ICA Gruppen: leaves behind exceptionally turbulent FY-2022

Stockholm / SE. (ica) ICA Gruppen AB leaves behind a year that has been exceptionally turbulent. From having high hopes as the pandemic receded to a devastating war in our neighbourhood – a war that has had dramatic consequences on the entire economy and the effects of which are now sweeping into 2023.

ICA Gruppen’s net sales increased by 6.5 percent during the period January to December 2022 to SEK 136,253 million (127,957). In local currencies the increase was 5.8 percent. The increase is attributable to positive price effects in all operations, however, growth was dampened by strongly negative volume effects in ICA Sweden and Rimi Baltic. For Apotek Hjärtat and ICA Insurance, higher volume contributed to the sales increase more than price.

Operating profit excluding items affecting comparability had stable development overall in 2022, but with variations in the various segments’ earnings performance, and totalled SEK 5,883 million (5,826). All of the Group’s businesses benefited from positive price effects. For Apotek Hjärtat, positive volume effects also led to a considerably better profit than in 2021. However, for ICA Sweden and Rimi Baltic, volume effects were strongly negative. Added to this were higher logistics costs in ICA Sweden. Overall this development resulted in a weakening of the Group’s gross margin. ICA Sweden also had costs for the startup and fine-tuning of the new, automated e-commerce warehouse in Stockholm, and in Rimi Baltic cost inflation was particularly tangible with respect to energy and personnel costs. ICA Bank’s earnings improved, driven by higher market interest rates and thus improved net interest income, and higher underlying earnings for ICA Insurance. ICA Bank’s earnings in the preceding year included a one-off accounting item of SEK -60 million coupled to the acquisition of Forex’s customer portfolios, and earnings in the current year include approximately SEK +30 million for the dissolution of a claims reserve in ICA Insurance. ICA Real Estate’s earnings include an effect of SEK +26 million from discontinued depreciation of properties that will be divested in 2023. Underlying earnings performance was positive. The IFRS 16 effect on earnings was higher than in the preceding year owing to the formation of the new joint venture company Trecore in April and other large lease arrangements.

The operating margin excluding items affecting comparability was 4.3 percent (4.6 percent).

Profit for the period was SEK 4,500 million (4,554). In addition to the earnings changes described above, performance can be explained by a considerably more negative level of net financial items coupled to the merger with Murgröna, SEK -1,372 million (-399), and recognition of an impairment loss for the value of Min Doktor, totalling SEK -199 million. These items were countered by net capital gains of SEK 799 million (82) on sales of properties and a considerably lower tax cost of SEK -581 million (-924). The positive deviation in the tax cost is largely attributable to the formation of the new joint venture property company Trecore during the second quarter.

Important events during the fourth quarter

  • 01 November 2022: ICA Gruppen and Murgröna are merged, and ICA Gruppen takes over Murgröna’s assets and liabilities. Murgröna conducted no operating activities.
  • 22 December 2022: ICA Real Estate announces future sale of two logistics properties to Catena. See also the ICA Gruppen release of 22 December at www.icagruppen.se.
  • 23 December 2022: Per Strömberg is elected to ICA Gruppen’s board of directors.
  • 23 December 2022: ICA Real Estate announces formation of a new joint venture, Delcore, together with AMF. See also the ICA Gruppen release of 23 December at www.icagruppen.se.

Important events after the end of the fourth quarter

  • 01 January 2023: Nina Jönsson took office as new President and CEO.
  • 01 February 2023: Two warehouse properties sold to Catena. The divestments generated cash flow of SEK +0.5 billion and a capital gain of approximately SEK +50 million. See also the ICA Gruppen release of 22 December at www.icagruppen.se.

Chief Executive’s Commentary

CEO Nina Jönsson: «We leave behind a year that has been exceptionally turbulent. From having high hopes as the pandemic receded to a devastating war in our neighbourhood, which has had dramatic consequences on the entire economy, on ICA Gruppen and on our customers. ICA Sweden had lower earnings and margins than a year ago, and added to this, profit distribution from ICA stores was lower, given that store earnings were down compared with 2021. Of course it is of major importance that we are able to meet customers’ demands for good and affordable products, and in this regard we are working closely with the ICA retailers to accurately calibrate our efforts together. Creating a winning offering for food, pharmacy products, home mortgages, banking and insurance will give us power to grow while enabling us to make a difference in our customers’ daily lives.»

ICA Gruppen AB (publ) is one of the leading retail companies in the Nordic countries with a focus on food and health. The Group includes ICA Sweden and Rimi Baltic, which mainly conduct grocery retail, ICA Real Estate, which owns and manages properties, ICA Bank, which offers financial services, ICA Insurance, and Apotek Hjärtat, which conducts pharmacy business. ICA Gruppen had sales of approximately SEK 136 billion in 2022.