Part of a living room interior with a sofa and a round side table with a round lit lamp on top.

Inter IKEA Group FY19 financial results

IKEA retail sales grew by 6.5% to EUR 41.3 billion in FY19. This led to increased wholesale income and franchise fees for Inter IKEA Group.

Inter IKEA Group’s financial performance was stable in FY19. Gross profit was slightly less than in FY18 due to higher costs for materials, transport and logistics. Combined with flat operational costs, this resulted in lower operating income. The decrease was offset by improved financial income and expenses. Income taxes increased to 17%, resulting in net income of EUR 1,485 million.

The Inter IKEA Group consolidated income statement shows a simplified overview of this year’s financial performance.

Consolidated income statement
in millions of EUR FY19 FY18
Sales of goods 23,986 23,651
Franchise fees 1,195 1,200
Other income 73 68
Total revenues 25,254 24,919
Cost of goods sold 20,703 20,228
Gross profit 4,551 4,691
Operational cost 2,695 2,729
Total operating income 1,856 1,962
Financial income and expense -65 -257
Total income before taxes 1,791 1,705
Income taxes -301 -256
Losses from the sale of entities
-5
Net income 1,485 1,449

Note to reader: the included abbreviated financial statements are an abridged version of the consolidated financial statements of Inter IKEA Holding B.V. as included in the Annual Report for the financial year 2019. An unqualified auditor’s report dated 7 November 2019 was issued on these financial statements. Inter IKEA Holding B.V.’s consolidated financial statements, from which these abbreviated financial statements have been derived, have been prepared in accordance with Part 9 of Book 2 of the Dutch Civil Code.

Sales of goods

Sales of goods refers to bulk sales of IKEA products to IKEA franchisees. Inter IKEA Group also owns and operates one IKEA store in Delft, the Netherlands. IKEA Delft’s retail sales are also included in this line item.

IKEA franchisees purchased more than 39.2 million cubic metres of IKEA products from Inter IKEA Group in FY19, compared to 38.4 million cubic metres in FY18. Together with increased sales prices, this contributed to increased sales of goods.

Two hands holding up a tablet. The screen shows a sofa with lots of blue pillows.
This year Inter IKEA Group introduced new Artificial Intelligence features for IKEA Place, the IKEA augmented reality app.

Franchise fees

In a franchise setup, one company pays another franchise fees for the right to use their intellectual property. The IKEA franchise offer includes the IKEA trademark and IKEA concept.

IKEA franchisees pay Inter IKEA Group an annual fee of 3% over their net sales. In return, they are authorised to market and sell the IKEA product range and operate IKEA stores and other sales channels.

Although retail sales went up in FY19, franchise fee income remained roughly the same due to fluctuating currencies.

Other income

Other income mainly consists of income from selling the IKEA catalogue and other marketing materials created for IKEA retailers including the IKEA Delft store.

Ori, an American start-up, worked with IKEA product developers to create the new ROGNAN robotic furniture, which debuts in Hong Kong and Japan next year.

Cost of goods sold

Cost of goods sold describes the total accumulated costs to manufacture and distribute products.

The cost of goods sold relates to both wholesale and Delft store sales. Inter IKEA Group manufactures about 12% of the IKEA range and sources the remaining 88% from nearly 1,000 external suppliers. This includes both home furnishing and food products.

E-commerce sales created increased costs for packaging and logistics in FY19. Increased raw material prices, tariffs and import duties also affected costs, although raw material prices decreased during the second half of the year.

Operational cost

Operational cost includes staff costs, utilities, rent and other costs related to day-to-day operations.

A yellow circle showing the number FTE co-workers and a pie chart showing where they work.
The Inter IKEA Group mainly consists of three core businesses: Franchise,Range & Supply, and Industry. To support the core businesses, Inter IKEA Group includes group functions for finance, communication, digital, people and culture. IKEA Älmhult AB, which owns and operates the IKEA Hotell and Museum, is also part of Inter IKEA Group.

Staff costs mainly consist of salaries, benefits, training and social costs. As per 31 August 2019, Inter IKEA Group employed 26,227 full-time equivalent co-workers, compared to 26,504 in FY18. Changes are mainly due to restructuring and the sales of factories.

Operational costs also include expenses to develop new products and solutions. The costs related to our development and innovation portfolios amounted to EUR 175 million in FY19. Part of this investment went to develop products that help people live more sustainable lives and reduce the IKEA climate footprint.

More than half of the IKEA climate footprint comes from the material in the products and the production process. To transform into a low carbon business, IKEA is moving towards recycled and renewable materials and is pushing for more lightweight construction. In FY19 this required significant investments to transform the supply chain, sourcing and product development.

Inter IKEA Group also worked closely with retailers to develop new and different ways to shop the IKEA product range – online, in remote locations and in city centres (e.g. IKEA La Madeleine in Paris). This includes new locations closer to where people live, work and socialise. It also includes a wider range of flexible and affordable services to make shopping more convenient for IKEA customers.

Financial income and expense

Financial income and expense is revenue and costs regarding loans, investments and positions in foreign currencies. Inter IKEA Group paid less interest following repayment of long-term loans in FY19. Favourable currency developments partly offset the interest expenses.

Income taxes

This year the Inter IKEA Group tax charge was EUR 301 million, around EUR 45 million more than last year. This equals 17% of pre-tax income, compared to 15% in FY18. Inter IKEA Group operates in several countries, with its main activities in the Netherlands, Sweden and Switzerland. As a result most income tax is paid in these countries.

  • €25.3

    billion Inter IKEA Group FY19 revenues

  • €1.5

    billion Inter IKEA Group FY19 profit

Losses from sales of entities

Losses from sales of entities mainly consists of a loss connected to the sale of the Inter IKEA Group production facility in Lure, France.

Read more about the Inter IKEA Group FY19 year in review

Read more about the Inter IKEA Group FY19 balance sheet