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Ikea's revenues are rising - why are its profits not growing?

Ikea is reporting a 5.9 percent bump in worldwide sales in the 12 months to August 2014 - bu...
Newstalk
Newstalk

15.19 28 Jan 2015


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Ikea's revenues are ri...

Ikea's revenues are rising - why are its profits not growing?

Newstalk
Newstalk

15.19 28 Jan 2015


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Ikea is reporting a 5.9 percent bump in worldwide sales in the 12 months to August 2014 - but its net profit is flat at €3.3bn. The company says that the extra money was spent on employee bonus programmes, and price reductions.

The flat-packed budget furniture company reported strong sale-increases in China, Russia and Hungary. Europe is still the company's primary market - 70 percent of its merchandise is sold across the continent.

It is likely that China will become an increasingly important market for the company. It says that urbanisation and the swelling of the country's middle class is creating strong demand for home furniture.

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Chief executive Peter Agnefjall commented that he is particularly encouraged to see a strong performance in southern-European countries - sales picked up in Portugal, Spain and Italy. The Swede's also report that North American sales have been steady.

He added that he was not worried about deflationary pressures in Europe - saying that the company already works to a template that is based around driving down prices.

Mr Agnefjall expressed confidence about the company's immediate prospects: "We have seen a strengthening situation where consumer spending continues to increase, more people visiting the stores and buying more home furniture."


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