FY24 financial results

FY24 marked a trend-break after several years of high rising costs, for sourcing IKEA products. Both raw material and commodity prices, as well as costs related to transportation and logistics, have come down significantly during the financial year.

Following this trend, Inter IKEA Group has reduced its wholesale prices to IKEA retailers by a global average of 10%, with a full-year effect of 15%,  during FY24 to support affordability across the IKEA value chain.

These price reductions have in FY24 resulted in lower sales of goods and lower franchise fees for Inter IKEA Group. In turn, this has resulted in an uplift in sales volumes during the second half of the year. This uplift – in combination with the positive cost developments – have improved our gross margin despite despite lower revenues.

Lowering wholesale prices has enabled IKEA retailers to lower their retail prices to customers. In addition, substantial marketing investments were made by Inter IKEA Group during FY24 to support IKEA retailers in communicating these lower prices in their markets. This created one-time additional operational costs. Adjusted for this one-off item, operational cost remained flat, thanks to robust cost control in an inflationary environment.

Financial income and expense has changed significantly compared to previous year due to changes in the funding structure for Inter IKEA Group. Non-current liabilities are almost nil and working capital funding is primarily managed inhouse. This reduces the interest expenses significantly.

After financial income and expense, and income taxes, net income amounts to EUR 2.2 billion. The increase versus FY23 is primarily driven by increased operating income plus the positive result from financial income and expenses. The Inter IKEA Group consolidated income statement shows a simplified overview of this year’s financial performance.

Consolidated income statement 

Sales of goods

Sales of goods refers to wholesale sales of IKEA products to IKEA franchisees. Retail sales from IKEA Delft, which is the only store owned by Inter IKEA Group, are also included in this line item. Sales of goods are down following the price decreases on the goods sold to the franchisees.

Franchise fee

In a franchise setup, one company pays another franchise fees for the right to use its intellectual property. The IKEA franchise offer includes the IKEA trademarks and IKEA Concept. IKEA franchisees pay Inter IKEA Group an annual fee of 3% over their net sales. In return, they are authorised to operate IKEA stores and other sales channels for marketing and selling the IKEA product range. As retail sales decreased in FY24, franchise fee income came down accordingly.

Other income

Other income mainly consists of income from marketing materials and communication created for, and sold to, IKEA franchisees.

Cost of goods sold

Cost of goods sold describes the total accumulated costs to source, manufacture and distribute products. The cost of goods sold relates both to wholesale and IKEA Delft store sales.

Inter IKEA Group manufactures about 10% of the IKEA product range and sources the remaining 90% from over 800 external suppliers. This includes home furnishing and food products.

Raw material and commodity prices, as well as costs related to transportation and logistics, have come down significantly during the financial year.

This has had a positive impact on gross profit levels, while at the same time it has enabled Inter IKEA Group to lower their sales prices to the IKEA franchisees.

Operational cost

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

Disregarding one-time costs in FY23 and FY24, operational cost has slightly decreased due to the effects of internal organisational restructurings during FY23. These restructurings were focused on creating efficiencies in order to adapt our cost base to lower revenues. During FY24, our co-worker base (measured in average FTE) reduced from 24,944 in FY23 to 23,892 in FY24.

Financial income and expense

Financial income and expense are revenue and costs regarding loans, investments, cash deposits and positions in foreign currencies. The net financial income and expense has changed considerably compared to previous years.

In FY23, a shareholder restructuring took place through which ownership of Inter IKEA Group was transferred from Interogo Foundation and Interogo Holding AG to Inter IKEA Foundation. During this change, our outstanding long-term loan payable was transferred through a capital contribution, which almost reduced our non-current liabilities to almost nil. As a result, Inter IKEA Group no longer pays interest for this loan, which was an annual expense of EUR 324 million.

Additionally in FY23, interest expenses relating to working capital funding were driven upwards due to high interest rates. In FY24, positive working capital development reduced the funding need and instead, interest income was gained on outstanding cash balances.

Taxation

In FY24, the Inter IKEA Group tax charge was EUR 466 million – equal to 17.5% of pre-tax income – compared to EUR 307 million (15.8%) in FY23.

Inter IKEA Group’s total tax contribution amounted to EUR 2,140 million and mainly consisted of payments of corporate income tax, custom duties, VAT and payroll taxes. Read more in the Inter IKEA Group Tax Report FY24.