# IKEA stores owner Ingka’s annual operating profit rises 9%
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-11-25
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Ingka Group Reports 9% Rise in Annual Operating Profit Amid
Meta Description: Discover how Ingka Group increased profits by 9% despite challenges in raw material costs and operating in Russia. Learn more here.
URL: https://financedigest.com/ikea-stores-owner-ingkas-annual-operating-profit-rises-9html

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By Anna Ringstrom

STOCKHOLM (Reuters) – Ingka Group, the owner of most IKEA stores, reported on Friday a 9% rise in annual operating profit, as price increases helped it offset higher input costs as well as compensate for costs incurred to wind down in Russia.

The world’s biggest furniture retailer said operating profit in the 12 months through August was 2.04 billion euros ($2.12 billion), on sales growth of 6%. It had in March predicted [price increases would average 12% in the year](https://www.financedigest.com/hong-kong-home-prices-drop-15-6-in-2022-snap-13-years-of-gain.html "Hong Kong home prices drop 15.6% in 2022, snap 13 years of gain").

During FY22, we needed to compensate substantial cost [increases in raw materials](https://www.financedigest.com/syngenta-4q-profit-falls-as-raw-material-prices-increase.html "Syngenta 4Q profit falls as raw material prices increase"), energy, transport and logistics,” Chief Financial Officer Juvencio Maeztu told Reuters. “We absorbed many of these new costs ourselves, but ultimately had to pass on parts of them.”

Maeztu also said the operating profit reflected good performance across divisions, which also include [shopping malls](https://www.financedigest.com/covid-cant-break-south-africas-love-affair-with-shopping-malls.html "COVID can’t break South Africa’s love affair with shopping malls") and an investment arm.

Net profit, however, tumbled 82% to 287 [million euros](https://www.financedigest.com/hellofresh-sees-2023-core-profit-of-460-540-million-euros.html "HelloFresh sees 2023 core profit of 460-540 million euros"). Ingka attributed this to higher interest rates, which [hit one of Ingka Investments’](https://www.financedigest.com/uks-dominos-expects-tech-investments-to-hit-2023-profit.html "UK’s Domino’s expects tech investments to hit 2023 profit") investment portfolios.

(The drop is) mainly due to the significant [impact of interest rates](https://www.financedigest.com/oil-falls-as-earthquake-impact-on-crude-eases-rate-hike-fears-rise.html "Oil falls as earthquake impact on crude eases, rate hike fears rise") on Financial Market Investments (FMI), in line with global financial market developments and due to the effects of scaling down operations in Russia,” Ingka said.

During the year, [rising interest rates](https://www.financedigest.com/uk-inflation-rate-unexpectedly-rises-to-10-4-in-february.html "UK inflation rate unexpectedly rises to 10.4% in February") meant lower bond values in our FMI, in line with the world’s financial markets,” an Ingka spokesperson added.

Ingka [Investments has 20 billion euros worth of financial assets under management](https://www.financedigest.com/french-watchdog-fines-h2o-asset-management-executives-over-tennor-investments.html "French watchdog fines H2O Asset Management, executives over Tennor investments"), according to its website.

Ingka in March closed its IKEA stores in Russia, previously [accounting for around](https://www.financedigest.com/5-common-mistakes-around-accounts-payable-automation.html "5 Common Mistakes Around Accounts Payable Automation") 4% of sales, and has since laid off most of its 12,000 employees in the country. Its [Russian shopping malls remain open](https://www.financedigest.com/russian-rouble-opens-flat-sticks-to-60-mark-against-u-s-dollar.html "Russian rouble opens flat, sticks to 60-mark against U.S. dollar").

[Ingka is the main franchisee to brand owner Inter IKEA](https://www.financedigest.com/ikea-stores-owner-ingka-says-campaigns-help-boost-store-visits-and-sales.html "IKEA stores owner Ingka says campaigns help boost store visits and sales"), which is in charge of supply.

Inter IKEA in October said its operating profit fell 56% as it passed on some of its [soaring raw material and transport costs to retailers](https://www.financedigest.com/amazon-other-retailers-revamp-free-shipping-as-costs-soar.html "Amazon, other retailers revamp ‘free’ shipping as costs soar"). It said its [sales volumes to franchisees](https://www.financedigest.com/kfc-franchisees-in-russia-ask-govt-to-halt-sale-of-stores-to-local-operator-ria.html "KFC franchisees in Russia ask govt to halt sale of stores to local operator – RIA") fell 7%-8%, half of which due the Russia store closures.

($1 = 0.9606 euros)

(Reporting by Anna Ringstrom; editing by Uttaresh.V)


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