The owner of most IKEA stores, STOCKHOLM Reuters -- Ingka Group, reported a 9% increase in annual operating profit, as price increases helped offset higher input costs, as well as compensate for costs incurred in Russia.
The world's biggest furniture retailer said operating profit was 2.04 billion euros $2.12 billion in the 12 months to August, a growth of 6%. In March, it had predicted price increases would average 12% in the year.
Chief Financial Officer Juvencio Maeztu told Reuters he needed to compensate for significant cost increases in raw materials, energy, transport and logistics during FY22. We absorbed many of these new costs ourselves, but had to pass on parts of them. Maeztu said that the operating profit reflected good performance across the divisions, which also include shopping malls and an investment arm.
Net profit fell 82% to 287 million euros. Ingka said that it was due to higher interest rates, which hit one of Ingka Investments' investment portfolios.
The impact of interest rates on Financial Market Investments FMI is in line with global financial market developments and the effects of scaling down operations in Russia, Ingka said.
An Ingka spokeswoman said that rising interest rates meant lower bond values in our FMI during the year, in line with the financial markets.
According to its website, Ingka Investments has 20 billion euros of financial assets under management.
In March, Ingka closed its IKEA stores in Russia, which previously accounts for around 4% of sales, and has laid off most of its 12,000 employees in the country. Ingka is the main franchisee of Inter IKEA, which is in charge of supply.
In October, Inter IKEA said its operating profit fell by 56% as it passed on some of its soaring raw material and transport costs to retailers. Half of the Russian store closures resulted in its sales volumes to franchisees falling 7% -- 8%.