INTER IKEA GROUP FINANCIAL SUMMARY - FY17 - €29.95 - THENEWSMARKET
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Inter
IKEA Group
Financial
Summary
FY17
TRÅDFRI
Smart lighting dimming kit
€
29.95
* Price in The Netherlands (may vary per country)
...pick-up and order
points, augmented reality,
sustainable sourcing,
local partnerships, more
affordable, accessible
and sustainable
products, new collections,
new collaborations, new
IKEA stores, new ways
to shop...
YPPERLIG
Collection
About
last
year
20,000,000
trees planted
on Industry forest
leases in Russia
RYET LED
bulb E27
400 lumen
€ 0.99/pcs.
IKEA Place
App
* Price in The Netherlands (price may vary per country)
2 Inter IKEA Group // Financial Summary FY17 © Inter IKEA Systems B.V. 2017
These are just a few examples of the new products we
introduced last year to make IKEA even more affordable,
accessible and sustainable for IKEA customers. They can
today meet all these products in many different places. This
year IKEA attracted 2.3 billion website visits and 936 million
visits to 403 IKEA stores – 14 of which opened in FY17. This
included a store in Serbia, a new IKEA market. In FY18, 22
new IKEA stores are planned, which includes the opening
of two new markets in India and Latvia. Long-term, we will
continue to work with IKEA franchisees to expand even
more with a focus on South East Asia and South America.
To support this expansion, we’re working with franchisees
to test and develop new formats like city-centre stores
and IKEA pick-up and order points – convenient locations
where IKEA customers can collect their online purchases
or place an order. And we launched new ways to meet and
interact with IKEA, like IKEA Place, which uses augmented
reality to help people visualise IKEA products in their
own homes. We’re also, together with IKEA franchisees,
making significant improvements of the IKEA website and
The world is changing, and the IKEA business is e-commerce capabilities to make shopping from home fun,
changing with it. But for IKEA one thing will always easy and convenient.
remain the same: our vision to create a better
everyday life for the many people. All of this has helped us learn more about how to improve
our customer focus and ability to grow. IKEA growth this
IKEA is a franchise business. That means many people year was about 4% – lower than previous years. IKEA retail
and companies with different owners work under one IKEA sales (including sales of services) amounted to EUR 38.3
Brand. FY17 was the first full year we worked together in a billion across 49 markets.
simplified and improved franchise system.
Inter IKEA Group has also closed a successful FY17. We
On 31 August 2016 we created the new Inter IKEA Group, stayed true to our conservative financial principles, and
bringing together three core businesses: Franchise, Range our stable financial results give us resources to grow. This
& Supply and Industry. Together we work constantly to makes it possible for us to continue to work long-term
improve the IKEA home furnishing offer and make it more and independently of economic cycles. In FY17 Inter IKEA
accessible for the many people. Group realised EUR 23 billion revenue – including wholesale
product sales to retailers, franchise fees and other income.
Changes in design, technology and urbanisation affect In addition Inter IKEA Group invested EUR 300 million in the
everyone, and people’s expectations as a result. To meet IKEA value chain through new production capacities
and exceed their expectations, we continue to open up the and distribution set-ups.
product design process for collaborations with students,
scientists and design partners from around the world. One Each and every Inter IKEA Group co-worker should be proud
good example is our collaboration with HAY, a Danish design of what we accomplished in FY17. Together we’ve inspired
studio. The result is YPPERLIG – a new collection that makes more of the many people than ever before, and we’ve
great design affordable. Developed during FY17, it was helped them to live a better, more healthy and sustainable
launched just this autumn. life at home. Ahead we see that people’s behaviour and the
retail industry will continue to change and evolve. Together
During much of last year, we also prepared for a new with IKEA franchisees we’ll meet these challenges to create
commercial focus: “Make room for life”. The living room the IKEA of the future – together.
is the heart of everyday life at home. It’s a place for
connecting with family and friends, celebrating special Torbjörn Lööf
occasions, reminding us what matters in life. So we’ve CEO Inter IKEA Group
developed new products and solutions to make living rooms
more functional, personal and inspiring. This includes the
new EKET cabinet series, which can be stacked, hung and
combined endlessly.
3 Inter IKEA Group // Financial Summary FY17 © Inter IKEA Systems B.V. 2017
This 403 194
is IKEA IKEA stores
worldwide
IKEA co-workers
in thousands
936 2.3 38.3
IKEA store visits IKEA website visits IKEA retail sales
in millions in billions in billion Euros
275
stores in
56 Europe
stores in
North America
47
stores in
1 14 Asia
stores in
store in
Middle East
Caribbean
and North Africa
14
New IKEA 10
stores in
stores worldwide Australia
Note to reader: Figures are for the financial year that ended 31 August 2017. Retail sales exclude
consumption tax and include sales of services
IKEA BY NUMBERS E-commerce is available in 42 From napkins and pillows to
All over the world people are markets. During FY17, there were complete kitchens, IKEA customers
looking, discussing, comparing, 2.3 billion IKEA website visits and bought home furnishing products,
thinking, dreaming and buying IKEA 936 million visits to the 403 IKEA solutions and services for 38.3
products both online and in IKEA stores in 49 different countries. billion Euros. And a total co-worker
stores. Each year, those needs and And 203 million copies of the IKEA force of 194,000 people took care
dreams amount to the big numbers catalogue – an important guide of IKEA customers either directly on
that make up the IKEA retail and source of inspiration for many the sales floor or indirectly through
business. people – were printed. the IKEA value chain.
4 Inter IKEA Group // Financial Summary FY17 © Inter IKEA Systems B.V. 2017
Many customers took home their underlying concept and stimulating The diagram below shows a
new sofas, tables or beds directly an entrepreneurial spirit. simplified overview of the IKEA
after purchase. Instant gratification franchise system. Inter IKEA
has always been an important part Inter IKEA Systems B.V. is the Systems B.V., IKEA of Sweden
of the IKEA Concept. Others chose IKEA franchisor who continuously AB, IKEA Food Services AB,
to visit a convenient IKEA pick-up develops the IKEA Concept and IKEA Supply AG and IKEA
and order point close to their home ensures its implementation in all Communications AB are companies
– there are now 46, including three markets. IKEA franchisees run the within the Inter IKEA Group. Inter
new ones that opened in FY17. That day-to-day retail business and IKEA Group also includes other
number will definitely keep growing pay a franchise fee. Together, the companies like IKEA Industry AB.
in the future. companies in the franchise system
develop and improve how people The IKEA franchise system is
It’s humbling that so many people discover and interact with IKEA and people-oriented and encourages
all over the world trust IKEA with IKEA products. everyone to contribute. It forms an
their needs and dreams for life at interdependent framework and
home. Inter IKEA Systems B.V. has lays a solid foundation for the
assigned other IKEA companies IKEA Brand while enabling a
THE IKEA FRANCHISE SYSTEM to develop the range, supply and scalable and dynamic value
As the IKEA business was communication. IKEA of Sweden chain. Last, but not least, it
expanding in the early 1980s, IKEA AB develops the IKEA home answers Ingvar Kamprad’s three
founder, Ingvar Kamprad, realised furnishing product range, IKEA desired intentions: allowing and
that he needed to protect the IKEA Food Services AB develops the encouraging IKEA to remain
Concept. After a long search, Ingvar IKEA Food & Beverages product entrepreneurial; enabling
decided that a franchise system range, IKEA Supply AG manages international growth; and keeping
would be the best choice for IKEA. purchasing and distribution and the IKEA Concept strong and
It would allow for international IKEA Communications AB produces consistent.
expansion while protecting the IKEA communication.
The IKEA franchise system
®
a simplified overview
IKEA franchisor IKEA franchisees
Franchise agreements
Inter IKEA INGKA* Dairy Farm Sarton
Systems B.V.
Assignments
Al-Sulaiman MAPA Al-Homaizi
IKEA assignments
Al-Futtaim House Market Miklatorg
IKEA of IKEA Food IKEA IKEA
Sweden AB Services AB Supply AG Communi-
cations AB
Ikano Northern
Birch
Sales and supply agreements
The list above refers, in a simplified way, to companies/groups of
companies operating IKEA retail businesses in one or more markets.
The listed names do not represent the legal company name of the
franchisee companies that have entered into franchise agreements
with Inter IKEA Systems B.V.
*INGKA refers to INGKA Holding B.V. and its controlled entities.
5 Inter IKEA Group // Financial Summary FY17 © Inter IKEA Systems B.V. 2017
BETTER AND BETTER WITH reach out to people and make in IKEA stores and online. The RYET
DEMOCRATIC DESIGN them part of the value chain. LED bulb was introduced in most
The IKEA business idea is “to offer Great products that appeal to markets at a price of around one
a wide range of well-designed, many people also open up large euro, enabling more people to save
functional home furnishing products production volumes and low energy and money. The product
at prices so low that as many retail prices. And by asking IKEA developers looked at everything,
people as possible will be able to customers to do some of the from small components to the
afford them”. These words capture assembly work themselves, prices design and production, in order to
the essence of IKEA. can be reduced even further. streamline and keep costs down –
and the quality high.
Democratic Design is the IKEA view In the future, IKEA will make the
on how to create products that are shopping experience even easier IKEA also launched PÅTÅR – a new
worthy of the IKEA Brand and the and more inspiring by developing range of coffee that is both UTZ-
many people. new concepts and coming closer to certified and organic according
where people live. to EU standards. This is part of
Form, function, sustainability, the IKEA efforts to ensure food
quality and, of course, low price. From FY18 and onward, the IKEA ingredients are from responsible
These are the five dimensions of value chain will become more open and more sustainable sources,
Democratic Design. and include further collaborations produced with care for people and
with designers, suppliers and many the planet.
Not every product meets all of the more of the many people. IKEA
dimensions, but Democratic Design customers, startups, students and
guides IKEA product designers to designers will also get opportunities
make things better. It’s the gateway to co-create innovations to solve
to better products, better homes the big problems – as well as new
and a better everyday life for even products for the IKEA range.
more of the many people.
TOWARD A CIRCULAR IKEA
THE IKEA VALUE CHAIN – Over the years IKEA companies
OPEN FOR IDEAS have made strong contributions to
The word value chain might have resource and energy independence,
a technical ring to it, but the IKEA sustainable life at home and
value chain is all about people. improved conditions for people
in the IKEA value chain. Despite
To begin with, it’s people who these advancements we still face
design and develop IKEA products. challenges that are bigger than the
Most of that work is carried out actions we take today.
in Älmhult, Sweden, where IKEA
was founded. And it’s done in close One of our biggest ambitions for
collaboration with IKEA suppliers. the future is to transform IKEA into
Sharing each other’s expertise a “circular” business. Circularity is
strengthens knowledge about about prolonging the life of products
design, materials development, and materials, using resources
sustainability and distribution. in smarter ways and creating as
This allows IKEA to produce better little waste as possible. Kitchens,
products at lower prices. LED bulbs, coffee – everything is
possible.
The goal of IKEA range developers
is to create products people really During FY17, the first IKEA kitchen
need. To understand what those fronts made from recycled wood
products might be, they have to and recycled plastic were launched
6 Inter IKEA Group // Financial Summary FY17 © Inter IKEA Systems B.V. 2017
TILLTALANDE Pick-up and
Collection order points
THE MAKING OF MORE Entrepreneurship Initiative to investments in new e-commerce
ENTREPRENEURS explore how we can support them capabilities and an improved IKEA
Throughout the IKEA value chain through empowering the social website where customers can rate
there are many examples of our entrepreneurs of this group. The and review IKEA products according
constant strive to contribute to IKEA Social Entrepreneurship to the five dimensions of democratic
a better everyday life for, and Initiative will mobilise and design. And we’re exploring the
together with, the many people. empower change makers in highly- possibility of selling IKEA products
One such example is how we challenged areas to strengthen via third-party platforms, though no
have built long-term partnerships their social entrepreneurial skills specific platform has been chosen
across the world to address social and businesses for success and yet.
issues and create lasting change in sustainable change.
communities. As a result, around In FY18, 22 new IKEA stores are
10,500 people have become part of REACHING OUT TO MORE, planned, including new markets in
the IKEA value chain – creating and IN MORE WAYS India and Latvia. Long-term, IKEA
producing IKEA products. IKEA expansion is now a multi- will continue to explore new ways
dimensional operation, and it’s not to meet customers in existing and
To support this enterprise, IKEA only about opening more stores potential new markets with a focus
Supply AG started purchasing from in more markets. It’s also about on South East Asia and
Jordan in November 2016. This finding new ways for people to South America.
created jobs for 47 Syrian women reach and interact with IKEA by
refugees and 50 Jordanian women. coming closer to where they are,
The first collection from Jordan – and offering new IKEA experiences
TILLTALANDE – will consist of floor in more spaces, both physical and
cushions, cushions and rugs, all digital.
to be made available in the IKEA
Amman store in December 2017. The big stores outside city centres
remain important IKEA sales
Despite this work, these initiatives channels. However, in the coming
do not always reach people in years, city locations will play a
poor communities close to the more important role. We’re also
IKEA value chain. To tackle working to make online shopping
this situation Inter IKEA Group more inspirational and convenient
is launching the IKEA Social for IKEA customers. This includes
7 Inter IKEA Group // Financial Summary FY17 © Inter IKEA Systems B.V. 2017
Inter 9,500 24
IKEA products in the
IKEA range
purchasing
offices
Group
1,000
home furnishing
40
factories
28
co-workers
suppliers in 51 operated by in thousands
countries IKEA Industry
Simplified overview Inter IKEA
Inter IKEA Group Holding B.V.
Inter IKEA IKEA of IKEA IKEA
Systems B.V. Sweden AB Supply AG Industry AB
Franchise Range & Supply Industry
Note to reader: Figures are for the financial year that ended 31 August 2017. Inter IKEA Group is
defined as Inter IKEA Holding B.V. and its controlled entities.
ABOUT INTER IKEA GROUP worldwide, enabling the long- development, sustainability, people
Inter IKEA Group consists of three term fulfilment of the IKEA and environment, social media,
core businesses: Franchise, Range business idea. market potential and expansion.
& Supply and Industry. Its main Planned projects range from
operations are located in The Inter IKEA Systems B.V. is repositioning in certain markets
Netherlands (Franchise), Sweden continuously developing the IKEA to automating goods flow and
(Range) and Switzerland (Supply). Concept to ensure its successful further digitalisation of the IKEA
Most Industry activities are based implementation in new and catalogue.
in Poland. existing markets. For example,
the IKEA Concept is being Franchise is today developing
Franchise: Inter IKEA Systems reviewed with an eye toward re- a new IKEA sustainability
B.V. is the owner of the IKEA establishing different aspects to strategy. Its ambition is to outline
Concept and the worldwide IKEA align multichannel retailing. This common long-term sustainability
franchisor. It offers the IKEA enables IKEA to remain forward- commitments for everyone in the
Concept to IKEA franchisees looking in areas such as brand IKEA franchise system and value
8 Inter IKEA Group // Financial Summary FY17 © Inter IKEA Systems B.V. 2017
chain. The new strategy will focus production setups and focuses on all key competencies are combined
on three main areas: healthy affordability, accessibility, quality and will strongly contribute to
and sustainable living, becoming and sustainability. As volumes building the future of the IKEA
circular and climate positive, and increase, the costs decrease. This Food business.
contributing to a fair and equal allows us to offer lower prices to
society. IKEA customers, and lower prices Industry: Industry manufactures
in turn generate higher volumes. IKEA home furnishing products.
Range & Supply: Range & Supply IKEA Supply AG also plays a key Its ambition is to be the most
is responsible for developing and role in ensuring IKEA suppliers live competitive manufacturer in
supplying the global IKEA range. up to IWAY – the IKEA supplier the home furnishing industry by
This means working throughout the code of conduct. delivering outstanding customer
whole value chain – from supplier value. Industry also develops
to customer. It includes IKEA of IKEA Communications AB is an unique IKEA capabilities and
Sweden AB, IKEA Communications in-house communication agency capacities in relevant parts of
AB, IKEA Food Services AB, IKEA that creates and produces IKEA the value chain (e.g. material,
Supply AG and related businesses. communication for customers and manufacturing and distribution).
All work under assignment from other IKEA organisations. It’s best
Inter IKEA Systems B.V. known for the IKEA catalogue – the Industry produces approximately
largest single printed publication 10-12% of the total IKEA range,
IKEA of Sweden AB is responsible in the world. It also produces the with its main focus on furniture. Its
for developing, designing and IKEA website, apps, brochures, operations are conducted through
producing home furnishing in-store communications, TV some 40 production units that
solutions to address the everyday commercials, augmented reality include forestry, sawmills, and
needs of the many people. Product and packaging and assembly production of board material, wood
development is based on the belief instructions for all IKEA products. components and ready furniture. It
that even with a thin wallet people This year IKEA Communications is the largest producer of wooden
should be able to create a beautiful AB played a key role in developing furniture in the world.
home with functional, safe and IKEA Place – an Apple iPhone app
healthy products. Every product is that lets customers virtually place As an IKEA supplier, Industry
designed with the five dimensions furniture in their homes. strives to create a positive impact
of Democratic Design in mind. on people, society and the planet.
Each year, 2,000 new products are IKEA Food Services AB develops Key focus areas include co-worker
introduced. The total IKEA range the IKEA Food & Beverages product safety, energy efficiency and water
consists of 9,500 products. range sold in the IKEA restaurants, stewardship with increased re-use.
cafés, bistros and Swedish food This year Industry planted its 20
IKEA Supply AG is a wholesale markets in IKEA stores. Today it millionth tree on its forest leases in
company that supplies the IKEA is working to develop a world- Tikhvin, Russia.
franchisees with IKEA products, class food business by increasing
and produces and supplies the the focus on a new product range
component solutions used to that more closely meets customer
assemble those products. It also needs and improves operations.
owns the goods in distribution
centres located worldwide. There During FY17, Inter IKEA Group
are 24 purchase and logistic acquired the Bring Group, to
service offices to support and whom the IKEA Food supply chain
develop external suppliers. management had been outsourced.
This allows the establishment of a
IKEA Supply AG uses a large- food wholesaler and investments
volume approach that enables in operational supply chain
investment in efficient industrial capabilities. Through this change,
9 Inter IKEA Group // Financial Summary FY17 © Inter IKEA Systems B.V. 2017Key
Key consolidated figures August 2016. Additionally, the
Inter IKEA Group FY17 acquisition of IKEA of Sweden
During FY16, Inter IKEA Group AB, IKEA Supply AG and IKEA
figures
changed its financial year to Industry AB – and their related
better reflect the IKEA business businesses – was completed
cycle. That means last year’s on 31 August 2016. This did
FY17
consolidated income statement not impact the FY16 income
covers the eight-month period statement. FY17 covers a
from 1 January 2016 to 31 twelve-month period.
Consolidated Income Statement
in millions of EUR
FY17 FY16 costs incurred for manufacturing
12 months 8 months and sourcing the goods sold to
the franchisees and in the IKEA
Sales of goods 20,778 1,337
store in Delft. Operational costs
Franchise fees 1,156 725 include spending for development
of the IKEA Concept, such as new
Other income 944 114 digital touchpoints, fulfilment
Total revenue 22,878 2,176 solutions and meeting the needs of
customers. It also includes costs
Cost of goods sold 18,688 1,292 connected to range development
and expansion activities, as well
Operational cost 2,894 333
as competence development and
Total operating expenses 21,582 1,625 learning solutions.
Total operating income 1,296 551
Financial income and expenses
Financial income and expenses -143 -222 relate to interest costs connected
to the long-term loans payable to
Total income before taxes 1,153 329 the shareholder, partly offset by
positive currency results.
Income taxes -241 -71
Net income 912 258 The tax charge for FY17 amounted
to EUR 241 million, resulting in an
effective tax rate of 21.0% (FY16:
21.6%).
In FY17, IKEA retail sales outperforming others in the Net income for FY17 is highly
(including sales of services) by range. Higher sales also led to impacted by the effect of the
IKEA franchisees rose to EUR an increase in franchise fees. acquisition of the range, supply
38.3 billion, with increased and industry activities. Further
volumes more than offsetting Sales of goods include the impact on the FY18 financial
the lower average retail wholesale revenue from the performance will be limited and an
prices. Most markets showed distribution of goods to our increase of net profit is expected.
growth with new stores (14) franchisees, plus the sales of goods
and e-commerce contributing in the IKEA store in Delft, The
most. The commercial theme Netherlands, which is owned and
for FY17, “It starts with the operated by Inter IKEA Group. The
food” has been successful, cost of goods sold relate to the
10 Inter IKEA Group // Financial Summary FY17 © Inter IKEA Systems B.V. 2017Consolidated Balance Sheet
in millions of EUR
31 Aug. 31 Aug.
2017 2016
Intangible fixed assets 8,243 8,932
Tangible fixed assets 1,451 1,336
Financial fixed assets 246 322
Total fixed assets 9,940 10,590
Inventories 3,998 4,284
Receivables 4,435 3,783
Cash and cash equivalents 284 302
Total current assets 8,717 8,369
Total assets 18,657 18,959
Group equity 4,194 4,258
Provisions 497 538
Non-current liabilities 7,861 8,601
Current liabilities 6,105 5,562
Total liabilities 14,463 14,701
Equity and liabilities 18,657 18,959
Intangible fixed assets mainly IKEA retailers. During FY17, a Note to reader: The included abbreviated
relate to proprietary rights. These dividend of EUR 1 billion was paid financial statements are an abridged
rights include the IKEA trademarks, to our shareholder. Provisions are version of the consolidated financial
protection rights, intellectual recorded for warranties, pensions statements of Inter IKEA Holding B.V.
property rights and the rights to and deferred taxes. as included in the Annual Report for
the IKEA catalogue. The rights are the financial year 2017. An unqualified
amortised to the income statement An amount of EUR 500 million auditor’s report dated 5 December 2017
over 45 years. was repaid on the long-term loans was issued on these financial statements.
during FY17. Current liabilities Inter IKEA Holding B.V.’s consolidated
Tangible fixed assets include 40 include short-term borrowings and financial statements, from which these
factories and the IKEA store in amounts payable to our suppliers. abbreviated financial statements have
Delft. Inventories for the most part been derived, have been prepared in
consist of finished IKEA goods, In FY18, Inter IKEA Group will accordance with Part 9 of Book 2 of the
while receivables include money continue to invest in further Dutch Civil Code.
to be received from IKEA retailers development and expansion of the
regarding franchise fees and IKEA IKEA Concept and product range,
goods sold. while continuing to produce and
supply low-priced products to the
Inventories decreased slightly IKEA retailers.
during FY17, while still maintaining
good availability towards the
11 Inter IKEA Group // Financial Summary FY17 © Inter IKEA Systems B.V. 2017The IKEA logo and the IKEA wordmark are registered trademarks of Inter IKEA Systems B.V. All copyrights in the pictures used
in this document are owned by Inter IKEA Systems B.V. and may in no way be copied or reproduced without the consent of Inter
IKEA Systems B.V.
can be requested
Inter IKEA Group
Holding’s Annual
Report for FY17
For further information,
www.inter.IKEA.com
please visit the Inter
IKEA Group website:
through the
Inter IKEA
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