Ingka Group, which owns most IKEA stores, on Friday reported a 9 percent rise in annual operating profit as price increases helped offset higher input costs and offset the cost of handling in Russia.
he world’s largest furniture retailer announced that operating profit for the 12 months ended August was €2.04 billion ($2.12 billion) on sales growth of 6 percent. It had forecast in March that price increases would average 12 percent a year.
“During FY22 we had to offset significant cost increases in raw materials, energy, transportation and logistics,” Chief Financial Officer Juvencio Maeztu told Reuters. “We bore many of these new costs ourselves, but ultimately had to pass on parts of them.”
Maeztu also said the operating profit reflected the good performance of all businesses, including shopping centers and an investment arm.
However, net profit fell by 82 percent to 287 million euros. Ingka attributed this to higher interest rates hitting one of Ingka Investments’ investment portfolios.
“(The decrease is) mainly due to the significant impact of interest rates on financial market investment (FMI) in line with global financial market developments and the impact of the reduction in activities in Russia,” said Ingka.
“During the year, rising interest rates resulted in lower bond values in our FMI, in line with world financial markets,” added an Ingka spokesman.
According to its website, Ingka Investments manages financial assets worth 20 billion euros.
Ingka closed its IKEA stores in Russia in March, which previously accounted for around 4 percent of sales, and has since laid off most of its 12,000 employees in the country. Russian shopping malls remain open.
Ingka is the main franchisee of the brand owner Inter IKEA, which is responsible for delivery.
Inter IKEA said in October that its operating profit fell 56 percent as it passed on some of its rising raw material and transportation costs to retailers. Sales volume to franchisees has fallen by 7 to 8 percent, half of which is due to store closures in Russia.
https://www.independent.ie/business/world/ikea-stores-owner-ingkas-annual-operating-profit-rises-9pc-42172702.html IKEA business owner Ingka’s annual operating profit increases by 9 percent