ANNUAL REPORT 2003 INEX PARTNERS OY

BOARD OF DIRECTORS´ REPORT FOR 2003
The Inex Group’s main businesses are the purchase
of groceries and supply of logistics services for retail
chains and the supply of logistics services for the speciality
products trade. The Group also provides grocery
purchasing and logistics services for the hotel, restaurant
and catering (HoReCa) sector. The Group’s main
business units are organised into limited companies.
The purpose of our business operations is to provide our
customer chains with a strategic and commercial competitive
edge and fi nancial benefi ts. Moreover, we aim
to create new competitive benefi ts through our ongoing
and innovative development functions. While remaining
focused on our business goals, we will aim to keep our
own activities profi table, as well as maintaining a stable
fi nancial position.
Our businesses’ competitiveness is based on cost-effi -
cient processes which cross organisational boundaries
and which we develop continuously in co-operation with
our customer chains, suppliers and other partners.
During 2003, no major changes were made to the structure
of our purchasing and logistics businesses, or the
organisation of the activities of the Inex Group.
In response to the tighter market situation and, in particular,
to the intensifying price competition, the Inex Group
will concentrate on company brands, international purchasing
co-operation, information management and personnel
as its key development targets. To further improve
cost effi ciency, the Group has focused on the defi nition of
value chains and upgrading of business processes.
Inex Group companies’ main customers include the retail
and HoReCa chains of the S Group and the Co-operative
Tradeka Corporation.
Ownership of the parent company, Inex Partners Oy, is
split 50–50 between SOK Corporation and Co-operative
Tradeka Corporation.
Organisation of Business and Other Activities
The parent company of Inex Group is Inex Partners Oy.
The parent company’s resources are used to provide
services in support of the fi nances, management and development
of the subsidiaries’ business operations.
The business activities of Inex Group companies are as
follows:
Inex Partners Oy
• Purchase of groceries and supply of logistics services
for the retail sector
• Logistics services for the speciality products trade
Meira Nova Oy
• Grocery purchasing, marketing and logistics services
for the hotel, restaurant and catering (HoReCa) sector
The Canelokiinteistöt Oy real estate and investment
company leases the lots and premises it owns. Finnfrost
Oy, an associated company, specialises in the purchase
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of frozen products, and in logistics services for retail and
HoReCa units – Inex Partners Oy owns 50 per cent of
this company.
Tucano Oy (formerly Meira Oy) was merged into the parent
company on 28 November 2003. On the same day,
the Group fi nalised a voluntary dissolution of its wholyowned,
inactive subsidiaries Elintarvikemestarit Oy, Makumauste
Oy, Nautintopapu Oy and Leijona Vaatetus
Oy. Furthermore, Inex sold its holding in the Oulu-based
company Ps-Logistiikkakylä Oy at the end of 2003.
The Business Environment and the Group’s Activities
The general uncertainty concerning the future development
of the international economy was the predominant
trend during the fi nancial year. Financial and stock market
volatility and the sudden and successive changes
in market trends weakened economic stability and predictability.
This was a global trend attributable not only
to weak economies in several key countries, but also
to the uncertain political situation, such as the war in
Iraq, which had a major effect on market fl uctuations
throughout the world.
The substantial strengthening of the euro towards the
end of the year weakened export opportunities in Finland
and elsewhere in the EU area. Finland’s economical
environment and development indicators remained
stable. Low infl ation and interest rates contributed to
consumer confi dence which also remained stable.
In Finland, the growth in the grocery retail market diminished.
According to the Finnish Food Marketing Association,
the year-on-year growth was 1.3 per cent. The
HoReCa sector experienced zero growth.
International operators and operating models increased
their infl uence in Finland and its neighbouring countries,
affecting the markets and competitive situation of
the grocery trade and industry. In particular, this was refl
ected in the emphasis placed on price as a competitive
tool.
Inex Group’s main customer chains further strengthened
their position and market share in the grocery retail
trade.
Inex Group’s business units clearly outperformed the
industry average in terms of growth in sales. Both the
parent company, Inex Partners Oy, and Meira Nova Oy,
which provides services for the HoReCa sector, consolidated
their share of sales in their respective sectors, as
well as their market shares.
Improved cost effi ciency and reliability in deliveries
throughout our core processes brought operational and
economic benefi ts to Inex Group’s customers. Development
projects covered product ranges, purchasing cooperation,
information management, personnel and operational
networks. The Group has also analysed the impact
of, and opportunities created, by EU enlargement,
and included these in its action plans for 2004.