10/06/2010

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IKEA discloses financial results for 2009 and invests in renewable energy

"Over the past number of years, we have had many requests to learn more about Ikea and we welcome the increased interest," said an Ikea spokesman. "Therefore, the board decided in December 2009 to every year present a summary and comments in an easy and accessible way on our financial results and the most important developments."The short report shows that the company weathered the global downturn, with net profit climbing 11 % to EUR 2.5 billion from EUR 2.28 billion in the 2009 financial year and sales 1.4 % higher at EUR 21.5 billion, for the fiscal year ending 31st August. Sales increased a further 7.7 % in the 2010 fiscal year although the company did not disclose profits for the most recent year but said they would do so later. The company, with 280 stores in 26 countries, employs 127,000 people, said it paid EUR 384 million in tax in 2009. Operating income rose 4.4 % to EUR 2.77 billion while its assets totalled EUR 37 billion. London's Financial Times reported that IKEA officials stated that the company's net income has consistently stayed between 10 % and 13 % of revenue over the past decade. It said sales growth came entirely from its 15 newly opened stores (down from 20 store openings a year during its period of rapid expansion). Cheaper raw materials and a lower tax bill also helped.In June 2009, IKEA slashed 5,000 jobs to cope with the drop in demand for its products caused by the global economic crisis. The company's results in Russia, where it faces corruption charges, were reported to below expectations. IKEA also faced problems in France, where a labour dispute culminated in a massive strike over pay at 23 of 26 stores earlier in the year."Good profitability is needed to carry out our extensive growth programme on existing as well as new markets, to give more people access to the IKEA range," said Ohlsson. "We are admittedly never completely satisfied. But it was much better than we had expected and a much better outcome keeping in mind the extremely tough business climate in many markets. We are definitely taking market share now." He also stated that cost-cutting will continue, as he wants to turn IKEA into a leaner group.The Swedish group is keen on expansion in Asia, planning a push into South Korea followed by India where it is looking for a local partner. The group currently sources EUR 500 million worth of supplies in India and this could double this within three years. IKEA also hopes to continue expansion plans in Russia and China. IKEA opened in Romania in March and plans to open stores in Serbia and Croatia in the next few years.Investment in wind farms
IKEA has recently bought six German wind farms from Gamesa, the Spanish wind turbine group, as part of its efforts to reduce the company's carbon footprint. This has increased the total number of wind turbines owned by IKEA to 52 after a similar deal to buy four French wind farms last year. The company expects to make further investments in both wind and solar power to meet its long-term goal to secure all its electricity needs from renewable sources. "We are conscious of our impact on people and the environment, so we feel duty bound to act responsibly in all we do," explained Ohlsson. The German wind farms a have generating capacity of 45MW, delivering an estimated 88GWh of electricity per year, or enough to power 17 stores.Germany continues to be IKEA's largest market, representing 16 % of sales in 2009, ahead of the US with 11 %. Nearly half the electricity used in its stores and distribution centres around the world comes from renewable sources, the company said. It is also in the process of equipping 150 of its buildings with solar panels.

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