0IZA Tallinna Kaubamaja Grupp As

The Group's consolidated unaudited sales revenue for the fourth quarter of 2024 was 256.6 million euros, exceeding the previous year's revenue by 1.6%. The unaudited sales revenue for the entire year of 2024 amounted to 944.6 million euros, representing a decline of 0.3% compared to 2023, when sales revenue also totalled 947.3 million euros. The Group's consolidated unaudited pre-tax profit for the fourth quarter of 2024 was 13.2 million euros, marking a 1.0% increase compared to the same period in the previous year. The pre-tax profit for 2024 was 35.5 million euros, a decrease of 17.5% compared to the previous year.

The fourth quarter has traditionally been the most active period for the Group's economic activities. Despite the continued decline in Estonia's retail sector, the Group managed to increase its revenue in the final quarter of 2024 compared to the same period in the previous year. As anticipated, the Estonian car dealer in the Group's automotive segment benefited from a car purchase boom in the fourth quarter, driven by the announcement of the Estonian car tax set to take effect in 2025. Unlike competitors, the Group avoided deep discounts, which contributed to an increase in the automotive segment’s profit during the fourth quarter. The security segment demonstrated sound sales growth throughout the reporting year, continuing its strong organic performance in the fourth quarter, when the impact of a companies acquired in the first half of 2023 no longer had any comparison effect. The prolonged cooling of the Estonian economy has influenced consumers to increasingly prefer discounted products, which has put pressure on the margins of retail segments, resulting in a slight decline in margins in the final quarter of 2024 compared to the previous year. The Group’s operating expenses remained broadly stable. Marketing costs, driven by increased campaign volumes, and IT expenses related to automation initiatives showed higher growth rates. Continued process efficiency improvements have helped maintain control over labour costs, which grew by 3.2% in the fourth quarter, while the average number of employees increased by 2.0%. Net profit was negatively impacted by the gradual effect of higher loan interest rates and the revaluation of deferred tax liabilities under international accounting standards. Fourth-quarter profit was positively influenced by an extraordinary gain of 2.1 million euros from the sale of two non-core properties in the Group’s real estate segment in Latvia.

In the fourth quarter of 2024, Viking Motors, the Estonian car dealer in the Group's car segment, completed a new KIA flagship showroom in Peetri, on the outskirts of Tallinn. Construction of a body shop adjacent to the Peetri showroom is ongoing. At the end of the reporting year, a new KIA showroom was opened in the Bikernieku area of Riga to better serve customers in that part of the city. In Lithuania, work continued in collaboration with TKM Lietuva UAB on the construction of a new KIA-Škoda multi-brand showroom in Vilnius. Earlier development activities in the reporting year included the opening of two new Selver stores. In August, a new Selver store was launched in Rocca al Mare Shopping Centre in Tallinn, followed by the opening of another in Tartu’s Raadi district in September. In the department store segment, a new Toidumaailm (Food World) was opened in the Tartu department store in August, offering the best selection of food products in Southern Estonia. Development of a new e-store, closely integrated with the physical stores, also continued. The Partner Kuukaart Instalment and Hire Purchase options are now available in the e-store, providing flexible payment solutions. The department store segment also expanded and updated the I.L.U. store in the Lõunakeskus shopping centre to a new concept. In the real estate segment, a logistics centre in Maardu was completed and became operational at the end of September. The construction cost of the new logistics centre was 20 million euros, and it enhances the Group's supply chain management and logistics services.

At the end of the reporting period, the number of loyal customers exceeded 744 thousand, an increase of 3.3% over the year. The share of loyal customers in the Group’s turnover was 86.0% (compared to 86.6% in the 2023). The Partner Kuukaart "buy now, pay later" payment solutions were introduced to the department store e-store at the end of September, received a warm reception and positive feedback from customers during the fourth quarter. The Instalment option allows customers to split their payments into 3 or 6 equal parts with no additional costs, while the Hire Purchase option allows payments to be spread over up to 36 months.

Selver supermarkets

The consolidated sales revenue of the supermarket business segment for 2024 was 610.4 million euros, a decrease of 1.6% compared to the previous year. The consolidated sales revenue for the fourth quarter was 164.1 million euros, remaining at the previous year's level (a change of -0.5%). The average monthly sales revenue per square metre of selling space was 0.41 thousand euros in 2024 (compared to 0.43 thousand euros in 2023) and 0.43 thousand euros in the fourth quarter (compared to 0.45 thousand euros in 2023). For comparable stores, the average monthly sales revenue per square metre of selling space was 0.41 thousand euros in 2024 (compared to 0.44 thousand euros in 2023) and 0.43 thousand euros in the fourth quarter (compared to 0.45 thousand euros in 2023). A total of 44.4 million purchases were made in stores in 2024, with the number of transactions remaining at the previous year's level (an increase of 0.4%).

The pre-tax profit for the fourth quarter of 2024 was 4.6 million euros, 2.8 million euros lower than the base period. The consolidated pre-tax profit of the supermarket segment for 2024 was 16.0 million euros, a decrease of 4.0 million euros compared to the previous year. The net profit for 2024 totalled 15.5 million euros, declining by 2.9 million euros compared to the previous year. The difference between net profit and pre-tax profit arises from the reallocation of deferred income tax across the Group’s business segments.

The comparison base data is influenced by the closure of the segment’s largest store, Järve Selver, for renovation in March 2023, as well as the preceding clearance sale. Järve Selver reopened to customers in its renovated form in May. The base data is also affected by the opening of Kurna Selver in August 2023, the closure of WOW Selver ABC in January, and the closure of Punane Selver in May. In 2024, two new Selver stores were opened—one at the end of August in the Rocca al Mare Shopping Centre in Tallinn and another at the end of September in Tartu’s Raadi district. The one-off costs associated with the opening of these stores have impacted the profit for 2024.

Selver's sales performance has been influenced by the overall state of the Estonian retail market, where sales volumes have been in decline for the third consecutive year, and consumer confidence remains weak. Low purchasing power and subdued consumer confidence are clearly reflected in the food and essential goods segment. In the first eleven months of 2024, the sales revenue of non-specialised stores, predominantly selling food, tobacco, and alcohol, grew by 0.8%, but volume sales declined by approximately 2.5%. Limited additions to retail space, the closure of two stores, and activities related to pricing perception have resulted in slower sales revenue growth compared to the market average, while ensuring better volume sales performance within the segment. On a positive note, the production volumes of the Central Kitchen, part of the supermarket segment, showed strong growth of nearly 6% in the final quarter of the year. Despite a temporary decline in production volumes during the summer months, annual production volume increased by over 2.5%. To boost customer purchasing activity, the number of discounts offered has been increased, and a "Permanently Good Prices" initiative was launched, featuring approximately 650 products at very competitive prices. In spring, a targeted campaign, "Golden Wednesday," was introduced for customers of retirement age, receiving highly positive feedback from the target group. The 2024 profit has been primarily affected by a decline in goods turnover and a reduction in gross profit from sales, driven by pricing initiatives and an increased share of promotional products in shopping baskets. During the reporting period, prices for nearly all services and materials increased; however, cost-saving measures have helped limit the growth of operating expenses to 3% in a challenging economic environment. Labour costs have remained at the same level as the previous year, thanks to continuous efforts to improve process efficiency.

Product assortment and process optimisation remain key areas of focus, with an emphasis on meeting the goals of the sustainability strategy. The culinary department has transitioned to using recyclable monomaterial packaging for nearly all product categories, bringing the company closer to achieving the goal of 100% recyclable packaging. In addition to product packaging, attention has been directed to transport packaging, with a full transition to reusable plastic pallets for logistics.

As of the end of December, the supermarket segment included 73 Selver stores, 2 Delice stores, a Mobile Store, and a café, with a total sales area of 124.8 thousand square metres. In addition, there is e-Selver, which is the largest online store in Estonia by service area, and the central kitchen, Kulinaaria OÜ, whose product portfolio includes over 400 products.

Department stores

The sales revenue of the department store business segment for 2024 was 104.2 million euros, representing a 5.7% decline compared to the same period in the previous year. The sales revenue for the fourth quarter was 33.2 million euros, a decrease of 4.7% compared to the prior year. The pre-tax loss of the department store segment for 2024 was 0.3 million euros, which was 2.0 million euros lower than the result for the previous year. The pre-tax profit for the fourth quarter was 1.8 million euros, 7.2% lower than the comparable period in the prior year.

The average sales revenue per square metre of selling space in the department stores for 2024 was 0.32 thousand euros per month, a decrease of 6.6% compared to the same period in the previous year. The economic slowdown that began in 2023 continued into the reporting year, resulting in more aggressive discount campaigns in the first half of the year compared to 2023, which also affected the performance of the department stores. The results of the Tallinn department store were negatively impacted by the ongoing construction of the Old Harbour tram line in the city centre and the closure of the Viru Centre bus terminal, which significantly affected foot traffic. In the Tartu department store, the full renovation of the Toidumaailm (Food World) began at the end of June, leading to a two-month closure of the Tartu Toidumaailm during the summer. On 29 August, a completely redesigned food store with the best selection in Southern Estonia was opened, and foot traffic has increased significantly since the reopening. The autumn season of 2024 was marked by unusually warm weather, with true winter conditions only arriving late in the year, which significantly affected the sales of fashion goods in the fourth quarter. Customers were more measured in their Christmas shopping, starting their holiday purchases early during the major campaigns of the fourth quarter. Nevertheless, during the Christmas season, the department store achieved a record-breaking sale of handcrafted truffles as part of its charitable project, with proceeds donated to the charity foundation "Minu Unistuste Päev" (My Dream Day), which supports the emotional well-being of children with severe illnesses.

In the first quarter, the department store launched a new e-store platform, which significantly improved user convenience and introduced an AI-powered recommendation engine to enhance sales performance. In the fourth quarter, customers were also able to access financial services through the e-store.

The sales revenue of OÜ TKM Beauty Eesti, which operates I.L.U. cosmetics stores, was 2.8 million euros in the fourth quarter of 2024, 2.21% lower than the same period in 2023. The profit for the fourth quarter was 0.1 million euros, which was 0.1 million euros lower than the result for the fourth quarter of 2023. Christmas sales were affected by a general decline in consumer confidence, driven by anticipation of upcoming tax changes, leading to a preference for lower-priced and promotional gifts. The sales revenue for 2024 was 8.7 million euros, an increase of 3.0% compared to 2023. The pre-tax profit for 2024 was 0.2 million euros, which was weaker than the previous year’s result by 0.2 million euros. A key event of the year was the expansion of the I.L.U. store in the Lõunakeskus shopping centre, accompanied by updates to the store’s concept and product offerings.

Car trade

The sales revenue of the car trade business segment for 2024 was 200.8 million euros, exceeding the previous year’s sales revenue by 3.3%. The fourth-quarter sales revenue of 51.2 million euros surpassed the revenue for the same period in the prior year by 12.0%. A total of 6,2646,619 new vehicles were sold during the year, including 1,4221,878 in the fourth quarter. The pre-tax profit of the segment for 2024 was 11.1 million euros, 16.1% lower than the result for the previous year. The pre-tax profit for the fourth quarter of 2024 was 2.3 million euros, which was 0.4 million euros higher than the profit for the same period in the prior year.

The Baltic car market, which experienced a decline in the first half of the year, achieved an overall growth of 6% for the year, according to preliminary data. This was significantly influenced by a purchasing boom in Estonia ahead of the car tax implementation in 2025. The Group’s car segment experienced more modest growth in sales volumes. The car tax applicable to the models sold by the Group is somewhat more competitive, and the Group refrained from engaging in deep price dumping, thereby helping to maintain profitability. In the fourth quarter of the reporting year, the all-new KIA EV3 electric vehicle and the updated EV6 model were introduced to the market. The car tax impact on these models is minimal, which meant consumers were not in a rush to purchase them. In 2025, the KIA EV4 will be added to the portfolio, along with the first electric vans by year-end. Other significant additions include the completely redesigned KIA Ceed family and the refreshed KIA Sportage SUV.

The Group’s Estonian dealer, Viking Motors, completed a new KIA flagship showroom in Peetri, on the outskirts of Tallinn, which opened its doors to customers on 2 January 2025. Construction of a body shop next to the Peetri showroom is ongoing. At the end of the reporting year, a new KIA showroom was opened in the Bikernieku area of Riga to better serve customers in that part of the city. In Lithuania, work continued in collaboration with TKM Lietuva UAB on the construction of a new KIA-Škoda multi-brand showroom in Vilnius.

Security segment

The security segment's sales revenue earned outside the Group in the fourth quarter of 2024 was 6.0 million euros, a growth of 13.5% compared to the same period in the previous year. The segment's pre-tax loss for the fourth quarter amounted to 0.1 million euros, an improvement of 0.1 million euros compared to the same period in the prior year. The security segment's sales revenue earned outside the Group in 2024 was 21.9 million euros, representing a 39.6% increase compared to the previous year. The segment’s pre-tax profit for 2024 was 0.2 million euros, an improvement of 0.3 million euros compared to the previous year.

Both turnover and profit growth continued in the fourth quarter, supported by all business areas. Growth was particularly strong in the management centre services sector and in technical project construction. However, there remain more payment difficulties among clients than usual, and price sensitivity has increased. Despite the challenging economic environment, the security segment achieved growth in both turnover and profit over the year and continues on a positive trajectory.

Real estate

In the 2024, the real estate segment's sales revenue from outside the Group was 7.3 million euros, reflecting an increase of 10.8% compared to the previous year. The sales revenue from outside the Group in the fourth quarter was 2.1 million euros, marking a 23.7% growth compared to the same period in the prior year. The pre-tax profit of the real estate segment for 2024 was 11.1 million euros, an increase of 6.0%. The pre-tax profit for the fourth quarter amounted to 5.5 million euros, representing an improvement of 2.7 million euros compared to the corresponding period in the previous year.

The growth in fourth-quarter sales revenue for the real estate segment was supported by rental income from the logistics centre, which commenced operations at the end of September. To focus on core activities and improve efficiency, the Group’s logistics centre is operated by an external professional party with whom the Group has an established long-term partnership. Sales revenue for the quarter decreased in the Latvian real estate business due to the sale of commercial buildings in Ogre and Rezekne, which previously generated external rental income. Annual sales revenue growth was bolstered by the summer launch of the car wash, built as an extension to the petrol station leased to an external party near the Peetri Selver, and the occupancy of commercial spaces in shopping centres by new tenants. Despite the low economic activity, footfall in the shopping centres owned by the real estate segment remained only slightly below the levels of the previous year, with a decline of less than 1%. The decrease in footfall at the Tartu Kaubamaja Centre was linked to the renovation of the ground floor during the summer, during which some stores were partially closed. The last months of the year showed signs of stabilisation in shopping centre footfall, with some months recording an increase.

Fourth-quarter profit for the segment was positively impacted by an extraordinary gain from the sale of the commercial buildings in Ogre and Rezekne, as well as the annual revaluation of real estate investments, which contributed 4.1 million euros to profit (compared to 1.1 million euros in the fourth quarter of 2023). The segment’s profit continues to be negatively affected by the increased cost of financing due to the rise in Euribor interest rates in recent years. The gradual decline in the Euribor rate during the second half of the reporting year began to alleviate the segment's interest expenses, with more significant cost reductions expected in 2025. The real estate segment houses a significant portion of the Group’s loan portfolio, which increased during the reporting period due to the construction of the logistics centre, contributing to the rise in interest expenses. The logistics centre was constructed at a cost of approximately 20 million euros.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

In thousands of euros

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

In thousands of euros

Raul Puusepp
Chairman of the Board
Phone +372 731 5000

Attachment

• TKMGrupp_4Q2024_eng

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