jussi Mikkola, Vice President for leisure goods trade, including the Intersport Finland, Budget Sport, Kesport, Intersport Russia and Kookenkä chains; Tommi Kasurinen, Vice President for finance, store sites, logistics; Jarno Kivinen, Vice President for business development; Jennie Stenbom, Vice President for human resources and communications; Jani Karotie, Vice President for Rautakesko commerce, and Mikko Pasanen, Vice President for Rautakesko B2B Sales.

The revised organisation will improve operational efficiency and offer synergies while improving the price competitiveness of the stores.

- The combination of the divisions will provide a basis for an efficient implementation of concepts, as well as strengthen the development of interactive online services and online stores offering home improvement and speciality goods, says Terho Kalliokoski, Senior Vice President for the home improvement and speciality goods trade (starting from 1 January 2015).

Cooperation negotiations about changes planned in Kesko's home and speciality goods trade, building and home improvement trade and food trade were started on 7 October 2014 in Kesko's home and speciality goods trade companies and building and home improvement trade companies in Finland and in Kesko Food Ltd, Kesko Corporation and K-Plus Oy. The negotiations were completed on 24 November 2014. A total of approximately 2,800 people were included in the negotiations and the combined reduction need in the companies was estimated at a maximum of 230 full-time equivalents. As a result of the negotiations, the total need for reductions in personnel was confirmed at 193 full-time equivalents, of which 119 are allocated to companies belonging to the home improvement and speciality goods trade division starting from 1 January 2015. The reductions also include possible pension plans and terminations of fixed-term employments.

- We have clarified our management structure and financial responsibilities, as well as strengthened the operational basis of our chains. Our clear objective is to improve the profitability of the home improvement and speciality goods trade.

In 2013, the net sales of the home improvement and speciality goods trade totalled around €3.4 billion. The division has operations in Finland, Norway, Sweden, Estonia, Latvia, Lithuania, Russia and Belarus and it employs around 14,000 people.

Further information is available from Terho Kalliokoski, Senior Vice President for the home improvement and speciality goods trade (starting from 1 January 2015), tel. +358 105 320 200.

Kesko (www.kesko.fi) is a retail specialist whose stores offer quality to the daily lives of consumers. Kesko's chains have about 2,000 stores in the Nordic and Baltic countries, Russia, and Belarus.