Ikea profits up 8% in 2012

Driven by demand for its flatpack furniture in emerging markets, Ikea made profits of £2.7bn last year

Demand in emerging markets for Ikea’s flatpack furniture has helped the Scandinavian company post an 8% increase in profits in 2012.

Worldwide sales last year increased 9.5% to €27bn (£22.6bn) with profits up 8% to €3.2bn (£2.7bn), thanks to strong sales particularly in new markets including China, Russia and Poland.

Prices were cut by an average of 0.8%, despite raw materials and transport costs increasing, but sales increased following 11 new store openings in nine countries and a 21.8% increase in website visits. In the UK a £30m investment in stores saw like-for-like sales rise 6.5%.

Chief executive Mikael Ohlsson said: “The Ikea business idea is more relevant than ever. People around the world are more value conscious and appreciate beautifully designed and functional home furnishing solutions at affordable prices.”

He revealed the company aims to double sales by 2020, spending up to £12.6bn on expansion. This includes more than £1bn on opening around 25 stores in India.

Ohlsson said recently, however, that the speed at which Ikea can open new stores has slowed in the past few years.

He said: “What some years ago took two to three years now takes four to six years, and we also see that there’s a lot of hidden obstacles in different markets … that’s holding us back. We are planning to increase the establishment speed, but we see that the process to go through all the administrative procedures is taking longer and longer.”

Indian authorities liberalised retail rules in the country last month allowing foreigners to own 100% of Indian subsidiaries, allowing Ikea to enter the market.

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