Ingka Group achieved strong financial results in FY21, with revenue amounting to EUR 39.8 (FY20: EUR 37.4 billion), and total IKEA Retail sales were EUR 37.4 billion, an increase of 6.3% compared with the previous year (FY20: EUR 35.2 billion).
Financial independence and our unique ownership structure
Built for purpose
Our financial approach is based on 78 years of earning money before we spend it, which allows us to be financially independent and purpose-driven in our decisions. We think in generations, not quarters, and invest in the long-term good of our customers, our business, people, society and our planet.
Ingka Group is owned by a Dutch foundation, Stichting INGKA Foundation, with a charitable purpose that is achieved by making funds available to Stichting IKEA Foundation.
Built for purpose, we reinvest the majority of our profit in our business to help us grow and innovate, and the remaining part as dividends to INGKA Foundation to achieve its charitable purpose.
Ingka Group pays taxes in all countries in which we operate and view this as an important part of our wider economic and social contribution to society. We pay taxes in accordance with laws and regulations, wherever we are present, as a retailer or in any other role.
Progress and challenges in FY21
In FY21 (1, fotnot: 1 September 2020 to 31 August 2021) Ingka Group delivered an overall strong performance with growing revenues. Thanks to the entrepreneurship of our co-workers and transformation of our business, we met the needs and dreams of our customers and kept IKEA open with digital capabilities, despite store closures due to Covid-19 restrictions. We are proud to have served millions of customers in a time when life at home has never been more important, and to have led in the pandemic in a professional and caring way with people and business at heart.
In parallel, we continued to invest in our ongoing transformation to establish an affordable, accessible and sustainable omnichannel IKEA that delivers the profitability we need for future resilience.
Empowered by our healthy financial position, we were flexible, agile and quick to act on opportunities. It is part of our culture and values to ensure we are financially strong and resilient. Our profit gives us resources to continue investments so that we can grow and live up to our vision to create a better everyday life for the many.
Ingka Group financial performance
Total Ingka Group revenue for FY21 amounted to EUR 39.8 billion and increased by 6.5% compared to FY20. Operating income amounted to EUR 1.9 billion, an increase of 31% compared to the previous year. Income before tax amounted to EUR 2.2 billion (EUR 1.6 billion in FY20).
Ingka Group pays taxes in all countries where it operates. The taxes we pay are an important part of our wider economic and social contribution to society. In FY21, our total tax bill, including other taxes and duties such as property taxes, environmental taxes and customs duties, amounted to approximately EUR 1.1 billion. See Tax for more on our tax payments.
The net profit of FY21 was EUR 1.6 billion (FY20: EUR 1.2 billion).
We continued to invest in our business transformation in our stores, distribution and customer fulfilment networks, the digital customer experience and shopping centres, and continued our sustainability investments in renewable energy and forestry, amounting to a capital expenditure of EUR 3.2 billion (FY20: 1.9 billion).
Total assets amounted to EUR 55.1 billion (EUR 52.2 billion in FY20). We further strengthened our equity position to EUR 45.2 billion at year-end (EUR 43.2 billion in FY20). The total cash flow for FY21 was EUR 1.2 billion positive (EUR 2.3 billion negative in FY20). Cash flow from operating activities was EUR 4.2 billion (EUR 2.9 billion in FY20).
IKEA Retail continued development of the IKEA omnichannel business model, securing better accessibility to the IKEA offer. During FY21, we have truly created a new omnichannel world of IKEA. IKEA retail sales reached EUR 37.4 billion for the financial year 2021, an increase of 6.3% compared to last year (EUR 35.2 billion in FY20). FY21 highlights:
The improved buying journey on IKEA.com
During the year, due to Covid-19 related closures, we experienced a small decrease in store visitation and a large increase in online visitation. The improved buying journey on IKEA.com resulted in an increase of the online sales share from 18% in FY20 to 30% of total retail sales in FY21.
The new IKEA app
The new IKEA app has been successfully launched in all Ingka Group markets, offering a simple and enjoyable way to find, choose and buy products fast. The app reached 33.5 million users and an average rating of 4.6/5 stars. The number of downloads of the app more than doubled and the number of visits using the app almost tripled, compared to FY20.
We continued with physical expansion and opened 10 new IKEA stores (including city stores), 4 new IKEA shops and 12 new planning studios. We also opened one Customer Distribution Centre. Notable openings include new and innovative small-format stores in urban centres, mini-malls in China (called the ‘Home Experience of Tomorrow’) and a sustainable city store in Vienna with a GREENPASS design certification.
Adoptning to omnichannel needs
We worked on adopting the IKEA fulfilment model to omnichannel needs with stores acting as fulfilment centres. New capabilities were added like the automated warehouse in Zagreb, which increases store capacity to fulfil e-commerce orders.
New energy service
We started to offer a new and exciting energy service that is good for the planet and people’s wallets. Sweden is the first IKEA market to start offering electricity through wind and solar through the new electricity subscription.
Ingka Centres, Ingka Group’s arm of shopping centres, moved forward in developing the meeting places concept where the many people can meet, find what they need and connect with their communities and the world. Ingka Centres reached almost 16% rise in sales for tenants and saw footfall reach 372 mln (369 million in FY20). Almost 1,000 new stores, which includes renowned international brands such as Bershka, Decathlon, H&M, Uniqlo, Sephora, Starbucks and Zara, and local shops opened across the portfolio and raised the attractiveness of Ingka Centres’ meeting places to its visitors. FY21 highlights:
First acquisition in the USA
The 6X6 building in San Francisco, a downtown retail destination, was acquired and will be anchored by IKEA and complemented with mixed-use offerings that are uniquely suited for San Franciscans and their lifestyles.
Entry to the Canadian market
The Aura Retail Podium in downtown Toronto was acquired, where a new, smaller format store will open in FY22.
Entry to the Indian market
A land plot in Noida was acquired to become an ‘IKEA anchored’ meeting place destination in India.
Meeting places in China
With the opening of two meeting places in FY21, Livat Fuzhou and Livat Changsha, China has now five meeting places operational. Livat Changsha is the first mixed-use, retail and work-live destination in China.
Ingka Investments, Ingka Group’s investment arm, strengthens long-term growth, secures our financial position and supports sustainability goals by making responsible investments in people and businesses. Ingka Investments’ activities are organised in six portfolios: Business Development Investments, Prioritised Cities Real Estate Investments, Venture & Growth Capital, Renewable Energy Investments, Forestland Investments and Financial Markets Investments. FY21 highlights:
Investments into financial services
Ingka Investments acquired a 49% stake in Ikano Bank as part of the IKEA transformation journey. The objective is to provide financial services for a more affordable, convenient life at home for the many.
Finding fast-moving, cutting-edge companies to back
We acquired minority shareholdings in Fluid Truck (app-based rental solution), DST (electric vehicle rental), what3words (global addressing system) and Jifiti (fintech company).
Investment in a recycling company
By investing in RetourMatras, which opened their fourth mattress- recycling facility in the Netherlands, we contribute to the IKEA circular agenda.
Large-scale support for renewable energy in Russia
Ingka Investments acquired a 49% stake in eight photovoltaic parks in Russia. The parks will produce enough electricity for all 17 IKEA stores in Russia plus part of the MEGA shopping centres around the country.
Increasing responsible forest management
In FY21, we bought additional forestland in Estonia and USA, with the aim of protecting biodiversity.
Continued investments in renewable energy
To support the transition towards a renewable energy future, we committed ourselves during FY21 to an additional EUR 4 billion investment up to 2030, on top of EUR 2.5 billion in the past decade.
Progress against target
Making a positive economic contribution
Make a positive economic contribution through our business activities, including the jobs we create, our procurement, the taxes we pay and through our community investment.
Total Ingka Group revenue for FY21 was EUR 39.8 billion (6.5% increase compared to FY20). 96% of this was distributed to stakeholders (e.g. coworkers, communities, governments and suppliers). Of the 4% remaining, some was distributed to our shareholder the INGKA Foundation for charitable donations and the rest was retained in the business to invest in the long-term good of our customers, our business, people, society and our planet.
Our journey to create a better IKEA continues in a world that faces unprecedented challenges. Covid-19 will continue to impact our business and the communities we are a part of. The global supply and transport crisis will require a resilient, flexible response.
Efforts across the value chain will continue to mitigate the challenges with product availability, inflation, prices of raw materials and transport that are expected to continue into FY22.
Solving the climate crisis has become critical, calling for sustainable business models and radical collaboration to reach the Paris Agreement and limit the global temperature rise to 1.5°C. Climate change will challenge humanity and alter business conditions.
We are committed leaders in dealing with climate change together with businesses and governments. We will continue to integrate sustainability fully into our business model and maintain our holistic approach on performance that steers our business for growth, a better planet, better lives and better homes for customers. We will take the next steps in our decade of People and Planet actions towards the IKEA ambition to become climate positive, circular and enable 1 billion people to live within the boundaries of the planet by the end of 2030.
The new, three-year strategic direction called the Next 10 Jobs in three years is focusing on the next transformation steps, creating a better IKEA. We will provide a more relevant offer and better service at affordable prices through excellent omnichannel operations, a robust digital backbone and a healthy, sustainable business performance, and we will continue to invest in the same way as we have done in previous years.
We have active portfolio management of our assets to secure the right investments in both the maintenance and development of existing assets, together with some selected divestments. We will continue to expand in our prioritised markets and city centre locations and to realise our transfor- mational investments, securing that our purpose and financial ambition go together.
All in all, we will navigate forecasted, stormy waters with flexibility, speed and increasing simplicity. We will make optimal use of the potential we have in our existing business while ensuring a resilient company for future generations. We will thrive by building on our strengths: our products, customers, fantastic people, dedication to life at home and most of all – our culture and values, while creating the future. We have a positive view and will play our part in circularity for a better life for the many people. Life at home has never been so important, and our vision to create a better life for the many people has never been so relevant.
Ingka Group pays taxes in all countries where it operates. The taxes we pay are an important part of our wider economic and social contribution to society.
Tax payments in FY21
The effective tax rate of 29.3% (FY20: 24.1%) corresponds to an amount of EUR 0.7 billion corporate income taxes (FY20: EUR 0.4 billion). In FY21, our total tax bill, including other taxes and duties such as property taxes, environmental taxes and customs duties, amounted to approximately EUR 1.1 billion.
Over the past five years (FY17–FY21), corporate income tax and other taxes and duties amounted to approximately EUR 5.5 billion. In addition, we collected substantial tax amounts on behalf of governments, such as value added tax and employee taxes. Over these 5 years, we’ve also created tens of thousands of jobs, directly in our IKEA stores and warehouses, and indirectly with our external suppliers, which in turn generate taxable income.