FY20 financial results

Despite the pandemic, Inter IKEA Group achieved a solid financial result in FY20.

When the lockdowns began, Inter IKEA Group revised sales projections and took several measures to mitigate the negative consequences of the pandemic and reduce operational costs. Following the fast and strong recovery of retail sales, Inter IKEA Group delivered better operating income than projected.

After taxes and financial expenses, net income was EUR 1,731 million. The Inter IKEA Group consolidated income statement shows a simplified overview of this year’s financial performance.

NRS table
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 2020. An unqualified auditor’s report dated 29 October 2020 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 wholesale 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.

At the height of the pandemic, more than 350 IKEA stores were closed. As a result, sales of goods dropped significantly for several weeks. Orders were cancelled, and production at both Inter IKEA Group and IKEA suppliers’ factories stopped.

After the lockdowns, sales were significantly higher than initial projections. To meet the new demand, suppliers quickly ramped up production. But the lockdowns were lifted unevenly across the supply chain, hampering logistics. This affected product availability on various markets.
This year Inter IKEA Group launched RÅVAROR a new collection that quickly turns small spaces into smart spaces with the convenience and comfort of home. And when it is time to move, it’s simple to pack up, stack the items together and relocate to your next home.

Franchise fees

In a franchise setup, one company pays another franchise fees for the right to use their brand, products and intellectual property. 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.

As retail sales decreased in FY20, franchise fee income decreased accordingly.


Other income

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

Cost of goods sold

Cost of goods sold describes the total accumulated costs to purchase, manufacture, store and distribute products. IKEA Industry, part of Inter IKEA Group, manufactures about 11% of the IKEA range. Inter IKEA Group sources the remaining 89% from nearly 1,000 external suppliers. This includes both home furnishing and food products.

Total costs this year were less than in FY19, mainly as a result of lower purchase volumes due to the pandemic and lower prices from IKEA suppliers. However, e-commerce sales continued to create increased costs for packaging and logistics in FY20.

Decreased raw material prices offset part of the lost sales volume, resulting in a higher gross margin percentage.

Operational cost

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

Staff costs mainly consist of salaries, benefits, training and social costs. During FY20, Inter IKEA Group employed 24,771 full-time equivalent co-workers, compared to 26,227 in FY19. To manage staff costs during the pandemic, several Inter IKEA Group companies introduced recruitment stops.
FY 207 2

FY20 full time equivalent co workers per core business

Inter IKEA Group also re-financed pension obligations for co-workers at IKEA of Sweden AB, a subsidiary. This contributed a one-off gain of EUR 113 million to this year’s total net income. Co-workers’ pension terms and conditions were unaffected.

Operational costs also include expenses to develop new products and solutions. The costs related to development and innovation portfolios amounted to EUR 267 million in FY20. Charitable donations are also included in operational costs.
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FY20 operational cost per category

Financial income and expense

Financial income and expense is revenue and costs regarding loans, investments and positions in foreign currencies. Last year currency developments led to financial income, while this year they led to expenses.

Income taxes