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Press release
Released for publication on 15 February 2007 at 13.00 p.m.

The S Group achieves strong growth in 2006

The S Group racked up good performance in 2006. In the core business areas, sales growth outpaced the market average.
The aggregate profit of the cooperative enterprises and SOK Corporation was EUR 341 million.
The number of customer-owners increased by more than 127,000 new members during the year, totalling 1.6 million at the end of the year. Customer-owners were paid EUR 232 million in Bonuses.
Operating according to cooperative principles, the companies belonging to the S Group use their profits to reward members and to develop services for them.

• The S Group's retail sales rose to EUR 9,777 million, an increase of 13.4 per cent on the previous year.

• The S Group's retail sales in Finland were up 15.4 per cent. The Group's market share of the grocery trade is estimated to have risen significantly during 2006.

• Members were paid EUR 232 million in Bonuses, an increase of 20 per cent on the figure a year earlier.

• The number of customer-owners increased by more than 127,300 new members during the year. Membership totalled 1,621,060 at the end of the year. A total of 878,000 new members have joined the S Group since the turn of the millennium.

• The S Group's aggregate profit before extraordinary items was EUR 341 million, as against EUR 400 million a year earlier.

• The S Group's investments came to EUR 532 million, an increase of EUR 217 million.

• SOK Corporation's net turnover was up 62.3 per cent on the previous year, to EUR 6,834 million. Profit before extraordinary items and taxes was EUR 29.9 million, as against EUR 69.0 million a year earlier.

• Aggregate sales by the Baltic units were EUR 190 million.

• The S Group had a payroll of 34,000 employees at the end of the year, or nearly 6 000 more than a year ago.

"For the S Group, 2006 was a year of substantial growth. The service network of the cooperative enterprises and SOK Corporation was enhanced both through an energetic programme of acquisitions and by way of internal development investments with the aim of serving customer-owners' needs more broadly and with greater versatility. Concurrently, major investments were also made in information systems that support the S Group's operations and assist managers, whilst also furthering the development of our people's competence," observes Kari Neilimo, SOK's chief executive.

"The growth in the number of customer-owners and their increased loyalty in making purchases at the S Group's service outlets had a significant impact on the good performance of the entire S Group. Customer-owners accounted for 64 per cent of retail sales, and in the core business areas, bonus sales to them hit 80 per cent. At present, already 67 per cent of all Finnish households are members of the S Group. Finns have shown their interest in the S Group's operations and services. The cooperative enterprises are truly - in line with our vision - Finns' own store," adds Kari Neilimo.

"The investments made in 2006 have served to create a good foundation for expanding and developing the S Group's operations in coming years. Despite the heavy development investments, the financial position of the cooperative enterprises and SOK Corporation have remained stable," observes CEO Kari Neilimo.

Growth and development investments of over EUR 500 million affect the S Group's earnings

The S Group posted aggregate profit before extraordinary items of EUR 341 million, down about EUR 59 million on the figure a year earlier. The lower level of earnings was attributable to smaller gains on the sale of fixed assets than a year ago as well as to large growth and development investments. The cooperative societies' aggregate result was EUR 311 million. All the regional cooperative societies reported a profit.

"SOK Corporation's profit before extraordinary items was EUR 30 million, coming in above budget but EUR 39 million short of the comparable profit figure a year ago. The decrease in earnings was due to smaller gains on the sale of fixed assets, on a comparable basis, to the loss-making result of automotive trade operations and to the investments made in 2006. The growth and development investments pave the way for the growth of our businesses in the years ahead," says CEO Kari Neilimo.

The S Group's total capital expenditures in 2006 amounted to EUR 532 million, as against EUR 315 million a year earlier.

The S Group's retail sales in Finland rise by 13.4 per cent

The S Group's retail sales in Finland rose to EUR 9,587 million last year. Growth amounted to 13.4 per cent, outpacing the average growth in Finland's retail trade. The cooperative societies' share of the S Group's retail sales was EUR 8,073 million, or 84.2 per cent, and SOK Corporation accounted for 15.8 per cent. Retail sales by the cooperative enterprises were up 11.6 per cent on the previous year.

The S Group's grocery sales in Finland increased by 15.4 per cent on the previous year and were EUR 4,909 million, or 51.2 per cent of the S Group's retail sales in Finland. Supermarket sales in the Baltic countries amounted to about EUR 117 million.

"In the grocery trade, the S Group's sales growth outpaced the market average by a good margin, enabling it to strengthen its market leadership in the grocery sector. Market share gains were made in the service station store and fuel trade, and market positions were also strengthened in other S Group business areas during 2006. Operations in the Baltic countries also grew rapidly," observes Kari Neilimo.

The S Group's sales in Finland showed the following growth rates on the previous year by business area: grocery trade 14.4 per cent; service station store and fuel trade 17.8; department stores and speciality stores 8.2; hotel and restaurant business 11.8; automotive and accessories trade 19.4; and agricultural trade 3.5 per cent, respectively. Operations in the Baltic countries grew by 12.7 per cent.

Bonus sales account for 64 per cent

More than 127,300 new members joined the S Group's cooperative enterprises last year. Since the turn of the millennium, a total of 878,000 new members have joined. The membership totalled 1,621,060 at the end of the year.

Bonus sales by the S Group's companies totalled EUR 6,121 million, up 15 per cent.

Bonus sales to members accounted for 64 per cent of the S Group's sales in Finland. Members were paid EUR 232 million in Bonuses, an increase of 20 per cent on the figure a year earlier.

The S Group's nationwide bonus system partners in 2006 included Elisa Corporation, Hertz car rentals, Isku Koti Oy, Matka-Vekka (a travel operator), the Silmäasema chain of opticians and the Tapiola Group of insurance companies. Purchases by members from partners granting a Bonus increased by 15 per cent and reached EUR 899 million.

The S Group's commercial chains

The S markets are still both the S Group's and the country's largest chain of grocery markets. At the end of the year, the chain comprised 409 locations, an increase of 37 locations. The chain's aggregate sales, excluding fuel outlets, amounted to EUR 2,681 million, up 14.4 per cent.

The Prisma hypermarkets continued their strong sales growth. Sales reported by the chain, excluding restaurants, fuel outlets and other additional services, amounted to EUR 2,173 million, an increase of 9.7 per cent. There were 53 Prismas at the end of the year, an increase of two locations. Five of these operate in Tallinn, Estonia, and one in Latvia.

The Sale and Alepa chains had aggregate sales of EUR 570 million, an increase of 15.6 per cent. The number of locations increased by 29 and totalled 289 at the end of the year.

There were 81 ABC service station stores and 206 ABC unmanned stations. The number of unmanned stations also includes those in operation at the supermarkets. All in all, there were 320 fuel distribution sites, or 16 more than in the previous year. The service station store and fuel trade reported sales of EUR 1,137 million, up 17.8 per cent.

There were 20 Sokos department stores at the end of the year. The number of locations did not change during the report year. The Sokos department stores posted consumer goods sales of EUR 333 million, an increase of 6.9 per cent.

The Sokos Hotels chain comprised 38 hotels in Finland as well as the Sokos Hotel Viru in Tallinn. The Radisson SAS chain included 7 hotels, an increase of one. At the end of the year, there were 6 locations in the Holiday Club chain. In addition, the S Group had three smaller hotels. Sales by the hotel and restaurant units totalled EUR 732.6 million. The increase on the previous year was 11.4 per cent. Eighteen new locations were added to the chain, bringing the total number up to 297. The number of restaurants and cafés totalled 555, when including those locations that operate in hotels and supermarkets.

There were 46 automotive trade outlets in Finland and another 5 in the Baltic countries. The number of locations did not change during the year. The automotive trade generated sales of EUR 871.5 million, up 18.8 per cent. The sales figure includes the automotive trade carried on by SOK in Estonia and Latvia.

There were 147 agricultural outlets at the end of the year, of which 130 were Agrimarkets, 8 were Machinery Centres and the other 9 were agricultural and hardware stores. These units had sales, including the grain trade, of EUR 1,080 million. Net turnover within agricultural trade was up 3.5 per cent on the previous year.

There were 1 475 locations in Finland at the end of the year (up 83). In addition, there are 13 locations in the Baltic countries.

A big increase in personnel strength as operations expand

The S Group had a payroll of 34,045 employees at the turn of the year (28,092), and SOK Corporation had 8,563 employees during the same period (5,052).

The S Group's growth set to continue in 2007

The S Group's sales will grow in all business areas in 2007. The number of customer-owners will also increase and they will continue to patronise the S Group's service outlets in the current year. Credit services for customer-owners will be enhanced when the S Bank's operations get under way in the latter part of 2007.

"The financial position of the S Group and SOK Corporation will remain stable. The growth in investments required for the business and service operations that are starting up will nevertheless lower the operational result, especially SOK Corporation's earnings compared with 2006," observes CEO Kari Neilimo.

S Bank gets a familiar look

S Bank has been chosen as the marketing name of the bank which the S Group will open at the end of 2007.

"The name fits in with the S Group's overall brand philosophy. It creates the image of a reliable service provider that is knowledgeable and Finnish," comments Pekka Ylihurula, S Bank's managing director.

The objective of S Bank's operations is to round out our services for the benefit of customer-owners.

"We chose the name S Bank because it's straightforward and very approachable. What's more, it's closely linked to customer-ownership and the S Benefit Card," says Mr Ylihurula.

The visual appearance of the logo, with its familiar green colour, likewise carries the message of customer-ownership within banking operations.

For additional information, please contact:
CEO Kari Neilimo, tel. + 358 10 76 80200
Jukka Salminen, Director, tel. +358 10 76 81860,
+358 50 63 827
Managing Director Pekka Ylihurula, tel. +358 10 76 82100,
+358 50 388 3800

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